Industry Reacts To Reversal On Efficiency

January 21, 2004
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The Air-Conditioning and Refrigeration Institute (ARI) is one industry group that expressed disappointment in a recent ruling by a federal appeals court, which reversed a Bush administration change regarding efficiency standards for home air conditioners.

On Jan. 13, the U.S. Appeals Court for the Second Circuit in New York ruled that the U.S. Department of Energy (DOE) did not follow "proper procedures" when it adopted its 12 SEER (Seasonal Energy Efficiency Ratio) standard in May 2002. As a result, the more stringent 13 SEER standard, issued by the Clinton administration during its final weeks in office, will go into effect in 2006.

Translation: Unless the recent court ruling is changed or reversed, all central air conditioners and heat pumps manufactured after Jan. 26, 2006, must meet the 13 SEER standard.

"We are disappointed that such an important decision affecting homeowners in all 50 states should be determined on process rather than on the impact of the regulation on millions of people," stated ARI President William Sutton. "We will take some time to review the court's decision with counsel and then make a decision on what options best serve consumers and energy conservation."

Added Ed Dooley, ARI vice president of Communications & Education, "We are considering what to do. Our lawyers need to get a copy of the ruling and discuss our options."

Washington, D.C.-based Competitive Enterprise Institute (CEI) - a nonprofit, nonpartisan public policy group which says it is "dedicated to the principles of free enterprise and limited government" - was just as disappointed with the recent court's decision.

"We feel the 12 SEER standard is better for consumers," said Ben Lieberman, senior policy analyst for CEI. "The decision was disappointing, but there may be a silver lining.

"The judge threw out the 12 SEER rule because he said the 13 SEER rule was already published and it couldn't be changed. But the court did say that the separate challenge brought by ARI on the merits of 13 SEER could go forward."

The Details

In late 2000 the Clinton administration proposed a 30-percent increase in the SEER standard, from 10 SEER to 13 SEER. The standard was set out in a rule transmitted by the outgoing Assistant Secretary for Energy Efficiency to the Federal Register on Jan. 16, 2001, four days before the conclusion of President Clinton's final term in office. The ruling was published on Jan. 22, 2001.

Despite objections from ARI and members of Congress (called a "multi-billion dollar regulatory rip off that makes a mockery of the rulemaking process," by then ARI President Ted Rees Jr.), the DOE supported the increase.

However, after a 60-day review period in which ARI and other concerned industry groups and businesses voiced their objections to the proposed increase, the DOE reversed its position in May 2002. At that time, the DOE published a 12 SEER standard for all central air conditioners and heat pumps manufactured after Jan. 26, 2006.

In turn, the Natural Resources Defense Council (NRDC), along with 10 states and consumer groups, countered with a lawsuit against the DOE ruling, claiming that DOE had not followed proper procedures in the adoption of a 12 SEER rule.

In its Jan. 13 decision, the New York appeals court said, "the May 23, 2002 replacement standards [12 SEER rule] were promulgated in violation of that section [42 U.S.C. § 6295(o)(1)] because DOE failed to effect a valid amendment of the original standards' [13 SEER] effective date, and as a consequence was thereafter prohibited from amending those standards downward."

Dooley reiterated that the "process is in question, not the content [of the 12 SEER standard]."

Shifting Battleground

Dooley believes that the focus of attention should return to the burden that a 13 SEER standard would put on the average U.S. consumer.

"This [13 SEER standard] gives people the right to claim that they were going to provide energy efficiency for all of our country, when in fact, it would have the opposite effect and impact those who would be least able to pay - i.e., working families and people on fixed incomes who suffer through hot weather," said Dooley. "By driving the cost of air conditioning up, it would be more likely that some people wouldn't be able to afford replacements."

Dooley said that it is still possible for the Fourth Circuit Court of Appeals to take up the issue of the 13 SEER standard being fair and equitable. "And the DOE could go back to court and ask for a full hearing on the issue," he said.

Sutton said ARI will look at all avenues. "Unlike the Second Circuit's decision, which was based on procedural grounds, the Fourth Circuit would be reviewing DOE regulations to determine whether the standard was economically justified for consumers and manufacturers."

Lieberman encouraged ARI "to go forward."

"We haven't lost yet," he said.

Happy With Decision

While ARI and CEI vocally expressed disappointment, the American Council for an Energy-Efficient Economy (ACEEE) and others supported the recent appeals court decision.

"This important ruling will save consumers money, reduce the risk of blackouts, and cut emissions of air pollutants and greenhouse gases," said ACEEE Executive Director Steven Nadel.

ACEEE noted that with a 13 SEER standard "American consumers will save 250 billion kilowatt hours and $21 billion in electricity bills through 2030. Over the same period, utilities will avoid building 20,000 MW of peak power capacity, saving billions of dollars in capital costs and reducing future electric rates. The energy saved will prevent the emission of over 50 million metric tons of carbon - the equivalent of taking 34 million cars off the road for one year."

Added Nadel, "The blackout and natural gas situations make strong air conditioner standards more important than ever. We hope the Department of Energy will now turn its attention to turning out new efficiency standards, for residential heating systems and other important products."

In an interview with the Associated Press, New York Attorney General Eliot Spitzer, one of those who challenged the 12 SEER standard, said "this is a vindication of good energy policy, good environmental policy" and shows that a new administration "can't simply ignore" rules that already have been put in place.

Meanwhile, the Alliance to Save Energy, a private advocacy group, said the higher 13SEER standard will cut consumer electricity bills by as much as $1.1 billion a year by 2020, when the more efficient units would be expected to be in wide use.

Publication date: 01/26/2004

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