Introduction

Since 1978 Congress has authorized mandatory federal programs to regulate the energy and water consumption of appliances and commercial equipment used in buildings. The Department of Energy (DOE) has implemented this authority for over 70 categories of devices to achieve energy and water conservation. Some of the better-known covered devices include refrigerators, furnaces, and commercial air conditioning. The regulations also cover less noticeable equipment and equipment parts such as transformers and furnace fans. The effect of the national standards program is to require the sale or adoption of devices that consume less energy while providing the same service—a refrigerator with the same storage volume that consumes less electricity, for example. According to a 2017 DOE estimate, the program was expected to deliver energy savings of 71 quadrillion British thermal units (quads)¹ from inception through 2020,² which is roughly three-quarters of one year's primary energy consumption in the United States.

This report describes the regulatory concepts that underpin the national standards program; the controlling statutes; how DOE develops and revises the standards regulations; how the program is operated such as through certification and testing; and the impact of the program on energy conservation.

Overview

The Appliance and Equipment Standards Program, as the national standards program is formally known, was authorized in 1975 by the Energy Policy and Conservation Act (EPCA),³ first as nonbinding targets. In 1978 Congress amended EPCA and authorized the Secretary of Energy to set binding standards through regulations.⁴ In the 1978 law, Congress expressed its desire "to reduce the growth in demand for energy in the United States, and to conserve nonrenewable energy resources produced in this Nation and elsewhere, without inhibiting beneficial economic growth."⁵ With the passage of the National Appliance Energy Conservation Act of 1987,⁶ Congress set the first national energy conservation standards. Title III of EPCA established the goal for the standards that remains in effect today: for a new standard to be promulgated, DOE must first find that it would result in significant conservation of energy and be technologically feasible and economically justified.⁷

DOE sets minimum efficiency standards or maximum water⁸ or energy use standards both for consumer products and for commercial and industrial equipment—collectively, "products and equipment." Congress has amended EPCA multiple times; Table 1 lists the significant legislative action related to energy efficiency. Starting in 1975, Title III of EPCA has included targets for energy conservation. In 1978, Congress amended Title III to require DOE to set standards for thirteen covered products.⁹ With successive amendments to EPCA, Congress increased the number of covered products and equipment that became subject to the national standards program, and as of February 2022 had done so for 19 products and 11 types of equipment.¹⁰ EPCA also grants the Secretary of Energy authority to identify new covered products and equipment. Congress has directed DOE to follow standards and adopt test procedures set by engineering societies, independent standards organizations, or industry groups in certain instances.

Key Concepts in the National Standards Program

Covered Products and Equipment

Covered products and equipment are those units, devices, or appliances that are subject to the national standards program. Products and equipment can be classified as "covered" in two ways. First, Congress has enumerated specific products and equipment to be covered. For example, when the binding national standards program was first authorized in 1978 there were 13 covered products (i.e., consumer products such as appliances) defined by EPCA.¹¹ The list of covered equipment (i.e., pumps, motors etc.), cumulative from the laws described in Table 1, is codified in 42 U.S.C. §6311(1).

Second, DOE may classify additional consumer products as "covered." DOE has broad authority to do so, provided the Secretary of Energy finds it is necessary to carry-out the energy conservation goals of EPCA and DOE estimates the energy consumption of the product will exceed 100 kilowatt hours (kWh) per household per year.¹² A recent example is the Secretary's proposed determination of air cleaners as a covered consumer product.¹³

The process differs slightly for commercial and industrial equipment. EPCA, as amended, includes a list of equipment the Secretary may choose to designate as covered.¹⁴ A recent example is the Secretary's final determination of fans and blowers as covered equipment.¹⁵

Lighting products are sometimes considered to be a third category, independent of their origin as product or equipment.

Some equipment is known as "ASHRAE equipment"¹⁶—ASHRAE is the American Society of Heating, Refrigerating and Air-Conditioning Engineers—to acknowledge the standards issued independently by that organization in conjunction with the American National Standards Institute (ANSI) and the Illuminating Engineering Society of North America (IESNA). The relevant provisions of EPCA are discussed below in the section "ASHRAE Equipment."

Classes and Definitions of Products and Equipment

The standard for a particular covered product can be divided or split through creation of product classes. Such classes are created in certain instances to acknowledge, as determined by the Secretary, that a subset of products in the category "consume a different kind of energy" or have "capacity or other performance-related feature[s]" distinct from other products in the category.¹⁷ For example, there are 18 classes of room air conditioners,¹⁸ based in part on cooling capacity, as depicted in Figure 1. Other covered products such as water heaters have multiple classes depending on the type of energy consumed, the presence or absence of a storage tank, and other attributes.¹⁹

Figure 1. Classes of Room Air Conditioners

Source: CRS based on 10 C.F.R. §430.32(b). Notes: The two left-most categories have one standard applicable to each. The two right-most categories have multiple standards because the product is split into classes based on the louver and the cooling capacity (measured in British thermal units per hour [Btu/hr]).

In likewise manner, the standards for commercial and industrial equipment divide these into "category" or "equipment category" or "product class" or similar. For example, the standards for commercial refrigerators, freezers and refrigerator-freezers found in Subpart C of 40 C.F.R. Part 431 include a look-up table with rows for refrigerators with solid doors, refrigerators with transparent doors, and so forth. Each has its own maximum daily energy consumption.

Congress itself has shown specific interest in creating additional classes. In the case of residential furnaces, Congress directed DOE to consider a separate standard for the smaller models used in warmer regions.²⁰ EPCA required DOE to consider the possibility of fuel switching and set a standard that "is not likely to result in a significant shift from gas heating to electric resistance heating with respect to either residential construction or furnace replacement."²¹ DOE has estimated that 2.7% of consumers, when faced with a purchasing decision, would switch to heat pumps, and 1.7% to electric furnaces given the new standard.²² Today there are distinct classes of standards for small furnaces of less than 45,000 Btu/hr capacity.²³

The scope of coverage of general service lamps (GSLs; i.e., "light bulbs" such as incandescent, compact fluorescent, LEDs [light-emitting diodes] and other types) has also been at issue. EISA amended Section 321(30), subparagraph (D), of EPCA to exclude 22 enumerated incandescent lamps from the definition of incandescent GSLs ("GSILs").²⁴ The standards are not elaborated into classes, unlike the examples above, but include look-up tables²⁵ that apply to any and all lamps that meet the definition of GSILs.²⁶ The definitions are thus important because they determine which lighting products are to be covered by the national standards program and which are not. EISA also required DOE to conduct a future rulemaking, to start before January 1, 2014, to determine whether the exemptions should be maintained.²⁷ Removing the exemptions would have the effect that more lamps would be subject to energy conservation standards to be developed by DOE. Figure 2 shows the rulemakings DOE undertook first to remove the GSL exemptions by revising the definitions²⁸ and, later, to withdraw the proposed definitions (and maintain the exemptions).²⁹ The withdrawal took place prior to the first rulemaking having taken effect. On August 19, 2021, DOE issued a proposed rule again to remove the exemptions.³⁰

Figure 2. Rulemakings on Definition of General Service Lamps

Source: CRS.

Point of Compliance

EPCA makes manufacturers responsible for certifying that their products and equipment comply with the standards. As implemented by DOE, the regulations require testing of a "sample comprised of production units."³¹ Notionally, a manufacturer would show compliance by "select[ing] a sample at random from a production line."³² The regulations do not require field testing in deployment; the unit must comply prior to its being shipped as determined by statistical sampling. The section "Certification, Compliance, and Enforcement" includes further details on testing.

The Form of the Standards

The standards regulations are collected in the Code of Federal Regulations and include written sections related to testing, certification and the binding energy conservation standards that give effect to the prescriptions of EPCA Title III. The standards describe energy conservation in one of two ways. In the first, the standards establish a maximum allowable energy consumption expressed in units found on utility bills such as kWh or Btus.³³ For example, standard-sized dishwashers shall not consume more than 307 kWh/year.³⁴ Second, the standards can address the performance of the device in terms of its minimum required energy efficiency. Efficiency is a physical measure of the performance of the product or equipment. Efficiency is sometimes a simple percentage value representing how much of the energy in the fuel the appliance is able to convert into a useful service. For example, gas-fired hot water boilers manufactured after January 15, 2021, must have an Annual Fuel Utilization Efficiency (AFUE) of 84%,³⁵ representing how much of the fuel's energy the boiler delivers as heat inside the home. Efficiency can also be a combination of units, and, for example, general service lamps (i.e., light bulbs) meet standards specified in lumens per watt—the efficacy measure unique to lighting products.

Some of the standards regulations also include design standards necessitating the incorporation of certain features into the product. Design standards have no physical units and no associated testing requirement.³⁶ The manufacturer submits an annual compliance report to DOE.³⁷ Nonetheless, design standards can decrease energy consumption. An example of a design feature is that gas-burning clothes dryers cannot have continuously-burning pilot lights.³⁸

The Quantitative Level of a Standard

The choice of standard—what is the quantitative level—is the outcome of a detailed process. DOE elaborates a set of possible standards of varying stringency based on the technologies. The first step is the screening analysis, in which "DOE uses information about commercially available technology options and prototype designs as input in identifying technologies used to attain higher energy efficiency levels (EL)."³⁹ In addition to technological feasibility, DOE also considers the technological options for their (1) practicability to manufacture, install, and service; (2) impacts on product utility or product availability; and (3) adverse impacts on health or safety.⁴⁰ In the engineering analysis, DOE has used an efficiency-analysis approach to elaborate a set of ELs at discrete values of energy consumption or energy efficiency. The highest-performing level identified in the engineering analysis is sometimes known as "max tech." The determination of "max tech" is the result of an analysis required by statue to determine the "maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible." 42 U.S.C. §6295(p)(1)). Figure 3 illustrates the ELs proposed for non-weatherized (i.e., residential) gas furnaces in 2016 and the incremental technology associated with each.

Figure 3. Efficiency Levels Considered for Non-Weatherized Gas Furnaces September 23, 2016, supplemental proposed rule

Source: Efficiency levels from 81 Federal Register 65760 (September 23, 2016). Note: BPM = brushless permanent magnet.

The ELs are one of the pieces with which DOE assembles the various trial standard levels (TSLs). TSLs are more fully specified than the ELs because, like the standards regulations themselves, ELs take into account the different appliance sizes, features, and types of fuel consumed. Once elaborated, the TSLs are candidates for the energy conservation standard DOE ultimately promulgates. The rulemaking process solicits public comment on the appropriateness of the various TSLs DOE creates. Table 2 lists the TSLs for the rulemaking depicted in Figure 3 and the associated ELs. Note that some TSLs include two standards, and some of these apply to different sizes of furnaces measured in Btu/hr.

The manner in which DOE selects from among the various TSLs is known as a "walk-down" approach. To evaluate at which TSL to set the standard, DOE first conducts a series of analyses of the impacts with three principal metrics: (1) the energy savings; (2) the benefits to consumers (savings in fuel costs over the appliance lifetime, net of incremental product cost); and (3) the change in manufacturer cash flow.⁴¹ DOE conducts these analyses at each TSL. The walk-down process begins with a review of these results at the highest TSL or "max tech." (For the example in Table 2, this is TSL 9.) If the Secretary finds that "the benefits to the nation of the standards [defined by the given TSL] ... outweigh the burdens"⁴² then the max tech TSL is adopted as the energy conservation standard. If the Secretary does not make such a finding, the process "walks down" to the next most stringent TSL (e.g., TSL 8 in the example of Table 2), and the process repeats until the TSL then-under consideration meets the criteria. DOE considers other metrics and analyses as well, including, for example, the emissions or pollutants associated with generating electricity.

Relationship Between Standards and Energy Consumption

Energy efficiency in general and the standards for minimum energy efficiency in particular can alter consumer purchasing behaviors. These changes in behaviors mean that the relationship between a more stringent energy efficiency standard and a decrease in total energy consumption is not always direct. DOE has analyzed the situation in which a change in standards may lead to the suboptimal use of less efficient technology; a user may continue to use and repair a less efficient technology rather than pay the up-front cost of the appliance that complies with the new energy conservation standard.⁴³ DOE estimated this effect in the case of furnaces and found the repair-versus-replace effect would occur in an additional 1% to 4% of households subject to the standards.⁴⁴

Likewise, there is a phenomenon known as the rebound effect in which better performing appliances can erode expected energy savings. An appliance that is more energy efficient will consume less fuel and hence have lower operating costs for the same level of energy service provided (i.e., space conditioning [room temperature], hygienic services [hot water], etc.), potentially leading to increased use. In its simplest form, the rebound effect can occur if the lower operating cost induces higher demand for the energy service. DOE considers the rebound effect in the case of furnaces, for example.⁴⁵

Technological progress itself can improve the customer-facing attributes of an appliance and lead to greater use of the energy service the appliance provides. So, for example, improved, thinner insulation can increase the interior volume of the refrigerator and make it possible to provide refrigeration for a greater amount of food. To the extent that this greater volume increases the cooling requirements (i.e., Btu/hr), energy consumption may increase.⁴⁶

Title III EPCA Requirements

Requirement That Standards Be "Economically Justified"

The Secretary of Energy may not prescribe a new or amended standard if doing so "will not result in significant conservation of energy, or ... is not technologically feasible or economically justified."⁴⁷ EPCA requires the Secretary to determine whether a proposed standard is "economically justified" based on seven so-called statutory factors described in detail in the section, "Statutory Factors."⁴⁸ A rough idea of what constitutes "economically justified" follows from EPCA itself, which specifies that if the additional cost of the standards-compliant product is less than three times the value of the energy savings in the first year, then the standard is presumed to be economically justified.⁴⁹ DOE, however, has favored conducting additional analyses to consider the "full range of impacts to the consumer, manufacturer, Nation, and environment" and believes these have "serve[d] as the basis for DOE to definitively evaluate the economic justification for a potential standard level."⁵⁰

Further, EPCA includes an anti-backsliding provision by which a new or amended standard may not increase the maximum allowable energy use or decrease the minimum required energy efficiency of a covered product⁵¹ or covered equipment.⁵²

ASHRAE Equipment

The subset of commercial and industrial equipment known as "ASHRAE equipment" includes "generally, commercial water heaters, commercial packaged boilers, commercial air conditioning and heating equipment, and packaged terminal air conditioners and heat pumps."⁵³ EPCA requires that DOE adopt standards that, generally speaking, are "at the minimum level specified" in any amendment to ANSI/ASHRAE/IESNA Standard 90.1 (henceforth ''ASHRAE Standard 90.1'').⁵⁴

When these groups amend ASHRAE 90.1—an event known as the "ASHRAE trigger"—DOE must publish an analysis of the energy savings potential of amended energy efficiency standards within 180 days.⁵⁵ Thereafter DOE has 18 months to amend its own standard(s) to match the amended ASHRAE 90.1.⁵⁶ An exception occurs if DOE finds "clear and convincing evidence" that a more stringent standard than that in ASHRAE 90.1 would result in "significant additional conservation of energy" yet still be "technologically feasible" and "economically justified."⁵⁷ In such instances, DOE has 30 months to amend the standard. EPCA requires DOE apply similar considerations in determining "economically justified" as for other standard-setting rulemakings,⁵⁸ described further in the section "Statutory Factors."

Recent changes and reverted changes to the way DOE treats ASHRAE equipment are discussed further, below, in "The Process Rule."

Product Availability and the "Features Provision"

Congress included in EPCA the stipulation that an energy conservation standard not reduce consumer choice, sometimes known as the "features provision." This applies to "performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States."⁵⁹ In the past such features have included such items as oven door windows. These were judged to provide utility to consumers by allowing them to monitor what was cooking.⁶⁰ DOE preserved this feature even though doing so resulted in a product that raised total energy consumption relative to one without. Another example occurred in 2020 when DOE created another class of dishwashers, "Standard size dishwashers with a 'normal cycle,'"⁶¹ reasoning that units with "a short 'Normal' cycle have a performance-related feature that other dishwashers currently on the market lack."⁶² The text box below narrates a further example of an interpretive rule that invoked the statutory provision on features.

Application of the Features Provision of EPCA An example of the application of the features provision of EPCA was the splitting of efficiency standards for furnaces into two tracks: those having condensing technology63 versus those with non-condensing technology. In 201564 and again in 201665 DOE proposed one standard applicable to both. In January 2021,66 DOE determined that non-condensing technology (and associated venting) comprise a feature under 42 U.S.C. §6295(o)(4) and in a separate notice67 withdrew the proposed rules from 2015 and 2016. Underlying this determination were some technical issues. DOE noted that access to venting infrastructure in a building was not always assured.68 DOE reasoned that, for those consumers with a demonstrated preference for natural gas furnaces,69 lack of venting infrastructure could be an issue. In 2019 DOE stated in a proposed interpretive rule that the "totality of such concerns may raise non-condensing appliances (and their associated venting) sufficiently in the consciousness of the consumer as to be deemed a 'feature' under EPCA."70 In the final interpretive rule, issued in 2021, DOE concluded that "use of non-condensing technology (and associated venting) constitute a performance-related 'feature' under EPCA that cannot be eliminated through adoption of an energy conservation standard."71 In the same final rule DOE formally withdrew the March 12, 2015 proposal and the September 23, 2016 supplemental proposal covering residential ("non-weatherized") gas furnaces.72 It also withdrew a May 31, 2016, proposal for commercial water heating equipment.73 Based on a rethinking of what qualifies as a feature, DOE proposed an interpretive rule in August 2021 that would eliminate the separate tracks (effectively reinstating the 2015/2016 proposals).74 In doing so, DOE stated that "the technology used to supply heated air or hot water is not a performance-related 'feature' that provides a distinct consumer utility under EPCA."75 DOE noted that it had not yet implemented the January 2016 final interpretive rule "in the context of any individual energy conservation standards rulemaking."76 DOE issued the final rule to make this change on December 29, 2021.77 Figure 4. Timeline for Furnace Rulemakings Source: CRS from Federal Register notices.

Periodic Review ("Lookback")

With the Energy Independence and Security Act of 2007 (P.L. 110-140), Congress required DOE to conduct an every-six-year review of efficiency standards of covered products (42 U.S.C. §6295(m)(1)) and covered equipment (42 U.S.C. 6316(e)(1); 42 U.S.C. 6295(m)(1)).⁷⁸ DOE is then required to either publish a determination that a standard does not need amending or issue a notice of proposed rulemaking (NOPR) for a new standard.

In March 2019 the House Energy and Commerce Committee, Subcommittee on Energy, held a hearing after DOE had missed the deadlines for completion of 16 such reviews.⁷⁹ Four of the rulemakings accomplishing such reviews had been signed and dated in 2016 but not yet published.⁸⁰ A federal court ordered DOE to issue those rulemakings,⁸¹ which DOE then promulgated in January 2020.⁸²

Industry has commented on the six-year review requirement. At the March 2019 hearing, both the Association of Home Appliance Manufacturers (AHAM) and the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) expressed their view that six years is too often given the time needed for manufacturers to comply. AHAM further noted that successive revisions can lead to small energy savings relative to the additional costs imposed on the manufacturer. AHRI cited estimates from DOE's 2016 rulemaking on commercial boilers in which DOE estimated a 0.8% savings (0.39 quads) over the 30-year analysis period at a cost to industry of $13.1 million to $23.8 million.⁸³ DOE further estimated conversion costs for industry to be $27.5 million while the change in consumer net present value (i.e., the cost savings) was to be $0.414 billion (at a 7% discount rate) to $1.687 billion (at a 3% discount rate).⁸⁴

Standards Development Process

Rulemaking

Standards, test procedures, and coverage determinations are set utilizing rulemaking processes defined by administrative statutes and other requirements.⁸⁵ EPCA has additional procedural requirements, and for energy conservation standards, rulemakings generally have taken about three years to complete the four phases: framework, preliminary analysis, notice of proposed rulemaking (NOPR), and issuance of a final rule. The test procedures used to certify compliance with and enforce the standards are also set by rulemaking.⁸⁶ Figure 5 provides a notional illustration of the process that applies to products and to equipment other than ASHRAE equipment.

Figure 5. Rulemaking Process for Energy Conservation Standards and Associated Test Procedure Applies to products and to equipment other than ASHRAE equipment (sample timeline—actual timeline may vary; see notes for statutory requirements on timeframes)

Source: adapted from Daniel Cohen, U.S. Department of Energy, "The U.S. Appliance Standards Program," at https://www.americanbar.org/content/dam/aba/administrative/administrative_law/appliance_standards_program_deck.authcheckdam.pdf. Notes: TP = test procedure rulemaking; ECS = energy conservation standard rulemaking; NPRM = notice of proposed rulemaking (same as NOPR). For an ECS rulemaking, EPCA requires at least a 60-day comment period on proposed rules and at least a 90-day period between publication of proposed rule and final rule. 42 U.S.C. §§6295(p) and 6316(a). The differing requirements for ASHRAE equipment is discussed in the section "ASHRAE Equipment."

For some products, Congress established a quantitative energy conservation standard; DOE codified the standards as given in EPCA without conducting its own rulemaking.⁸⁷ DOE itself may designate a previously unregulated type of product or equipment as a covered category as well.⁸⁸ In other instances, Congress has specified the product category as "covered" but directed DOE to develop the energy conservation standards.

DOE makes documents available and seeks comments through all phases of the rulemaking process until issuance of a final rule. For the framework, preliminary analysis, and NOPR phases, DOE solicits public comment and often holds public meetings that may allow for remote participation. In the framework phase, DOE announces the availability of a framework document in the Federal Register and presents the approach and legal authority for the process in a public meeting.⁸⁹ The preliminary analysis phase incorporates available information and presents initial determinations to inform the proposed rule. The framework phase and preliminary analysis phase are not required by statute. (These various stages are again illustrated in Figure 5.) Once DOE issues a final rule, the rule typically sets a compliance date within three to five years.

Statutory Factors

As noted in "Requirement That Standards Be "Economically Justified",'" DOE must first show any new or amended standard to be economically justified. EPCA sets forth seven statutory factors⁹⁰ the Secretary must apply to "determine whether the benefits of the standard exceed its burdens"⁹¹ for covered products. The factors cover economic impacts; savings in operating costs versus up-front and maintenance costs; energy savings; competition; utility and performance of the product; and the need for national energy conservation. An additional factor is "other factors the Secretary considers relevant." EPCA does not require these seven factors be analyzed of the commercial and industrial equipment in the national standards program, but DOE does so.⁹²

DOE has conducted rulemakings on the process it uses to apply these factors—in effect, it has issued a rulemaking on how it does rulemakings. (These are discussed further below in the section "The Process Rule.") One such rulemaking describes how DOE evaluates the TSLs against the seven statutory factors. The rulemaking addressed whether TSLs would be evaluated comparatively or in a "walk-down" process that considers them seriatim compared to a no-new-standards baseline. See further discussion in the section, "The Process Rule."

Executive Orders

The process of regulatory development is also subject to presidential executive order. E.O. 12866, Regulatory Planning and Review, requires that certain proposed and final regulations be accompanied by specific analyses and further, for regulations deemed "significant,"⁹³ that the Office of Management and Budget review them prior to publication.⁹⁴ The E.O. requires that an agency "identify the problem that it intends to address (including, where applicable, the failures of private markets or public institutions that warrant new agency action)."⁹⁵ Later executive orders have made changes, perhaps most significantly E.O. 13422, Further Amendment to Executive Order 12866 on Regulatory Planning and Review. This latter E.O. again reiterated the need for agencies to identify the market failure or problem the draft regulation is attempting to solve.

The Process Rule

DOE maintains a set of procedures known collectively as the Process Rule⁹⁶ for setting efficiency standards and test methods for consumer products. When originally published in 1996, the purpose of the Process Rule was to provide "enhanced opportunities for public input, improved analytical approaches, and encouragement of consensus-based standards."⁹⁷ DOE follows the Process Rule for much of its work on the standards regulations, in addition to following other procedural requirements established in law and executive order. For example, the Process Rule addresses the statutory criteria provided in 42 U.S.C. §6295(o).⁹⁸

DOE revised a number of provisions of the Process Rule in a February 2020 final rule⁹⁹ and an August 2020 final rule¹⁰⁰ in order to "update and modernize"¹⁰¹ by changing its scope and applicability to cover not only consumer products but also commercial and industrial equipment;¹⁰² clarifying its treatment of test procedures; defining a threshold for what comprises significant energy savings; and for other purposes. DOE reverted a number of these provisions in a December 2021 final rule¹⁰³ and modified the scope and applicability so as not to mandate DOE follow the Process Rule in all cases, but may depart from it "to account for the specific circumstances of a particular rulemaking."¹⁰⁴

Two particular provisions in the revised Process Rule could have had an impact on the quantity of energy conserved. The first of these set a minimum threshold of energy conservation for a potential new or amended standard; to be promulgated, a new or amended standard must have resulted in site energy savings of 0.3 quads, or a 10% reduction in site energy, accrued by units sold over, typically, a 30-year analysis period.¹⁰⁵ DOE removed this provision in the December 2021 final rule, reasoning that the 0.3 quads threshold ignored the question of when the energy savings had occurred. For example, DOE continued, lower energy use during periods of peak demand—important for appliances such as air conditioners—"helps reduce stress on energy infrastructure."¹⁰⁶ The December 2021 final rule also noted that, by focusing on site energy—the physical point at which the energy conservation standards themselves apply—the 2020 revision had neglected the energy used in generating electricity and in extracting, processing, and transporting primary energy sources such as natural gas either to the power plant or to the site.

In the second area affecting the quantitative aspects of energy conservation standards, the December 2021 final rule restored a provision of the Process Rule on the method of choosing among possible quantitative levels for the energy conservation standards (i.e., the TSLs). Known as the walk-down approach (discussed earlier in the section "The Quantitative Level of a Standard"), it had been replaced in an August 2020 final rule.¹⁰⁷ Then, DOE had changed its approach to "include a comparison of the benefits and burdens of that TSL against the benefits and burdens of the baseline case ('no new standards' case) and across all other TSLs."¹⁰⁸ In that earlier final rule, DOE had reasoned that the process could otherwise result in selection of a TSL "no matter how minute an estimated cost savings," a reference to the way DOE might otherwise interpret "economic justification" during a rulemaking.¹⁰⁹ In other words, the TSL chosen might provide marginally better energy savings than a less-stringent TSL but at much higher cost. In the December 2021 final rule, DOE reverted to the walk-down approach, explaining that the other approach might have resulted in a standard that "maximizes net benefits" rather than "maximizes energy savings and is technologically feasible and economically justified."¹¹⁰

Other provisions affected by the 2020 revisions still stand. DOE has issued a NOPR to revert some of these as well;¹¹¹ the final rule is pending as of this writing. For example, the 2020 revisions to the Process Rule addressed the standards that apply to ASHRAE equipment. DOE had added to the Process Rule regarding how and to what extent it must adopt any amendments to ASHRAE 90.1, including what finding it must make before setting a more stringent standard.¹¹² (These and other EPCA requirements are discussed earlier in the section "ASHRAE Equipment.") DOE asserted, in the 2020 revisions, that there must be "no substantial doubt that a standard more stringent ... would result in a significant additional amount of energy savings [etc.]"¹¹³ and further that it would opt to set a more stringent standard only in "very limited circumstances."¹¹⁴ DOE further explained that there would be no opportunity for it to revise such standards without the ASHRAE trigger first having occurred. This meant DOE could not amend standards for ASHRAE equipment at a time of its own choosing.

In July 2021,¹¹⁵ DOE published a NOPR that would, if finalized, revert these changes regarding standards for ASHRAE equipment. DOE explained that the criteria in setting more stringent standards, both in EPCA—the "clear and convincing evidence" standard—and in case law, were sufficiently clear and that the February 2020 final rule had introduced language that was not needed.¹¹⁶ The July 2021 NOPR also proposed to restore DOE's discretion to amend standards for ASHRAE equipment, not only as a result of the ASHRAE trigger having occurred, but also as a result of DOE's own periodic reviews.¹¹⁷ Nonetheless, the meaning of "clear and convincing evidence" is part of ongoing litigation.¹¹⁸ The litigation also touches upon whether DOE could amend a standard for ASHRAE equipment absent the ASHRAE trigger.¹¹⁹

Additional revisions to the Process Rule are discussed below in the section "Test Procedures."

Alternatives to Rulemaking Process

DOE can use variations to the above rulemaking process in certain circumstances. DOE may start the process at the preliminary analysis phase or at the NOPR phase (see Figure 5) if it has the necessary data and information to conduct its analysis.

In about 10% of its standards-making activities since 2008, DOE published a direct final rule that established energy conservation standards.¹²⁰ The direct final rules were based on documents submitted jointly by stakeholders that "are fairly representative of relevant points of view."¹²¹ An example is the direct final rule issued on residential furnaces in June 2011.¹²²

In a further 23% of standards rulemakings since 2008, DOE has applied a technique known as negotiated rulemaking,¹²³ facilitated by DOE's Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC) using authority granted under the Alternative Dispute Resolution Act (ADRA, P.L. 104-320, 5 U.S.C. §561-570).¹²⁴ In 2015, for example, a working group recommended energy conservation standards and test procedures for fans and blowers; this supported DOE's later determination that fans and blowers were to be covered equipment.¹²⁵

Certification, Compliance, and Enforcement

The covered products and equipment cannot enter commerce (e.g., be sold or imported) without first being certified as being in compliance with the standards regulations. DOE requires manufacturers or a third-party labeler to submit a certification report of energy performance; such reports are required when the basic model is first sold and annually thereafter. In addition, DOE conducts selected testing through third-party laboratories to verify energy efficiency performance. The basic models, which are the subject of the tests, can be "a group of models that differ in non-energy-related characteristics like color."¹²⁶ For residential water heaters there are roughly 200 basic models but nearly 4,000 individual models.¹²⁷

DOE also engages in enforcement activities and can initiate enforcement testing either under its own initiative or when it receives written information alleging a violation.¹²⁸ Such cases focus on manufacturers that distribute products in the United States that, according to DOE, do not meet required energy standards. Compliance certification cases focus on manufacturers that either have submitted invalid compliance certifications or have not certified that the products have been tested and meet the applicable efficiency standards. DOE has applied the principle of enforcement discretion as demonstrated by a recent enforcement policy statement. This policy allowed specific water heater units that do not comply with the applicable energy conservation standards to be sold. This policy was issued following a period in which the test procedures applicable to water heaters were changed by three rulemakings following a mandate in a 2012 law.¹²⁹ Stakeholders with unsold residential water heater inventory requested DOE use enforcement discretion to allow the continued sale of what were now noncompliant units.¹³⁰ DOE issued an enforcement policy statement to the effect that it would not seek civil penalties for certain products that failed to meet applicable energy conservation standards for the next year.¹³¹ First issued in December 2016, the policy was renewed several times and expired on December 31, 2021.¹³²

Other federal agencies have roles in energy efficiency and provide consumers with information on the performance of products—both those covered in EPCA and those that are not. The ENERGY STAR program affixes a label to products indicating they meet minimum energy performance requirements as a way of informing consumers on their purchases.¹³³ The Environmental Protection Agency ensures that the information that appears on ENERGY STAR labels is independently certified. The Federal Trade Commission uses its authority under Title III of EPCA¹³⁴ to require manufacturers to provide EnergyGuide labels¹³⁵ on energy use and operating costs of a number of covered products.¹³⁶

Test Procedures

Congress specified test procedures for certain products¹³⁷ and equipment¹³⁸ and further authorized DOE itself to prescribe test procedures. DOE issues test procedures by rulemaking. For a number of covered products and equipment, DOE adopts procedures set by engineering societies, independent standards organizations, or industry groups in a process known as incorporation by reference (IBR). In this fashion numerous test procedures have become part of the regulations for energy conservation. DOE is required to review test procedures for covered products and equipment at least once every seven years.¹³⁹ EPCA has criteria that DOE must consider when adopting a test procedure but leaves it to DOE's discretion to determine if the criteria have been satisfied.¹⁴⁰ EPCA has required that DOE develop test procedures that, for example, are "in accord with"¹⁴¹ or "conform to"¹⁴² a specific test procedure named in the statute for the covered product or equipment in question.

In 2020, DOE added,¹⁴³ and then in a December 2021 final rule reverted,¹⁴⁴ a provision in the Process Rule on the use of IBR for test methods. In the February 2020 final rule, DOE explained that it would be requiring "adoption, without modification, of industry standards as test procedures for covered products and equipment unless such standards do not meet the EPCA statutory criteria for test procedures."¹⁴⁵ With the promulgation of the December 2021 final rule, DOE will retain the discretion to either adopt the test procedure "as is," modify the standard so that it complies with the statutory criteria, or reject it and develop a new test procedure.

Federal and State Authorities

Federal energy conservation standards, test procedures, and label requirements generally supersede state requirements. DOE is authorized to grant a waiver of federal preemption for "unusual and compelling State or local energy or water interests" (42 U.S.C. §6297). Legislation introduced in the 117^th Congress (H.R. 1512 and H.R. 1326) would suspend this preemption—allowing states to set their own standards—for instances in which DOE has not updated a standard within eight years of its most recent promulgation.¹⁴⁶ (EPCA generally requires this update within six years.)

Impact of the Standards

For all covered products and equipment, EPCA directs that "the Secretary may not prescribe an amended or new standard" if it would "not result in significant conservation of energy" and is "not technologically feasible or economically justified."¹⁴⁷ (See the discussion in the section "ASHRAE Equipment" for discussion of how that type of equipment is treated.)

DOE estimates the net cumulative energy savings accrued by products purchased over the (typically) 30-year analysis period (i.e., the period starting with the year in which the standard becomes mandatory). The rulemakings calculate the projected energy use assuming the proposed standard and subtract the projected energy use in the counterfactual case of no new standard.

Among revised standards, 2009 to 2017, the savings shown in Figure 6 have ranged from 14.8 quads for commercial package air conditioners and heat pumps—for which total net cost savings to consumers were $15.2 billion (at a 7% discount rate) to $50 billion (at a 3% discount rate)¹⁴⁸—down to 0.16 quads for residential boilers—for which total net cost savings to consumers were $0.35 billion (at 7%) to $1.20 billion (at 3%).¹⁴⁹ (Both these points are labeled in Figure 6.) One way in which DOE judges the impact on industry for a rulemaking is the effect on the industry net present value (INPV).¹⁵⁰ The rulemakings DOE concluded from 2009 to 2017 ranged from a slight, one- or two-percent improvement in INPV to an almost 30% decrease (see Figure 6),¹⁵¹ but in all cases DOE had determined that the "the benefits to the nation of the standards ... outweigh the burdens."¹⁵²

Figure 6. Effect of Appliance and Equipment Standards Rulemakings 2009-2017

Source: Federal Register notices for appliance and equipment standards rulemakings. Notes: Each point represents one standards rulemaking and is plotted to indicate DOE's estimates of the change in industry net present value incurred by the rule and the energy savings accrued by products and equipment purchased over the 30-year analysis period. DOE made the calculations using the same models and methods but, as the analyses were performed for different years, the basis for the energy savings and costs may rely on different inputs and assumptions.

DOE has made calculations of the cumulative benefits of the entire national standards program. One estimate, cited earlier in the "Introduction" section, was that the standards completed through 2016 would save 71 quads of energy by 2020 and nearly 142 quads through 2030.¹⁵³ A subsequent DOE analysis refined this by considering only the energy that is used or converted directly by the appliance or equipment (i.e., the "site energy," reflecting the physical location where the standards themselves apply). This latter analysis estimated savings to be 55 quads attributable to standards published from 1989 to 2019.¹⁵⁴ The two analyses may not be directly comparable because of the latter's reliance on site energy¹⁵⁵ and its exclusion of any benefits that may derive from DOE's adoption and promulgation of ASHRAE Standard 90.1 (i.e., Standard 90.1 was taken as the baseline "no standards" case).

The impact of a standards regulation is often to remove from the market or require modification of those products or equipment that exceed the maximum allowable energy consumption or, alternatively, fall below a minimum energy performance level. The case of a standard for gas furnaces provides a clear example. As discussed earlier (see "Product Availability"), DOE proposed in 2016 to amend the standards for non-weatherized (i.e., residential) gas furnaces. Then, as now, the gas furnaces can be differentiated by technology according to whether they are condensing and non-condensing. Figure 7 shows the number of models available at the time of the 2016 proposed rule.

Figure 7. Basic Models of Furnaces at Various AFUEs Models shown were those analyzed at the time of the 2016 DOE Supplemental Proposed Rule

Source: Data from U.S. Department of Energy, Technical Support Document: Energy Efficiency Program for Consumer Products and Commercial and Industrial Equipment: Residential Furnaces, August 30, 2016, p. 3-19, at https://www.regulations.gov/document/EERE-2014-BT-STD-0031-0217. Note: AFUE = Annual fuel utilization efficiency.

DOE's proposed standard, which was not finalized, would have required an AFUE of 92% for all non-weatherized (i.e., residential) gas furnaces with capacities greater than 55 kBtu/hr, meaning non-condensing furnaces of that size would not have complied without modification. DOE estimated that roughly half of such furnaces sold would first require modification "to include a secondary heat exchanger or increased overall heat exchanger surface area."¹⁵⁶

Issues for Congress

The six-year lookback provision, requiring DOE to review all standards of that age, is attracting attention in both Congress and in federal courts. DOE's failure to meet this six-year deadline for a number of standards was addressed in the 116^th Congress in a hearing of the House Committee on Energy and Commerce, Subcommittee on Energy in March 2019; in the 117^th it has been addressed in two bills (H.R. 1512 and H.R. 1326). At the March 2019 hearing, a representative of the Association of Home Appliance Manufacturers expressed the view that revisions to an existing standard can lead to small energy savings relative to the additional costs imposed on the manufacturer.¹⁵⁷ Currently, EPCA affords DOE no discretion on whether or when to conduct these "lookback" reviews. Congress could amend EPCA to grant DOE regulatory flexibility while balancing the EPCA purpose of energy conservation. For example, it could allow DOE to prioritize certain energy conservation standards that could save more energy in aggregate than other standards. Other approaches to address the backlog could be to extend the time between review periods, or for additional DOE staff to support the regulatory process.  

Recent rulemakings have gone back and forth on the question of how much deference DOE should give to engineering societies, standards organizations, and industry groups when considering the energy conservation standards that these groups develop. One noteworthy example is the treatment of ASHRAE equipment. A 2020 final rule, later reverted, would have favored DOE's adopting any new ASHRAE equipment standard "as is." The question of adopting ASHRAE Standard 90.1 is also in ongoing litigation.¹⁵⁸ Congress could clarify to what extent DOE must defer to ASHRAE by treating the latter's equipment standards as final—in other words, clarify to what degree and to what legal standard DOE may exercise its discretion in choosing the quantitative level of energy conservation.

The question of deference to ASHRAE arises, not just when setting energy conservation standards, but also in test methods used to show compliance. For a number of covered products and equipment, DOE adopts procedures set by engineering societies, independent standards organizations, or industry groups in a process known as incorporation by reference (IBR). DOE has changed its procedures back and forth on whether it must accept such test procedures "as is." Congress could likewise clarify to what extent DOE must defer to these organizations when promulgating test methods.

Prior amendments to EPCA¹⁵⁹ and court decisions¹⁶⁰ on natural-gas consuming products have favored mitigating the potential for fuel switching (e.g., replacing a natural gas unit with an electric one). This long history continues, and DOE proposed and, in January 2021, finalized an interpretive rule¹⁶¹ that would further mitigate against fuel switching. DOE has since reversed this interpretive rulemaking,¹⁶² but in doing so may not have settled the question. Congress could amend EPCA to clarify its intentions on fuel switching and thereby make implementation less contentious.