DOE Releases Proposed Regional Standards Enforcement Rule
Industry has until Jan. 4 to comment on the enforcement proposed rule
WASHINGTON — On Nov. 19, The U.S. Department of Energy (DOE) published a notice of proposed rulemaking (NOPR) regarding enforcement of the new regional energy conservation standards for split-system and single package central air conditioners in the Federal Register.
The long-awaited announcement comes more than a year after the Regional Standards Enforcement Working Group submitted a negotiated plan of enforcement for the standards to the DOE, which went into effect Jan. 1. Industry stakeholders will have until Jan. 4, 2016, to submit comments, data, and information to the DOE.
The Nov. 19 publication of the NOPR tentatively ends a one-year period of uncertainty for the HVACR industry, which adapted as best it could to the new energy conservation standards in the absence of enforcement guidance from the DOE.
“More or less, it appears what’s been proposed is what we agreed to a year ago,” said Jon Melchi, vice president of government affairs and business development for Heating, Air-conditioning, and Refrigeration Distributors International (HARDI), which participated in the working group. “The major change is that [distributors] had agreed to a Nov. 30 implementation date [for the recordkeeping requirements], which has since been pushed to July 1, 2016, which was our first preference, anyway, as it aligns with the end of the sell-through period in the South and Southwest. That’s the fallback date that clearly makes the most sense.”
Francis Dietz, vice president of public affairs for the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), said AHRI also participated in the working group and found the negotiated rulemaking process beneficial. “This is a situation where the consensus process worked and everyone was able to have their views and concerns aired,” he said. “The NOPR basically follows the outline of the consensus agreement we negotiated with the working group. It’s essentially the same, so we don’t have any concerns about this.”
However, the uncertainty caused by the rulemaking delay has been a burden on the industry, and the cost to comply with the proposed rule will only continue to impact HVACR distributors and contractors, in particular.
“The thing that’s bad is there were a lot of companies that spent a lot of money and resources to gear up for a Nov. 30 implementation date and incurred costs to comply with something they didn’t need to do yet,” Melchi said. “That’s disappointing for the companies that had to incur an additional financial hit due to the DOE’s delay. But, it does appear to be what we agreed to, and HARDI members should have minimal trouble complying with the proposed rule.”
Charlie McCrudden, senior vice president of government relations for ACCA, also participated in the working group and said ACCA is “pleased the NOPR so closely mirrors the proposal submitted by the working group.” Overall, the NOPR is very similar to what the working group submitted to ASRAC (Appliance Standards and Rulemaking Federal Advisory Committee), which they approved and submitted to the DOE last fall, McCrudden added. However, of the two items the working group never agreed upon, one is addressed in the NOPR while the other is not.
Currently, the only entity that faces the $200 civil penalty for violating the standard is the manufacturer, though there was talk in the working group of expanding that penalty to distributors and contractors. “The DOE does not include additional prohibited acts” in the NOPR, which aligns with ACCA’s stance on the issue, McCrudden said.
“The other item we couldn’t agree on is the definition of product,” he continued. “The discussion was about whether ‘product’ meant only equipment subject to regional standards or all central air conditioners and heat pumps. The difference is, the product category of central air conditioners and heat pumps includes not only central air conditioners and heat pumps, but also small-duct, high-velocity [systems]; space-constrained systems; and other products. That means a routine violator — someone who has repeatedly violated the regional efficiency standards — can’t purchase heat pumps, which are not subject to regional standards. An installer can’t commit a violation with a heat pump because there are no regional standards for heat pumps, and equipment manufactured before the changeover date is legal to install anywhere, anyway. This ‘death penalty,’ as we’ve termed it, for being a routine violator is very severe. There will likely be comments filed to that effect.”
OPEN FOR COMMENT
Industry stakeholders will have until Jan. 4, 2016, to submit comments, data, and information regarding the proposed enforcement rule to the DOE. But, potentially complicating matters is a Nov. 9 supplemental notice of proposed rulemaking (SNOPR) that proposes to amend the test procedure for central air conditioners and heat pumps.
“The test procedures SNOPR came out a few weeks ago, and there are potential changes to how products are rated and certified, and the changes come from a lot of discussion we had as a working group as to what constitutes a 14-SEER unit,” McCrudden explained. “You could take a 13-SEER condensing unit and match it with a certain coil or indoor unit, and it could achieve 14 SEER. This was problematic for regional standards because you couldn’t legitimately ban the sale or installation of 13-SEER condensing units in the South or Southwest because, potentially, it could be matched with the right coil [to achieve 14 SEER]. So, in the working group, we resolved that by suggesting some changes to how the DOE rates and certifies condensing units.
“There has been further discussion because the DOE has been looking at the test procedure itself, and they’ve made some changes that came out on this a couple of weeks ago based on discussions we had last year,” he continued. “So, the DOE, in this SNOPR, gives the option of some changes that we talked about as a working group and changes that are being proposed in the test procedure. The DOE is taking comments [through Dec. 9] on which of those two options would be preferred. This is unique because two different NOPRs are interacting with each other and could result in the outcome of one being applied to the other.”
In addition to the test procedures SNOPR, there is another parallel rulemaking regarding the information-collection component of the regional standards enforcement plan.
“Playing into this is what’s called an information-collection request [ICR],” McCrudden said. “Because the DOE is proposing that everybody in the supply chain maintains certain records, they had to go through an information collection request review. Anytime the federal government asks 10 or more entities to provide or maintain records, that request for information has to be reviewed by the Office of Management and Budget [OMB]. So, there’s a parallel rulemaking that has a 60-day comment period. In this case, because the information being collected was covered during the working group, it’s unlikely there will be many adverse comments to the OMB.”
THE BURDEN OF REGIONAL STANDARDS
While the industry is generally satisfied with the regional standards enforcement rule, industry leaders are quick to point out the significant burden the standards have already had on the entire HVACR supply chain.
“I don’t want to downplay this,” Melchi said. “This requirement is unprecedented in our industry. This is going to cost distributors a significant amount of money and time; they estimate the changes for distributors to be approximately $50 million. This is a major change to the way we do business, and it’s not something we’re thrilled about. This is a consequence of regional efficiency standards, and we think we did our best to mitigate and avoid some other alternatives for enforcement that were significantly more burdensome and intrusive to the way we do business. So, we don’t like this. It’s better than some of the alternatives, but, at the end of the day, for HARDI, this is something that shows the cost of a regional standard.”
The biggest problem, Melchi said, is that the DOE doesn’t factor in the cost of enforcement when performing its cost-benefit analysis.
“We tried to make the best of a bad situation, and we’re pleased what we agreed to is what’s in the proposal and that there are no major curveballs,” he said. “We’ll comment appropriately, but it does represent a significant change to the way our members do business, and we don’t take that lightly.”
SIDEBAR: Proposed Recordkeeping Requirements
RECORD RETENTION REQUIREMENTS
The working group recommended that contractors retain records for 48 months after the date of installation, distributors retain records for 54 months after the date of sale, and manufacturers retain records for 60 months after the date of sale. The working group explicitly noted that retaining records allows each entity to archive records as long as they are not deleted or disposed of. The working group also clarified the records-retention requirements neither mandate that contractors, distributors, or manufacturers create new forms for the purpose of tracking central air conditioners nor require records to be electronic. The DOE proposes to adopt these record-retention requirements, as with a few minor modifications, and requests comment on these requirements.
Beginning 30 days after the issuance of a final rule, a manufacturer must retain:
• For split-system central air conditioner condensing units: the model number; serial number; date of manufacture; date of sale; and party to whom the unit was sold, including the person’s name, full address, and phone number;
• For split-system central air conditioner indoor coils or air handlers (not including uncased coils sold as replacement parts): the model number; date of manufacture; date of sale; and party to whom the unit was sold, including the person’s name, full address, and phone number; and
• For single-package central air conditioners: the model number; serial number; date of manufacture; date of sale; and party to whom the unit was sold, including the person’s name, full address, and phone number.
Beginning July 1, 2016, a distributor must retain:
• For split-system central air conditioner condensing units: the manufacturer; model number; serial number; date the unit was purchased from the manufacturer; party from whom the unit was purchased, including person’s name, full address, and phone number; the date the unit was sold to a dealer or contractor; the party to whom the unit was sold, including person’s name, full address, and phone number; and, if delivered to the purchaser, the delivery address; and
• For single-package central air conditioners: the manufacturer; model number; serial number; the date the unit was purchased from the manufacturer; the party from whom the unit was purchased, including the person’s name, full address, and phone number; the date the unit was sold to a dealer or contractor; the party to whom the unit was sold, including the person’s name, full address, and phone number; and, if delivered to the purchaser, the delivery address.
For all installations in the South and Southwest, beginning 30 days after issuance of a final rule in this rulemaking, contractors must retain:
• For split-system central air conditioner condensing units: the manufacturer name; model number; serial number; location of installation, including the street address, city, state, and zip code; the installation date; and the party from whom the unit was purchased, including the person’s name, full address, and phone number;
• For split-system central air conditioner indoor coils or air handlers, not including uncased coils sold as replacement parts: the manufacturer name; model number; location of installation, including street address, city, state, and zip code; date of installation; and the party from whom the unit was purchased, including the person’s name, full address, and phone number; and
• For single-package central air conditioners: the manufacturer name; model number; serial number; location of installation, including street address, city, state, and zip code; date of installation; and party from whom the unit was purchased, including the person’s name, full address, and phone number.
Information courtesy of the U.S. Department of Energy (DOE).
Publication date: 11/30/2015