Manufacturers, importers and private labelers of appliances, lighting products and commercial and industrial equipment can expect a much more aggressive federal regulatory approach to energy and water efficiency, as the Biden Administration looks to revisit, and where possible, reverse Trump-era efforts to rein in the Appliance and Equipment Standards Program. On January 21, President Joseph Biden signed Executive Order 13990, entitled “Protecting the Public Health and the Environment and Restoring Science to Tackle the Climate Crisis,” which instructs several federal agencies – including the Department of Energy – to “immediately review” and “take action to address the promulgation of Federal regulations and other actions during the last 4 years that conflict with important national objectives.” As part of the Biden administration’s energy and climate mitigation plan, several Department of Energy (DOE) regulations were identified for review. On February 19, 2021, DOE published a preliminary list of actions being considered pursuant to EO 13990. DOE is likely to attempt to repeal or substantially revise process-related regulations that slowed the development of new efficiency standards as well as the tightening of existing standards. DOE will also likely revisit a series of product-specific controversial rules that DOE issued during the Trump Administration, and will make an effort to push out new and more stringent standards that had languished, prompting an onslaught of legal challenges by states, environmental groups, and consumer groups over the course of past four years.

Background

The Energy Policy and Conservation Act of 1975 (EPCA), as amended, requires DOE to establish energy conservation standards for consumer appliances that are both “technologically feasible” and “economically justified.” EPCA covers twenty different categories of consumer products, including a variety of household appliances, electronics and lighting equipment. Twelve years after EPCA’s enactment, it was amended by the National Appliance Energy Conservation Act of 1987 (NAECA) to include a requirement that DOE review its regulations at regular intervals to determine whether to amend its existing efficiency standards. Notably, NAECA prohibits DOE from amending its efficiency standards to allow any increase in maximum energy usage; DOE may only amend its efficiency standards to include more stringent standards. This stipulation is often referred to as the “anti-backsliding” provision.

During the Trump administration, DOE revised decades-old process regulations which govern how DOE develops its standards and makes decisions. DOE also attempted to loosen standards for certain product categories without running afoul of the “anti-backsliding” provision, by redefining or creating new product categories. These rulemakings along with a number of decisions not to revise and strengthen existing product standards, prompted legal challenges.

E.O. 13990 is the opening step in the Biden Administration’s efforts to distance itself from the prior administration’s approach to energy efficiency policy, and the regulated community can expect to ramp up its development of new standards and test procedures, updates to old standards, and enforcement of its standards, certification and marking requirements. 

List of DOE Actions for Review

EO 13990 calls out specific appliance energy efficiency regulations – with deadlines – and directs DOE leadership to “consider suspending, revising, or rescinding the agency actions.” Summaries of some of the more impactful regulations subject to DOE review are provided below.

Process Rules

• Significant Savings Requirement. This revision sparked controversy with its new baseline which required “significant savings” in order to establish a new standard. The rule requires either 0.3 quads of site energy savings over 30 years, or a 10 percent improvement in efficiency over existing standards. If this standard had been applied to the existing standards, DOE acknowledges that nearly 40 percent of those standards would have failed to produce “significant savings” and thus would not have been established.

• Test Procedure Interim Waiver Process. This rule grants automatic waiver approvals to manufacturers if DOE does not process the waiver request within the 45 business day window. Moreover, even if the waiver is eventually denied, the manufacturer can keep using its proposed alternate test procedure for another 180 days.

• Economic Justification. This revision changed the previous “economically justified” requirement to make it easier for DOE to reject efficiency standards. The previous standard required DOE to identify the maximum energy efficiency that is “technologically justified”. If that standard was not also “economically justified,” DOE was required to set the standard at the next highest level which was both economically and technologically justified. The revision outlines a new “walk-down” process, which critics expected to lead to the adoption of less stringent standards.

Substantive Rules

• Energy Conservation Program: Definition of Showerhead. This rule was an attempted work-around of the three decades-old 2.5 gallon-per-minute-maximum water flow rate for showerheads. Under the old rule, the flow limit applied to the entire showerhead fixture, while under the new rule, the limit applied separately for each showerhead on the fixture.

• Energy Conservation Program: Establishment of New Product Classes for Residential Clothes Washers and Consumer Clothes Dryers. This rule creates a new product class which permits lower efficiency standards for speedier washers and dryers. If the new class of products offer a “normal cycle” of less than 30 minutes for front-loading clothes washers and less than 45 minutes for top-loading clothes washers, they are not required to meet the existing efficiency standards.

• Energy Conservation Program: Establishment of a New Product Class for Residential Dishwashers. Similar to the washer and dryer rule, this new rule exempts fast-cleaning dishwashers from thirty year old rules by creating a separate product class. Standard residential dishwashers with a cycle time for the “normal cycle” of one hour or less from washing through drying are not required to meet the existing efficiency standards.

• Energy Conservation Standards for General Service Incandescent Lamps. This rule finalized the Trump Administration’s reversal of the Obama administration’s implementation of backstop efficiency standards. The Obama administration had also proposed to revise certain lamp definitions to greatly expand the scope of the new standard. The Obama Administration revision of the general service lamps and general service incandescent lamps rules was expected to transition the market away from incandescent bulbs by applying a “backstop” efficiency standard to a far wider range of lamps. However, in a series of rulemakings, the Trump Administration withdrew the GSL definition and declined to implement the backstop GSL efficiency standard. Certain states (including Vermont, California, Nevada and others) implemented the federal backstop standard at the state level, although DOE took the position that such standards were federally preempted. A number of states, environmental and consumer groups have sued to force DOE to implement the backstop standard for the wider range of general service lamps covered by the initial Obama Administration rulemaking. By reversing course, DOE may now seek to extricate itself from that litigation, although in doing so, DOE may in turn prompt an industry-led lawsuit.

Next Steps

To the extent DOE will seek to undo final rules, it may encounter many of the same administrative and litigation hurdles that the Trump Administration faced when it sought to distance itself from Obama-era energy efficiency policy. A renewed focus on appliance efficiency will, regardless, mean more standards, more stringent standards, and, in all likelihood, more aggressive enforcement of those standards.

Beveridge & Diamond's Consumer Products industry group works with U.S. and multinational companies that make, distribute, transport, or sell consumer products in a hyper-competitive and evolving consumer goods market. We help them identify, understand, and comply with complex regulatory requirements throughout the product lifecycle. For more information, please contact the authors.