Court Orders U.S. Energy Department to Set Efficiency Standards

Published March 12, 2020

Under an order from the U.S. Ninth Circuit Court of Appeals, the U.S. Department of Energy (DOE) finalized Obama-era rules tightening energy use requirements for commercial packaged boilers, and set energy conservation standards for industrial air compressors, portable air conditioners, and uninterruptible power supplies or battery backup devices used to protect computers and other sensitive equipment.

As previous presidential administrations had done, President Donald Trump placed a hold on all regulatory changes proposed or pending publication in the Federal Register when he took office, giving the administration time to consider whether the regulations were justified.

Some pending rules were eventually allowed to go forward, and the Trump administration rescinded or modified other regulations, but the energy efficiency regulations remained in limbo, never officially rescinded nor published in the Federal Register. The U.S. Ninth Circuit Court of Appeals ruled the DOE had violated its own rules by delaying publication of the energy efficiency standards, which is what would make the standards official.

Standardizing Efficiency Rulemaking

Shortly after publishing the efficiency mandates required by the court, DOE finalized a new “process rule” to standardize and make transparent requirements for the Appliance Standards Program to mandate energy efficiency increases going forward.

Under DOE’s new rule, federal appliance energy efficiency upgrades must be “significant”—defined under the rule as saving at least 0.3 quads of energy over 30 years or improving energy use by at least 10 percent above existing standards. DOE found approximately 60 percent of prior standards met these requirements, whereas the other 40 percent accounted for just 4 percent of total energy savings.

Ensuring Justifiability

DOE’s process rule also authorizes the agency to conduct comparative analyses of proposed standards before finalizing a new rule, to ensure any new standards are justifiable. Such market testing would gauge whether consumers would choose a product meeting the trial standard over a product meeting other possible standards when energy savings, efficacy, product features, and life-cycle costs for each are presented.

The new rule should benefit consumers and manufacturers alike, said Energy Secretary Dan Brouillette in a January 15 statement.

“Clearer energy efficiency standards will provide certainty to manufacturers, allowing them to produce products that will save consumers money on a variety of appliances,” Brouillette said. “These modernized procedures will increase transparency, accountability, and regulatory certainty for the American people.”

‘No Need for a Mandate’

The government should stop dictating appliance standards and instead allow consumers to express what characteristics of appliances are most important to them based on their purchases in the market, says Sam Kazman, general counsel at the Competitive Enterprise Institute.

“Government promises of significant savings over time, despite often significant upfront costs, do not always hold true,” Kazman said. “All efficiency regulations suffer from the fallacy that we cannot trust consumers to make good choices, but if the savings are clear-cut, there is no need for a mandate.”

Duggan Flanakin ([email protected]) writes from Austin, Texas.