Did DOE “flip the bird” to the DC Circuit?

From MasterResource

By Mark Krebs — August 8, 2023

“All three Notice of Proposed Rulemakings demonstrate the same anti-consumer biases of the Executive Branch’s Department of Energy: to ban non-condensing appliance products. Each suffers the same analytic and procedural defects that caused the Circuit Court to vacate DOE’s Final Rule for commercial boilers.  DOE’s continued flaunting of its authority, despite the Court’s action inspired my post title (above).”

On July 10, 2023, MasterResource published Energy Appliance Victory! (DC Circuit vs. DOE). The “victory” was overturning a DOE Final Rule that would have banned non-condensing commercial boilers.  In so doing, it also rejected the long-standing assumptions with the administrative state’s super weapon; its cherished “Chevron Deference.”[1]

The opening paragraph of my July 10th article read:

“The ‘wheels of justice turn slowly,’ but they indeed turned, even within the District of Columbia’s ‘uni-party.’ As for holding on to this victory, it is far from a slam-dunk for preserving consumer choice and free markets. I expect the struggle to escalate in Biden’s all-of-government war against natural gas and other fossil fuels.”

I had a gut feeling DOE would do something reactionary, and it didn’t take long. The DC Court vacated DOE’s commercial boiler efficiency rule on July 7. On July 28, DOE issued three notices for more stringent appliance efficiency mandates. One of these has been published in the Federal Register as a Docket EERE-2017-BT-STD-0019: Energy Conservation Standards for Consumer Water Heaters; Notice of Proposed Rulemaking (NOPR), thus starting a comment period (closing August 28, 2023). The other two are pre-publication versions yet to be published in the Federal Register. Once final versions of these are published in the Federal Register, they become official and posted to regulations.gov under their corresponding Docket ID. Then, the comment period starts.

All three of these notices demonstrate the same anti-consumer biases of the Executive Branch’s Department of Energy: to ban non-condensing appliance products. Each suffers the same analytic and procedural defects that caused the Circuit Court to vacate DOE’s Final Rule for commercial boilers.  DOE’s continued flaunting of its authority, despite the Court’s action begs the question of this article’s title.

This is a big deal. It speaks to the separation of powers between two ostensibly co-equal branches of government: the Executive and the Judicial. The third branch, Legislative, has a significant role to play here. The Energy Policy Conservation Act (EPCA) should be modified to effectively mitigate the chronic regulatory failures and self-serving nanny state behaviors that are chronic within DOE’s  administration of EPCA.

Three Rulemakings

The escalation didn’t take long. On July 28, 2023, DOE issued three new notices for more stringent appliance efficiency mandates. One of these has been published in the Federal Register as a Docket EERE-2017-BT-STD-0019: Energy Conservation Standards for Consumer Water Heaters; Notice of Proposed Rulemaking (NOPR), thus starting a comment period (closing August 28, 2023). The other two are pre-publication versions yet to be published in the Federal Register. (Once Federal Register versions are published, they’ll be posted to regulations.gov under their corresponding Docket ID and the comment period started.)

All three of these notices demonstrate the same sort of anti-consumer biases of the Executive Branch’s U.S. Department of Energy: to ban non-condensing appliance products. Each also suffers the same defects that caused the Circuit Court to rule against DOE in the commercial boilers case. Behavior driven by that bias that led to the DC Circuit vacating a Final Rule.  DOE’s apparent disregard of the Court’s action begs the question of this article’s title.

Going forward, the third branch, legislative, also has a significant role to play here. Specifically, it is to exercise control and restraint of the Energy Policy and Conservation Act (EPCA).  Enacted in 1975 as a reaction to oil embargoes, EPCA has been subject to constant “mission creep” ever since.  EPCA should at least be modified by the legislative branch to correct DOE’s regulatory failures and self-serving gaming of its analytical processes that are endemic within its administration of appliance efficiency standards.  Alternatively, Congress should “reimagine” EPCA. Perhaps EPCA should be scrapped given how it has been hijacked by scores of renewable energy eco-warriors and electrotechnology zealots.

Overview of DOE’s Three July 28th Appliance Efficiency Standards

The following discussion provides a rudimentary summary of these three notices:

1. Docket EERE-2017-BT-STD-0019: Energy Conservation Standards for Consumer Water Heaters; Notice of proposed rulemaking and announcement of public meeting

While residential gas storage heaters for the most popular sizes (20 to 55 gallons) would not require condensing technology, minimum efficiency levels being proposed could adversely affect consumer safety due to increased condensation within conventional exhaust systems.

Specifically, reduced temperatures of exhaust gases can, over time, result in excessive condensation within venting systems that could eventually lead to corrosion and leakage of combustion products (including carbon monoxide) into homes.  Additionally, new mandates being proposed call for an additional inch of insulation on the sides, top and bottom of storage tanks.

Accommodating larger tanks (due to additional insulation) can and will significantly increase replacement costs and, at least in typical “tight-fit” situations, prevent replacements with like-sized water heaters.  Additional hassle factors being proposed include the addition of flue dampers and electronic ignition (eliminating continuous pilot light) thus requiring gas water heaters to have electric connections.

These increased cost issues are especially important for low-income consumers, and comments are already being filed that express such concerns (20230724_Kramer Subject_Proposed water heater rules). The following is an excerpt:

I believe these new standards will HARM a very high percentage of the poor population in our nation. The long term cost will certainly be lower, that’s why we install them in weatherization, however the upfront cost will be so significantly higher that a great deal of the poor population will go without hot water simply because they cannot afford the additional cost of the unit and the increased cost of the installation.

DOE is also proposing to ban non-condensing instantaneous (a.k.a., wall mounted, tankless) gas fueled water heaters; specifically, those that share conventional venting systems with non-condensing gas furnaces as well as non-condensing power vented instantaneous water heaters.

On the electric side, the most popular electric storage water heaters (from 20 to 120 gallons) will replace electric resistance heating and force the use of immensely more expensive heat pump technologies.

• Docket EERE-2021-BT-STD-0027:  Energy Conservation Standards for Commercial Water Heating Equipment

Also on July 28th, DOE issued a pre-publication Federal Register Final Rule pertaining to energy conservation standards for commercial water heating (CWH).

Note:  The term “pre-publication means that it is not yet posted on regulations.gov as it has not been published in the Federal Register and may therefore be changed

New standards for CWH would require gas-fired storage water heaters to be 95% efficient.  Gas-fired instantaneous water heaters would require 96% efficiency.  The following table, extracted from DOE’s pre-publication Federal Register Final Rule, provides additional details:

Note that required efficiencies are predicated upon usage patterns. Less hot water consumption equates to less stringent minimum efficiency requirements.  How DOE will go about determining individual household hot water consumption is not explained.  Like their recent notice of proposed rulemaking (NOPR) for cooking products, DOE’s objective for establishing usage patterns  may include a move towards rationing controls.

• EERE-2019-BT-STD-0036: Energy Conservation Standards for Consumer Boilers

Also on July 28th, 2023, DOE issued a pre-publication Federal Register NOPR pertaining to energy conservation standards for consumer boilers.

Note:  The term “pre-publication” means that it is not yet posted on regulations.gov as it has not been published in the Federal Register and may therefore be changed.

In this NOPR, DOE is proposing a 95% AFUE (condensing) minimum efficiency requirement for consumer (residential) hot water boilers that are gas-fired.  For gas-fired steam boilers, an 82% AFUE minimum efficiency requirement.  This places such boilers on the same “bleeding edge” of safety to guard against vent corrosion (as previously explained above under 1: Energy Conservation Standards for Consumer Water Heaters).

Regarding non-gas boilers, DOE is proposing a slight increase for consumer oil boilers but no increase for consumer electric boilers.  According to DOE in several previous rulemakings, electric resistance heating is so close to 100% efficient, there is essentially no room for additional improvements. And banning electric resistance is apparently not an option DOE cares to pursue.

The following table, extracted from DOE’s pre-publication Federal Register NOPR, provides additional details:

Vindictive, Rogue DOE

Has DOE, a taxpayer organization working against consumers, gone rogue? The answer is affirmative because DOE has clearly demonstrated its vindictive nature towards anyone legally challenging their “authority” in the past.

Case-in-point: DOE’s actions after the “settlement” with the American Public Gas Association (APGA).  This case was documented with a July 15, 2015, article of mine published in MasterResource titled Gas Furnace Rule Part II: Return of the “Scorched Gas” Policy. The following is extracted from that article to show how DOE vindictively reacted to that settlement when DOE tried to ban non-condensing furnaces by increasing their claimed benefits by (in some cases) thousands of percent:

To graphically illustrate what appears to be DOE’s vindictive behavior, the following table compares key differences in DOE’s official “determinations” within its Life Cycle Cost (LCC) spreadsheets between the 2011 DFR and this [then] current NOPR.

Comparison of 2011 & 2015 Life Cycle Cost (LCC) Spreadsheet Results

Non‐Weatherized Residential Gas Furnaces

Notes to table:

• 2011 data from EERE-2011-BT-STD-0011-0010 LCC spreadsheet, summary tab, cells K9:K58, L9:L58 &  AI9:AI58
• 2014 data from EERE-2014-BT-STD-0031-0021 LCC spreadsheet, summary tab, cells O8:O41, AE8:AE41 & AT:AT41

[This table was presented to DOE at the continuation of its public meeting on April 13^th, 2015 and subsequently entered into regulations.gov on April 30^th, 2015. At that time, I asked DOE to account for these changes.  At page 127, line 21-22, of the transcript, DOE’s explanation was:

1. BROOKMAN: Okay. We’re going to move on now to manufacturer impact analysis.]

Clearly (to me at least), DOE can and does hold grudges and the above table aptly demonstrates a certain vindictiveness.  I expected that our “victory” of July 7^th, 2023 would at least cause DOE going forward to think twice about its unsubstantiated claims based upon misleading and opaque models.  But it apparently didn’t even slow DOE down. The similarities between DOE’s energy efficiency models and IAM models used to justify the “existential threat’ of global warming appear to be cut from the same centralized “command and control” cloth; but I digress (somewhat).

The same “errors” made by DOE in the commercial boiler rule that was just vacated by the CD Court also exist in the present batch of edicts issued on July 28^th.  Apparently, DOE’s lawfare tactic is to wear out their opposition.  After all, they have a ‘weaponized” Department of Justice on their side with virtually unlimited legal budgets (assuming the Federal printing presses keep printing money and unwitting consumers continue to pay for such waste).  In stark contrast, “industry” has limited legal resources and funding.  This is a war of attrition where “industry” must litigate or capitulate (likely followed by elimination shortly thereafter).

I realize that the documents issued on July 28th, 2023, were already in the que for release prior to the July 7^th “victory.” Regardless, DOE decided to simply go with what they have rather than avoid making the same mistakes that led to the Court vacating the commercial boiler rule. For whatever reason, DOE chose not correct its errors, so to me, that is tantamount to rendering the middle-finger salute.

Path(s) Forward

So now what? Back to square one of appealing more biased Final Rules as they are “determined” by DOE?  Or will “industry” begin to comply with the Borg-like administrative state?  There are other (non-mutually exclusive) alternatives that can fundamentally correct DOE’s rampant abuse of its congressionally granted authority.

1. One possibility may be filing for a temporary restraining order holding DOE from adopting anything until the technical and procedural issues from the commercial boiler are ‘resolved’. We could easily argue that the faults in the just vacated commercial boiler are still occurring in this and other rulemakings, thus  perpetuating regulatory failure.
2. Additionally, Congress could defund DOE’s ability to conduct activities that limit consumer choice as this recent letter from Senator Grassley to DOE may be implying.
3. Another possibility is to get Congress to revoke (or at least overhaul) the appliance efficiency authority they vested with DOE via EPCA way back in 1975 (at a time when world energy situation was way different) and rebalance the powers of the three branches. Given the present buzz about gas stove bans (etc.), and “administrative state” tactics, this might get traction. Senator Grassley and Cruz, are you listening?
4. Expand H.R.1640, the Save Our Gas Stoves Act, to protect  other gas fueled appliances that DOE plans to replace with electric appliances.  That said, H.R. 1640 has a slim chance at best getting through the Senate and probably zero chance of Biden signing it if it were to get through the Senate. Consequently, it may have to wait for a more conservative/free-market oriented Administration.

Again, none of the alternative strategies are mutually exclusive.  Many if not all of them can be executed simultaneously to increase effectiveness.  Even though more members of both the House and Senate sound willing to take on the administrative state, they need more understanding of what it will take to correct an errant DOE.

I was interviewed by Thomas Catenacci, a Fox News journalist for an article published on July 26^th, 2023 titled Experts warn Biden admin’s water heater crackdown will hike prices, reduce consumer choice.  Representative Bill Johnson (R-OH) was also interviewed.  The video clip of that interview clearly demonstrates that Rep, Johnson has a solid grasp of the situation and is remarkably fluent in expressing his knowledge about it.  We hope Rep Johnson can spread his knowledge and enlist more like-minded Congress members then take decisive action to change the course from the self-serving nanny/administrative state culture that is manifested by DOE s chronic overreach within its appliance efficiency programs.

Consider the opening of DOE’s press release for these new notices:  DOE Announces Efficiency Standards to Save Americans More Than $1 Billion Annually in Utility Bills.  It states: Congressionally-Mandated Appliance Standards Will Save Americans Nearly $20 Billion Over 30 years and Slash Carbon Pollution in Communities Across the Nation. The purpose of that sentence is to give DOE cover that it is simply implementing the will of Congress.  

What the “victory” accomplished by getting DOE’ commercial boiler rule vacated was to display that DOE couldn’t exhibit its burden of proof for its “regulatory determinations.”  This judicial action adversely impacted the administrative state’s cherished Chevron Deference.  DOE wasn’t then and still isn’t now playing by the rules  to expand their regulatory domain over appliance efficiency  (and/or they change the rules as they deem fit on the go). DOE is not going to change its ways. 

Therefore, Congress must change DOE.  What Congress giveth, Congress can taketh. The above list is intended as a modest start. Please weigh-in with your recommendations in the comment section below. Legal reality checking will be especially appreciated.

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[1] For those not familiar with the Chevron Deference, it basically assumes that federal agencies (such as DOE) are uniquely qualified through the expertise of “career professionals” to interpret ambiguous legislative language for then carrying-out policy objectives.  For more information,  the Daily Caller published Bureaucrats ‘Don’t Give a Damn’: Ted Cruz EVISCERATES Chevron Deference in New Supreme Court Filing on July 27, 2023.  It makes a strong case how the Chevron Deference is being abused by the “administrative state” to exert control over consumers.

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Mark Krebs, a mechanical engineer and energy policy consultant, has been involved with energy efficiency design and program evaluation for over thirty years. Mark has served as an expert witness in dozens of State energy efficiency proceedings, has been an advisor to DOE and has submitted scores of Federal energy-efficiency filings. His many MasterResource posts on natural gas vs. electricity and “Deep Decarbonization” federal policy can be found here.

Mark’s first article was in Public Utilities Fortnightly, titled “It’s a War Out There: A Gas Man Questions Electric Efficiency” (December 1996). Recently retired from Spire Inc., Krebs has formed an energy policy consultancy (Gas Analytic & Advocacy Services) with other veteran energy analysts.