Standards Save Trillions. Why Mess With a Good Thing, DOE?

The Department of Energy (DOE) issued a review of the regulations it oversees this week, and the results are what you’d expect from an administration that repeatedly prioritizes polluters over people. If DOE moves forward with the proposals it’s considering—some of which are likely illegal—the result will be a bigger burden on the cheapest, cleanest domestically produced energy resource: energy efficiency. The proposals in question undercut the highly successful energy efficiency standards program by making changes to a program that has worked well for decades.

Some background: in March 2017, Donald Trump’s Executive Order 13783 required agency heads to review regulations, with a focus on potential burdens to “the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.” DOE issued a Request for Information at the end of May 2017 and received hundreds of suggestions from interested parties. Commenters including NRDC (page 564) and a coalition of energy efficiency advocates (page 444) put forward constructive recommendations on the regulatory functions of DOE, including recommendations to enhance the extremely successful efficiency standards program and to fix the inadequate and troubled nuclear-related regulation.

But the final report issued this week is a cherry-picked selection of the comments and proposals DOE received, most of which skew toward prioritizing dirty energy at the expense of real improvements to programs that benefit consumers and the environment. In addition to proposals that make it easier to export liquefied natural gas, a review of operations at the National Laboratories, and a review of DOE’s compliance with the National Environmental Policy Act (NEPA) that could make it easier for polluting projects to be approved, DOE is considering a variety of proposals that could negatively affect the hugely successful and beneficial appliance efficiency standards program.

The campaign underway by the Trump administration to blindly reduce regulations, regardless of their benefits to Americans, is incredibly shortsighted. Here’s the thing: contrary to what the current administration would have you believe, regulations aren’t inherently bad! They protect public health and the environment, and they ensure quality and safety for consumers. In the case of appliance efficiency standards, regulations save Americans more than $2 trillion (yes, trillion with a “t”) on their utility bills. The efficiency standards program has been incredibly successful since the enabling law was signed by President Reagan in 1987, and the program has long enjoyed bipartisan support both from presidents and in Congress. By DOE’s own estimates, by 2030, the federal energy efficiency standards completed through 2016 will save more energy than the entire nation consumes in one year. That’s something to celebrate and work to enhance, not handicap.

Yet, DOE chooses to focus on counterproductive efficiency standards-related proposals, some of which raise red flags because they violate the requirements of the National Appliance Energy Conservation Act, the strong federal statute signed in to law by President Ronald Reagan, which has been amended and strengthened many times with bipartisan support over the past few decades. DOE’s description of their plans are incredibly vague, but the agency says its “considering:”

  • Changes to the statutorily established 6-year standards review provision: DOE is required by law to review and potentially update appliance and efficiency standards every six years, at the highest level that is technically feasible and economically justified. DOE cannot unilaterally change the requirements of this lookback provision, and they know it. The six year review timeframe generally works well, but in some cases, it is already too long of a cycle. Many products, especially those in the high-tech sector, change dramatically in a short amount of time. Any change that would extend this timeframe would mean that American consumers lose out on energy savings benefits and innovative manufacturers have little incentive to develop high-efficient, better quality products.
  • Voluntary, non-regulatory, and market-based alternatives to standards-setting: Again, DOE is required by law to set efficiency standards for a large number of household and residential products under a set schedule established by Congress. Any alternative to a national standard which all manufacturers must meet is risky for consumers. Without mandatory standards, the market could become a “race to the bottom” where cheap, low-quality products flood the shelves. Manufacturers who need to be regulated the most – those who produce the cheapest and lowest-quality goods—are those least likely to comply with a voluntary standard. And that means consumers lose. This proposal could undercut the purpose of a standard in the first place, which is to ensure all consumers are guaranteed a minimum level of quality.
  • Changes to the DOE Direct Final Rule Process: DOE appears to be suggesting that it will do away with one of its regulatory tools to set efficiency standards, known as a “direct final rule.” The direct final rule is a regulatory mechanism that allows an agency to issue a rule without having to go through the review process twice (i.e., at the proposed and final rule stages). It is only used when there is broad consensus around a standard and the agency decides that a rule is uncontroversial—and there is always opportunity for public comment and input. DOE falsely claims that direct final rules impact consumers.

Representatives from state governments and consumer organizations, including the Consumer Federation of America, are regularly involved in the standards-setting process and are supportive of efficiency standards because they reduce consumer energy bills. These groups have not advocated for changes to the direct final rule process. We agree that consumer voices are critical in the standards-setting process, but the solution is to involve more consumer advocates in rulemakings, not to do away with an important tool in DOE’s regulatory toolkit.

Furthermore, efficiency standards—including those set by direct final rules—actually reduce the economic burden on households by lowering household energy bills. Some of the most cost-effective and beneficial standards to date were set using the direct final rule process. This includes the standard for pool pumps, which was the result of a unanimous agreement between industry, efficiency advocates, and DOE and will save pool owners around $2,000 over the lifetime of the pumps used to circulate water in pools.

  • Improve the cost-benefit analysis, including development of internal DOE standards for when a large portion of the public would bear net costs: As required by law, DOE already determines whether a standard is economically justified by considering all of the costs weighed against all of the benefits, using a formula that looks at national costs and benefits, as befits a federal program. So this proposal seems unnecessary and arbitrary.
  • Reconsidering standards and test procedures for certain products: Standards and test procedures are not just a nice idea; they’re the law. It’s disturbing that DOE would even consider proposals that are so blatantly harmful to the consumers and businesses these standards are designed to benefit. We’ll be giving particular scrutiny to any attempt by DOE to circumvent or undercut existing laws.

We’ll have more to say about all of this as we learn more about these proposals. But if first impressions are anything, this “reform” will do nothing to help domestic energy resources, but will do a lot to hurt consumers. DOE says that its next steps will happen in an “open and transparent process.” You can be sure that we’ll be paying close attention and working to defend and protect the standards program at every turn.