Judges: Ripple
Filed: Aug. 08, 2016
Latest Update: Mar. 03, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit _ Nos. 14-2147, 14-2159, & 14-2334 ZERO ZONE, INC., et al., Petitioners, v. UNITED STATES DEPARTMENT OF ENERGY, et al., Respondents. _ On Petitions for Review of Final Regulations of the United States Department of Energy. Agency No. EERE-2010-BT-STD-0003 & Agency No. EERE-2013-BT-TP-0025 _ ARGUED SEPTEMBER 30, 2015 — DECIDED AUGUST 8, 2016 _ Before BAUER, RIPPLE, and ROVNER, Circuit Judges. 2 Nos. 14-2147, 14-2159, & 14-2334 TABLE O
Summary: In the United States Court of Appeals For the Seventh Circuit _ Nos. 14-2147, 14-2159, & 14-2334 ZERO ZONE, INC., et al., Petitioners, v. UNITED STATES DEPARTMENT OF ENERGY, et al., Respondents. _ On Petitions for Review of Final Regulations of the United States Department of Energy. Agency No. EERE-2010-BT-STD-0003 & Agency No. EERE-2013-BT-TP-0025 _ ARGUED SEPTEMBER 30, 2015 — DECIDED AUGUST 8, 2016 _ Before BAUER, RIPPLE, and ROVNER, Circuit Judges. 2 Nos. 14-2147, 14-2159, & 14-2334 TABLE OF..
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 14‐2147, 14‐2159, & 14‐2334
ZERO ZONE, INC., et al.,
Petitioners,
v.
UNITED STATES DEPARTMENT OF ENERGY, et al.,
Respondents.
____________________
On Petitions for Review of Final Regulations of the
United States Department of Energy.
Agency No. EERE‐2010‐BT‐STD‐0003 &
Agency No. EERE‐2013‐BT‐TP‐0025
____________________
ARGUED SEPTEMBER 30, 2015 — DECIDED AUGUST 8, 2016
____________________
Before BAUER, RIPPLE, and ROVNER, Circuit Judges.
2 Nos. 14‐2147, 14‐2159, & 14‐2334
TABLE OF CONTENTS
I. Background .................................................................................5
A. Statutory and Regulatory Context ....................................5
1. Energy Policy and Conservation Act ..............................5
2. Energy Policy Act of 2005 .................................................9
3. 2009 Final Rule .................................................................10
4. American Energy Manufacturing Technical
Corrections Act ................................................................10
B. The New Standards Rule ..................................................10
C. The 2014 Test Procedure Rule ..........................................16
D. Petitions for Review ..........................................................18
II. Discussion ................................................................................18
A. Engineering Analysis ........................................................22
1. Notice and Comment ......................................................23
2. Compressors .....................................................................26
3. Insulation Foam Thickness .............................................29
4. Validation .........................................................................32
B. Economic Analysis .............................................................35
1. Elasticity ............................................................................36
2. Environmental Benefits ..................................................39
3. Cost‐Benefit Analysis ......................................................41
4. Anticompetitive Effects ..................................................45
C. Regulatory Flexibility Analysis .......................................52
Nos. 14‐2147, 14‐2159, & 14‐2334 3
D. Cumulative Regulatory Burden ......................................57
1. EPA Significant New Alternatives Policy Program ...57
2. ENERGY STAR Program ................................................60
E. 2014 Test Procedure Rule ..................................................60
1. Conformity to Industry Standards ................................61
2. Operation of the Rule ......................................................63
3. Procedural Challenges ....................................................65
Conclusion ...................................................................................68
RIPPLE, Circuit Judge. The United States Department of En‐
ergy (“DOE”) published two final rules aimed at improving
the energy efficiency of commercial refrigeration equipment
1
(“CRE”). The first rule adopted new energy efficiency stand‐
ards for CRE. 79 Fed. Reg. 17,726 (Mar. 28, 2014) (the “New
1 “Commercial refrigeration equipment” includes refrigerators and freez‐
ers sold to restaurants and other industries. The term specifically is de‐
fined as refrigeration equipment which:
(i) is not a consumer product … ;
(ii) is not designed and marketed exclusively for medi‐
cal, scientific, or research purposes;
(iii) operates at a chilled, frozen, combination chilled and
frozen, or variable temperature;
(iv) displays or stores merchandise and other perishable
materials horizontally, semivertically, or vertically;
(v) has transparent or solid doors, sliding or hinged
doors, a combination of hinged, sliding, transparent, or
solid doors, or no doors;
4 Nos. 14‐2147, 14‐2159, & 14‐2334
Standards Rule”). The second rule, issued a month later, clar‐
ified the test procedures that DOE uses to implement those
standards. 79 Fed. Reg. 22,278 (Apr. 21, 2014) (the “2014 Test
Procedure Rule”).
Petitioners Zero Zone, Inc. (“Zero Zone”), a small business
specializing in CRE, and Air‐Conditioning, Heating and Re‐
frigeration Institute (“AHRI”), a trade association of CRE
manufacturers, petitioned for review of both rules. Petitioner
North American Association of Food Equipment Manufactur‐
ers (“NAFEM”), another trade association of CRE manufac‐
turers, petitioned for review of the first rule. AHRI and Zero
Zone moved to consolidate the cases, and we granted the mo‐
2
tion.
(vi) is designed for pull‐down temperature applications
or holding temperature applications; and
(vii) is connected to a self‐contained condensing unit or
to a remote condensing unit.
42 U.S.C. § 6311(9)(A).
2 The Energy Policy and Conservation Act (“EPCA”) grants us jurisdiction
to hear these cases:
Any person who will be adversely affected by a rule pre‐
scribed under section 6293, 6294, or 6295 of this title may,
at any time within 60 days after the date on which such
rule is prescribed, file a petition with the United States
court of appeals for the circuit in which such person re‐
sides or has his principal place of business, for judicial re‐
view of such rule.
42 U.S.C. § 6306(b)(1). The New Standards Rule was prescribed under
§ 6295. The 2014 Test Procedure Rule was prescribed under § 6314, which
is covered by § 6306(b). See id. § 6316(a)(1) (explaining that “references to
Nos. 14‐2147, 14‐2159, & 14‐2334 5
Petitioners challenge both the decisionmaking process
and the substance of the final rules. Upon review of those
challenges, we conclude that DOE acted in a manner worthy
of our deference. The New Standards Rule is premised on an
analytical model that is supported by substantial evidence
and is neither arbitrary nor capricious. DOE conducted a cost‐
benefit analysis that is within its statutory authority and is
supported by substantial evidence. Its methodology and con‐
clusions were not arbitrary or capricious. It also gave appro‐
priate consideration to the rule’s effect on small businesses
and the role of other agency regulations. DOE similarly acted
within its authority, and within reason, when it promulgated
the 2014 Test Procedure Rule. For these reasons, we deny the
petitions in their entirety.
I
BACKGROUND
A. Statutory and Regulatory Context
1. Energy Policy and Conservation Act
The Energy Policy and Conservation Act (“EPCA”), Pub.
L. No. 94‐163, §§ 321–339, 89 Stat. 871, 917–32 (1975) (codified
as amended at 42 U.S.C. §§ 6201–6422) was enacted in part to
improve the energy efficiency of specific types of equipment
and appliances. § 2(5), 89 Stat. at 874. Congress enacted the
EPCA in the wake of the 1973–1974 embargo of petroleum ex‐
ports to the United States by the Organization of Arab Petro‐
leum Exporting Countries. S. Rep. No. 94‐26, at 26 (1975). It
sections 6293, 6294, and 6295 of this title shall be considered as references
to sections 6314, 6315, and 6313 of this title”).
6 Nos. 14‐2147, 14‐2159, & 14‐2334
viewed the embargo as presenting a need for “legislation
which would facilitate the reduction of the nation’s petroleum
consumption through energy conservation.” Id. at 27; see also
H.R. Rep. No. 94‐340, at 1 (1975) (“This legislation is directed
to the attainment of the collective goals of increasing domestic
supply, conserving and managing energy demand, and establish‐
ing standby programs for minimizing this nation’s vulnera‐
bility to major interruptions in the supply of petroleum im‐
ports.” (emphasis added)).
As originally enacted, the EPCA authorized the Federal
3
Energy Administration (“FEA”)—the predecessor to DOE —
to implement voluntary “energy efficiency improvement tar‐
get[s]” that would encourage manufacturers to decrease the
energy consumption of their equipment. Pub. L. No. 94‐163,
§ 325, 89 Stat. 923–26. However, Congress determined shortly
thereafter that, “[u]nder the target approach, there would be
little incentive by a manufacturer to exceed a target, and to do
so might place a given manufacturer at a competitive disad‐
vantage.” H.R. Rep. No. 95‐496, at 45 (1977). It therefore
amended the EPCA to impose mandatory energy conservation
standards. National Energy Conservation Policy Act, Pub. L.
No. 95‐619, § 422, 92 Stat. 3206, 3259 (1978). As amended, the
EPCA directs DOE to review these standards and implement
new ones when appropriate. 42 U.S.C. §§ 6313(c), 6316(e),
6295(m).
3 The Department of Energy Organization Act of 1977 established the De‐
partment of Energy and transferred the responsibilities of the Federal En‐
ergy Administration into DOE. Id. § 7151(a).
Nos. 14‐2147, 14‐2159, & 14‐2334 7
When establishing new energy conservation standards,
DOE must follow certain statutory requirements. First, stand‐
ards may not “increase[] the maximum allowable energy use”
of any individual unit. Id. § 6295(o)(1). Second, standards
must be “designed to achieve the maximum improvement in
energy efficiency” and be “technologically feasible and eco‐
nomically justified.” Id. § 6295(o)(2)(A). The EPCA explains
that:
In determining whether a standard is economi‐
cally justified, the Secretary shall, after receiving
views and comments furnished with respect to
the proposed standard, determine whether the
benefits of the standard exceed its burdens by,
to the greatest extent practicable, considering—
(I) the economic impact of the standard on
the manufacturers and on the consumers of
the products subject to such standard;
(II) the savings in operating costs through‐
out the estimated average life of the covered
product in the type (or class) compared to
any increase in the price of, or in the initial
charges for, or maintenance expenses of, the
covered products which are likely to result
from the imposition of the standard;
(III) the total projected amount of energy, or
as applicable, water, savings likely to result
directly from the imposition of the standard;
(IV) any lessening of the utility or the perfor‐
mance of the covered products likely to re‐
sult from the imposition of the standard;
8 Nos. 14‐2147, 14‐2159, & 14‐2334
(V) the impact of any lessening of competi‐
tion, as determined in writing by the Attor‐
ney General, that is likely to result from the
imposition of the standard;
(VI) the need for national energy and water
conservation; and
(VII) other factors the Secretary considers
relevant.
Id. § 6295(o)(2)(B)(i). The EPCA further explains that, for the
purposes of determining anticompetitive effects, the Attorney
General must submit his or her opinion in writing “not later
than 60 days after the publication of a proposed rule” and that
“[a]ny such determination and analysis shall be published by
the Secretary in the Federal Register.” Id. § 6295(o)(2)(B)(ii).
The EPCA also charges DOE with establishing test proce‐
dures for measuring the energy use of covered equipment. Id.
§ 6314. Manufacturers must use these test procedures when
determining whether their equipment complies with the ap‐
plicable energy conservation standards. Id. §§ 6295(s),
6316(e)(1). According to the EPCA:
(1) The Secretary shall, not later than 3 years af‐
ter the date of prescribing a test procedure un‐
der this section (and from time to time thereaf‐
ter), conduct a reevaluation of such procedure
and, on the basis of such reevaluation, shall de‐
termine if such test procedure should be
amended. In conducting such reevaluation, the
Secretary shall take into account such infor‐
mation as he deems relevant, including techno‐
Nos. 14‐2147, 14‐2159, & 14‐2334 9
logical developments relating to the energy effi‐
ciency of the type (or class) of covered equip‐
ment involved.
(2) If the Secretary determines under paragraph
(1) that a test procedure should be amended, he
shall promptly publish in the Federal Register
proposed test procedures incorporating such
amendments and afford interested persons an
opportunity to present oral and written data,
views, and arguments. Such comment period
shall not be less than 45 days’ duration.
Id. § 6314(c).
2. Energy Policy Act of 2005
Congress amended the EPCA in 2005, and in doing so
added CRE to the industrial equipment category. Energy Pol‐
icy Act of 2005, Pub. L. No. 109‐58, § 136, 119 Stat. 594, 638–39
(codified at 42 U.S.C. § 6313(c)(2)–(3)) (“EPACT”). The
EPACT prescribed standards for six different classes of CRE.
4
§ 136, 119 Stat. at 639. It also required DOE to set standards
for additional classes of CRE that were not yet covered by the
EPCA. Id.
4 Specifically, the EPACT prescribed standards for refrigerators with solid
doors, refrigerators with transparent doors, freezers with solid doors,
freezers with transparent doors, refrigerator‐freezers with solid doors,
and self‐contained condensing units with transparent doors designed for
pull‐down temperature applications. Id. § 6313(c)(2)–(3).
10 Nos. 14‐2147, 14‐2159, & 14‐2334
3. 2009 Final Rule
Accordingly, DOE published a final rule on January 9,
2009, that prescribed energy conservation standards for
thirty‐eight additional equipment classes. 74 Fed. Reg. 1092.
These classes were defined by a combination of the equip‐
ment’s geometry (vertical, semivertical, or horizontal), door
type (solid, transparent, or open), condensing‐unit configura‐
tion (self‐contained or remote‐condensing), and operating
5
temperature (medium, low, or ice‐cream).
4. American Energy Manufacturing Technical Correc‐
tions Act
Congress made an additional amendment to the statute in
January 2012, which prescribed a specific standard for self‐
contained commercial refrigerators with transparent doors.
American Energy Manufacturing Technical Corrections Act,
Pub. L. No. 112‐210, § 4, 126 Stat. 1514, 1516 (codified as
amended at 42 U.S.C. § 6313(c)(4)) (“AEMTCA”). As a result,
the existing energy conservation standards for CRE at the
time of this rulemaking had been established by three sepa‐
rate sources: the EPACT, the AEMTCA, and DOE’s 2009 Final
Rule.
B. The New Standards Rule
DOE published a sixty‐page framework document in
2010, which discussed the relevant issues and processes in de‐
5 For example, a unit could be in the “vertical open, remote condensing,
medium temperature equipment class.” See 79 Fed. Reg. 17,726, 17,732
(Mar. 28, 2014). This class is identified by DOE as “VOP.RC.M.” Id.
Nos. 14‐2147, 14‐2159, & 14‐2334 11
termining whether to amend the CRE energy efficiency stand‐
ards. 75 Fed. Reg. 24,824, 24,824–25 (May 6, 2010); App. R.6,
Admin. R.2. DOE then published a notice of proposed rule‐
making for new CRE energy efficiency standards on Septem‐
ber 11, 2013. 78 Fed. Reg. 55,890. The notice of proposed rule‐
making listed new standards for forty‐nine classes of CRE. See
id. at 55,890–92. DOE also made available a technical support
document for the proposed rule. App. R.6, Admin. R.51. On
October 3, 2013, DOE held a public meeting in Washington,
D.C. to solicit comments and provide some preliminary re‐
sponses. App. R.6, Admin. R.62. DOE also permitted the pub‐
lic to submit further comments until a November 12, 2013
deadline, although a few comments were submitted after that
date. On March 28, 2014, DOE published the New Standards
Rule, the rule before us in this proceeding.
The New Standards Rule establishes energy conservation
standards for forty‐nine classes of CRE. 79 Fed. Reg. at 17,727.
Just as in DOE’s earlier 2009 Final Rule, the classes were de‐
fined by a combination of the equipment’s geometry, door
type, condensing‐unit configuration, and operating tempera‐
ture. Id. at 17,743. For each class, the maximum daily energy
consumption is determined by a function of either the unit’s
refrigerated volume (“V”) or the unit’s total display area
6
(“TDA”). Id. at 17,727. For eight equipment classes, DOE
made no changes from the 2009 Final Rule. Id. at 17,728. For
the remaining forty‐one equipment classes, DOE set forth a
6 For example, a CRE in the vertical, open, remote‐condensing, medium
temperature class has a maximum daily energy consumption of (0.64 x
TDA + 4.07) kilowatt‐hours. 79 Fed. Reg. at 17,727. Therefore, if a CRE in
this equipment class had a total display area of ten square feet, its maxi‐
mum allowable energy consumption would be 6.47 kilowatt‐hours/day.
12 Nos. 14‐2147, 14‐2159, & 14‐2334
higher standard that it determined was both technologically
feasible and economically justified. Id. at 17,727–30. DOE esti‐
mated that the revised standards were likely to result in a sav‐
ings of 2.89 quadrillion British thermal units of energy in
2014—an “annualized energy savings equivalent to 0.5 per‐
cent of total U.S. commercial primary energy consumption in
2014.” Id. at 17,728, 17,736–37.
To determine the appropriate standard for each class of
equipment, DOE used a design‐option engineering analysis.
Id. at 17,745; Final Technical Support Document, App. R.6,
Admin. R.102 at 5‐41 to 5‐68. In that analysis, DOE chose a
representative unit from each class of CRE. App. R.6, Admin.
R.102 at 5‐1 to 5‐2. DOE intentionally chose a unit that “was
toward the larger end of the equipment available within that
class.” Id. at 5‐68. DOE then, using an analytical model, esti‐
mated the cost to manufacturers of implementing more effi‐
cient components into that unit, as well as the “calculated
daily energy consumption” (“CDEC”) that would result from
implementing those components. Id. at 5‐1 to 5‐3, 5‐13 to 5‐41.
This analysis included modeling the effect of more efficient
lighting, compressors, and insulation. Id. at 5‐13 to 5‐41. DOE
then ranked the components in order of cost, and drew a cost‐
efficiency curve that illustrated a feasible maximum energy
consumption level for a unit of that size. Id. at 5‐2 to 5‐3.
Nos. 14‐2147, 14‐2159, & 14‐2334 13
This maximum energy consumption level served as an
“analysis point” for DOE, which it used to establish an equa‐
tion for determining a CRE unit’s maximum energy con‐
sumption level. Id. at 5‐68. DOE’s method for establishing this
equation is illustrated in the graphs below:
Id. As the graph to the left shows, DOE first plotted the anal‐
ysis point on a graph measuring the relationship between a
CRE unit’s CDEC and its TDA (or, in some cases, CDEC and
refrigerated volume). Id. DOE then drew a line from the anal‐
ysis point to the origin. Under the scheme contemplated by
the left graph, a CRE unit would need to have a CDEC at or
below that line. Id.
DOE originally had intended to employ this scheme in its
2009 Final Rule, but it had received comments about the ef‐
fects of such an equation on smaller equipment. Id. As the
comments pointed out, drawing a line from the origin as‐
sumed that a small CRE unit with a TDA approaching zero
could consume energy at a level close to zero. Id. DOE there‐
fore chose to include an “offset” factor for each class, which
allowed smaller equipment to consume more energy under
14 Nos. 14‐2147, 14‐2159, & 14‐2334
the standards. Id. The offset “represent[s] energy consump‐
tion end effects inherent in equipment operation regardless of
the size of the equipment.” Id. at 5‐3. As shown in the graph
above on the right, the offset serves as the y‐intercept for the
7
CDEC equation. Id. at 5‐68.
The resulting energy conservation standards do not com‐
pel manufacturers to use any particular components to
achieve improved efficiency. Instead, as DOE explained,
“should manufacturers value some features over others, they
are free to use different design paths in order to attain the per‐
formance levels required.” 79 Fed. Reg. at 17,750.
DOE then considered whether its new standards were eco‐
nomically justified. Id. at 17,737. It developed five potential
“trial standard levels” of energy efficiency requirements for
each class and considered the costs and benefits at each level.
Id. at 17,738, 17,803–11. DOE initially proposed that the stand‐
ards be set at the second‐highest level. 78 Fed. Reg. at 55,948.
7 NAFEM commented before the agency and submits in its brief that DOE
offset factors are ill conceived because they are based on only forty‐nine
classes of equipment and are illogical in their structure. We have consid‐
ered this submission on the basis of the briefs and have studied the record,
including the engineering report compiled by DOE during its study of
these standards. It is clear to us that DOE undertook a study of industry
patterns, compared those patterns to the ones that it had encountered in
earlier rulemaking, and concluded that the categories that it implemented
were an accurate reflection of the current industry situation. NAFEM has
countered with no data or other information demonstrating that DOE’s
conclusion is not supported by substantial evidence or that its approach
to the problem is arbitrary or capricious. Since this argument is underde‐
veloped by NAFEM, we see no reason for further discussion in our later
analysis.
Nos. 14‐2147, 14‐2159, & 14‐2334 15
However, after the notice and comment period, DOE deter‐
mined that the third‐highest level “will offer the maximum
improvement in efficiency that is technologically feasible and
economically justified and will result in the significant con‐
servation of energy.” 79 Fed. Reg. at 17,810.
As part of this economic analysis, DOE requested a letter
on September 24, 2013 from the United States Department of
Justice (“DOJ”) that would assess the rule’s anticompetitive
effect. DOJ did not respond until November 25, 2013, when
the Assistant Attorney General for Antitrust sent a letter to
DOE. App. R.6, Admin. R.106. According to DOJ, the new rule
would not have anticompetitive effects. Id. DOE added this
letter to the record on June 17, 2014—several months after the
public hearing on the rule. See id. DOE also published this let‐
ter in the Federal Register on July 28, 2015—over a year after
the Final Rule had been published and one day before it filed
its appellate brief in this case. 80 Fed. Reg. 44,892.
After receiving the DOJ letter and other sources, DOE con‐
cluded in the Final Rule, published on March 28, 2014, that
the new standards would result in lower energy use and thus
produce a net benefit to consumers between $4.93 and $11.74
billion. 79 Fed. Reg. at 17,728, 17,810. In addition, DOE noted
the monetary benefits of the reductions in greenhouse gas
emissions. Id. at 17,811. DOE then determined that the devel‐
opment of new CRE would cost manufacturers between $93.9
and $165 million. Id. at 17,810. DOE concluded that the bene‐
fits outweighed the costs and that the standards therefore
would be economically justified. Id. at 17,810–11.
16 Nos. 14‐2147, 14‐2159, & 14‐2334
C. The 2014 Test Procedure Rule
The New Standards Rule noted that “[t]he test procedure
amendments established in the 2012 test procedure final rule
are required to be used in conjunction with the amended
standards promulgated in this … final rule.” 79 Fed. Reg. at
17,735. In that 2012 Test Procedure Rule, DOE incorporated
the method for calculating the TDA of CRE required by stat‐
ute. 77 Fed. Reg. 10,292, 10,318 (Feb. 21, 2012). As shown
above, the maximum allowable daily energy consumption for
some units is dependent on their TDA.
To measure the TDA of a CRE unit, one must take certain
measurements of the unit and enter those measurements into
a general equation.8 One of those measurements is the
“Length of Commercial Refrigerated Display Merchandiser”
(“L”). 79 Fed. Reg. at 22,299. Under DOE’s energy efficiency
standards, “L” is directly proportional to a CRE unit’s maxi‐
mum energy consumption level: the longer the display on a
CRE unit, the more energy a CRE unit is allowed to consume
on a daily basis. Therefore, the precise definition of “L” will
impact the energy efficiency standards. However, the 2012
Test Procedure “contain[ed] no figures or illustrations in‐
structing a user how to perform this measurement.” Id.
DOE issued a notice of proposed rulemaking on October
28, 2013, which proposed a clarification on the meaning of “L”
in the 2012 Test Procedure Rule. 78 Fed. Reg. 64,296, 64,309–
8 According to DOE, TDA = Dh x L + Ae. “Dh” stands for “Dimension of
projected visible product.” “L” stands for “Length of Commercial Refrig‐
erated Display Merchandiser.” “Ae” stands for “Projected area from visi‐
ble product through end walls.” 79 Fed. Reg. 22,278, 22,299 (Apr. 21, 2014).
Nos. 14‐2147, 14‐2159, & 14‐2334 17
12.9 That definition would have corresponded to the total
length of the transparent area on CRE but would have not in‐
cluded any opaque or non‐transparent areas. Id. at 64,309–10.
Several companies, however, submitted comments, contend‐
ing that the “industry has always treated the length ‘L’ as the
‘length of the commercial refrigerated display merchandiser’
from inside wall to inside wall, disregarding the presence of
non‐transparent mullions[10] and door frames.” 79 Fed. Reg. at
22,300.
A little less than a month after the CRE standards were
published, on April 21, 2014, DOE published a CRE test pro‐
cedure that clarified how energy efficiency was to be meas‐
ured. Id. at 22,278. In light of the comments it received, DOE
departed from its proposed rule and published a CRE test
procedure that was “consistent with and clarifie[d] current in‐
dustry practice and the existing provisions of the DOE test
procedure.” Id. at 22,301. According to this final rule, “L” was
defined “as the interior length of the CRE model, provided no
more than 10 percent of that length consists of non‐transpar‐
ent material.” Id. The rule provided further clarification on
measuring “L” for units where more than ten percent of the
surface was not transparent. Id.
9 DOE issued this notice of proposed rulemaking after it issued the notice
of proposed rulemaking for the New Standards Rule on September 11,
2013.
10 A mullion is the vertical bar between the panes in a window, door, or
screen.
18 Nos. 14‐2147, 14‐2159, & 14‐2334
D. Petitions for Review
NAFEM timely filed a petition for review on May 23, 2014,
challenging the New Standards Rule. Four days later, on May
27, 2014, AHRI and Zero Zone filed a petition similarly chal‐
lenging the New Standards Rule. AHRI and Zero Zone then
filed a petition challenging the 2014 Test Procedure Rule on
June 19, 2014. Upon AHRI’s and Zero Zone’s motion, we con‐
solidated the petitions.
II
DISCUSSION
The petitioners raise a series of procedural and substan‐
tive challenges to DOE’s final rules pertaining to energy effi‐
ciency standards. We will consider, in turn, the challenges to:
(1) DOE’s engineering analysis; (2) DOE’s economic analysis;
(3) DOE’s regulatory flexibility analysis, which considered
the effect of the new standards on small businesses; (4) DOE’s
assessment of the cumulative regulatory burden; and (5) the
2014 Test Procedure Rule.
Pursuant to the Administrative Procedure Act (“APA”),
we will “hold unlawful and set aside agency action, findings,
and conclusions” that are:
(A) arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law;
(B) contrary to constitutional right, power, priv‐
ilege, or immunity;
(C) in excess of statutory jurisdiction, authority,
or limitations, or short of statutory right;
Nos. 14‐2147, 14‐2159, & 14‐2334 19
(D) without observance of procedure required
by law; [or]
(E) unsupported by substantial evidence in a
case subject to sections 556 and 557 of this title
… .[11]
5 U.S.C. § 706(2). When determining whether an agency’s de‐
cision is arbitrary or capricious, we ask whether the agency
has relied on factors which Congress had not in‐
tended it to consider, entirely failed to consider
an important aspect of the problem, offered an
explanation for its decision that runs counter to
the evidence before the agency, or is so implau‐
sible that it could not be ascribed to a difference
in view or the product of agency expertise.
Natʹl Assʹn of Home Builders v. Defs. of Wildlife, 551 U.S. 644,
658 (2007) (quoting Motor Vehicle Mfrs. Assʹn v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983)) (internal quotation marks
omitted). “Substantial evidence,” we have explained, “means
‘such relevant evidence as a reasonable mind might accept as
adequate to support the conclusion’” reached by the agency.
Local 65‐B, Graphic Commc’ns Conference of Int’l Bhd. of Team‐
sters v. NLRB, 572 F.3d 342, 347 (7th Cir. 2009) (quoting Huck
Store Fixture Co. v. NLRB, 327 F.3d 528, 533 (7th Cir. 2003)); see
also Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938) (ex‐
plaining that the agency must produce “more than a mere
scintilla” of evidence).
11 The EPCA states that “no rule under” the statutory provisions applica‐
ble to this case “may be affirmed except by substantial evidence.” 42
U.S.C. § 6306(b)(2).
20 Nos. 14‐2147, 14‐2159, & 14‐2334
In our review, “[w]e give great deference to an agency’s
predictive judgments about areas that are within the agency’s
field of discretion and expertise.” W. Fuels‐Ill., Inc. v. ICC, 878
F.2d 1025, 1030 (7th Cir. 1989) (internal quotation marks omit‐
ted); see also Pub. Citizen, Inc. v. NHTSA, 374 F.3d 1251, 1260–
61 (D.C. Cir. 2004). “[W]hen reviewing an agency’s scientific
and technical determinations, ‘a reviewing court must gener‐
ally be at its most deferential.’” Indiana v. EPA, 796 F.3d 803,
811 (7th Cir. 2015) (quoting Balt. Gas & Elec. Co. v. NRDC, 462
U.S. 87, 103 (1983)). However, we also note that the Supreme
Court “has stressed the importance of not simply rubber‐
stamping agency factfinding.” Dickinson v. Zurko, 527 U.S.
150, 162 (1999). Further, “[t]he reviewing court should not at‐
tempt itself to make up for … deficiencies” in the agency’s
reasoning; “‘we may not supply a reasoned basis for the
agency’s action that the agency itself has not given.’” Motor
Vehicle Mfrs. Assʹn, 463 U.S. at 43 (quoting SEC v. Chenery
Corp., 332 U.S. 194, 196 (1947)).
For those of petitioners’ challenges based on the statutory
language of the EPCA, our review is structured by Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837 (1984). At the first step of Chevron review, we ask whether
Congress has spoken directly on the precise question of inter‐
pretation. Chevron, 467 U.S. at 842 (“If the intent of Congress
is clear, that is the end of the matter … .”). When there is a
statutory ambiguity, we then move to the second step of Chev‐
ron review and ask whether the agency’s interpretation is “ar‐
bitrary or capricious in substance.” Mayo Found. for Med. Educ.
& Research v. United States, 562 U.S. 44, 53 (2011) (internal quo‐
tation marks omitted). As the Supreme Court has noted, this
second step of Chevron is functionally equivalent to tradi‐
Nos. 14‐2147, 14‐2159, & 14‐2334 21
tional arbitrary and capricious review under the APA. Judu‐
lang v. Holder, 132 S. Ct. 476, 483 n. 7 (2011). For those of peti‐
tioners’ challenges based on the language of DOE regulations,
we will uphold DOE’s interpretations of its own regulation
“unless plainly erroneous or inconsistent with the regula‐
tion.” Auer v. Robbins, 519 U.S. 452, 461 (1997) (internal quota‐
tion marks omitted); see also Joseph v. Holder, 579 F.3d 827, 833
(7th Cir. 2009).12
12 The Supreme Court has explained that:
Although Auer ordinarily calls for deference to an
agency’s interpretation of its own ambiguous regulation,
even when that interpretation is advanced in a legal brief,
see Chase Bank USA, N.A. v. McCoy, 562 U.S. —, —, 131
S.Ct. 871, 880, 178 L.Ed.2d 716 (2011); Auer, 519 U.S., at
461–462, 117 S.Ct. 905, this general rule does not apply in
all cases. Deference is undoubtedly inappropriate, for ex‐
ample, when the agency’s interpretation is “‘plainly erro‐
neous or inconsistent with the regulation.’” Id., at 461, 117
S.Ct. 905 (quoting Robertson v. Methow Valley Citizens
Council, 490 U.S. 332, 359, 109 S.Ct. 1835, 104 L.Ed.2d 351
(1989)). And deference is likewise unwarranted when
there is reason to suspect that the agency’s interpretation
“does not reflect the agency’s fair and considered judg‐
ment on the matter in question.” Auer, supra, at 462, 117
S.Ct. 905; see also, e.g., Chase Bank, supra, at —, 131 S.Ct. at
881. This might occur when the agency’s interpretation
conflicts with a prior interpretation, see, e.g., Thomas Jef‐
ferson Univ. v. Shalala, 512 U.S. 504, 515, 114 S.Ct. 2381, 129
L.Ed.2d 405 (1994), or when it appears that the interpreta‐
tion is nothing more than a “convenient litigating posi‐
tion,” Bowen v. Georgetown Univ. Hospital, 488 U.S. 204,
213, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988), or a “‘post hoc
rationalizatio[n]’ advanced by an agency seeking to de‐
fend past agency action against attack,” Auer, supra, at
22 Nos. 14‐2147, 14‐2159, & 14‐2334
A. Engineering Analysis
The New Standards Rule was based in part on a “design
option” engineering analysis. 79 Fed. Reg. at 17,763. To con‐
duct this analysis, DOE defined a hypothetical “representa‐
tive unit” from each class of CRE. App. R.6, Admin. R.102 at
5‐1 to 5‐2. The unit displayed the characteristics of that class
of CRE, id., but was “toward the larger end of equipment
available for that class,” id. at 5‐68. DOE then, using an ana‐
lytical model, estimated the cost to manufacturers of imple‐
menting more efficient components into that unit, as well as
the “calculated daily energy consumption” that would result
from implementing those components. Id. at 5‐1 to 5‐3, 5‐13 to
5‐41. This analysis included, for example, modeling the effect
of more efficient lighting, compressors, and insulation. Id. at
5‐13 to 5‐41. From this model, DOE determined an appropri‐
ate energy consumption level for a unit of that size, id. at 5‐2
to 5‐3, and then extrapolated from those results to create an
equation for determining the energy consumption level for
the rest of the class, id. at 5‐68.13
The petitioners raise several procedural and substantive
challenges to DOE’s engineering analysis. We will discuss
each in turn.
462, 117 S.Ct. 905 (quoting Bowen, supra, at 212, 109 S.Ct.
468; alteration in original).
Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 2166–67 (2012).
13 A more detailed explanation of the engineering analysis can be found
supra Part I.B.
Nos. 14‐2147, 14‐2159, & 14‐2334 23
1. Notice and Comment
NAFEM contends that DOE failed to provide a meaning‐
ful opportunity for notice and comment of an “engineering
spreadsheet” that compiled all the data that was used in
DOE’s analysis. See App. R.6, Admin. R.98. Early in the prom‐
ulgation of the standards rule, DOE provided two technical
support documents that explained its planned analysis. App.
R.6, Admin. R.2; App. R.6, Admin. R.30. On August 29, 2013—
two weeks before the publication of the notice of proposed
rulemaking—DOE published a more complete technical sup‐
port document that further spelled out its engineering analy‐
sis and included all the relevant raw data. See App. R.6, Ad‐
min. R.51 at 5‐1 to 5A‐17. However, at that time, DOE did not
provide the engineering spreadsheet that it used. After receiv‐
ing questions about the spreadsheet at a public hearing on Oc‐
tober 3, 2013, a DOE representative stated that DOE would
make the spreadsheet publicly available. App. R.6, Admin.
R.62 at 337. DOE subsequently published the spreadsheet on
October 8, 2013. App. R.6, Admin. R.59. Several members of
the public provided assessments of that spreadsheet in their
submissions before the November 12, 2013 deadline for pub‐
lic comments.14 Nevertheless, NAFEM now contends that the
engineering spreadsheet was not provided early enough in
the process and that the spreadsheet lacks certain infor‐
mation.
We previously expressed “reluctan[ce] to approve a regu‐
lation where … much of the information in support of the pro‐
posed rule was kept secret until after the hearing,” Granite
14 See App. R.6, Admin. R.65‐A1 at 6; App. R.6, Admin. R.75‐A1 at 4; App.
R.6, Admin. R.85‐A1 at 3.
24 Nos. 14‐2147, 14‐2159, & 14‐2334
City Steel Co. v. EPA, 501 F.2d 925, 927–28 (7th Cir. 1974), but
we have never held that petitioners have a right to full notice
and comment of the scientific data relied upon by the agency.
Several of our sister circuits have held that “[a]mong the in‐
formation that must be revealed for public evaluation are the
technical studies and data upon which the agency relie[d].”
Chamber of Commerce v. SEC, 443 F.3d 890, 899 (D.C. Cir. 2006)
(internal quotation marks omitted); Lloyd Noland Hosp. &
Clinic v. Heckler, 762 F.2d 1561, 1565 (11th Cir. 1985); Wash.
Trollers Assʹn v. Kreps, 645 F.2d 684, 686 (9th Cir. 1981); United
States v. Nova Scotia Food Prods. Corp., 568 F.2d 240, 251–52 (2d
Cir. 1977).15
This case presents no occasion for us to determine whether
we ought to join these circuits. Here, an examination of the
proceedings before the agency makes clear that the petition‐
ers received adequate notice of the engineering spreadsheet.
NAFEM first criticizes DOE for only providing the spread‐
sheet a month before final comments were due. However,
NAFEM and the rest of the public had access to all of the
spreadsheet’s underlying data almost three months earlier
when the technical support document was published. See
App. R.6, Admin. R.51 at 5‐1 to 5A‐17. The spreadsheet simply
organized this information in a different manner. We note as
well that several members of the public provided meaningful
15 Cf. Am. Radio Relay League, Inc. v. FCC, 524 F.3d 227, 246 (D.C. Cir. 2008)
(Kavanaugh, J., concurring) (asking whether this requirement can “be
squared with the text of § 553 of the APA” and Vermont Yankee Nuclear
Power Corp. v. Natural Resource Defense Council, Inc., 435 U.S. 519, 524
(1978)).
Nos. 14‐2147, 14‐2159, & 14‐2334 25
commentary in direct response to the spreadsheet by the No‐
vember deadline.16 NAFEM received sufficient notice of the
applicable data and, consequently, had adequate opportunity
to comment on that spreadsheet. See App. R.6, Admin. R.98.
NAFEM also submits that DOE was obliged to provide a
spreadsheet that could be “manipulated” to permit manufac‐
turers to ascertain how DOE’s analysis would apply to spe‐
cific products in their present or future inventories. In
NAFEM’s view, DOE should have been required to provide
manufacturers with the capacity to insert data about their
own units into the spreadsheet, so that they could “predict
how [their] individual products would perform under the
same analysis.”17 According to NAFEM, it should have been
possible for manufacturers to manipulate the spreadsheet to
account for volumes and total display areas different from the
hypothetical model actually studied by DOE.
At the most fundamental level, this contention fails be‐
cause it asks the DOE spreadsheet to perform a function dif‐
ferent from the one for which it was designed. As we have
noted earlier, DOE designed the spreadsheet to calculate the
efficiency level of one specific hypothetical “representative
unit,” of a specific size, for each class of refrigeration equip‐
ment. App. R.6, Admin R.102 at 5‐1 to 5‐2. Relying on the data
from its testing of the hypothetical unit, it then created a for‐
mula for determining the efficiency level of units of other
sizes in the same class. Id. at 5‐2 to 5‐3. In creating that for‐
mula, DOE did not apply the calculations on the spreadsheet
16 See supra note 14.
17 NAFEM Br. at 36.
26 Nos. 14‐2147, 14‐2159, & 14‐2334
to units of differing sizes. See id.
In any event, if a manufacturer wanted to determine the
accuracy of the calculations in the engineering spreadsheet, it
could have compared the spreadsheet’s results for a given
type of refrigeration product to units of the same type and size
in its own product line. See App. R.6, Admin. R.98. Moreover,
if a manufacturer wished to go further and test the accuracy
of DOE’s overall analysis, including the results that the anal‐
ysis would produce for units of varying sizes, it could have
looked to the actual energy efficiency standards provided by
DOE in the notice of proposed rulemaking. See 78 Fed. Reg. at
55,892. If the manufacturer’s product, when altered to con‐
form to the energy standards proposed by DOE, could not
reach those standards, the manufacturer would have cause to
believe that DOE’s underlying computations on the hypothet‐
ical model could not be replicated in the real world or were
otherwise faulty. Petitioners were provided with a sufficient
opportunity to see and comment upon technical data. There
is no basis here for our disturbing the agency’s decision.
2. Compressors
We now turn to the substance of DOE’s engineering anal‐
ysis. As we have discussed earlier, DOE modeled the effect of
different component designs on energy efficiency in order to
determine a technologically feasible energy consumption
level for each class of CRE. NAFEM challenges DOE’s model‐
ing of one of those components: compressors.
DOE concluded “that two levels of technology were appli‐
cable for the compressor design option:” “standard single‐
speed hermetic compressors” and “high‐efficiency single‐
speed hermetic compressors.” App. R.6, Admin. R.102 at 5‐33.
Nos. 14‐2147, 14‐2159, & 14‐2334 27
DOE could obtain “publicly‐available performance data for
standard single‐speed hermetic compressors.” Id. However,
DOE pointed out, “[a]lthough several compressor manufac‐
turers produce high‐efficiency compressors, little data are
currently available on their performance.” Id. at 5‐34.
Despite this absence of data, DOE initially estimated that
high‐efficiency compressors could achieve an efficiency level
that was ten percent above the standard level. 79 Fed. Reg. at
17,760. According to the technical support document that was
provided alongside the notice of proposed rulemaking, “DOE
developed this multiplier through its own research, consulta‐
tion with outside experts, and verification through discussion
with commercial refrigeration equipment manufacturers.”
App. R.6, Admin. R.51 at 5‐30; see also App. R.6, Admin. R.62
at 71 (“A general market‐vetted, industry‐vetted assumption
of a ten percent improvement in compressor EER being feasi‐
ble across the board at a five percent cost premium was used
based on the input that we got from the industry.”). However,
subsequent comments from several manufacturers persuaded
DOE to abandon its optimism and to expect lower perfor‐
mance during the compliance period. Several manufacturers
suggested there could only be meager product improvement
on the basis of present technology, and one manufacturer, the
Danfoss group, suggested that only a two percent improve‐
ment in efficiency was realistic. 79 Fed. Reg. at 17,760. Accord‐
ingly, DOE estimated that a switch to high‐efficiency com‐
pressors would yield energy savings only two percent above
the standard model. Id.
This revision was not an “eyeball guesstimate.” In altering
its decision, DOE had the benefit of its earlier research as well
28 Nos. 14‐2147, 14‐2159, & 14‐2334
as the commentary of the manufacturers. It therefore was con‐
fronted with significant warning that the state of the technol‐
ogy made its earlier estimation unrealistic. In short, the pri‐
mary purpose of the notice and comment period functioned
as it should have, and the agency was apprised of responsible
opinions contrary to its own. “[A]n agency’s change of course,
so long as generally consistent with the tenor of its original
proposals, indicates that the agency treats the notice‐and‐
comment process seriously, and is willing to modify its posi‐
tion where the public’s reaction persuades the agency that its
initial regulatory suggestions were flawed.” Am. Med. Ass’n v.
United States, 887 F.2d 760, 767 (7th Cir. 1989).18
We also cannot fault DOE for placing significant weight
on the view of the Danfoss group that “it would be reasonable
to assume either continued use of efficient compressors avail‐
able today, or alternatively a 1% to 2% efficiency improve‐
ment.” App. R.6, Admin. R.61‐A1 at 2; 79 Fed. Reg. at 17,760.
The agency had a basis for considering this manufacturer to
be a major supplier of CRE and one with significant institu‐
tional experience.19 Moreover, in its letter, Danfoss stated its
18 See also Kern Cty. Farm Bureau v. Allen, 450 F.3d 1072, 1076 (9th Cir. 2006).
19 NAFEM relatedly claims that DOE should have provided the public
with an opportunity to respond to the Danfoss comment. We cannot ac‐
cept this argument. “[T]he public gets to comment on the proposed rules,
not on the agency’s response to earlier public comments.” Nat. Res. Def.
Council v. Jackson, 650 F.3d 662, 666 (7th Cir. 2011). We would only enter‐
tain such an argument if “the revisions materially change the text, adding
features that the commentators could not have anticipated.” Id. Here, DOE
initially proposed that some compressors could achieve an efficiency level
that was ten percent higher than the standard compressor. The public
clearly was on notice that DOE might issue a rule which assumed that
Nos. 14‐2147, 14‐2159, & 14‐2334 29
belief that the compressor technology available was “ma‐
ture.” App. R.6, Admin. R.61‐A1 at 2. DOE therefore could
conclude that product development on the basis of “existing
technologies,” 79 Fed. Reg. at 17,767, could be expected to be
very slow during the compliance period. Relying on present
technology would yield marginal improvement in compres‐
sor performance.
NAFEM nevertheless submits that the two percent in‐
crease is inconsistent with DOE’s statement in the final rule
“that existing technologies should be the basis of its engineer‐
ing analysis.” Id. We believe that is an uncharitable and unre‐
alistic reading of the administrative record in its entirety.
DOE simply concluded that the current state of the technol‐
ogy, including the increased use of high‐efficiency compres‐
sors, would yield at least an incremental improvement. Such
an incremental improvement “reflect[s] the options available
to manufacturers of commercial refrigeration equipment.” Id.
at 17,760. DOE’s decision may be questionable in the minds of
some, but its decision is supported by substantial evidence
and was reached through a reasoned decisionmaking process.
“[O]ur role is limited; we require only that the agency
acknowledge factual uncertainties and identify the consider‐
ations it found persuasive.” Rural Cellular Assʹn v. FCC, 588
F.3d 1095, 1105 (D.C. Cir. 2009).
3. Insulation Foam Thickness
The petitioners also submit that DOE acted arbitrarily and
capriciously when it modeled another component: insulation.
DOE explained that increasing insulation foam thickness by a
compressors could achieve an efficiency level that was two percent higher
than the standard model.
30 Nos. 14‐2147, 14‐2159, & 14‐2334
half‐inch was a viable design option for eight primary equip‐
ment classes of CRE. 79 Fed. Reg. at 17,749; App. R.6, Admin.
R.102 at 5‐43 to 5‐67. However, the petitioners contend that
increasing insulation is not an available design option be‐
cause the “footprint” of a refrigerator or freezer is sometimes
fixed due to limited floor space. In their view, increasing in‐
sulation either will decrease a unit’s internal volume (which
could prevent the storage of industry‐standard sheets and
pans at restaurants) or will increase its external dimensions
(which could lead to narrower walkways and restrict the abil‐
ity to move CRE units through doorways).
In promulgating the final rule, however, DOE explained
that it had conducted manufacturer interviews during the
rulemaking period and that the manufacturers had agreed
that an extra half‐inch of insulation was feasible. 79 Fed. Reg.
at 17,749–50. DOE also noted that a number of models cur‐
rently on the market were already using this thickness of in‐
sulation, which suggested that a product with this thickness
of insulation was useful and marketable to consumers. Id. at
17,750. “DOE believe[d] that this serves as a proof of concept
and that the resulting changes … would be of minimal impact
to end users.” Id. We must conclude that DOE’s investigation
of the situation clearly justifies its conclusion. The determina‐
tion is supported by substantial evidence and certainly cannot
be characterized as arbitrary and capricious.
Moreover, in promulgating the rule, DOE stated explicitly
that manufacturers were “free to use different design paths in
order to attain the performance levels required by today’s
rule,” should they decide that increasing the thickness of in‐
sulation would not be a viable option for some of their con‐
sumers. Id. DOE noted, for example, that if a manufacturer
Nos. 14‐2147, 14‐2159, & 14‐2334 31
determines that adding insulation is not a possible or desira‐
ble way to enhance energy performance, the manufacturers
can instead implement enhanced evaporator coils, high‐effi‐
ciency reciprocating compressors, and more effective vacuum
insulated panels. See App. R.6, Admin. R.102 at 5‐27, 5‐32 to
5‐34.
The petitioners point out that these recommended alterna‐
tives are not viable options for at least one class of CRE. See id.
at 5‐51, 10B‐3 (describing the available design options for hor‐
izontal self‐contained freezers without doors). They also con‐
tend that, for other classes, alternatives such as evaporator
coils can result in frost buildup; that high‐efficiency recipro‐
cating compressors are noisy, expensive, and unreliable; and
that vacuum insulated panels are prohibitively expensive.
Even if these design options have their faults, however, they
are still alternative solutions that manufacturers can choose in
order to increase energy efficiency for the vast majority of
CRE units. That one energy‐saving solution is not feasible in
one class of CRE does not prevent DOE from including it
among the energy‐saving devices that might be employed by
the industry as a whole. Similarly, drawbacks in the other en‐
ergy‐saving devices do not prevent DOE from concluding
that, for units in other classes, the industry may have to settle
for a less‐than‐optimum situation to achieve the necessary
conservation goals. In short, DOE was on solid ground in con‐
cluding that increasing the thickness of insulation was a fea‐
sible design option. That conclusion is worthy of deference.
AHRI and Zero Zone also contend that DOE acted capri‐
ciously by failing to address directly a comment submitted by
AHRI during the rulemaking process. See App. R.6, Admin.
R.75 at 5. The comment noted that the estimated costs related
32 Nos. 14‐2147, 14‐2159, & 14‐2334
to improving the insulation of CRE were dramatically differ‐
ent from DOE’s estimated costs of insulation in 2009. Id. We
believe that DOE’s response was entirely reasonable. It ex‐
plained in the final rule that it “estimated the conversion costs
associated with increases in foam thickness based on direct
input from the industry in interviews, as well as through anal‐
ysis of production equipment that is part of the engineering
cost model.” 79 Fed. Reg. at 17,775. The analysis, DOE noted,
“included capital conversion costs, including … tooling costs
and production line upgrades, and product conversion costs,
including redesign efforts, testing costs, industry certifica‐
tions, and marketing changes.” Id. DOE’s conclusions were
based on new data; there was no reason to provide further jus‐
tification for departing from the estimates it had made in
2009. There was a solid basis for DOE’s determination. It was
based on substantial evidence and can hardly be character‐
ized as arbitrary or capricious.
4. Validation
Finally, the petitioners contend broadly that DOE’s engi‐
neering analysis is not based on real‐world application and
therefore must be verified by testing actual equipment. This
submission is governed by some basic principles. “That a
model is limited or imperfect is not, in itself, a reason to re‐
mand agency decisions based upon it.” Appalachian Power Co.
v. EPA, 249 F.3d 1032, 1052 (D.C. Cir. 2001); see also In re Polar
Bear Endangered Species Act Listing & Section 4(d) Rule Litig.—
MDL No. 1993, 709 F.3d 1, 13 (D.C. Cir. 2013). Rather, we will
remand only if the model “bears no rational relationship to
the reality it purports to represent” or if the agency fails to
Nos. 14‐2147, 14‐2159, & 14‐2334 33
“provide a full analytical defense” when the model is chal‐
lenged. Columbia Falls Aluminum Co. v. EPA, 139 F.3d 914, 923
(D.C. Cir. 1998) (internal quotation marks omitted).
Our previous discussions go a long way toward answer‐
ing this broad‐brush assault on DOE’s general manner of pro‐
ceeding. As we have demonstrated throughout our earlier
discussion, DOE provided a complete analytical defense to
each of the challenges that were raised during the notice and
comment period. Our review of the record gives us a high
level of confidence that DOE was fully aware of the inherent
difficulties of formulating regulations for real‐world situa‐
tions on the basis of a model. DOE correctly noted that
“[i]nputs to the model included data from tangible sources
such as manufacturer literature, manufacturer interviews,
production facility tours, reverse engineering and teardown
of existing products on the market, and tests of commercial
refrigeration equipment and components.” 79 Fed. Reg. at
17,763. DOE explained that its present analytical model was
consistent with models used in at least three other final
rules—including the 2009 CRE Standards Rule. Id. Indeed, in
many respects, this process can be characterized as a continu‐
ing dialogue with the industry before the backdrop of DOE’s
earlier regulations.
The petitioners nevertheless contend that DOE acted arbi‐
trarily and capriciously by failing to test its conclusions
against a full range of actual CRE equipment. As an initial
matter, we note that an agency need not “‘justify [its] model
on an ad hoc basis for every [unit] to which the model is ap‐
plied.’” Columbia Falls Aluminum Co., 139 F.3d at 923 (quoting
Chemical Mfrs. Assʹn v. EPA, 28 F.3d 1259, 1265 (D.C. Cir.
34 Nos. 14‐2147, 14‐2159, & 14‐2334
1994)). In any event, DOE performed validation testing on a
representative sample of units:
In response to the comments … that DOE per‐
form validation testing to confirm the veracity
of its model, at the final rule stage DOE pro‐
cured a number of commercial refrigeration
units currently on the market, including high‐
performance units featuring advanced designs.
It gathered physical test data on each unit from
certification directories and, in some cases, from
independent laboratory tests conducted by
DOE on the units. DOE then performed physi‐
cal teardowns and inspection of the units to
quantify the features and design attributes in‐
cluded in each model. Then, DOE used this em‐
pirically‐determined data as inputs into its en‐
gineering model, allowing the model to simu‐
late these specific manufacturer models as
closely as possible. The results showed good
alignment between the model outputs and the
physical test results across a range of equipment
classes and efficiencies, validating the abilities
of the model.
79 Fed. Reg. at 17,763; see also App. R.6, Admin. R.102 at 5‐40
to 5‐41 (“The results of the energy consumption model were
compared against the performance data gathered through
testing or certification, and the two showed sound agreement,
with the energy consumption model generally being slightly
conservative (modeling the units as using slightly more en‐
ergy than they consumed as tested).”). Further, “DOE utilized
information from the ENERGY STAR and California Energy
Nos. 14‐2147, 14‐2159, & 14‐2334 35
Commission appliance databases as a point of comparison to
its engineering analysis results.” 79 Fed. Reg. at 17,763 (foot‐
notes omitted). Although DOE did not provide data or further
details of its validation testing, DOE did publish the web ad‐
dresses for the appliance databases, which included the “cer‐
tified data” that “DOE compared its results against … as a
check.” Id.
This is not a close call. We are convinced that DOE’s engi‐
neering analysis, including its use of an analytical model, was
neither arbitrary nor capricious.
B. Economic Analysis
The EPCA requires that efficiency standards be “econom‐
ically justified.” 42 U.S.C. § 6295(o)(2)(A). In addressing this
statutory mandate, DOE established five different “trial
standard levels,” and determined which “level” would be
economically and technologically feasible. See 79 Fed. Reg. at
17,738, 17,803. It originally proposed that the benefits of the
second‐highest level of standards would outweigh the costs.
78 Fed. Reg. at 55,948. After receiving public comment, it de‐
termined that the third‐highest level would be more appro‐
priate. 79 Fed. Reg. at 17,810. DOE concluded that this level of
standards would produce a net benefit to consumers between
$4.93 and $11.74 billion and reduce greenhouse gas emissions.
Id. at 17,728–29, 17,780–11. Conversely, the new standards
would cost manufacturers between $93.9 and $165 million. Id.
at 17,795–96. DOE determined therefore that the standards
were justified. Id. at 17,810–11. The petitioners fault DOE’s
economic analysis in several ways. We now address each of
those arguments.
36 Nos. 14‐2147, 14‐2159, & 14‐2334
1. Elasticity
The petitioners first contend that DOE acted arbitrarily
and capriciously when it assumed that the new standards
would not result in significant changes in purchasing behav‐
ior. DOE essentially treated CRE as “price inelastic,” meaning
that an increase in the price of CRE would not impact the
amount of CRE purchased. See 79 Fed. Reg. at 17,770. The pe‐
titioners object to that assumption, noting that consumers
could refurbish used equipment or switch to cheaper, less‐ef‐
ficient models of CRE.
Our review of the record convinces us that DOE’s consid‐
eration of this issue was certainly more balanced and careful
than the petitioners suggest. DOE explained in the New
Standards Rule that it “did not have enough information on
CRE customer behavior to explicitly model” the effects of the
new standards on demand, and therefore it had to make a
20
prediction about the market for CRE. Id. In its technical sup‐
port document, DOE reasoned:
In general, when the data are available[,] DOE
incorporates a purchase price elasticity into the
shipments model. This allows for the possibility
that total shipments will fall under a standard,
due to a rise in the first cost of the equipment.
For commercial refrigeration equipment, DOE
20 DOE made clear, during a public hearing, that more information was
needed to measure price elasticity, and told industry leaders that “if you
can supply that information, then we can incorporate that into our mod‐
els.” App. R.6, Admin. R.62 at 220–21. That information was never pro‐
vided. 79 Fed. Reg. at 17,770.
Nos. 14‐2147, 14‐2159, & 14‐2334 37
did not have access to any data that would al‐
low the estimation of purchase price elasticities.
Therefore the total shipments in the standards
case scenarios are the same as the total ship‐
ments in the base case scenario. As most users
of this equipment are subject to health codes
and other regulations, it is not very likely that a
business owner would forego the purchase of
needed equipment even under a price increase.
Price sensitivity is more likely to occur in the
form of increased equipment lifetimes. How‐
ever, equipment lifetimes for food sales and ser‐
vice are driven primarily by the remodeling cy‐
cle, and so are unlikely to be affected on the av‐
erage by a standard.
App. R.6, Admin. R.102 at 9‐8 to 9‐9.
DOE’s analysis hardly is arbitrary and capricious. A busi‐
ness must store food at a proper temperature in order to com‐
ply with health code regulations. Consequently, in DOE’s
view, restaurants and other businesses will purchase CRE re‐
gardless of its price. A refrigerator cannot easily be substi‐
tuted. DOE reasonably concluded that CRE is a “necessity”
for restaurants and other businesses, which makes demand
21
relatively inelastic. That conclusion is worthy of our defer‐
ence.
21 See Crystal Semiconductor Corp. v. TriTech Microelecs. Int’l, Inc., 246 F.3d
1336, 1359 (Fed. Cir. 2001) (“[I]f substitution of a product were impossible
and the product were a necessity, elasticity of demand would be zero …
.”).
38 Nos. 14‐2147, 14‐2159, & 14‐2334
The petitioners note that businesses could refurbish used
equipment and that this ability to “substitute” proves that the
market for CRE is elastic. Indeed, in the New Standards Rule,
“DOE acknowledge[d] that increases in price due to amended
standards could lead to more refurbishing of equipment (or
purchase of used equipment).” 79 Fed. Reg. at 17,770 (empha‐
sis added). DOE simply decided “that the extent of refurbish‐
ing would not be so significant as to change the ranking of the
[trial standard levels] considered for today’s rule.” Id. DOE
has the authority “to make such a prediction about the market
it regulates, and a reasonable prediction deserves our defer‐
ence notwithstanding that there might also be another reason‐
able view.” Envtl. Action, Inc. v. FERC, 939 F.2d 1057, 1064
(D.C. Cir. 1991); see also White Eagle Coop. Assʹn v. Conner, 553
F.3d 467, 475 (7th Cir. 2009).
The petitioners also suggest that businesses could switch
to more affordable and less efficient CRE. The trend in the
CRE market has been towards more efficient “closed” equip‐
ment with transparent doors and away from “open” equip‐
ment that does not have doors. See 79 Fed. Reg. at 17,770. The
petitioners contend that the new standards will reverse that
trend, as closed equipment will lose its utility. DOE acknowl‐
edged this concern in the New Standards Rule. DOE pointed
out that at least one manufacturer “had not observed a rever‐
sal of the trend toward closed units in response to previous
efficiency standards.” Id. DOE also responded to one of the
stakeholders’ major concerns that the use of triple‐pane
coated glass would reduce the visibility of objects in a CRE
unit and thus decrease the utility of a closed unit. Id. DOE ex‐
plained that the new standards “do not require triple‐pane
coated glass.” Id. DOE thus concluded that the new standards
Nos. 14‐2147, 14‐2159, & 14‐2334 39
would not reverse the consumer trend toward closed equip‐
ment. Id.
Without evidence that contradicts DOE’s assumptions, we
cannot conclude that DOE’s conclusions were “so implausible
that it could not be ascribed to a difference in view or the
product of agency expertise.” Natʹl Assʹn of Home Builders, 551
U.S. at 658 (internal quotation marks omitted); see also USA
Grp. Loan Servs., Inc., v. Riley, 82 F.3d 708, 714 (7th Cir. 1996);
W. Fuels‐Ill., Inc., 878 F.2d at 1030. The petitioners have failed
to show that DOE acted arbitrarily or capriciously when it de‐
termined that CRE was price inelastic.
2. Environmental Benefits
DOE considered the environmental benefits of the
amended standards when determining whether the New
Standards Rule was “economically justified.” 79 Fed. Reg. at
17,738. In particular, DOE employed “an estimate of the mon‐
etized damages associated with an incremental increase in
carbon emissions in a given year,” known as the Social Cost
22
of Carbon (“SCC”). Id. at 17,777. The petitioners contend that
the EPCA does not allow DOE to consider environmental fac‐
tors and that DOE abused its discretion when it considered
them. In the alternative, the petitioners contend that DOE’s
analysis of the SCC was itself arbitrary and capricious.
We turn first to DOE’s statutory authority under the
EPCA. An agency decision is arbitrary and capricious when
22 The estimate “include[s] (but is not limited to) changes in net agricul‐
tural productivity, human health, property damages from increased flood
risk, and the value of ecosystem services.” 79 Fed. Reg. at 17,777.
40 Nos. 14‐2147, 14‐2159, & 14‐2334
the agency “has relied on factors which Congress had not in‐
tended it to consider.” Natʹl Assʹn of Home Builders, 551 U.S. at
658 (internal quotation marks omitted). Here, however, the
EPCA specifically requires DOE to consider “the need for na‐
tional energy … conservation.” 42 U.S.C.
§ 6295(o)(2)(B)(i)(VI). In the New Standards Rule, DOE ex‐
plained that the “Need of the Nation to Conserve Energy” in‐
cludes the “potential environmental benefits” which would
result. 79 Fed. Reg. at 17,738 (citing the Rule’s subsection on
SCC). To determine whether an energy conservation measure
is appropriate under a cost‐benefit analysis, the expected re‐
duction in environmental costs needs to be taken into ac‐
count.23 We have no doubt that Congress intended that DOE
have the authority under the EPCA to consider the reduction
24
in SCC.
Alternatively, AHRI and Zero Zone contend that DOE’s
calculation of SCC was irredeemably flawed. They submit
that DOE failed to address three concerns about these calcu‐
lations raised by the Chamber of Commerce in a letter during
23 This argument is highlighted by an amicus brief submitted by the Insti‐
tute for Policy Integrity at New York University School of Law. The peti‐
tioners argue that we should strike the amicus brief from the record. That
motion is denied.
24 Although we need not reach these questions today, DOE probably also
had the authority to consider environmental benefits under 42 U.S.C.
§ 6295(o)(2)(B)(i)(I), which allows the agency to consider “the economic
impact of the standard on the manufacturers and on the consumers of the
products subject to such standard.” Environmental benefits have an eco‐
nomic impact. Further, DOE would have the authority to consider envi‐
ronmental benefits under 42 U.S.C. § 6295(o)(2)(B)(i)(VII), which allows
DOE to consider “other factors the Secretary considers relevant.”
Nos. 14‐2147, 14‐2159, & 14‐2334 41
the notice and comment period. See App. R.6, Admin. R.79‐
25
A2. That letter complained that: (1) who exactly worked on
the SCC analysis had not been made public, id. at 5–7; (2) the
inputs to the models were not peer reviewed, id. at 7–9; and
(3) the “damages functions,” or variables based on problems
like sea level rise, were determined in an arbitrary manner, id.
at 12. DOE responded to the letter in general, noting that it
“acknowledge[d] the limitations in the SCC estimates.” 79
Fed. Reg. at 17,779. DOE then referenced letters from multiple
parties that supported the SCC values, a 2010 interagency
group report on the discount rates used, and the OMB’s Final
Information Quality Bulletin for Peer Review. Id. Although
DOE did not respond to the specific points laid out in the
Chamber of Commerce letter, it did respond to the Chamber
of Commerce’s general concerns and made clear that, despite
those concerns, the calculation of SCC could be used. See St.
James Hosp. v. Heckler, 760 F.2d 1460, 1469 (7th Cir. 1985).
DOE’s determination of SCC was neither arbitrary nor capri‐
cious.
3. Cost‐Benefit Analysis
The petitioners raise a series of objections to DOE’s gen‐
eral approach to weighing the costs and benefits of its new
standards. In their view, DOE’s analysis overestimated the
benefits of the new rule and underestimated its costs.
25 AHRI and Zero Zone frame this issue as a violation of the Information
Quality Act. See 44 U.S.C. § 3516 note (a). However, “almost every court
that has addressed an Information Quality Act challenge has held that the
statute ‘creates no legal rights in any third parties.’” Miss. Commʹn on En‐
vtl. Quality v. EPA, 790 F.3d 138, 184 (D.C. Cir. 2015) (quoting Salt Inst. v.
Leavitt, 440 F.3d 156, 159 (4th Cir. 2006)). That being said, the APA still
affords the petitioners the right to bring this challenge.
42 Nos. 14‐2147, 14‐2159, & 14‐2334
The petitioners first contend that DOE arbitrarily consid‐
ered indirect benefits like carbon reduction over hundreds of
years but ignored indirect costs like the long‐term effects on
displaced workers. DOE fully responded to that objection in
the New Standards Rule:
AHRI stated that DOE calculates the present
value of the costs of standards to consumers and
manufacturers over a 30‐year period, but the
SCC values reflect the present value of future
climate related impacts well beyond 2100. AHRI
stated that DOE’s comparison of 30 years of cost
to hundreds of years of presumed future bene‐
fits is inconsistent and improper. (AHRI, No. 84
at p.12)
For the analysis of national impacts of the
proposed standards, DOE considered the life‐
time impacts of equipment shipped in a 30‐year
period. With respect to energy and energy cost
savings, impacts continue past 30 years until all
of the equipment shipped in the 30‐year period
is retired. With respect to the valuation of CO2
emissions reductions, the SCC estimates devel‐
oped by the interagency working group are
meant to represent the full discounted value
(using an appropriate range of discount rates) of
emissions reductions occurring in a given year.
DOE is thus comparing the costs of achieving
the emissions reductions in each year of the
analysis, with the carbon reduction value of the
emissions reductions in those same years. Nei‐
Nos. 14‐2147, 14‐2159, & 14‐2334 43
ther the costs nor the benefits of emissions re‐
ductions outside the analytic time frame are in‐
cluded in the analysis.
79 Fed. Reg. at 17,779. DOE further explained in the technical
support document that these standards “should lead to up‐
ward pressure on wages and a shift in employment away
from electricity generation towards consumer goods. Note
that in long‐run equilibrium there is no net effect on total em‐
ployment since wages adjust to bring the labor market into
26
equilibrium.” App. R.6, Admin. R.102 at 16‐3. DOE therefore
found that the reduction of carbon over thirty years would
have long‐term effects on the environment but that the in‐
creased costs over thirty years would not have long‐term ef‐
fects on employment. The petitioners may disagree with the
merits of DOE’s conclusion, but DOE’s analysis is neither ar‐
bitrary nor capricious.
AHRI and Zero Zone next contend that DOE arbitrarily
considered the global benefits to the environment but only
considered the national costs. They emphasize that the EPCA
only concerns “national energy and water conservation.” 42
U.S.C. § 6295(o)(2)(B)(i)(VI). In the New Standards Rule, DOE
did not let this submission go unanswered. It explained that
climate change “involves a global externality,” meaning that
carbon released in the United States affects the climate of the
entire world. 79 Fed. Reg. at 17,779. According to DOE, na‐
tional energy conservation has global effects, and, therefore,
those global effects are an appropriate consideration when
looking at a national policy. Id. Further, AHRI and Zero Zone
26 See also 79 Fed. Reg. at 17,780 (referring to this section of the technical
support document).
44 Nos. 14‐2147, 14‐2159, & 14‐2334
point to no global costs that should have been considered
alongside these benefits. Therefore, DOE acted reasonably
when it compared global benefits to national costs.
Finally, AHRI and Zero Zone criticize DOE’s determina‐
tion of discount rates for CRE in its cost estimate. DOE used
the “Capital Asset Pricing Model” (“CAPM”) to estimate the
cost of equity financing. The CAPM assumes that the cost of
equity is proportional to the amount of systemic risk of failure
associated with a company. The model therefore estimates the
overall risks and returns for all of a firm’s capital, rather than
the risks and returns associated with one specific asset. The
petitioners, however, believe that DOE should have used a
model specific to the risks and returns of CRE. They contend
that DOE did not adequately respond to a comment from the
Mercatus Center at George Mason University, which urged
DOE to adopt an analysis of capital costs that was particular
to CRE.27 However, DOE addressed the Mercatus comment in
the New Standards Rule in sufficient detail:
The cost of capital is commonly used to esti‐
mate the present value of cash flows to be de‐
rived from a typical company project or invest‐
ment, and the CAPM is among the most widely
27 Specifically, the Mercatus comment urged that a more particularized
model was appropriate because (1) CRE has a higher depreciation rate
than other products (meaning it will decrease in value quicker), and (2)
CRE has a lower salvage value than other products (meaning that it cannot
be resold as easily). App. R.6, Admin. R.72‐A1 at 2–3. If CRE decreases in
value at a faster rate than the average product, and if CRE cannot be resold
as easily as the average product, then a company may be less willing to
purchase CRE at a higher price than other products at a higher price.
Nos. 14‐2147, 14‐2159, & 14‐2334 45
used models to estimate the cost of equity fi‐
nancing. The types of risk mentioned by Merca‐
tus may exist, but the cost of equity financing
tends to be high when a company faces a large
degree of systemic risk, and it tends to be low
when the company faces a small degree of sys‐
temic risk. DOE’s approach estimates this risk
for the set of companies that could purchase
[CRE].
Id. at 17,767. DOE considered the point and concluded that
the cost of equity financing is commonly determined at the
firm‐wide level rather than unit‐by‐unit. Id. Therefore, the
CAPM provided an appropriate estimate of the cost of equity
financing. DOE’s choice of economic model was neither arbi‐
28
trary nor capricious.
4. Anticompetitive Effects
The petitioners contend that DOE’s consideration of anti‐
competitive effects was both substantively and procedurally
arbitrary and capricious. In its cost‐benefit analysis, DOE
28 When discussing the Mercatus comment, AHRI and Zero Zone also con‐
tend that DOE was required to identify a “market failure” that justified
the amended efficiency standards. AHRI Br. 30; AHRI Reply Br. 22. The
petitioners rely on Schurz Commc’ns, Inc. v. FCC, 982 F.2d 1043 (7th Cir.
1992) for this proposition. In Schurz, however, the agency had previously
ruled that it could “not intervene in the market except where there is evi‐
dence of a market failure.” Id. at 1053 (internal quotation marks omitted).
The agency therefore was bound by its previous ruling. Id. Here, the EPCA
merely requires DOE to promulgate standards which are “technologically
feasible and economically justified.” 42 U.S.C. § 6295(o)(2)(A). The peti‐
tioners point to no statute or agency rule that requires DOE to identify a
market failure. Therefore, their argument is without merit.
46 Nos. 14‐2147, 14‐2159, & 14‐2334
must consider the anticompetitive effects of its proposed rule
“as determined in writing by the Attorney General.” 42 U.S.C.
§ 6295(o)(2)(B)(i)(V). Pursuant to this provision, the Assistant
Attorney General for the Antitrust Division, acting on behalf
of the Attorney General, sent DOE a letter (the “DOJ letter”).
The letter stated that “the proposed energy conservation
standards for commercial refrigeration equipment [we]re un‐
likely to have a significant adverse impact on competition.”
80 Fed. Reg. at 44,892. DOE relied on this letter in the New
Standards Rule and considered the Attorney General’s deter‐
mination in its cost‐benefit analysis. 79 Fed. Reg. at 17,803.
The petitioners contend that the DOJ letter does not articulate
adequately the reasoning behind the Attorney General’s de‐
termination. They also contend that both the DOJ letter’s sub‐
mission to DOE and its publication to the Federal Register
were untimely.
As originally enacted, the EPCA instructed the rulemak‐
ing agency (then the FEA, now DOE) to consider anticompet‐
itive effects in its cost‐benefit analysis. Pub. L. No. 94‐163,
29
§ 325, 89 Stat. at 924–25. However, the rulemaking agency
29 The EPCA originally read:
(D) For purposes of subparagraph (B), improvement of
energy efficiency is economically justified if it is econom‐
ically feasible the benefits of reduced energy consump‐
tion, and the savings in operating costs throughout the
estimated average life of the covered product, out‐
weigh—
…
(iii) any negative effects on competition.
Nos. 14‐2147, 14‐2159, & 14‐2334 47
was not given the authority to determine anticompetitive ef‐
fects on its own. Instead, only the Attorney General could de‐
termine the extent of a regulation’s impact on competition. §
625, 89 Stat. at 925. The Attorney General would only make
such a determination “on request of the Administrator, the
Commission, or any person, or on his own motion.” Id. If the
Attorney General decided not to submit a letter with his or
her assessment of anticompetitive effects, then the agency
could not consider anticompetitive effects at all.
Three years after the EPCA’s enactment, these clauses
were amended to their current form. Pub. L. No. 95‐619, § 422,
92 Stat. at 3259–60. Under the EPCA as amended, the Attor‐
ney General always makes a determination about a proposed
30
rule’s anticompetitive effects. That determination is submit‐
(E) For purposes of subparagraph (D)(iii), the Adminis‐
trator shall not determine that there are any negative ef‐
fects on competition, unless the Attorney General (on re‐
quest of the Administrator, the Commission, or any per‐
son, or on his own motion) makes such determination
and submits it in writing to the Administrator, together
with his analysis of the nature and extent of such negative
effects. The determination of the Attorney General shall
be available for public inspection.
Energy Policy and Conservation Act, Pub. L. No. 94‐163, § 325, 89 Stat.
871, 924–25 (1975).
30 According to the EPCA:
(i) In determining whether a standard is economically jus‐
tified, the Secretary shall, after receiving views and com‐
ments furnished with respect to the proposed standard,
determine whether the benefits of the standard exceed its
48 Nos. 14‐2147, 14‐2159, & 14‐2334
ted to DOE within sixty days of the publication of the pro‐
posed rule. 42 U.S.C. § 6295(o)(2)(B)(ii). DOE must then con‐
sider the “lessening of competition, as determined in writing
by the Attorney General,” in its overall cost‐benefit analysis.
Id. § 6295(o)(2)(B)(i)(V). DOE then publishes the letter in the
Federal Register. Id. § 6295(o)(2)(B)(ii). Just like its predeces‐
sor, the amended EPCA does not grant DOE the authority to
alter DOJ’s conclusions or to determine anticompetitive ef‐
fects on its own.
The petitioners contend that the DOJ letter provided in‐
sufficient reasoning and that DOE therefore erred in relying
on this letter. We cannot accept this argument. DOE’s reliance
on the DOJ letter was clearly consistent with its secondary
burdens by, to the greatest extent practicable, consider‐
ing—
…
(V) the impact of any lessening of competition, as de‐
termined in writing by the Attorney General, that is
likely to result from the imposition of the standard;
…
(ii) For purposes of clause (i)(V), the Attorney General
shall make a determination of the impact, if any, of any
lessening of competition likely to result from such stand‐
ard and shall transmit such determination, not later than
60 days after the publication of a proposed rule prescrib‐
ing or amending an energy conservation standard, in
writing to the Secretary, together with an analysis of the
nature and extent of such impact. Any such determina‐
tion and analysis shall be published by the Secretary in
the Federal Register.
42 U.S.C. § 6295(o)(2)(B).
Nos. 14‐2147, 14‐2159, & 14‐2334 49
role under this provision of the EPCA. DOE’s statutory duty
under the EPCA is to defer to the Attorney General. The New
Standards Rule makes clear that DOE acted in complete ac‐
cordance with the statute:
EPCA directs DOE to consider any lessening
of competition that is likely to result from stand‐
ards. It also directs the Attorney General of the
United States (Attorney General) to determine
the impact, if any, of any lessening of competi‐
tion likely to result from a proposed standard
and to transmit such determination to the Sec‐
retary within 60 days of the publication of a pro‐
posed rule and simultaneously proposed rule,
together with an analysis of the nature and ex‐
tent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V)
and (B)(ii)) To assist the Attorney General in
making a determination for CRE standards,
DOE provided the Department of Justice (DOJ)
with copies of the [notice of proposed rulemak‐
ing] and the [technical support document] for
review. DOE received no adverse comments
from DOJ regarding the proposal.
79 Fed. Reg. at 17,803. DOE did exactly what the EPCA in‐
structs. Once it published the notice of proposed rulemaking,
it awaited the Attorney General’s assessment of the effect on
competition. In fact, DOE provided the Attorney General
with additional information—in a technical support docu‐
ment—so that it could receive a more informed determina‐
tion. After reviewing this document, the transcript of the pub‐
lic meeting, and other “supplementary information,” DOJ
provided a response that articulated enough information to
50 Nos. 14‐2147, 14‐2159, & 14‐2334
allow DOE to adequately consider anticompetitive effects. See
80 Fed. Reg. at 44,892. DOE then considered this “relevant fac‐
tor[],” among the other statutory factors, in its cost‐benefit
analysis. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402,
416 (1971); see also 42 U.S.C. § 6295(o)(2)(B)(i)(V). Under the
EPCA, DOE could do no more. We are convinced that DOE’s
approach was neither arbitrary nor capricious. Motor Vehicle
Mfrs. Ass’n, 463 U.S. at 43.
We must also determine whether the submission and pub‐
lication of the DOJ letter were “without observance of proce‐
dure required by law.” 5 U.S.C. § 706(2)(D). AHRI and Zero
Zone contend that the DOJ letter was submitted to DOE after
the EPCA’s deadline. They also contend that the DOJ letter
was untimely published in the Federal Register.
Under the EPCA, the Attorney General is required to sub‐
mit its letter “not later than 60 days after the publication of a
proposed rule.” 42 U.S.C. § 6295(o)(2)(B)(ii). However, the As‐
sistant Attorney General for Antitrust did not respond to
DOE until 75 days after the notice of proposed rulemaking. 80
Fed. Reg. at 44,892. Although DOJ erred when it submitted
the letter fifteen days late, the error was harmless. “[D]ue ac‐
count shall be taken of the rule of prejudicial error.” 5 U.S.C.
§ 706. “[I]f we are sure that the agency would if we remanded
the case reinstate its decision—if in other words the error in
its decision was harmless—a reversal would be futile … .”
People of the State of Ill. v. ICC, 722 F.2d 1341, 1348 (7th Cir.
1983); see also Spiva v. Astrue, 628 F.3d 346, 353 (7th Cir. 2010).
Further, “[w]e will not invalidate [an agency] decision based
on procedural error unless the errors alleged could have af‐
fected the outcome.” Zevallos v. Obama, 793 F.3d 106, 115 (D.C.
Cir. 2015). The DOJ letter was submitted on November 25,
Nos. 14‐2147, 14‐2159, & 14‐2334 51
2013. See 80 Fed. Reg. at 44,892. The final rule was not pub‐
lished until several months later, on March 28, 2014. 79 Fed.
Reg. at 17,726. DOE had enough time to consider fully the At‐
torney General’s determination of anticompetitive effects and
to factor that determination into its cost‐benefit analysis. In‐
deed, DOE fully considered the DOJ letter in its final rule. Id.
at 17,803.
The petitioners note that the DOJ letter was submitted
thirteen days after the period for public comment had closed;
the public therefore was denied the opportunity to respond to
the Attorney General’s analysis. However, this lack of time
for public comment does not render the procedural error
harmful. Under the EPCA, the notice and comment period
shall last “not less than 60 days” after publication of the notice
of proposed rulemaking. 42 U.S.C. § 6295(p)(2) (emphasis
added). However, the DOJ must submit its letter within sixty
days of the publication of the notice of proposed rulemaking.
Id. § 6295(o)(2)(B)(ii). Had Congress intended the public to
have the opportunity to respond to the DOJ letter, it would
have imposed its deadline for submission of the letter before
the end of any notice and comment period. Instead, Congress
imposed a deadline that ensured DOE—but not necessarily
the public—had enough time to consider the letter. We are
convinced that this procedural error did not impair DOE’s
ability to consider anticompetitive effects and we will not re‐
verse on this basis.
The EPCA also states that “[a]ny such determination and
analysis shall be published by the Secretary in the Federal
Register.” Id. Here, DOE did not publish the DOJ letter until
July 28, 2015, which the petitioners contend was untimely.
52 Nos. 14‐2147, 14‐2159, & 14‐2334
However, the EPCA does not impose a deadline for publica‐
tion. In the absence of any statutory language imposing such
a requirement, we cannot hold that the delayed publication of
this letter was “without observance of procedure required by
law.” 5 U.S.C. § 706(2)(D).
C. Regulatory Flexibility Analysis
The petitioners’ concerns about the New Standards Rule’s
anticompetitive effects also were addressed, in part, by DOE’s
discussion of the standards’ impact on small businesses. The
Regulatory Flexibility Act (“RFA”), 5 U.S.C. § 601 et seq., re‐
quires agencies to assess the effect of their rules on small en‐
tities. Under the RFA, “[w]hen an agency promulgates a final
rule under section 553 of this title, … the agency shall prepare
a final regulatory flexibility analysis.” 5 U.S.C. § 604(a). Ac‐
cordingly, DOE included such an analysis in its final rule. 79
Fed. Reg. at 17,812–14. In that analysis, DOE acknowledged
that “[s]mall firms would likely be at a disadvantage,” but it
determined that no alternative program would be viable. Id.
at 17,814.
The petitioners contend that DOE’s final regulatory flexi‐
bility analysis failed to comply with the RFA. The RFA re‐
quires a final regulatory flexibility analysis to include, in rel‐
evant part:
[A] description of the steps the agency has taken
to minimize the significant economic impact on
small entities consistent with the stated objec‐
tives of applicable statutes, including a state‐
ment of the factual, policy, and legal reasons for
selecting the alternative adopted in the final
Nos. 14‐2147, 14‐2159, & 14‐2334 53
rule and why each one of the other significant
alternatives to the rule considered by the agency
which affect the impact on small entities was re‐
jected.
5 U.S.C. § 604(a)(6). At the outset, we note that “the Act does
not require rules that are less burdensome for small busi‐
nesses;” it instead requires that “agencies … explain why any
such alternatives were rejected.” Council for Urological Interests
v. Burwell, 790 F.3d 212, 226 (D.C. Cir. 2015). When reviewing
an agency’s compliance with the RFA, we ask whether the
agency’s analysis “demonstrat[es] a ‘reasonable, good‐faith
effort to carry out [the RFA’s] mandate.’” U.S. Cellular Corp. v.
FCC, 254 F.3d 78, 88 (D.C. Cir. 2001) (quoting Alenco
31
Commcʹns, Inc. v. FCC, 201 F.3d 608, 625 (5th Cir. 2000).
In its final regulatory flexibility analysis, DOE identified
thirty‐two CRE manufacturers that met the definition of a
small business, and it interviewed four of those manufactur‐
ers. 79 Fed. Reg. at 17,813. DOE concluded that “small busi‐
nesses will likely have greater increases in component costs
than large businesses,” and “may have greater difficulty ob‐
taining credit.” Id. After reaching this conclusion, DOE con‐
sidered several different policy alternatives, including: “(1)
[n]o change in the standard; (2) consumer rebates; (3) con‐
sumer tax credits; (4) manufacturer tax credits; (5) voluntary
energy efficiency targets; and (6) bulk government pur‐
31 See also Ranchers Cattlemen Action Legal Fund United Stockgrowers of Am.
v. U.S. Depʹt of Agric., 415 F.3d 1078, 1101 (9th Cir. 2005); Associated Fisher‐
ies, Inc. v. Daley, 127 F.3d 104, 114 (1st Cir. 1997).
54 Nos. 14‐2147, 14‐2159, & 14‐2334
chases.” Id. at 17,814. Those policy alternatives were dis‐
32
cussed in detail in the technical support document. After
considering each alternative, “DOE determined that the en‐
ergy savings of these alternatives are significantly smaller
than those that would be expected to result from adoption of
the amended standard levels,” and it opted not to adopt any
of the alternatives. Id.
The petitioners nevertheless note that DOE failed to con‐
sider an exemption for small businesses in its final regulatory
flexibility analysis. Under § 604 of the RFA, an agency must
discuss “each one of the other significant alternatives” in its
final regulatory flexibility analysis. 5 U.S.C. § 604. The RFA
does not require that an agency “address every alternative,
but only that it address significant ones.” Associated Fisheries,
Inc. v. Daley, 127 F.3d 104, 115 (1st Cir. 1997); see also Ranchers
Cattlemen Action Legal Fund United Stockgrowers of Am. v. U.S.
Depʹt of Agric., 415 F.3d 1078, 1102 (9th Cir. 2005). In the peti‐
tioners’ view, a small business exemption constitutes a signif‐
icant alternative and must be considered.
Section 604 does not define what the RFA considers to be
“significant” alternatives. See 5 U.S.C. § 604. However, when
describing an agency’s duty to write an initial regulatory flex‐
ibility analysis, § 603 states that:
Consistent with the stated objectives of applica‐
ble statutes, the analysis shall discuss significant
alternatives such as—
(1) the establishment of differing compliance
or reporting requirements or timetables that
32 App. R.6, Admin. R.66 at 17‐1 to 17‐A‐20.
Nos. 14‐2147, 14‐2159, & 14‐2334 55
take into account the resources available to
small entities;
(2) the clarification, consolidation, or simpli‐
fication of compliance and reporting re‐
quirements under the rule for such small en‐
tities;
(3) the use of performance rather than design
standards; and
(4) an exemption from coverage of the rule, or
any part thereof, for such small entities.
Id. § 603(c) (emphases added). According to the petitioners,
agencies must also consider all four of these “significant alter‐
natives” in their final regulatory flexibility analysis. Therefore,
the petitioners contend, by not considering one of the alterna‐
tives listed in § 603 during its final analysis, DOE failed to
33
comply with its obligation under § 604 of the RFA.
Section 603 of the RFA limits the definition of a “signifi‐
cant alternative” to one which is “[c]onsistent with the stated
33 To the extent that the petitioners are raising a specific claim that DOE
failed to comply with § 603 of the RFA, we note that their claim is not
reviewable:
Section 611(c) of the RFA provides that “[c]ompliance or
noncompliance by an agency with the provisions of this
chapter shall be subject to judicial review only in accord‐
ance with this section.” 5 U.S.C. § 611(c) (emphasis
added). Section 611(a)(2) grants this court “jurisdiction to
review any claims of noncompliance with sections 601,
604, 605(b), 608(b), and 610.” 5 U.S.C. § 611(a)(2).
Natʹl Assʹn of Home Builders v. EPA, 682 F.3d 1032, 1041 (D.C. Cir. 2012); see
also Allied Local & Reg’l Mfrs. Caucus v. EPA, 215 F.3d 61, 79 (D.C. Cir. 2000).
56 Nos. 14‐2147, 14‐2159, & 14‐2334
objectives of applicable statutes.” Id. § 603(c). Therefore, to de‐
termine the merits of petitioners’ argument, we must first
consider the objectives of the EPCA. One of the EPCA’s stated
“purposes” is to “provide Federal energy conservation stand‐
ards applicable to covered products.” 42 U.S.C. § 6295(a)(1).
The EPCA contemplates exemptions for small manufacturers.
Id. § 6295(t). However, those exemptions are temporary, last‐
ing for a “period not longer than the 24‐month period begin‐
ning on the date such rule becomes effective.” Id. § 6295(t)(1).
In addition, an exemption will only be made “on application
of [the] manufacturer” and only after DOE investigates the
unique circumstances of that manufacturer. Id. Further, the
exemption can only be provided after DOE “makes a finding,
after obtaining the written views of the Attorney General, that
a failure to allow an exemption … would likely result in a less‐
ening of competition.” Id. § 6295(t)(2). These provisions make
clear that the EPCA’s objective is to impose consistent, na‐
tional standards for each class of covered product. Exceptions
to those standards are only allowed for short periods of time,
and only after consultation with the Attorney General. A
blanket exemption—made without any temporal limitation,
any applications from manufacturers, or any input from the
Attorney General—would be “[inc]onsistent with the stated
objectives of” the EPCA. See 5 U.S.C. § 603(c). Therefore, a
blanket exemption for small businesses was not a significant
alternative that DOE needed to consider.
DOE made a “good‐faith effort” to describe both the im‐
pact of its amended standard on small businesses and the sig‐
nificant alternatives it considered. U.S. Cellular Corp., 254 F.3d
at 88. Therefore, its final regulatory flexibility analysis fully
complied with the RFA.
Nos. 14‐2147, 14‐2159, & 14‐2334 57
D. Cumulative Regulatory Burden
The petitioners contend that DOE failed to properly con‐
sider the impact of two other regulatory burdens on CRE
manufacturers: EPA’s Significant New Alternatives Policy
(“SNAP”) Rule and the ENERGY STAR Program. According
to DOE Process Rule 10(g), DOE must consider the cumula‐
tive impacts of other federal regulations. 10 C.F.R. pt. 430,
subpt. C, app. A, at 10(g) (2016). DOE decided that neither the
SNAP rule nor the ENERGY STAR Program warranted a
change in its regulations. 79 Fed. Reg. at 17,754, 17,798. There‐
fore, we must determine whether DOE has “articulate[d] a
satisfactory explanation for its action including a rational con‐
nection between the facts found and the choice made.” Motor
Vehicle Mfrs. Ass’n, 463 U.S. at 43 (internal quotation marks
omitted).
1. EPA Significant New Alternatives Policy Program
We first turn to EPA’s proposed SNAP rulemaking. At the
time of DOE’s rulemaking, EPA was reviewing the refriger‐
ants R404 and R134a and was considering removing those re‐
frigerants from commercial refrigeration applications. 79 Fed.
34
Reg. at 17,754. Both R404 and R134a were used in DOE’s en‐
34 EPA published its final rule on refrigerants more than a year after the
New Standards Rule. See 80 Fed. Reg. 42,870 (July 20, 2015). In the rule,
EPA noted that:
We do, however, consider issues such as technical needs
for energy efficiency (e.g., to meet DOE standards) in de‐
termining whether alternatives are “available.” EPA rec‐
ognizes that the energy efficiency of particular models of
58 Nos. 14‐2147, 14‐2159, & 14‐2334
gineering analysis. Id. NAFEM contends that, based on a po‐
tential SNAP rule that EPA was considering, DOE should
have considered refrigerants other than R404 and R134a.
Responding to this critique, DOE explained that “there are
currently no mandatory initiatives such as refrigerant phase‐
outs,” id., and that “DOE does not include the impacts of
pending legislation or unfinalized regulations in its analyses,
as any impact would be speculative,” id. at 17,775. Indeed,
EPA did not even issue a notice of proposed rulemaking re‐
garding the SNAP program until months after DOE’s final
rule. See 79 Fed. Reg. 46,126 (Aug. 6, 2014). “In circumstances
involving agency predictions of uncertain future events, com‐
plete factual support in the record for [an agency’s] judgment
or prediction is not possible or required since a forecast of the
direction in which future public interest lies necessarily in‐
volves deductions based on the expert knowledge of the
equipment is a significant factor when choosing equip‐
ment. We also recognize that the energy efficiency of any
given piece of equipment is in part affected by the choice
of refrigerant and the particular thermodynamic and
thermophysical properties that refrigerant possesses. Alt‐
hough we cannot know what energy efficiency will be
achieved in future products using a specific acceptable re‐
frigerant, we can point to both actual equipment and test‐
ing results that show promise and often better results
than the equipment using the refrigerants that we are
finding unacceptable.
Id. at 42,921. After assessing the impact of the New Standards Rule, EPA
went on to extend the “change of status” date for certain units. See id. at
42,908, 42,916–17.
Nos. 14‐2147, 14‐2159, & 14‐2334 59
agency.” Rural Cellular Assʹn, 588 F.3d at 1105 (internal quota‐
tion marks omitted). DOE’s determination that the SNAP
rulemaking might not come to fruition is entirely reasonable,
and it is certainly within its discretion.35
Further, DOE explained that even if it assumed the SNAP
rulemaking would become binding, it did not have adequate
“publicly‐available data on the design, construction, and op‐
eration of equipment featuring alternative refrigerants to fa‐
cilitate the level of analysis of equipment performance which
would be needed.” 79 Fed. Reg. at 17,754. NAFEM finds this
rationale inadequate; it contends that DOE should have relied
on data regarding the use of alternative refrigerants in Eu‐
rope. However, NAFEM does not point to any comment that
raised this issue before the agency during the notice and com‐
ment period. Further, DOE notes that the basic design of CRE
in Europe differs from CRE in the United States, making that
data unreliable. In light of the deference due to DOE, White
Eagle Coop. Assʹn, 553 F.3d at 474, DOE’s decision to ignore the
EPA SNAP rulemaking was not arbitrary or capricious.36
35 As part of their objection to DOE’s consideration of carbon benefits,
AHRI and Zero Zone criticize DOE’s decision to ignore the impact of the
EPA’s proposed power plant rule on greenhouse gas emissions. For the
same reasons noted above, DOE was entirely within reason to disregard
the impact of this pending regulatory action.
36 We observe that DOE provided a remedy for any CRE manufacturers
that are unduly impacted by the burden of subsequent regulation. In the
New Standards Rule, DOE explained that “[i]f a manufacturer believes
that its design is subjected to undue hardship by regulations, the manu‐
facturer may petition” DOE, which “has the authority to grant … relief on
a case‐by‐case basis.” 79 Fed. Reg. at 17,754.
60 Nos. 14‐2147, 14‐2159, & 14‐2334
2. ENERGY STAR Program
NAFEM also contends that DOE failed to take account of
the ENERGY STAR program. ENERGY STAR is a program
that provides voluntary certifications and ratings to energy
efficient products as a way to incentivize manufacturers. 79
Fed. Reg. at 17,739. DOE noted that the program was “volun‐
tary for manufacturers. As such, [it is] not part of DOE’s con‐
sideration of cumulative regulatory burden.” Id. at 17,798.
That determination was entirely reasonable. DOE’s decision
not to consider ENERGY STAR was neither arbitrary nor ca‐
pricious.
In sum, DOE satisfied its duty laid out in Process Rule
10(g). 10 C.F.R. pt. 430, subpt. C, app. A. Neither the possibil‐
ity of a SNAP rulemaking nor the ENERGY STAR program
needed to be considered by DOE.
E. 2014 Test Procedure Rule
We now consider AHRI’s and Zero Zone’s challenges to
the 2014 Test Procedure Rule, a rule published after the New
Standards Rule. As discussed above, DOE encountered an in‐
terpretive difficulty when measuring the total display area
37
(“TDA”) of a CRE unit. Determining the TDA of a unit is
essential to calculating the maximum allowable energy con‐
sumption level for certain CRE units. 79 Fed. Reg. at 22,299.
According to DOE, the 2014 Test Procedure Rule clarified
how CRE manufacturers should measure a specific aspect of
the TDA: “L,” otherwise known as the “Length of Commer‐
cial Refrigerated Display Merchandiser.” Id. AHRI and Zero
37 See supra Part I.C.
Nos. 14‐2147, 14‐2159, & 14‐2334 61
Zone now contend, however, that the clarified definition of
“L” is contrary to law, substantively arbitrary and capricious,
and was promulgated in an impermissible manner. They fur‐
ther submit that if the 2014 Test Procedure Rule is ruled inva‐
lid, the New Standards Rule—which incorporates the defini‐
tion of “L”—must fall as well.
1. Conformity to Industry Standards
AHRI and Zero Zone first contend that the 2014 Test Pro‐
cedure’s definition of “L” is contrary to the EPCA’s definition
of “L.” As previously mentioned, “L” is a variable in the func‐
tion for determining the TDA of a CRE unit. The EPCA states
that “‘TDA’ means the total display area (ft2) of the refriger‐
ated case, as defined in AHRI Standard 1200.” 42 U.S.C.
§ 6313(c)(1)(D) (emphasis added). Therefore, the definition of
“L” employed by DOE must align with this industry stand‐
ard. According to AHRI and Zero Zone, however, DOE’s clar‐
ified definition of “L” deviated from AHRI Standard 1200.
Specifically, AHRI and Zero Zone believe that DOE employed
an impermissible “compromise” between the industry stand‐
ard and DOE’s own definition. See 79 Fed. Reg. at 22,300 (“As
a compromise, DOE is adopting … this final rule … .”)
We cannot accept petitioners’ understanding of the “com‐
promise” DOE made when defining “L.” As DOE explained
in its notice of proposed rulemaking for the 2014 Test Proce‐
dure Rule, AHRI Standard 1200 does not define or illustrate
the meaning of “L.” 78 Fed. Reg. at 64,309–12. Because the
promulgation and enforcement of energy standards required
a precise definition of the term “L,” DOE undertook to define
the term in a manner that, while remaining faithful to the stat‐
utory language, would provide both the regulator and the in‐
dustry with a workable metric. DOE proposed a definition of
62 Nos. 14‐2147, 14‐2159, & 14‐2334
“L” that was consistent with AHRI Standard 1200’s stated
definition of the TDA: “the sum of the projected area(s) for
visible product.” 79 Fed. Reg. at 22,299 (emphasis added). DOE
reasoned that if the TDA was defined as only consisting of the
visible area on a CRE unit, then a variable of the TDA also
must only consist of the visible area on a CRE unit. Id. After
considering comments from the industry, however, DOE de‐
termined “that defining TDA as strictly the total length of
transparent area may be inconsistent with the method used
by industry to calculate TDA today.” Id. at 22,300. That
method typically included non‐transparent areas like door
frames and mullions. DOE therefore chose what it termed,
somewhat imprudently and improvidently, a “compromise”
value. See id. “L” would be defined
as the internal length of the CRE model, pro‐
vided no more than 10 percent of that length
consists of non‐transparent material. For those
cases with greater than 10 percent of non‐trans‐
parent area, L shall be determined as the pro‐
jected linear dimension(s) of visible product
plus 10 percent of non‐transparent area.
Id. at 22,301.
Contrary to AHRI and Zero Zone’s contention that DOE
created a “compromise” between the department’s desired
standard and the AHRI standard, DOE actually crafted a
more precise definition of “L”—one not fully articulated in
the text of the AHRI Standard but found in the method of im‐
plementing the AHRI Standard. Id. at 22,299–301. DOE’s def‐
inition of “L” therefore conforms to AHRI Standard 1200 and
complies with the mandate of the EPCA. See 42 U.S.C.
§ 6313(c)(1)(D).
Nos. 14‐2147, 14‐2159, & 14‐2334 63
2. Operation of the Rule
AHRI and Zero Zone next raise a series of challenges to
the operation of the new test procedure. When issuing the
2014 Test Procedure Rule, DOE concluded that the clarified
definition of “L” will “not change the measured energy con‐
sumption of covered equipment” and therefore will not
change the expected impact of the amended standards on the
CRE industry. 79 Fed. Reg. at 22,301. AHRI and Zero Zone
disagree with this conclusion and contend that DOE’s defini‐
tion of “L” in the 2014 Test Procedure Rule will result in
smaller maximum energy consumption levels for CRE units
than the previously enforced definition. In their view, DOE
acted arbitrary and capriciously when it modeled the new
standards on a less stringent definition of “L.” More signifi‐
cantly, they contend that DOE failed to adhere to the EPCA’s
requirement that it “determine, in the rulemaking carried out
with respect to prescribing such procedure, to what extent, if
any, the proposed test procedure would alter the measured
energy efficiency [or] measured energy use … of any covered
product as determined under the existing test procedure.” 42
U.S.C. § 6293(e)(1).
This contention has no merit. Our review confirms that
DOE did explain why the definition of “L” in the 2014 Test
Procedure Rule was consistent with the definition it had pre‐
viously employed. DOE referred back to its engineering anal‐
ysis for the New Standards Rule, and it explained that the cal‐
culation for the length of the relevant model of CRE was
based “upon the continuous length of transparent area of the
CRE model, which included mullions and door frames, but
excluded any additional case wall present on the front face of
the unit. In other words, DOE included the entire length of
64 Nos. 14‐2147, 14‐2159, & 14‐2334
the transparent doors, including minor non‐transparent ar‐
eas.” 79 Fed. Reg. at 22,300; see also App. R.6, Admin. R.102 at
5A‐6 (displaying the length of the doors and TDA for the CRE
models); App. R.13, Admin. R.13‐A1 at 2–3 (comment from
Hillphoenix noting that mullion and door frame widths were
included in DOE’s calculation). DOE stated that the “10 per‐
cent of non‐transparent area that may be included in the di‐
mension L” was consistent with its consideration of the mul‐
lions and door frames during the engineering analysis. 79
Fed. Reg. at 22,301. DOE adequately explained how it reached
the conclusion “that this amendment should not change the
measured energy consumption of covered equipment.” Id.
We note that multiple manufacturers—including AHRI—
believed that an even more stringent definition of “L” would
have been consistent with prior practice. They suggested in
comments that DOE only account for door mullion and door
frame widths of five inches or less; any non‐transparent area
greater than five inches would be excluded from the calcula‐
38
tion of “L.” DOE noted in response that “the 10 percent
threshold [it adopted] is less stringent than the 5‐inch thresh‐
old recommended by manufacturers. That is, a threshold of
10 percent accommodates greater amounts of non‐transpar‐
ent area in the dimension ‘L’ for a majority of CRE models.”
Id. None of the petitioners have disputed DOE’s assertion that
its clarified definition is more favorable to manufacturers
than their proposal of a five‐inch threshold for non‐transpar‐
ent area, and we find that assertion entirely reasonable. DOE
38 App. R.13, Admin. R.11‐A1 at 4 (comment from Hussman); App. R.13,
Admin. R.13‐A1 at 3–4 (comment from Hillphoenix); App. R.13, Admin.
R.15‐A1 at 3 (comment from AHRI).
Nos. 14‐2147, 14‐2159, & 14‐2334 65
adequately explained that its clarification to the definition of
“L” would have no discernable impact on the application of
the new standards.
3. Procedural Challenges
AHRI and Zero Zone also object to the timing of both the
proposal and the publication of the 2014 Test Procedure Rule.
The Rule was proposed after the New Standards Rule was
proposed and published after the New Standards Rule was
39
published. The petitioners submit that this timeline violated
both the EPCA and DOE’s own Process Rules.
We begin with the challenge under the EPCA. According
to the EPCA, “[a]ny new or amended energy conservation
standard prescribed under this section shall include, where ap‐
plicable, test procedures.” 42 U.S.C. § 6295(r) (emphases
added). The petitioners contend that DOE therefore was obli‐
gated under the EPCA to include the 2014 Test Procedures in
the New Standards Rule. DOE did not fulfill this statutory
mandate, they contend, because the 2014 Test Procedures
were not published at the time of the publication of the New
Standards Rule. In response, DOE contends that it satisfied
the EPCA by including the 2012 Test Procedures in its New
40
Standards Rule.
39 The notice of proposed rulemaking for the New Standards Rule was
issued on September 11, 2013. The notice of proposed rulemaking for the
2014 Test Procedure Rule was issued on October 28, 2013. The publication
of the New Standards Rule occurred on March 28, 2014. The publication
of the 2014 Test Procedure Rule occurred on April 21, 2014.
40 The New Standards Rule notes that “[t]he test procedure amendments
established in the 2012 test procedure final rule are required to be used in
66 Nos. 14‐2147, 14‐2159, & 14‐2334
We agree with DOE’s interpretation: the inclusion of the
2012 Test Procedures satisfies § 6295(r). The EPCA clearly
contemplates that DOE will amend and proscribe test proce‐
dures independent of energy conservation standards. Indeed,
the EPCA states that “[i]f [DOE] determines that the amended
test procedure will alter the measured efficiency or measured
use, [DOE] shall amend the applicable energy conservation
standard during the rulemaking carried out with respect to
such test procedure.” Id. § 6293(e)(2). It naturally follows that
if DOE determines that the amended test procedures will not
alter efficiency standards—as DOE did here—DOE does not
need to amend the applicable efficiency standards during that
41
rulemaking. Therefore, DOE acted well within the bounds
of the EPCA when it included the 2012 Test Procedures in the
New Standards Rule and then clarified the meaning of those
test procedures in a subsequent rule.
We now turn to the challenges under DOE’s own process
rules. DOE Process Rule 7(b) explains that “[a]ny necessary
modifications [to test procedures] will be proposed before is‐
suance of an [advance notice of proposed rulemaking].” 10
C.F.R. pt. 430, subpt. C, app. A. DOE Process Rule 7(c) further
explains that “[f]inal, modified test procedures will be issued
prior to the [notice of proposed rulemaking] on proposed
standards.” Id. The petitioners submit that DOE violated both
conjunction with the amended standards promulgated in this … final
rule.” 79 Fed. Reg. at 17,735.
41 See King v. Burwell, 135 S. Ct. 2480, 2489 (2015) (“[W]hen deciding
whether the language is plain, we must read the words ‘in their context
and with a view to their place in the overall statutory scheme.’” (quoting
FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000)).
Nos. 14‐2147, 14‐2159, & 14‐2334 67
of these Process Rules because the 2014 Test Procedures were
not even proposed until the notice of proposed rulemaking
for the New Standards Rule. DOE responds that the 2014 Test
Procedures are merely “clarifying amendments” that are not
42
covered by either Process Rule. DOE Process Rule 7(b) refers
to “necessary modifications” and DOE Process Rule 7(c) re‐
fers to a “modified test procedure.” Id. In DOE’s view, clarify‐
ing the meaning of a procedure is not equivalent to modifying
the procedure itself.
DOE created these Process Rules, so we will affirm DOE’s
interpretation of those rules “unless plainly erroneous or in‐
consistent with the regulation.” Auer, 519 U.S. at 461 (internal
quotation marks omitted); see also Whetsel v. Network Prop.
Servs., LLC, 246 F.3d 897, 901 (7th Cir. 2001). Here, DOE’s in‐
terpretation is worthy of such deference. The Supreme Court
has explained that an “interpretation” of a rule, which is
meant to ascertain the meaning of text, is not the same as an
“amendment” of a rule, which is meant to change the text. Pe‐
rez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1207–08 (2015)
(“One would not normally say that a court ‘amends’ a statute
when it interprets its text. So too can an agency ‘interpret’ a
regulation without ‘effectively amend[ing]’ the underlying
source of law.” (alteration in original)). Similarly, a clarifica‐
tion of a rule, which is also meant to ascertain the meaning of
text, can be distinguished from a modification of a rule, which,
according to the Supreme Court, “connotes moderate
change.” MCI Telecomms. Corp. v. AT&T Co., 512 U.S. 218, 228
(1994). DOE determined that “L,” as defined in its previous
42 DOE Br. at 16.
68 Nos. 14‐2147, 14‐2159, & 14‐2334
test procedure rules, was ambiguous. By clarifying the mean‐
ing of “L” in the 2014 Test Procedure Rule, DOE acted within
its authority and did not violate any regulatory or statutory
provisions.
Conclusion
For the foregoing reasons, we deny the petitions for re‐
view in their entirety.
PETITIONS DENIED
