[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
DISCUSSION DRAFT, ENERGY STAR REFORM ACT OF 2017 AND H.R. 3477, CEILING
FAN ENERGY CONSERVATION HARMONIZATION ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 7, 2017
__________
Serial No. 115-74
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energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Ohio YVETTE D. CLARKE, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
SUSAN W. BROOKS, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, California
RICHARD HUDSON, North Carolina RAUL RUIZ, California
CHRIS COLLINS, New York SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
Subcommittee on Energy
FRED UPTON, Michigan
Chairman
PETE OLSON, Texas BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOE BARTON, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois SCOTT H. PETERS, California
ROBERT E. LATTA, Ohio GENE GREEN, Texas
GREGG HARPER, Mississippi MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia KATHY CASTOR, Florida
ADAM KINZINGER, Illinois JOHN P. SARBANES, Maryland
H. MORGAN GRIFFITH, Virginia PETER WELCH, Vermont
BILL JOHNSON, Ohio PAUL TONKO, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
MARKWAYNE MULLIN, Oklahoma Massachusetts
RICHARD HUDSON, North Carolina G.K. BUTTERFIELD, North Carolina
KEVIN CRAMER, North Dakota FRANK PALLONE, Jr., New Jersey (ex
TIM WALBERG, Michigan officio)
GREG WALDEN, Oregon (ex officio)
C O N T E N T S
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Page
Hon. Pete Olson, a Representative in Congress from the State of
Texas, opening statement....................................... 1
Prepared statement........................................... 2
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 3
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 5
Prepared statement........................................... 6
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 16
Witnesses
Joseph McGuire, President and CEO, Association of Home Appliance
Manufacturers.................................................. 18
Prepared statement........................................... 20
Kateri Callahan, President, Alliance to Save Energy.............. 43
Prepared statement........................................... 45
Answers to submitted questions............................... 165
Greg Merritt, Vice President, Marketing and Public Affairs, CREE. 52
Prepared statement........................................... 54
Answers to submitted questions............................... 170
Christopher Drew, Executive Vice President, Chief Marketing and
Strategy Officer, Air-Conditioning, Heating and Refrigeration
Institute...................................................... 59
Prepared statement........................................... 61
Douglas Johnson, Vice President, Technology Policy, Consumer
Technology Association......................................... 74
Prepared statement........................................... 76
Scott Pruitt, Administrator, U.S. Environmental Protection Agency
Answers to submitted questions............................... 173
Daniel Simmons, Administrator, Acting Assistant Secretary, U.S.
Department of Energy
Answers to submitted questions............................... 178
Submitted Material
H.R. 3477........................................................ 8
Energy Star Reform Act of 2017................................... 10
Statement of Congressman Buddy Carter............................ 114
Statement of the U.S. Environmental Protection Agency............ 115
Statement of the U.S. Department of Energy....................... 118
Statement of the American Council of Independent Laboratories.... 120
Statement of the U.S. Green Building Council..................... 122
Statement of the American Public Gas Association................. 126
Statement of the U.S. real estate industry....................... 128
Statement of Underwriters' Laboratories.......................... 136
Statement of the American Council for an Energy-Efficient Economy 139
Statement of Spire Inc........................................... 143
Statement of E4TheFuture and Home Performance Coalition.......... 150
Statement of the National Electrical Manufacturers Association... 153
Statement of the High Performance Building Coalition............. 158
Statement of Lowe's.............................................. 161
Statement of the Air Conditioning Contractors of America......... 162
DISCUSSION DRAFT, ENERGY STAR REFORM ACT OF 2017 AND H.R. 3477, CEILING
FAN ENERGY CONSERVATION HARMONIZATION ACT
----------
TUESDAY, NOVEMBER 7, 2017
House of Representatives,
Subcommittee on Energy,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in
room 2123 Rayburn House Office Building, Hon. Pete Olson (vice
chairman of the subcommittee) presiding.
Members present: Representatives Olson, Barton, Shimkus,
Murphy, Latta, Harper, McKinley, Griffith, Johnson, Long,
Bucshon, Flores, Mullin, Cramer, Walberg, Walden (ex officio),
Rush, McNerney, Peters, Green, Castor, Sarbanes, Welch, Tonko,
Loebsack, Schrader, Kennedy, Butterfield, and Pallone (ex
officio).
Staff present: Ray Baum, Staff Director; Allie Bury,
Legislative Clerk, Energy/Environment; Kelly Collins, Staff
Assistant; Zachary Dareshori, Staff Assistant; Wyatt Ellertson,
Research Associate, Energy/Environment; Adam Fromm, Director of
Outreach and Coalitions; Jordan Haverly, Policy Coordinator,
Environment; A.T. Johnston, Senior Policy Advisor, Energy; Ben
Lieberman, Senior Counsel, Energy; Mary Martin, Deputy Chief
Counsel, Energy & Environment; Alex Miller, Video Production
Aide and Press Assistant; Brandon Mooney, Deputy Chief Energy
Advisor; Annelise Rickert, Counsel, Energy; Dan Schneider,
Press Secretary; Peter Spencer, Professional Staff Member,
Energy; Madeline Vey, Policy Coordinator, Digital Commerce and
Consumer Protection; Hamlin Wade, Special Advisor, External
Affairs; Jeff Carroll, Minority Staff Director; Caitlin
Haberman, Minority Professional Staff Member; Rick Kessler,
Minority Senior Advisor and Staff Director, Energy and
Environment; John Marshall, Minority Policy Coordinator;
Alexander Ratner, Minority Policy Analyst; Tim Robinson,
Minority Chief Counsel; Tuley Wright, Minority Energy and
Environment Policy Advisor; and C.J. Young, Minority Press
Secretary.
OPENING STATEMENT OF HON. PETE OLSON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Olson. Good morning.
The Subcommittee on Energy will now come to order. The
chair now recognizes himself for 5 minutes for an opening
statement.
When the Trump administration proposed to zero out the
Energy Star program earlier this year, it got people talking.
Many manufacturers said Energy Star is worth saving but that
there is room for improvement.
This is a discussion draft. I repeat, discussion draft, and
offers possible solutions--and I repeat, possible--possible
solutions and reforms.
It would make the DOE the lead agency for Energy Star while
requiring them to consult with the EPA. Today, each
administration can choose whether EPA or DOE runs the show.
This is an energy program, which is why some want the
Department of Energy in the driver's seat.
This draft also has liability protections like what's in a
bill by my friends Bob Latta from Ohio and Peter Welch from
Vermont. Energy Star has its own penalties for those who break
the rules. We don't need more lawyers involved on top of that.
And I say that as a member of the Texas Bar and active with a
UT law degree on my wall.
This draft also creates more chances for industry input in
the program. I look forward to hearing your thoughts about any
and all sections.
One other point--last Friday, our Democratic colleagues
sent a letter asking to delay this hearing because they wanted
a government panel. You should know that staff tried but
couldn't get the appropriate witnesses. We need to have a high
level panel with live bodies confirmed by the Senate. Our
friends there have to move forward.
But both EPA and DOE have submitted statements and comments
and will respond to any questions for the record that they get.
And we will remind them that they need to be prompt with their
answers.
At this point, I would like to give the balance of my time
to Mr. Latta, who has been a leader on these issues for years.
[The prepared statement of Mr. Olson follows:]
Prepared statement of Hon. Pete Olson
When the Trump administration proposed to zero out the
Energy Star program earlier this year, it got people talking.
Many manufacturers said Energy Star is worth saving, but that
there is room for improvement.
This discussion draft offers several possible reforms.
It would make DOE the lead agency for Energy Star, while
giving them the power to bring EPA in. Today, each
administration can choose whether EPA or DOE runs the show.
This is an energy program, which is why some want DOE in the
driver's seat.
The draft also has liability protections like what's in a
bill by my friends Rep. Latta and Welch. Energy Star has its
own penalties for those who break the rules--we don't need to
get more lawyers involved on top of that. And I say that as
someone with a UT Law degree on my wall.
The draft also creates more chances for industry input in
the program, among other things. I look forward to hearing
thoughts about any and all sections.
One other point. Last Friday, our Democratic colleagues
sent a letter asking to delay this hearing because they wanted
a government panel. I'm told that staff tried but couldn't get
the right witnesses. I think we need a few more live bodies
confirmed by our friends in the Senate.
BUT, both EPA and DOE have submitted statements and will
respond to any questions for the record they get. We will
remind them that they need to be prompt with the answers.
At this point I would like to yield my time to Mr. Latta
who has been a leader on these issues for years.
Mr. Latta. Well, thanks very much, Mr. Chairman, and thank
you very much for yielding, and to our panel of witnesses
today, thanks very much for being here. We really appreciate it
for this discussion that we are going to have today.
Energy Star program has been a win-win for consumers and
manufacturers over the past 25 years. This program has proven
to be a successful tool in advancing the development and use of
efficient energy technologies. It has also promoted economic
expansion and job growth for participating manufacturers across
the nation including many across my home State of Ohio.
This hearing today is a starting point for reforming Energy
Star program. We have heard from stakeholders that reforms are
needed to Energy Star and that this draft is an opportunity to
discuss those ideas.
I want today to be a step in the process toward building a
strong bill that shows support for this program while making
the necessary changes that we need.
I am looking forward to the testimony. I hope that the
engagement of these issues will not stop after today's hearing.
We need to hear from all the stakeholders about reform ideas so
that we can move this package forward. I have an open-door
policy and I hope that anyone who is interested will share
their thoughts, concerns, and suggestions with me.
One provision in the draft directly addresses a recent
trend that has led to a chilled participation in the program.
This language protects manufacturers that have fallen out of
compliance if they have complied with all corrective measures
and penalties from litigation related to noncompliance. The
draft also moves the primary responsibility of the program to
the Department of Energy since the heart of this program is
helping consumers make energy-efficient choices.
Additionally, we will look at opportunities for more
transparency and public engagement in the standard-setting
process. The Energy Star program is widely recognized by
consumers and has seen major investments by the manufacturing
community over the past two decades.
The updates we are considering today are important for
ensuring that this program remains strong. I want to again
thank the committee for holding today's hearing and I also look
forward to hearing from our witnesses, and I yield back.
Thanks, Mr. Chairman.
Mr. Olson. Thank you.
Now the chair calls upon a man who's very happy that my
Houston Astros took the place of his Chicago Cubs as the World
Series champs, the subcommittee ranking member, Mr. Rush, for 5
minutes for an opening statement.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. Mr. Chairman, I have never been introduced like
that before and I am stunned with that introduction. But thank
you anyway, Mr. Chairman.
Mr. Chairman, as you know, Ranking Member Pallone and
myself, we sent a letter to you and Chairman Walden on Friday
asking that this hearing be postponed until representatives
from the EPA and from the DOE were made available to testify
before this subcommittee.
Mr. Chairman, it is highly unusually and wholly
unacceptable that we are now in the month of November and the
administration witnesses have been allowed to repeatedly thumb
their noses at requests made by this subcommittee to get them
to come here and to testify before the representatives of the
American people.
Mr. Chairman, I am very deeply concerned and disturbed that
this subcommittee seems to be completely feckless in persuading
the administrative officials to provide testimony on pending
legislation and to engage members in person as has been the
tradition of this subcommittee for as long as I can remember
and for as long as I have been on this subcommittee. At some
point very soon, Mr. Chairman, I would hope that we would use
all the power available to us to convince representatives of
this administration to answer our call when they receive an
invitation from this subcommittee to come before us.
Mr. Chairman, I think it does not do us well for us to
continue to accept these refusals to come before this
subcommittee, to continually accept this restraint and
disregard for this subcommittee.
And Mr. Chairman, to me it's the epitome, rather, of
foolhardiness for us to continually give government officials
from this administration namby-pamby excuses for not coming
here before this subcommittee.
Mr. Chairman, I can only imagine the howls and the growls
and the threats that we would have heard from your side of the
aisle if former EPA administrators, Gina McCarthy or Lisa
Jackson, would have simply refused to even show up in person or
even send a representative in their place to answer members'
questions.
Mr. Chairman, I think it is time to bring this kind of
disrespect to a screeching halt and I hope that you and the
Republican members of this subcommittee will be as outraged at
this inaction and this disrespect from the administration. Show
up before us and let's have some real discussion about
politics.
Mr. Chairman, for these two bills before us, I support H.R.
3477, the Ceiling Fan Energy and Conservation Harmonization
Act, and I strongly oppose the Energy Star Reform Act of 2017.
Mr. Chairman, I am going to yield right now the balance of
my time to the gentleman from Vermont.
Mr. Welch. Thank you very much, Mr. Rush.
This Energy Star draft is a step, and I appreciate the
intent of the drafters. Energy Star has had 25 years of a
fantastic success.
It has done a lot since 1992 on a voluntary program, saving
consumers and businesses $430 billion on their utility bills
and reducing carbon emissions by 3 billion metric tons, and I
appreciate the work of Mr. Walden, Mr. Upton, and Mr. Latta,
who I have worked with very, very closely in putting this draft
out there.
I appreciate the effort of Mr. Latta to maintain the
development of energy efficiency appliances through Energy Star
by preventing the need for class action, something he and I
worked on.
That said, here's the concerns I have about proposed
changes in the current draft that I hope we can address. I
think moving the program from EPA to DOE is a significant
issue, instituting the Administrative Procedure Act standards
and allowing for self-certification of certain products. All of
these, in my view, could be detrimental to the continued
effectiveness of this program.
So I look forward to working with my colleagues. This is a
bipartisan effort and I thank the authors of the draft
legislation for getting us moving.
Thank you. I yield back.
Mr. Olson. Gentleman yields back.
The chair, responding to the ranking member's concerns
about the people ignoring this committee, I remind my good
friend it took us 10 months--10 months to have our first
cabinet secretary, Rick Perry, speak before this committee.
The problem about this committee, it's a slow confirmation
process in the Senate. We tried to get witnesses. We tried. We
tried. But there is none available that have the stature we
need to do our job.
And so we're going forward. With that, I yield to the
chairman of the full committee, Mr. Walden, for 5 minutes'
opening statement.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. I thank the gentleman and appreciate his
comments. That is what we face. We share the frustration the
minority has expressed today about the inability to have the
administration's people confirmed by Senate and in place so we
would have somebody that could give us the administration's
perspective on these matters of legislation.
Our committee's energy focus is not limited to energy
production and delivery. As you all know, we are also
interested in policies that promote energy efficiency. Doing
more with less is always a win for consumers, for
manufacturers, for jobs, the environment, and for the economy
overall.
H.R. 3477, the Ceiling Fan Energy Conservation
Harmonization Act, authored by my good friend from North
Carolina, Mr. Hudson, is one of the two bills that we will
examine today. This legislation would align the compliance date
of the next efficiency standard for ceiling fans with the
compliance date for ceiling fan lights so the manufacturers can
deal with both at the same time. What a concept. Amazing we
have to pass legislation to fix something like this.
Shifting gears, I believe the Energy Star program is a nice
complement to the mandatory federal energy efficiency standards
for many energy-using products in that it helps consumers
identify those models that go above and beyond the minimum
standards. I know I look at that and my wife does when we buy
different appliances and things. It's a guide. Surveys show
that consumers are aware of the Energy Star label, that many of
them look for it when making their purchasing decisions. In
addition to appliances, Energy Star also helps building owners
and renters save on energy.
The Energy Star program received a great deal of attention
earlier this year when the administration's FY 2018 budget
proposed to zero out the program. I certainly disagreed with
this approach but I do believe the program could be improved
upon and now is a great time to kick off that dialogue. Today's
hearing will focus on our discussion draft of Energy Star
reforms. Keep in mind this is just a draft. We welcome
constructive criticisms of what it contains as well as
suggestions for things that we should add onto it.
One of the quirks of the Energy Star program is that it has
no permanent lead agency. Each new administration can decide
how to divide responsibilities between the Department of Energy
and the Environment Protection Administration, or agency. And
in 2009, the Obama administration shifted the lead to EPA. In
my mind, Energy Star is fundamentally an energy program and
belongs at the Department of Energy. I understand that many
participants in the program are happy with it being at EPA now.
The discussion draft proposes to make DOE the lead agency while
still giving EPA an important role. And, again, I stress that
this is just a discussion draft and we welcome all comments on
how the program should be structured.
As I mentioned, Energy Star is a well-functioning program
overall but there are areas for improvement. The discussion
draft addresses some of these such as protections against
unhelpful class action litigation as well as assurances that
companies have a chance to comment on major actions under the
program. It also has provisions to help safeguard consumer
choice.
I would also like to note that thoughtful legislating often
takes time. This is the first of what I am sure will be several
hearings and markups on legislation. Today's hearing is focused
on a discussion draft and has yet to be formally introduced. I
am looking forward to receiving feedback again from all the
stakeholders including EPA and DOE as we continue to move
through the legislative process.
As we discuss potential changes to the program we can't
lose sight that consumers are the reason for the Energy Star
and that the focus should always be on what is best for the
consumer. Any ideas that improve the process by which consumers
get the information they can use to save on their energy bills
is something we would like to hear about. So I thank the
witnesses for participating in this hearing. I look forward to
your testimony.
With that, Mr. Chairman, I yield back the balance of my
time.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Our committee's energy focus is not limited to energy
production and delivery--we are also very interested in
policies that promote energy efficiency. Doing more with less
is always a win for consumers, for manufacturers, for jobs, the
environment, and for the economy overall.
H.R. 3477, the Ceiling Fan Energy Conservation
Harmonization Act, authored by my good friend from North
Carolina, Mr. Hudson, is one of the two bills we're examining
today. The legislation would align the compliance date of the
next efficiency standard for ceiling fans with the compliance
date for ceiling fan lights, so that manufacturers can deal
with both at the same time.
Shifting gears, I believe that the Energy Star program is a
nice complement to the mandatory federal efficiency standards
for many energy-using products in that it helps consumers
identify those models that go above and beyond these minimum
standards. Surveys show that consumers are aware of the Energy
Star label and that many of them look for it when making their
purchasing decisions. In addition to appliances, Energy Star
also helps building owners and renters save on energy.
The Energy Star program received a great deal of attention
earlier this year when the administration's FY2018 budget
proposed to zero out the program. I certainly disagree with
this approach, but I do believe that the program could be
improved upon and now is a great time to kick off that
dialogue. Today's hearing will focus on our discussion draft of
Energy Star reforms. Keep in mind that this is just a draft--we
welcome constructive criticisms of what it contains as well as
suggestions for things we should add to it.
One of the quirks with the Energy Star program is that it
has no permanent lead agency. Each new administration can
decide how to divide responsibilities between DOE and EPA, and
in 2009 the Obama administration shifted the lead to EPA. In my
mind, Energy Star is fundamentally an energy program and
belongs at DOE, but I understand that many participants in the
program are happy with EPA. The discussion draft proposes to
make DOE the lead agency while still giving EPA an important
role, but again I stress that this is just a discussion draft
and I welcome all comments on how the program should be
structured.
As I mentioned, Energy Star is a well-functioning program
overall, but there are areas for improvement. The discussion
draft addresses some of these, such as protections against
unhelpful class action litigation as well as assurances that
companies have a chance to comment on major actions under the
program. It also has provisions to that help safeguard consumer
choice.
I'd also like to note that thoughtful legislating often
takes time. This is the first--of what I'm sure will be
several--hearings and markups on the legislation. Today's
hearing is focused on a discussion draft that has yet to be
formally introduced and I'm looking forward to receiving
feedback from all stakeholders--including EPA and DOE--as we
continue to move through the legislative process.
As we discuss potential changes to the program, we cannot
lose sight that consumers are the reason for Energy Star and
that the focus should always be on them. Any idea that improves
the process by which consumers get the information they can use
to save on their energy bills is something we would like to
hear about.
I thank the witnesses for their participation in this
hearing.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. The chairman yields back.
The chair now calls upon the ranking member of the full
committee, Mr. Pallone, for 5 minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
Today's hearing will look at two pieces of legislation
relating to energy efficiency, a very troubling discussion
draft entitled the Energy Star Reform Act of 2017 and another
bill, H.R. 3477, the Ceiling Fan Energy Conservation
Harmonization Act, that seems to have no opposition.
But before I discuss the legislation, I must say that it's
totally unacceptable to have a legislative hearing on a bill
that will make major changes to the Energy Star program without
witnesses from the Environmental Protection Agency and the
Department of Energy.
Unfortunately, the Trump administration's blatant refusal
to participate in our committee's legislative process has been
a common theme since President Trump took office in January.
It is now November and we are expected to believe that
there is not a single person at EPA who can discuss the impact
of a bill that completely moves the Energy Star program to DOE.
I have looked at the committee records and both the Obama
and Bush administrations were able to get EPA witnesses
including the administrator up here within 3 months of taking
office.
It has been almost 10 months now and this committee has yet
to have a single EPA witness before us and that is simply
unacceptable. If the administration's absence is due to a
scheduling conflict then today's hearing should have been
postponed. But if they're just refusing to appear before our
committee to discuss any legislative proposal then we should
not accept that. On Friday, Ranking Member Rush and I asked
that this hearing be postponed until we could have both EPA and
DOE before us. Clearly, that did not happen.
But I would hope that committee Republicans would join us
in saying enough is enough. The days of the administration
hiding are over. It is time that they appeared before us so
that we can hear their thoughts on the legislation that we are
considering.
Now let me move to one of the bills before us. I have
serious concerns with the Energy Star Reform Act of 2017
discussion draft, which makes several significant changes to
the Energy Star program, and I have one question. What problem
are we trying to solve with this proposal? The Energy Star
program is extremely successful, reducing energy consumption
and saving consumers money. According to EPA, in 2014 alone
this completely voluntary program saved consumers $34 billion
on their utility bills while stopping the release of 300
million metric tons of greenhouse gasses into the atmosphere.
This program is a win-win for consumers and the environment and
yet this bill is proposing major changes including taking the
program out of EPA and moving it to DOE.
Energy Star was originally established at EPA and the
program was codified into law with EPA as the co-lead agency in
the Energy Policy Act of 2005, which was produced by a
Republican Congress and president. It remains an extremely
effective and popular volunteer program so, again, why the need
for change.
I have yet to hear a credible argument from anyone as to
why this is necessary. The discussion draft also requires that
product certifications and other program specifications be done
using the administrative procedure act process which would
require every product certification be published in the Federal
Register and be subject to public notice and comment. And I
worry that this will make the program less nimble and harm both
consumers and companies by opening the process to new needless
litigation from companies who otherwise couldn't meet Energy
Star standards.
Two other provisions in the draft would harm consumers who
purchase products under this popular program. The no warranty
subsection would create a liability shield, blocking consumers
from recovering costs when the Energy Star labeled product they
bought turns out to be mislabeled and doesn't achieve the
energy savings promised. And another provision would allow
companies to once again deem their products to be energy
efficient with little to no outside verification of those
claims. GAO warned us back in 2010 that the Energy Star program
was vulnerable to waste, fraud, and abuse due to its self-
certification policy.
So EPA implemented reforms including a third party
certification program to ensure products with the Energy Star
label actually save energy. Rolling back this critical reform
would endanger the long-term viability of the Energy Star
program. It is particularly reckless when combined with the
liability shield because it would leave consumers with no
outside verification of manufacturer claims or removing a
critical avenue for consumers to make whole if the
manufacturer's claims prove to be wrong.
So, again, Energy Star is a program that enjoys broad
support from American consumers, manufacturers, and efficiency
advocates. It is a voluntary program and companies can choose
not to participate. The changes in this draft would undermine
the integrity of the Energy Star label, Incentivize companies
to cheat the system, and allow bad actors who lie about the
efficiency of their products to get off scot free. In all these
scenarios, consumers are left paying the price for the
legislative mistakes proposed in this draft.
And I yield back. Thank you, Mr. Chairman.
Mr. Olson. Gentleman yields back.
We have now concluded with member opening statements. Chair
would like to remind all members that pursuant to the committee
rules, all members' opening statements will be made part of the
record. And we want to thank all the witnesses for being here
on this cold day and taking the time to testify before this
subcommittee.
Today's witnesses will have the opportunity to give opening
statements followed by random questions from members. These
statements are limited to 5 minutes. You will have a green
light. At one minute left you'll have a yellow light and at 5
minutes you'll have the red light.
Our witness panel today includes, first of all, Mr. Joseph
M. McGuire, the President and CEO of the Association of Home
Appliance Manufacturers.
You have 5 minutes, Mr. McGuire. Hit the bottom of the
microphone there.
STATEMENTS OF JOSEPH MCGUIRE, PRESIDENT AND CEO, ASSOCIATION OF
HOME APPLIANCE MANUFACTURERS; KATERI CALLAHAN, PRESIDENT,
ALLIANCE TO SAVE ENERGY; GREG MERRITT, VICE PRESIDENT,
MARKETING AND PUBLIC AFFAIRS, CREE; CHRISTOPHER DREW, EXECUTIVE
VICE PRESIDENT, CHIEF MARKETING AND STRATEGY OFFICER, AIR-
CONDITIONING, HEATING AND REFRIGERATION INSTITUTE; DOUGLAS
JOHNSON, VICE PRESIDENT, TECHNOLOGY POLICY, CONSUMER TECHNOLOGY
ASSOCIATION
STATEMENT OF JOSEPH MCGUIRE
Mr. McGuire. Thank you for the opportunity to discuss the
future of Energy Star.
The Association of Home Appliance Manufacturers represents
the producers of the vast majority of home appliances purchased
by U.S. consumers. Our members are strong supporters of the
Energy Star program. AHAM has significant experience with the
Energy Star program, having worked closely with EPA and DOE
since the program's inception for home appliances in 1996.
AHAM is an Energy Star verification testing body approved
by both agencies. Because the Energy Star brand is known to
more than 80 percent of consumers nationwide, AHAM strongly
supports maintenance of the program within the federal
government. This program should not be privatized or
eliminated. The program should be adequately funded. But we
strongly believe the program should be improved in recognition
of its significant role in the marketplace.
Energy efficiency gains across core major appliance
categories have been dramatic over the past decades. A new
clothes washer today uses 70 percent less energy than it did in
1990 and less than half the water. Energy Star has played a
critical role in educating consumers on the benefits of energy
efficiency and it had become so ubiquitous that it is now
referenced in building codes. It is part of utility rebates,
federal procurement, and retail buyer specifications. Thus, the
voluntary program has effectively become mandatory in the
marketplace. As such, manufacturers must make significant
investment decisions to qualify products for the program just
as they must invest products to comply with mandatory appliance
efficiency standards.
The Energy Star program for home appliances originally was
administered by DOE so that critical coordination with
appliance standards and test procedures could occur. However,
in 2009, the program was transferred from DOE to EPA. The lack
of expertise within EPA has led to complications with
verification testing requirements and EPA officials began to
broaden the scope of the program into non-energy related
product requirements such as product performance and warranty
terms. This expansion has added consideration confusion for
manufacturers and diminishes the brand. Energy Star has drifted
from its original mission and operates at many levels as it if
were still an experimental program.
Within 25 years from its creation, the Energy Star program
is a full matured de facto mandatory federal program that needs
additional statutory authorization to keep it focused and to
create long-term stability and certainty. It must maintain its
focus on its intended and sole purpose--energy efficiency. To
address these concerns, AHAM proposes the following.
First, move the Energy Star for home appliances from EPA
back to DOE and provide funding for a reform program. I believe
Secretary Perry was receptive to this suggestion when he
appeared before this committee recently. While Energy Star can
be transferred back to DOE administratively, and we support
that, statutory requirement to house the program at DOE will
keep it from becoming a ping pong ball. We respectfully suggest
that the draft bill indicate that authority over the Energy
Star program be held by DOE and except for home appliances
covered under EPCA may be delegated to EPA as determined by the
secretary.
Secondly, we support the bill's revision to increase
transparency and long-term certainty of the program by
establishing administrative procedure process requirements.
There should be a formal and transparent process for changing
and developing Energy Star specifications for all stakeholders.
The APA will not slow down the Energy Star processes.
Finally, we support the draft bill's provision to stop
Energy Star class action lawsuits that undercut fair
enforcement by the federal government. Because Energy Star has
its own remedies, allowing class actions undermines the program
and fosters a system of double jeopardy for Energy Star
partners. Congress should make clear it does not intend this
program to be used for that purpose. Our members must earn the
trust of consumers each and every day, as our products are so
vital to their well-being.
We look forward to working with the committee to improve
the Energy Star processes and make the program stronger to
deliver reliable energy efficiency tools to consumers
purchasing home appliances.
On behalf of our industry, I'd like to thank the
subcommittee for its work on this issue including this draft
bill and I respectfully request that my written statement be
included as part of the hearing record.
I would be pleased to answer any questions you may have.
[The prepared statement of Mr. McGuire follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. Without objection, so ordered. And thank you,
Mr. McGuire.
The chair now calls upon Kateri Callahan, the President of
the Alliance to Save Energy. I am sorry if I butchered that
first name with that thick Texas drawl but----
STATEMENT OF KATERI CALLAHAN
Ms. Callahan. Sir, you did it just right and a Kentucky
drawl appreciates that Texas drawl.
Good morning, Mr. Chairman, and members of the
subcommittee. I have the pleasure of serving as the President
of the Alliance to Save Energy, which is a nonprofit coalition
comprised of over 130 different businesses and organizations
and I would note that all the witnesses before you today are
members of the Alliance to Save Energy's associate's program
and our businesses represent about $870 billion in market cap.
We were founded way back in 1977 by Senators Chuck Percy of
Illinois and Hubert Humphrey of Minnesota, and our bipartisan
heritage had continued the 40 years since.
Today, we have 15 members of Congress who serve in an
honorary capacity on our board representing both sides of the
Capitol and both sides of the aisle and I am just honored and
delighted that five members of this committee serve on the
Alliance's honorary board including Dr. Burgess, Mr. Kinzinger,
Mr. McKinley, Mr. Tonko, and Mr. Welch. We thank them for their
support.
The Alliance's history with the Energy Star program is
long. We supported the creation of the program and we worked
then with the Congress, with EPA, DOE, and all the Energy Star
partners to keep the voluntary program both robust and
impactful. For this reason, we very much appreciate and applaud
the subcommittee members and staff for fully engaging all the
key stakeholder groups as you seek to craft legislation that
will impact this program. While we are open to continuing to
improve the program, we have to caution the subcommittee to be
very careful to assure that there are no unintended negative
consequences as you consider changes.
As many have already mentioned and as detailed in my
testimony and those of other businesses and organizations that
are offering comment on the discussion draft, Energy Star today
is a venerable program. It is widely recognized as the world's
gold standard for public-private partnerships. More than 90
percent of Americans recognize and trust that familiar blue
label.
Energy cost savings to consumers have grown to over $430
billion and we are still counting. The program has driven $165
billion in private sector investment and new technology and
innovation.
Ten percent of the homes built today are built and proudly
display the Energy Star label and over 50 percent of the
commercial building floor space--50 percent--is using the
Energy Star portfolio manager to monitor and control energy
consumption. I think it was Mr. Pallone who mentioned this, but
if the old adage ever stood true--if it ain't broke, don't fix
it. That is the case with today's Energy Star program and it
should be the test against which the subcommittee determines
the content of any bill that will impact its future.
Our greatest concerns with the discussion draft are
twofold--the proposed wholesale move of the program from EPA to
DOE, and the application of the Administrative Procedures Act,
or APA. We oppose a wholesale move of the Energy Star program
from EPA to DOE. As Joe said, such a shift in responsibility
for parts of the programs can be done and the flexibility is
there under current law for EPA and DOE to assign or reassign
responsibilities to assure the most effective and streamlined
management of the program.
So we encourage the stakeholders and the committee to look
to the administration to move any parts that may make the most
sense over and back and forth between the two agencies. We also
oppose the broad application of the APA, which was designed and
intended for regulatory programs that carry the force of law,
not voluntary programs like the Energy Star.
We do believe, however, that there should be adequate
transparency and predictability to the specification-setting
process for Energy Star products and we'd very much like to
work with the agencies and the subcommittee to consider
provisions that can accomplish this goal.
The Alliance appreciates the efforts made by the
subcommittee to reduce costs for manufacturers that are in good
standing to the program. But we do not support an exemption of
third party certification for only certain manufacturers of
consumer electronic devices. We stand ready to work with the
subcommittee, EPA, and its partners to consider options that
could lower certification costs for all manufacturers who are
in good standing.
Finally, the Alliance does support the discussion draft
provision to explicitly put in a no-warranty clause to defend
against class action suits. In our experience, the agencies
have actively enforced specification compliance and have
delisted products and assessed penalties in an appropriate
fashion.
In conclusion, I would note, as other members of the
committee have, that the subcommittee's deliberations are
coming at a time when the Energy Star program is under threat
of elimination by the administration and significant budget
cuts by the Congress. We urge this subcommittee, therefore, to
continue to work closely with all of us who support this gold
standard public-private partnership and make sure that the
program has the congressional support, it has the guidance,
and, very importantly, it has the funding it needs to continue
to deliver the enormous energy and dollar savings that American
consumers and businesses have come to expect from the Energy
Star label.
Thank you, and I look forward to your questions.
[The prepared statement of Ms. Callahan follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. And as the people of Kentucky and Texas say,
much obliged.
Our next witness is Mr. Greg Merritt. Greg is vice
president at CREE. You have 5 minutes for an opening statement.
STATEMENT OF GREG MERRITT
Mr. Merritt. Thank you, and good morning. I'd like to thank
the committee, the chairman, and ranking member for the
opportunity to speak to you today.
CREE is a U.S.-based developer and producer of advanced
technology LEDs, LED lighting products, and power and wireless
semiconductor components. We are headquartered in North
Carolina and have facilities in Wisconsin, Arkansas, and
California with over 6,000 employees worldwide. Our
technologies, products, and solutions are all focused on
advancing energy-efficient improvements across the lighting,
communications, electric transportation, renewable energy, and
energy storage industries. We helped to launch what we called
the LED lighting revolution over 10 years ago and have
witnessed firsthand the important role Energy Star has played
in helping guide consumers to higher quality energy-efficient
products driving adoption by facilitating rebates and incentive
programs and providing a trusted brand among the confusion of
new technologies and many unknown manufacturer which, by the
way, included CREE in those early days.
Energy Star continues to be a trusted brand to consumers
and a valued partner to suppliers like CREE. The program's
remarkable success is undeniable, as you've heard earlier, and
as a marketing executive I will tell you that there are many
companies around the world that would envy the 90 percent brand
recognition that Energy Star enjoys today. This brand is an
incredibly valued asset and we should fiercely protect it. As a
participating Energy Star company with over 400 Energy Star-
rated products, CREE is very supportive of changes that will
improve the program and help secure its future but is also wary
of those that may do otherwise.
Our foremost interest, and I think you've heard this
earlier, is to ensure that Energy Star is fully funded, retains
its experience and capable staff and management, and continues
to deliver multiple valued programs including product
certification, commercial buildings, and homes. Furthermore, we
would advocate specific authorization of funding to ensure that
the appropriated levels going forward are adequate to keep the
program strong and viable and at least match historical levels
of funding.
Among the proposals included in the discussion draft we are
addressing today we are particularly concerned by the proposed
transfer of the program to DOE and the proposal to apply the
Administrative Procedures Act to the development of Energy Star
specifications. We believe the wholesale transfer of the
program to DOE threatens to severely disrupt funding, staffing,
and operations, and while there are always improvements that
can be made and we believe they could be made under the
existing structure, we believe Energy Star is running smoothly
and is well managed at EPA.
EPA has a talented team of professionals, years of
institutional knowledge and experience, not to mention
established and strong working relationships with 16,000 Energy
Star partners. We are, therefore, opposed to moving Energy Star
to DOE, an agency that does not have budget authority
appropriations or staff who are trained and experienced in the
critical marketing, brand management, and partnership aspects
of this important program.
As for the proposal to apply the APA to Energy Star
specifications, we are adamantly opposed. We believe this
proposal would add unnecessary, time-consuming, and burdensome
regulation and process to a voluntary program that by its very
nature must be nimble, flexible, and responsive to rapidly-
changing products, technologies, and markets.
We believe imposing APA will eliminate the ability of
program staff to make quick adjustments to the specification
that are necessary in response to technology evolution and the
program will forever be chasing technology and market
evolution, rendering it ineffective. I would also note that
recent experience with Energy Star, at least by my company, has
reflected improved engagement of product manufacturing and
specification process, multiple rounds of comment and drafts,
and many of these have been in response to our earlier requests
to EPA.
We would also be opposed to providing exemptions for
specific manufacturers or products from third party
certification. Third party certification was added to the
program to prevent bad actors from misusing the program with
products that don't meet Energy Star standards, depriving
consumers of their promised savings.
We believe allowing exemptions would create the opportunity
for this bad behavior to happen. While external testing does
create a longer process and adds some costs, we believe it is a
necessary and worthwhile trade-off. The trustworthiness of the
Energy Star certification and label is the most valuable
attribute of the program and it should not be risked for
convenience.
Finally, while we don't have a firm position on the
warranty provision, we would oppose it if it is paired with
exemptions from third party certification for the reasons I
delineated above.
Thank you very much for your time today and for the ability
to share CREE's perspective on this important issue. I will be
happy to answer questions.
[The prepared statement of Mr. Merritt follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. Thank you, Mr. Merritt.
The chair now calls upon Mr. Christopher Drew, the
executive vice president and chief marketing and strategy
officer for the Air Conditioning, Heating, and Refrigeration
Institute.
You have 5 minutes, sir.
STATEMENT OF CHRISTOPHER DREW
Mr. Drew. Mr. Chairman, Ranking Member Rush, and members of
the subcommittee, good morning, and thank you for the
opportunity to testify here today on possible reforms to the
Environmental Protection Agency's Energy Star program.
My name is Christopher Drew and I am the Executive Vice
President for Burnham Holdings. I am also Chairman of the Air
Conditioning, Heating, and Refrigeration Institute, an
organization representing more than 320 manufacturers.
Currently, our industry as a whole represents 1.3 million
employees and generates $257 billion in economic activity. AHRI
represents over 90 percent of the domestic HVACR and water
heating industry and more than 70 percent of the global
industry.
Today, 160 AHRI members participate in the Energy Star
program. I am pleased to say Burnham Holdings participates in
the Energy Star program and has about a hundred products
listed. From our experience, we have enjoyed a positive working
relationship with the EPA and we would like the program to
continue as a resource consumers can rely on and trust for
information on the efficiency of the products they are
considering for purchase.
My comments as chairman of AHRI reflecting the concerns
held by the HVACR manufacturers are covered in greater detail
in the testimony submitted for the record. The industry's
concerns are related to the approach taken to move the program,
compliance burdens that should be addressed, as well as
ensuring the program is able to continue as a valuable and
informative tool for educating consumers.
AHRI and its members have concerns about the draft's
suggestion to move the program from the EPA where it is
currently housed to the Department of Energy. The industry
would prefer to maintain the program as it currently stands at
the EPA where it has been able to operate successfully for our
products since 1992.
Though no doubt well intentioned, the draft does not
provide details as to how moving the program could be
accomplished without disruption. It is currently operated by a
knowledgeable and dedicated staff in a way that generally
ensures stakeholder input and successful outcomes. Furthermore,
if moved, the draft language leaves much of the administration
of the program to the discretion of the Secretary of Energy.
Energy Star's credibility and success over the last 25
years has been partially driven by its stability within the
EPA's portfolio and the certainty it provides to consumers that
what they are purchasing is government certified. There is no
false advertising. Therefore, if the program is to be moved,
which is not what our industry would prefer, we would like the
committee to provide more details on how it will be managed.
Reduced compliance burdens, the AHRI has also urged the
federal government to recognize voluntary certification
programs as a way to comply with federal energy efficiency
standards and the Energy Star program. Relying on industry
consensus certification programs reduces duplicative efforts
between the federal government and industry, encourages
compliance with energy efficiency regulations, reduces
regulatory burdens, and saves taxpayer dollars, all while
enhancing market surveillance.
AHRI is currently an EPA-designated certification body.
This allows AHRI program participants to realize significant
savings as they are able to meet Energy Star requirements
without any additional testing on the products they wish to
have labelled. The draft does include a promising improvement
to allow for good actors--those participants have met all
requirements of the program for a period of at least 18 months
to be eligible for reduced compliance burdens. Unfortunately,
the draft makes this available only to certain products. We
believe this section should be broadened to include all
products as a stated policy is to recognize those who are
compliant with the program to prove themselves trustworthy, not
based on a specific product type.
Additionally, while the Administrative Procedures Act is
the most commonly used method of ensuring stakeholder input,
Energy Star is not a regulatory process. It is a voluntary
program and applying a full APA process could create an
unnecessary burden for a program like Energy Star. Ensuring
proper stakeholder input and notification could easily be
achieved through agreeing on a process that is transparent and
predictable without the burdens APA would place on the agency
and participants.
Another area of concern for our industry, related to moving
the program from EPA to DOE, is the potential disruption it
might cause to highly successful and impactful Energy Star
building programs like Portfolio Manager. Portfolio Manager is
EPA's tool for building owners and managers to understand how
their properties operate and how to improve their economic
performance. Fifty percent of U.S. commercial floor space uses
Portfolio Manager and it is also used by the commercial real
estate industry to comply with the numerous state and local
laws.
In addition, under Energy Star's New Homes program, houses
are designed and built with a system-wide approach in mind so
that all energy efficiency systems and features work together
to deliver better performance. Quality installation of these
products is essential for consumers to gain the full benefits
of their highly efficient equipment.
Finally, sufficient funding for Energy Star is vital to the
continued success of the program no matter where it resides
within the federal government.
I would like to thank the committee members and staff for
being so inclusive of stakeholders and inviting comments on
this discussion draft.
We look forward to working with you to improve the Energy
Star program and the regulatory environment for HVAC-R and
water heating manufacturers.
Thank you.
[The prepared statement of Mr. Drew follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. Thank you, Mr. Drew.
And our final witness is Mr. Doug Johnson, and Doug is the
vice president of Consumer Technology Association.
Mr. Johnson, you have 5 minutes for an opening statement.
STATEMENT OF DOUGLAS JOHNSON
Mr. Johnson. Vice Chairman Olson, Ranking Member Rush,
members of the subcommittee, on behalf of the Consumer
Technology Association, thank you very much for the opportunity
to provide feedback from our membership on how best to improve
the Energy Star program. We thank the committee and Congressman
Latta for their work on this discussion draft.
CTA's membership includes 2,200 companies, 80 percent of
which are small businesses and startups. CTA also owns and
produces CS, the global stage for innovation in Las Vegas in
January. A large number of our members are partners in the
Energy Star program and some of them are award-winning
partners. As of 2015, more than half of the electricity savings
in the Energy Star products program came from electronics.
Regarding energy efficiency policy, we advocate for
approaches that are national, voluntary, market oriented,
globally harmonized, flexible, collaborative, and friendly to
innovation and economic growth. Most recently our efforts have
included groundbreaking industry-led voluntary agreements for
energy efficiency in set-top boxes and small network equipment.
This is a great time to identify and pursue regulatory
reform opportunities related to energy efficiency programs.
Based on our members' experience with the Energy Star program,
we have six recommendations we'd like to make regarding the
discussion draft.
First, we support the balanced and bipartisan solution to
third party certification that is part of the discussion draft
bill. This solution maintains Energy Star third party
certification authority but allows electronics manufacturers
with a demonstrated track record of compliance to earn their
way out of the burdensome requirement. If there is
noncompliance, then the more draconian costly third party
certification requirements reapply. It is important to keep in
mind that the rigorous post-market verification system that
exists today would stay in place.
Second, regarding moving program leadership to DOE, we know
our members' experience with EPA and Energy Star has been
collaborative in some categories and less so in others.If
program leadership were to move to DOE, which is used to
traditional regulatory rulemakings, we would need assurances
that DOE would work collaboratively in partnership with
industry in the voluntary Energy Star program.
Third, regarding application of the APA to Energy Star, our
view is that some changes are needed to ensure Energy Star
program transparency and accountability. Something elective and
less restrictive than full-blown application of the APA may be
best since we want to avoid encumbering the program and
undermining its ability to keep pace with the tech industry.
But APA could apply in some measure to ensure due process,
transparency, and rational decision making in the
administration of the program and the development of product
specifications. Increasing Energy Star program transparency and
accountability also could include a review of program decisions
by the Office of Management and Budget.
Our fourth recommendation concerns the provision about
application of Energy Star to products of various sizes and
capabilities. A few years ago, EPA decided it could impose a
cutoff based on product size for participation in the program.
We think Energy Star's specification should be scalable, giving
models across the board no matter size and performance
something realistic to shoot for and giving consumers an Energy
Star option across the board as well.
Our last two points concern topics not addressed in the
discussion draft but relevant to the Energy Star program and
its administration. At times over the years the EPA has
attempted to broaden the scope of Energy Star to cover non-
energy factors such as greenhouse gas emissions of
manufacturing processes and supply chains not related to the
energy efficiency of the product itself. This Energy Star
mission creep has appeared in past EPA proposals for new Energy
Star specifications for computers, displays, and televisions.
We think Energy Star should stay focused on energy
efficiency. Our final point concerns standard test procedures
on which Energy Star and other programs depend. DOE and EPA
have hired consultants to develop test procedures for measuring
the power consumption of products being considered for Energy
Star specifications and, if applicable, DOE standards. This use
of consultants is not only costly but also less transparent
than the open private sector's consensus standards development
process. We think Energy Star program administrators should
rely on these existing and less costly opportunities already
developed by the private sector.
In conclusion, I would reiterate that this committee's
focus on Energy Star reform and improvement opportunities is
important and necessary.
Thank you for the opportunity to contribute our industry's
views and ideas and we look forward to further engagement with
the committee.
[The prepared statement of Mr. Johnson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. Thank you, Mr. Johnson, and I thank all of you
for your testimony, and now the fun begins.
We'll move into member question and answers, 5 minutes per
member. I will begin by recognizing myself for 5 minutes, and
my first question is for you, Mr. Johnson.
One of the provisions this bill changes is third party
verification rules in Energy Star. It creates exemptions for
electronics manufacturers that are in good standing with the
program.
Can you go into some detail on why this is important and
how we can make sure companies don't abuse this?
Mr. Johnson. There are three thoughts along this line that
I have. One is why just electronics, as was mentioned earlier,
and the Energy Star program covers something like 60 different
product categories across various industry sectors.
We are rather unique in the sense that we have extremely
competitive time to market pressures in this industry, product
life cycles that may only be a few months long, and to take the
time and the cost at the pre-market stage to test products is a
particular burden in the case of our sector.
The second point I'd like to make is the track record of
industry performance under Energy Star. Our industry has an
excellent track record of compliance in the program. EPA
acknowledged that several years ago when they imposed third
party certification on everybody in order to tackle discrete
problems that could have been tackled in a discrete way. But
the blanket went over everybody and we were covered as well and
have been ever since. I think a tailored approach would have
been better, but what we are talking about here is a balanced
approach to let the good actors earn their way out of the
burden and if they mess up then they're back in for, as the
language says, at least three years.
The third point I'd like to make is that post-market
verification stays in place and that's really important. That's
testing products off the store shelf to make sure that they
adhere to the requirements of the Energy Star program. We don't
touch that.
So I think that the tailored and balanced approach we are
looking for is in this discussion draft. It is also reflected
in the Senate and has been for the past couple Congresses. So
we are happy to see it here and we look forward to supporting
it as it advances.
Mr. Olson. And more fun for you, Mr. Johnson. I know that
one controversial issue is class action lawsuits in the Energy
Star program.
Can you give an example of how one of your members was
impacted by a class action lawsuit and whether you think that
lawsuit was appropriate? No names. Just one member.
Mr. Johnson. Sure. Actually, this question may be best
directed to another witness. This is a provision that we are
not agnostic about in the sense of understanding what it's
trying to accomplish and that it would cover actually all
sectors in the program. But this is not part of the discussion
draft that we are particularly advocating.
Other witnesses may have a different view.
Mr. Olson. I was going to say, that witness is Mr. Drew.
Any comments, sir, about how was one of your members impacted
by a class action lawsuit and whether you think that was
appropriate. And no names. But just has this happened. I
suspect it has but an example of how this has gotten out of
whack with class action lawsuits.
Mr. Drew. I admit, I am not familiar that any of our
members have been caught up in a class action lawsuit specific
to Energy Star at this point in time.
Mr. Olson. OK. Another question for--well, the first one
for Mr. McGuire.
In your testimony about EPA and Energy Star, you mentioned
the problem of mission creep and Mr. Johnson mentioned mission
creep and some examples are climate change and other sorts of
focuses.
Energy Star's primary purpose is to help consumers save
money on energy bills by identifying those products that go
above and beyond mandatory efficiency standards. Give some
examples like Mr. Johnson did about climate change about
mission creep happening under Energy Star. Any example of
mission creep?
Mr. McGuire. There have been instances where the EPA has
added performance requirements to the Energy Star
specifications. In the case of dishwashers, they wanted to not
only control the energy and the energy used to heat water but
how the product would perform, and they have done that in the
case of clothes dryers too and have attempted to do that in
other products. They also, in the case of clothes dryers,
wanted to include requirements for warranty terms.
So our view is that the law that underpins the appliance
standards program itself requires that maximum energy is saved,
its cost effect to the consumer, and the requirement does not
jeopardize the product's functionality and performance. That's
what is left up to the manufacturer dealing with the customers.
They want to compete on performance and quality.
This is not an area for the government to be laying on top
of the energy efficiency requirements. So we've experienced it
firsthand since the program was moved to EPA.
Mr. Olson. Sorry, sir. I missed you at first. Any example
of class action lawsuit for your members that's happened
because of overreach of the Energy Star program?
Mr. McGuire. The Energy Star program has a very robust
penalty system to it where partners can be eliminated from the
program. They can be required to pay compensation to consumers
if the energy efficiency requirement was incorrect, and this is
all put on the Energy Star website.
It is very visible to consumers, to retailers. The penalty
is fit to the infraction. Having a class action lawsuit on top
of that is another layer of penalty that is totally unnecessary
and is not going to make the company--the partner, if you
will--change its behavior because it's already doing that with
regard to the penalty requirements of the program. It is double
jeopardy.
Mr. Olson. Thank you, sir. I am 50 seconds over so I
recognize the ranking member of the subcommittee for 5 minutes
and 50 seconds. Mr. Rush.
Mr. Rush. I want to thank you, Mr. Chairman.
Ms. Callahan, as stated previously the Energy Star program
is one of the more popular and trusted programs that's out
there and also is a voluntary program. So this bill that we are
considering is not only unnecessary but it would also turn a
good program into a bad program and I oppose disrupting this
program by moving it from EPA to DOE. I am opposed to making
this voluntary program to APA. I oppose undermining the
integrity of the program by limiting accountability for
manufacturers and I oppose revising the third party
certification requirements that lead to fraud and abuse.
That said, Ms. Callahan, in your opinion, if this bill were
to become law and these changes to Energy Star were to go into
effect, how would this impact the integrity of the overall
Energy Star program and how would it impact consumers'
confidence in the program?
Ms. Callahan. Thank you for your question, Mr. Rush.
I think our concern as an energy efficiency organization is
if this discussion draft as it's currently crafted were written
into law, that it would have very, very significant damaging
consequences on the program and on consumers' ability to have
confidence in that program.
You mentioned several things that we are very concerned
with. One is a wholesale movement of the program for EPA over
to DOE. Some of my fellow witnesses have talked about this as
well as members that there's 25 years of history of brand
management, of partnership relations, of IT and databases that
have been built that won't be easily moved. And there is not
appropriations at DOE to support that size of program. It is
about $42 million at EPA currently. There is not the expertise
and the staff that is there to do the brand management and the
marketing and we are very concerned that the program, even for
the period of time to dismantle an infrastructure and rebuild
it over in another agency will take away from the focus on the
program.
So we are very, very concerned. With respect to
certification, third party certification resulted from a GAO
study that found that there were folks that were not self-
certifying appropriately and were basically cheating the
system. So there are very good reasons for putting in that
third party certification. We are open to looking at ways to
minimize burdens and costs on manufacturers but we have to
protect the integrity of the program. If consumers cannot rely
on that blue label to indicate that there are energy savings in
that product as top of the market then we really lose what we
have and what we have built over 25 years.
Mr. Rush. Thank you.
I want to move to Mr. Merritt. Mr. Merritt, Energy Star is
a completely voluntary program but yet the legislation full
force will apply the APA specification to the program. What
impact would that have on the Energy Star program overall and
on your industry specifically?
Mr. Merritt. Thank you for the question, Mr. Rush.
So as I mentioned in my testimony, the application of APA,
we believe, would limit the ability of the program to be nimble
and responsive to changes in technology and the market.
Currently, the Energy Star program is able to make what we
will refer to as tweaks and specification based on developments
in the market without going through a long process of formal
notification, comment period, posting, et cetera.
We believe the current structure of the program allows the
program to work effectively with partners and participating
vendors to revise these specifications.
We are concerned about making the process so long and
burdensome that we are unable to keep up with the changes in
the market and the technology.
Mr. Rush. Ms. Callahan, as you know, the president's FY
2018 budget zeroes out the Energy Star program. But a proposal
put forward by the majority would enact major cuts to it.
Currently, the program is operating at $42 million pursuant
to the most recent continuing resolution. What level of funding
do you think is appropriate for the Energy Star program to
effectively operate at and what type of return will we see if
Congress funded the program at its optimal level?
Ms. Callahan. Thank you again for the question, Mr. Rush.
As you mentioned, the current appropriations are about $42
million over at EPA and DOE also contributes funding for some
of specification and the technical work that they do to support
EPA. We believe that that funding is insufficient to continue
the program and to look at including more products, more
different ranges and sizes of products.
We've suggested in our testimony an authorization level and
appropriation levels of up to $75 million. Historic levels for
the program have been $50 million but that's historic, and
there has been increase in funding for the 14 years that I have
been at the Alliance to Save Energy. It has been, roughly,
stable to falling and we believe that there have been
increases, of course, in cost of living and programs going
forward.
So we believe that this program should grow and should have
more funding than it does and have direction from the Congress
for what those levels should be, which is not currently there.
The other thing that I would add to that is on the return.
I think the EPA studies show that for every dollar invested
there are about $4.50 in energy savings that are realized, and
as I mentioned in my oral statement, this little program that
could at $42 million a year has driven $165 billion in private
sector investment in new technology and innovation.
So I think dollars here are very well spent and it's penny
wise and pound foolish to continue to decline the funding when
really it should go the other way.
Mr. Rush. I yield back, Mr. Chairman.
Mr. Olson. Gentleman yields back.
The chair now calls upon the pride of Ennis, Texas, the
vice chairman of the full committee, Mr. Barton, for 5 minutes
of questions.
Mr. Barton. Thank you, Mr. Chairman. You're in fine form
today.
I appreciate this hearing and the witnesses being here. I
want to make sure I am clear on this.
Mr. McGuire, this is a voluntary program, right?
Manufacturers don't have to participate if they don't want to.
Isn't that correct?
Mr. McGuire. It is a voluntary program. However, over its
21 years in existence for home appliances it has become in
effect mandatory in the marketplace. Utility rebate programs
specified, building code specified, federal procurement
specifies it, and many retailers will not carry your products
if you don't have Energy Star.
So while it is voluntary, manufacturers have to have Energy
Star products and what we are saying may be different from the
rest is appliances began their Energy Star career at DOE. The
very reason that the test procedures that allow manufacturers
to test a product to see how much energy it uses are changing
all the time because of technology. And so those test
procedures are needed to determine if you meet Energy Star
requirements. When it went to EPA and they began experimenting
with performance and warranty terms and other non-energy
features, that's where disruption and confusion occurred.
So Energy Star has been great for consumers. We just want
it to be stable and provide certainty so that our companies can
comply with it.
Mr. Barton. All I really needed was a yes.
[Laughter.]
I got a lot more than I bargained for. Let me go to part
two of the question. The reason I wanted to get on the record
explicitly that it was voluntary is because I don't think you
need to have a voluntary program subject to class action
lawsuits. Do you agree with that?
Mr. McGuire. I do.
Mr. Barton. OK. That's a----
Mr. McGuire. That would be yes.
Mr. Barton. That's a good answer. All right. And I will
come back to you one more time. The draft discussion draft
makes the Department of Energy the primary agency and it, to
some extent, redefines the responsibilities of the Department
of Energy and the Environmental Protection Agency.
I happen to believe, and this will surprise my friends on
the Democratic side, that we need a strong enforcement
capability at EPA.
But I think EPA should focus on enforcement and not on
setting policy, and as you pointed out, EPA more and more has
used the role under the current system to move into policy
areas that they really don't have a, in my opinion, a
legitimate reason to move into. Would you agree with that?
Mr. McGuire. I would, Mr. Chairman.
Mr. Barton. Good. So you're getting better at it.
Mr. McGuire. I am coachable.
Mr. Barton. If we were starting over and we had never had
an Energy Star program and we created an Energy Star program,
why would you not make the Department of Energy the standard
setter and EPA the enforcement oversight? Why wouldn't you do
that? What's wrong with that?
Mr. McGuire. Well, that's the way it did begin, and that
made total sense because of the technical nature of the
standards and the test procedures. And all the verification
testing that's done for Energy Star today is overseen by DOE
because of the complicated nature.
We do the verification testing. So it made total sense to
have it there at the beginning. It makes total sense to have it
there now, for consumers and for manufacturers.
Mr. Barton. I will go to Mr. Johnson for my last question.
How long does it take to go through the system and get a
product certified for Energy Star right now under the current
system?
Mr. Johnson. Thank you for the question.
Our members report that it can take a few days or a couple
of weeks. But, again, for an industry whose product life cycles
are relatively short and measured in months, that's a
significant amount of time to be off the store shelf.
Mr. Barton. Is there anybody that would state under the
current system it takes an excessive amount of time to get
certified? Anybody?
So in terms of actually submitting your product for review,
once you do it, the Department of Energy and the EPA act
expeditiously. Is that a fair statement? Not a fair statement?
Mr. Johnson. If I may, I think once you are certified there
are steps after that take less time.
But it is the time out of the product development cycle to
send your product to a third party to have it tested,
information to be sent to another and back to EPA.
It takes a while and, certainly, in contrast to self-
certification, which, again, worked for us quite well for many
years under Energy Star and in other regulatory arenas. It is a
relative burden.
Mr. Barton. Thank you, Mr. Chairman.
Mr. Olson. Gentleman yields back.
The chair now calls upon a gentleman who doesn't share Mr.
Rush--my admiration for the Houston Astros' victory, the man
from California, home of the Los Angeles Dodgers, Mr. McNerney,
for 5 minutes.
Mr. McNerney. OK. You're right, I don't. But we can move on
from that, Mr. Chairman.
I thank the witnesses and I thank the chairman this
morning. Mr. Johnson, what determines an adequate track record
for companies on the Energy Star program and who should
determine this?
Mr. Johnson. When we talk about third party certification
improvement, I would stress that we are not talking about
eviscerating the EPA's capability to have this.
I think it was important for EPA to recognize, and they
did, when they instituted third party certification that we had
an excellent track record and we've maintained that after third
party certification as well.
The problem we are trying to avoid is the burden that is
too much for a company that wants to maybe put a product on the
market that qualifies for Energy Star but doesn't want to take
the time and cost involved with testing. So we've heard
feedback from our manufacturer members who tell us that they
may not want to pay the bill or take the time. They'll just
meet the spec and get the product to market. So we end up with
the store shelf where you have Energy Star labelled products
and products that meet the Energy Star spec but don't have a
label because they didn't want to take the time and I don't
think that's very good for the program.
And we would still support EPA oversight, obviously, and in
the case of companies that violate and they would, of course,
be subject to the requirements of third party certification
once again. So I think, if anything, we have weighted this in
this language toward penalty. But I think the track record
speaks for itself in this industry. We were not the problems
that they were trying to address when they instituted this and
we would sure welcome a good actor's opportunity to earn our
way out.
Mr. McNerney. Thank you.
Ms. Callahan, the 2008 memorandum of understanding between
the DOE and the EPA helped the program. Is there any room for
improvement on that MOU?
Ms. Callahan. I think that it's a good thing to go back and
review the memorandum of understanding regularly and it's my
understanding that EPA and DOE are in discussions now about
that MOU and changes that may be made. Current law gives them
the ability, just as it did to put in force that MOU in 2008--I
think it was 2009, actually.
They can rewrite that and change and move around elements
of the program to make it most streamlined and most cost
effective. So we are encouraging stakeholders, and this is in
my testimony, to work with the agencies to seek improvements to
the program.
We are not convinced as the Alliance to Save Energy that it
takes a statutory change. We believe that the program can be
improved and that the agencies are motivated to improve the
program. So we would like to see it happen there first.
Mr. McNerney. Well, we don't have the agencies in front of
us today. But you're saying that there may be a new MOU in the
works?
Ms. Callahan. I said they are in discussions about ways to
improve the program, sir. I wouldn't want to overstate. I have
had no conversation to indicate that they are looking at and
rewriting the MOU.
Mr. McNerney. So how would you go about increasing the
predictability in Energy Star specification settings, as you've
suggested?
Ms. Callahan. I think working with the stakeholders and
with EPA and DOE to look at best practices and maybe
regularizing time frames between product specifications in a
way that makes sense. I think it's a bit tricky. As Doug
Johnson has indicated, some of these products are changing so
dramatically the technology in the marketplace.
So I think we have to preserve the flexibility and that's
working with the agencies and with the program administrators
and putting in place some best practices and guidelines, to me,
makes a lot more sense to keep that program flexible and nimble
rather than trying to codify something into law.
Mr. McNerney. Thank you.
Mr. McGuire, you seem to be the only one that is favorable
toward moving this back to the DOE. How would you address the
concerns of the other panelists that that would be disruptive
of a very successful program?
Mr. McGuire. Well, I am also the only one representing an
industry sector whose life at Energy Star began at DOE. All the
other products started at EPA.
So what I am saying is that there was disruption when our
appliances were moved to EPA in 2009--and some of the examples
I cited with that--created diversions and inefficiencies. I
think they should be back at DOE where they can be tied more to
the standards and test procedures work and make it more
predictable for our members and for the customers.
And so this can be done administratively, as Kateri
indicated, through a change to the memorandum of understanding.
We would support the memorandum being changed to bring home
appliances back to DOE. We would all support----
Mr. McNerney. You're just saying bring the home appliances,
not the whole program, back to the DOE?
Mr. McGuire. I am speaking only for home appliances. We
believe they should be back at DOE. I am not speaking for the
other products of the other industries.
Mr. McNerney. Right. Mr. Chairman, I yield back.
Mr. Olson. Gentleman's time has expired.
The chair now calls upon the gentleman from the land of
Lincoln, Mr. Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman. It is great to be
with you all. I may be the fly in the ointment.
I have always struggled with the Energy Star issue. First
of all, I think the budget is, I was told, $50 million. It has
been cut to $41 million, and the president proposes zero.
And Ms. Callahan, you think it should be $75 million.
Ms. Callahan. Up to.
Mr. Shimkus. So then it's really a fundamental debate about
government and kind of government's role and manufacturing and
consumer choices and education. So that's why I always struggle
with it. Yes, I understand that eventually consumers will get a
lower cost but there's a lot of gaming of the system that I
don't like.
I don't like the fact--and you can disagree--building new
homes today costs more because of these standards. Would anyone
disagree with that? If you're going to purchase a new home,
that cost of that home is more expensive based upon efficiency
standards.
Ms. Callahan. Can I respond to that?
Mr. Shimkus. Yes, quickly. But I----
Ms. Callahan. OK. Well, studies have shown that there is an
incremental cost----
Mr. Shimkus. Correct.
Ms. Callahan [continuing]. In terms of the mortgage,
reduction in the payment of the energy costs applied to----
Mr. Shimkus. OK. That gets me to my other point.
Then I don't like the ROI--return on investment of 20 or 30
years from the supposed energy savings that really makes that
initial purchase somewhat affordable.
What will be the debate. How much energy do you save--how
much money do you save. So you're willing to take the initial
upfront cost. And then my problem is what's government doing--
why is government involved with this to begin with. Why isn't
it buyers and manufacturers?
So has anyone heard of the National Institute for
Automotive Service Excellence? Anyone know what that is?
All right. So ASE--when you see ads, when you go to get
your car repaired, you want to go to an ASE-certified
mechanic--or at least that's what this institute says--because
what? They're trained.
Now, the ASE is short for the National Institute for
Automotive Service Excellence. Since 1972, our independent
nonprofit organization has worked to improve the quality of
vehicle repair and service by testing and certifying automotive
professionals.
Why does government have to do energy? Why can't we have a
National Institute for Energy Efficiency, funded by you all, to
certify and to advertise? We'll even give you the label if you
want.
Why is it government's role to do this? Anyone want to
answer that question? Mr. McGuire.
Mr. McGuire. Well, our members probably agree with you
philosophically but we have gone through decades of energy
efficiency policy at the national level that has resulted in
significant energy savings.
The dilemma is that if we were to wipe that federal program
away, including Energy Star, you would have a patchwork of
regulations throughout the country which we experienced in the
1980s. So----
Mr. Shimkus. So let me just--so, like, California may
continue to go a certain route. Not picking on my Californians.
They're very all into this, right?
And because there is such a huge market they may drive the
rest of the country to move in that direction based upon the
state standards, where if another state may not be.
The other issue I have is when the median income of your
district is $47,000 and they want to buy a home appliance and
that home appliance is now disproportionately increased for two
things--one is the efficiency standards, the other one is what
Mr. Johnson was talking about, I think, and this is that DOE/
EPA debate is if you start putting other new concerns in the
standardization and your testing, you're just going to increase
the costs of the goods.
So a short story. Many people know I own a townhouse. I
have renters, and I had to get a new washer. I bought the
cheapest washer I could buy and that's what we are using
because I wasn't willing to pay--and I paid probably $2,400
less than if I would have bought the top of the line energy
super efficient save-the-world piece of equipment.
So I am worried about the people who can't afford these
government standards, which I don't think are needed.
And I yield back.
Mr. Olson. Gentleman's time is expired. The chair now calls
upon a gentleman from California who is not happy again that my
Astros won the World Series over his Dodgers, Mr. Peters, has 5
minutes.
Mr. Peters. First of all, that is a total misread. You
cannot call a San Diegan a Dodger fan without their permission.
I think you've misread this one, Mr. Chairman, and this is
something on which we should be able to agree on actually.
Mr. Olson. I stand corrected.
Mr. Peters. To respond to Mr. Shimkus, I actually think
this is about the least intrusive way for government to promote
energy efficiency by sort of setting the table for consumers to
have the information that they need to make a decision about
whether they want to invest in energy efficiency.
And Mr. Shimkus decided on his own--nobody required him to
buy a fancy washer machine. But you had the information to make
that choice yourself.
I think it's actually very valuable and nonintrusive. So my
question goes to that, though, which is about the
certification.
And Mr. Johnson, I got to read over your testimony and you
said that in 2011 they switched to this self-certification. We
don't have the agency here. Can you tell me if, if they were
sitting here, why they would explain that they did that in
2011, to switch away from self-certification?
Mr. Johnson. Sure. As----
Mr. Peters. Mandated a third party certification regime for
products.
Mr. Johnson. Right. As Kateri Callahan referenced earlier,
EPA around that time was dealing with a couple of challenges or
issues with the program.
One had to do with the database that was used at the time
to administer the list of Energy Star qualified products and
that database essentially was fooled by a third party audit
that uploaded the famous gas-powered alarm clocks, right. So it
was an egregious and well-publicized situation with the
database on the administrative side of the program.
The other challenge, as I understand, had to do with a
product category outside of our industry in the refrigerator
category. Perhaps Mr. McGuire can shed further light than I
can.
But in any case, it was a discrete issue in a category of
product outside of our industry. The response by EPA was very
public and very broad and the blanket of third party
certification went over everybody even though at the time in
their press release EPA acknowledged that electronics had this
100 percent track record of compliance.
Mr. Peters. Let me ask you, though, about--so what would
you do in the case of fraud? So let's just say that there's
no--that self-certification, someone pats themselves on the
back for meeting a spec that they don't in fact meet.
Mr. Johnson. So I think the penalties should be there.
Mr. Peters. What would be the penalty?
Mr. Johnson. In the language in the discussion draft or----
Mr. Peters. In your mind, what would be the right thing?
Mr. Johnson. Well, I think we favor the approach that's in
this discussion draft, which on one hand allows the good actors
to earn their way out but if there's a screw up I think in at
least two instances then they are back under third party
certification for at least 3 years. So I think----
Mr. Peters. So there's no penalty to them for all the
products that they sold potentially fraudulently? In other
words, just next time you have to have a certification, is that
the way you'd advocate it?
Mr. Johnson. Well, in terms of allowing focus on the new
market entrants or the bad actors, I think that's really
important. But for the good actors who've had that demonstrated
track record of compliance, allow them to earn their way out.
I think EPA will or DOE would maintain the oversight of the
program and essentially kick the parties out that would
violate. I think there's also the consumer response as well and
there are a lot of publications and other parties that watch
this space and please note that the manufacturers have equity
in this brand as well. It is a partnership, fundamentally.
Mr. Peters. I am very sympathetic, actually, particularly
in your industry where things turn over so fast. My concern is
that without the certification, and I am not trying to answer
the question--I am trying to ask it--without certification, as
we go forward with this draft, how can we be confident that the
standards will actually have been met? And I guess that's what
I'd look at, too.
For myself, I also don't understand why this is not an
Energy Department program. It does seem to me that is where the
expertise relies. I don't have an objection to that part of the
bill. I am not sure why EPA is the better one to set standards
than the Department of Energy.
But I am--I just--with the limited amount of time I have I
just express the concern I have about compliance and not that I
am an advocate for litigation but if you left the third party
certification out there why you wouldn't want to have some sort
of hammer, I don't know. Do you want to respond to that?
Mr. Johnson. Yes, sir. The other note I wanted to make was
with respect to marketplace verification postmark. When the
products are on the store shelves, labelled as Energy Star,
very important to keep that going and the solution to third
party certification, which is a premarket exercise, is distinct
and separate from post-market verification. So that would be
the random testing of products on store shelves.
Mr. Peters. And I think there would have to be some sort of
penalties in place for actual fraud.
Ms. Callahan. There are penalties. The EPA----
Mr. Peters. I am out of time, ma'am. So I am sure maybe
someone else can ask you. Thank you. I yield back.
Mr. Olson. Gentleman yields back.
The chair now calls upon the author of the Energy Star
Reform Act of 2017, Mr. Latta from Ohio, for 5 minutes.
Mr. Latta. Thank you, Mr. Chairman, and again, thanks to
our panelists. I think it's a really good discussion that we're
having and that's why we are here today to talk about this
discussion draft.
And Mr. Drew, if I could just start with you. I think that
everyone here believes that the Energy Star program is
something that needs to be preserved. But the question is how
can we improve upon it. And so my question to you was what
improvements would you see or want to do to Energy Star to make
it a better program for the consumer across this country?
Mr. Drew. Thank you, sir.
In general, the products that are covered by AHRI are all
highly regulated. They're certified to not only performance
standards, they're also certified to numerous safety standards
just due to the nature of the piece of equipment that we are
manufacturing and then having installed in people's homes.
The Energy Star program as it stands we believe is a useful
tool for educating consumers but products that they don't buy
very often during their tenure as even homeowners or even if
they're renters or building owners.
We find that the processes that we have in place to report
the status of these products to Energy Star works extremely
well at this point in time. Not burdening them further with any
additional requirements for reporting, we believe, would be
beneficial. The energy savings that we provide through our
products from a high efficiency perspective, as stated earlier,
is a consumer choice. We believe it provides real value to the
consumer.
The fact that numerous third party organizations, not
necessarily government-affiliated are providing incentives to
purchase these products we also view as a significant benefit
to our industry as well as the validation that moving towards
higher efficiency equipment and achieving some reasonable
return on that investment is a positive thing.
Regarding this discussion, again, we believe strongly that
not moving it away from the EPA is the appropriate thing to do.
It has been in EPA for a number of years--works very well.
We deal with other issues at DOE. We like the separation
between EPA and DOE as it pertains to this particular program.
Mr. Latta. Thank you.
Mr. Johnson, I saw in your testimony some of the
manufacturers have said that EPA have made it more difficult
for the larger versions of some of their products for
qualifying for Energy Star. One of the examples that you cite
in your testimony is wide screen televisions.
Can you explain how EPA is making it difficult for the
larger versions to qualify for Energy Star and carry the Energy
Star label?
Mr. Johnson. Sure. From the EPA's perspective, I think they
were concerned about a program all about energy efficiency
applying to large products that would use more energy than
small products.
But our feeling was that if you're going to put a bogey out
there--if you're going to put a specification out there for the
market to shoot for, don't you want manufacturers up and down
the product line, no matter the size of the product that
consumers want, to strive for that specification?
So yes, this artificial cap or cut off for televisions in
an earlier television spec came up. I forget the exact numbers
but it was something like, say, a 50-inch TV. All TVs above
that would have to still meet that 50-inch TV spec even if they
were 70 inches.
So it was rather unachievable because, the bigger the
product the more energy. But there should still have been a
scalable specification for those larger TVs to shoot for.
And, again, consumers demand what they demand. We love
Energy Star. We think it should provide a scalable spec up and
down the product line.
Mr. Latta. Thank you.
Mr. McGuire, I'd like to go back and revisit the warranty
language and its importance. Can you expand on that warranty
language and why it's so important?
Mr. McGuire. Warranty language in the draft bill?
Mr. Latta. Right.
Mr. McGuire. Yes, sir.
Well, we think it's a great provision which would take
manufacturers, Energy Star partners out of double jeopardy. As
has been said already here today, when partners are
disqualified for a particular product, have a rating that
doesn't qualify, there are significant penalties that they pay
in terms of being pulled out of the program for a period of
time, restitution to consumers for utility costs that should
have been avoided.
This is all made very, very public and that's why these
partners take it very, very seriously. To be exposed to a class
action litigation on top of that, just additional punitive
damages to the company really doesn't do anything as far as the
behavior of the company.
It is simply a double jeopardy and it can actually
disincentive companies to want to participate in the Energy
Star program. So we think the penalty portion of the program of
enforcement makes sense. There's no need to lop on top of that.
Mr. Latta. OK. Thank you very much and my time has expired
and I yield back.
Mr. Olson. Gentleman's time has expired.
The chair now calls upon the biggest fan of the Houston
Astros--we are the world champions--except for me in Congress,
Mr. Green from Houston, Texas, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman--you and ranking member
for having this hearing. For more than 20 years, Energy Star
program has formed a foundation for energy savings and
assistance for Americans of all economic statuses.
Energy Star program has resulted in millions of dollars of
kilowatts saved through the highly efficient appliance
manufacturing.
Unlike my good friend from Illinois, I think the Energy
Star program is probably one of the best programs that we have.
Over the years, we have realized in this committee that
energy efficiency is really an important issue and to have a
regulation like we have that's a self-regulation we just want
the manufacturers to be accurate in what they say the energy
will be used.
And the consumers pick it up. I think it should be if not a
goal of the national government to give that information to
folks but also use that energy efficiency so we may not have to
build another electricity-generating plant.
So because I know my colleague from Illinois--maybe it's
because even in Texas our energy prices are fairly low right
now. But I would probably not go by the lowest price because I
look at that and see how much I can save over the life of this
refrigerator, for this washer and drier or whatever. But it is
a voluntary program. That's why I think this is a good example
of it, and transferring it to the Department of Energy I think
is reasonable because it fits in with what the Department of
Energy ought to be doing. And EPA is a regulatory agency but
they should be regulating my dishwater or whatever.
The third party certification for Energy Star programs is
initiated after that GAO report and I think that's such a
greater improvement in the program. I'd like to believe
companies do the right thing but--in compliance in this space
but it's not always been the case.
My first question to the entire panel, how did we strike a
balance when it comes to self-certification in the consumer
electronics space where we don't inhibit innovation under the
Energy Star program but also make sure the benchmarks that are
required are being met?
I know that's a tough one because how do you balance it?
Does any of the panel have--let me start with you, Mr. McGuire.
Mr. McGuire. Well, I won't speak for consumer electronics
but I will simply say that to meet a DOE energy efficiency
standard--the mandatory standard, which is the base and Energy
Star is above that--manufacturers have to self-certify to DOE
in a very prescribed testing method that they have to provide
all the data to DOE to prove that there's a reasonable chance
they will be in compliance and then DOE does verification
surveillance testing on top of that. So self-certification,
government verification testing after market.
For Energy Star, it's third party testing up front and
verification. One way you can make the program more efficient
would be to tie it more in with DOE for home appliances so that
the certification to meet the standard and to meet Energy Star
was the same process and then you'd have third party
verification. That would be one way to do it.
Mr. Green. Any other suggestions?
Ms. Callahan. I guess what I would say to that is that
there has to be a balance. You mentioned yourself you need
consumer protection. They need to have confidence in this. So
third party certification was put in place by EPA in response
to manufacturers not being in compliance.
I think what's really important here are the penalties that
accrue that Joe McGuire indicated earlier. So EPA can delist
products and they can require companies to make restitution to
consumers who didn't realize the energy savings that were
promised to then.
So I think as the committee looks at it, making sure that
those protections remain while we lower cost of compliance for
manufacturers is really the trick and the balance that needs to
be made there. But we need that accurate certification because
consumers need to be able to count on the energy savings that
they assume come with that Energy Star label.
Mr. Green. Anyone else?
Mr. Johnson. Yes, sir.
We agree with the idea of balance but balance is actually
reflected in this provision that's in this discussion draft
concerning third party certification.
We think it's a great solution. Again, EPA retains the
third party certification authority, or DOE, should it move.
But the program administrators retain that authority. We are
just talking about balancing a solution here, essentially,
targeting resources where they should be targeted, to new
market entrants or bad actors. But if a good actor has
demonstrated compliance for a period of time, why not let that
good actor earn its way out? And, again, penalize that good
actor should that good actor screw up a couple of times--
they're back in.
So I think that's the kind of balance we need here and
especially in the era of limited resources or perhaps smaller
budgets. Let's hone in on what the problems are. Let's
recognize where the problems are not.
Mr. Green. Thank you, Mr. Chairman. I know I am out of
time.
Mr. Olson. My friend's time has expired.
The chair now calls upon the gentleman from the Magnolia
State, Mr. Harper, for 5 minutes.
Mr. Harper. Thank you so much, Mr. Chairman, and thanks to
each of you for being here and giving us your insight and
assistance as we look at this discussion draft.
And Mr. Johnson, I have got a few questions and things I
want to cover with you, if I can. The discussion draft contains
provisions providing for an exemption from the third party
certification requirements for electronic manufacturers in good
standing with the Energy Star program.
I know we touched on it but give us a short background on
why these third party certification requirements came into
being and why you may think they have maybe gone too far.
Mr. Johnson. Sure. They came into being 6 or so years ago--
6 or 7 years ago in response to discrete problems in the Energy
Star program outside of our sector. One set of problems related
to the way the program was being administered in the database.
There was an opportunity certainly at that time to have a
targeted approach to dealing with those problems but the
easiest approach, the quickest way out was to apply premarket
third party certification to everybody in the program. So we've
lived under that regime since that time. All we are talking
about here is a balanced way to earn your way out of that
burden and I think that's the right way to go.
It is also interesting to note that at the time EPA was
proposing third party certification for Energy Star the
European Commission, a major partner in the program over in
Europe, was like-minded with industry in the United States in
saying we don't think this third party certification is
necessary for electronics, and the European commissioner were
partners in a couple of the electronics categories. So it was a
strange situation for European regulators and industry in the
U.S. to be allied but we both recognized that maybe a more
tailored approach would have been better at that time.
Mr. Harper. And give me a little insight. Why is it or what
is it about the electronics products and electronics industry
that makes that third party certification troublesome or more
difficult?
Mr. Johnson. So what members have told us that there are a
couple of reasons why it's relative burden for them. First, it
takes some time out of the product development cycle.
It takes a few days or maybe a couple of weeks for testing
and paperwork to clear, and for an industry such as ours,
again, with products that have relatively short product life
cycles, maybe they're on the market for only a number of
months. Two weeks is 2 weeks of sales, right? So we are an
industry in the tech industry that's used to self-
certification in various regulatory realms including
electromagnetic compatibility, FCC requirements and so forth.
So that's what we were used to. That's what we had in
Energy Star, and with self-certification we had an excellent
track record.
So the time to market penalty that comes with taking
something out of the product development cycle for a period is
a concern. The cost is there, too, and I suppose for big
companies the cost isn't such a big deal unless you have a big
product line under the Energy Star program. Then it really adds
up. For a smaller company, a startup that wants to be Energy
Star compliant, shouldn't we make it easier for that startup to
be in the program?
Mr. Harper. And sometimes critics of the provision say that
sometimes could allow manufacturers to perhaps cheat and to
produce products that had the Energy Star label on them that
maybe don't meet the Energy Star requirements or standards. How
do you respond to somebody making that assertion or allegation?
Mr. Johnson. Well, I think for problem actors there should
be penalties, certainly removal from the program, removal from
the database.
Penalization through this provision and this discussion
draft that you would now then be back under third party
certification for at least 3 years, that's actually weighted
toward the more onerous side, I would say.
But there's another angle to this, too. If the burdens to
participate in the Energy Star program are too great, you could
actually have companies manufacturing products that meet the
spec that don't carry the label--just they didn't want to
trouble with it. They get it to the store shelf. That was a
point I made earlier.
But essentially how are we supporting the Energy Star brand
if the store shelf is full of products that meet the spec but
some carry the label, some don't? I don't think that's good for
the brand strength.
Mr. Harper. Is it correct that the proposed exemption only
applies to the initial certification testing and that the
ongoing verification testing of compliance with the Energy Star
is not effective?
Mr. Johnson. That's absolutely the case and a very good
point as well. We are not changing post-market verification.
That's really important. Get out there, test the products on
the shelves.
Our members do that to each other. But there's also
organized ways of doing that now today under DOE and EPA and
that should continue. It is not touched by this proposal.
Mr. Harper. Great. Thank you very much, Mr. Johnson.
With that, I yield back, Mr. Chairman.
Mr. Olson. Gentleman yields back.
The chair now calls upon the gentlelady from Florida, Ms.
Castor.
Ms. Castor. You almost did it again.
Mr. Olson. Almost caught myself.
Ms. Castor. There is one female here on the committee. It
is not really a very good reflection of the country or even the
Congress to have only one female and not many minorities. So I
take this responsibility seriously to represent.
And what I want to say is the Energy Star program has been
a real success story for Americans and American families and
businesses. Since its inception in the 1990s, it has saved
consumer substantial moneys. It has helped us conserve energy,
which is important at a time where we want to control carbon
pollution and other greenhouse gases.
I thought Mr. Peters was right on when he said this is
probably one of the least intrusive ways we can help put money
back into the pockets of consumers and businesses, because
after all it's voluntary.
And to answer Mr. Shimkus' concern over the return on
investment, the return on investment for Energy Star has been
impressive. Since its inception, Energy Star has cumulatively
saved $2.5 billion in energy costs. In 2015, homeowners saved
$360 million in energy costs, approximately 30 percent of their
energy bill.
Since 1995, 1.7 million Energy Star homes have been
constructed and in 2016 approximately 92,000 Energy Star-
certified homes were constructed in the U.S. America is a
leader here, globally.
The Energy Star program is internationally recognized as a
proven standard for energy efficiency. A lot of the other
countries are catching up but America has been the leader and
we need to continue to be the leader.
But my takeaway today from the expert testimony is just
kind of what was stated at the beginning. If it's not broken,
why fix it? With all of the other pressing issues here before
the Congress this is one that I think, based upon the testimony
when you look at the track record, the savings for consumers,
why fix it?
But we do have to be on guard because the Trump
administration did propose a total elimination of Energy Star
in its last budget. I strongly oppose that. This has been a
vital lifeline for cost savings for consumers and helping us
conserve energy.
So I want to make sure all of the witnesses are on record
on that today. I'd like all of you just to answer yes or no. Do
you support or oppose the Trump administration's proposal to
totally eliminate Energy Star?
Mr. McGuire. Oppose.
Ms. Callahan. Strongly oppose.
Mr. Merritt. Oppose.
Mr. Drew. Oppose.
Ms. Castor. So you would oppose elimination as well? I hear
what you all are saying about the shift to the DOE. Most here
are opposed to that as well. I took Mr. Merritt's comments very
seriously that they lack experience at the DOE to do this. I
wonder, there also are going to be some significant costs if
the Congress were to make this move.
Ms. Callahan, do you know what it would cost to shift the
program entirely from EPA to DOE?
Ms. Callahan. I do not know what that would cost. I know
what the budget at EPA is now. It is $42 million. I know that
the entire budget at the EERE office, which is probably where
it would land, is about $2 billion.
The president proposed almost an 80 percent cut to that
budget and the House has recommended about a 40 percent cut to
energy efficiency programs over there.
So we don't see where the money comes from to support that
cost and that change.
Ms. Castor. Mr. Merritt, do you have any information on
what you think it would cost to shift DOE entirely?
Mr. Merritt. I do not, but I would support Ms. Callahan's
comments.
Ms. Castor. Does anyone else want to comment on the
potential cost of shifting and the loss of professional
expertise that's currently at EPA?
Mr. McGuire. We don't think the cost to the federal
government would be any more if the program for appliances were
at DOE than EPA. I agree with the adage if it ain't broke don't
fix it.
I think it is broke when the appliance portion went over to
EPA and there have been inefficiencies there. So I would make
the argument that if they were shifted back to DOE there would
be more efficiencies and less cost for running the appliance
portion of Energy Star program.
We want the program to be funded.
Ms. Castor. Do you have any hard data on that? Any studies?
Mr. McGuire. I don't have hard data. I don't think----
Ms. Castor. I think it's an open question right now and,
because you would clearly incur significant costs including
hiring and training of new staffers, standing up new online
data systems comparable to those at EPA to collect
certification data, that allows building owners to track their
energy waste and waste consumption. It is not as simple as just
snapping your fingers, especially in this budget arena where--
and I think Ms. Callahan's comments are very well taken. The
proposed decimation of the EERE budget at DOE and then you're
going to increase costs by the shift and then probably put all
of Energy Star at risk when DOE subsumes it all. I would be
very concerned for consumers and our ability to put money back
into their pocket.
I yield back the balance of my time. Thank you.
Mr. Olson. The gentlelady yields back and, ma'am, if you're
the only member of this committee that's female we are proud of
that because you are the MVP. I see you chase down a ball in
center field like George Springer from Astros. He's an MVP.
You're an MVP.
The chair now calls upon the member from West Virginia.
Mr. McKinley. Thank you, Mr. Chairman.
Ms. Callahan, it's good to have you here. I have enjoyed
working with you over the years I have been here in Congress.
It is good to be able to continue a discussion on energy
efficiency and I particularly appreciated the work over the
last 7 years with you and also Peter Welch. What a great
champion of that and I think it has been beneficial for us to
be able to team up.
Ms. Callahan. And we've appreciated your leadership
tremendously.
Mr. McKinley. Thank you.
So one of the questions--I guess I am having some concerns
as well about creating an exception under the verification. I
am a strong advocate of IV&V--independent verification and
validation--that we've used in NASA and elsewhere where we have
someone else looking at it.
I am also familiar, having come from the construction
industry on efficiency, of dealing with UL, the Underwriters
Laboratory, and Factor Mutual--FM.
Can any of you give me an indication, because they've been
around for decades--is there an exception to UL ratings or FM?
Can anyone share----
Mr. Johnson. I am being looked at so I will respond.
This is different than product safety. Energy efficiency is
different than product safety and I would note that in product
safety, of course, there is third party certification that's
very important. But there's actually no post-market
verification for product safety.
With Energy Star, we are talking today about an approach
that includes premarket certification and post-market
verification. It is relatively more burdensome than product
safety.
Should that be the case in all cases? I think we need that
balance.
Mr. McKinley. Maybe we are just picking nuances of this.
But I am just curious. I am not sure that I am going to embrace
the idea of an exception on this.
I have come from an industry that we depend on it. When you
see a UL rating you know it's good. You know it has been done
independently, and the same thing with FM.
Maybe, Mr. McGuire, go back to you on some of your
comments. What was broken that Ms. Castor made that remark?
What was broken in 2009 that caused the administration back in
2009 to switch from DOE over to EPA? What was broken then that
they were intending to fix?
Mr. McGuire. Sir, I don't know the answer. I don't know
what was broken. I would submit that nothing was broken and
what happened was the program that oversees Energy Star for
appliances at EPA today became diverted from the energy
efficiency mission and got into things like warranties and
procurement rules and performance.
So we'd like to fix it. We'd like to have it go back and be
part of the whole appliance efficiency policy apparatus where
you have the minimum standards and Energy Star above that and
they can be coordinated as they used to be.
Mr. McKinley. I just don't want anything to come in between
the government or whatever and energy efficiency and Energy
Star. We've made great strides with this and I am looking to
see what's going to facilitate it the best and that's why I was
trying to understand.
Can any of the rest of you share with me what was broken in
2009 that caused the administration to switch it or to flip it?
OK. Thank you and I yield back my balance of my time.
Mr. Olson. Gentleman yields back.
The chair now calls upon the gentleman from Vermont, Mr.
Welch, for 5 minutes.
Mr. Welch. Thank you very much and thank you for this
hearing. The witnesses have been tremendous.
What I'd like to do is just lay out some of my concerns and
then I have questions for each of you.
The question of moving the program from EPA to DOE, I am
agnostic about things so--what department does it, but the
concerns I have are, number one, it's very disruptive to make a
move.
You've got established expertise in one place than the
other. Second, there's a real funding question that is really
active because of the policies of the Trump administration and
that's without passing judgment on them.
And then third, the continuity of this system is really
important. So that's a concern I have. Will this on a practical
level work, even if you think on a theoretical level it might?
And I have got the APA standard issue is really about
maintaining the flexibility and the agility of the current
program. If you get into the APA, you get lawyers involved, and
it becomes a contested hearing.
And what has been tremendous, I think, about Energy Star in
general has been the voluntary nature of it and the cooperative
nature of it.
And then third, the third party certification, we had that
problem with LG when the voluntary part of it wasn't also
consistent and honest, quite frankly. So how do you have
confidence in the program if you're leaving it up to the
applicants without review to make that decision?
So those are the concerns I have in addition to the funding
issue that across the government with the new administration is
all in doubt--25 percent cuts pretty much across the board.
So that's where I am coming from. I think maybe we can work
these out. But let me ask Mr. Drew, first of all. You've
focused on the impacts of moving Energy Star to DOE. I know in
the commercial building side of the program a number of home
and commercial building organizations are supportive of EPA
running Energy Star and do prefer the status quo. Can you
elaborate on your experience with EPA's operation of these
building programs?
Mr. Drew. We are referring specifically to that portfolio
manager program. For commercial buildings when you're buying
large equipment that consumes a significant amount of energy,
the ability to go in and model the Portfolio Manager program,
how the purchase of higher efficiency equipment, potentially
Energy Star, is going to impact the overall energy usage and
the potential cost savings for that building owner is
significant for our members.
Mr. Welch. Thank you. I don't have a lot of time. Let me
ask you, Ms. Callahan, about your thoughts on the APA process
as opposed to the current process.
Ms. Callahan. I agree with you completely that it could add
significant time and cost and complication. You're putting a
formal process design for regulatory programs that have the
force in law in place on a voluntary program and we think that
that's very troubling.
Mr. Welch. Do you have any changes that you would support
in the process?
Ms. Callahan. Yes. We should support working with the
committee, working with the agencies and the other stakeholders
to look at ways that we could put in place more transparency
and perhaps more discipline to the program. And so by dint of
guidelines, best practices, policies to be--there's a lot that
we can do that's short of what I think is a really over step.
Mr. Welch. Thank you.
Mr. Merritt, let's go on this requiring APA procedures. Can
you suggest some changes EPA has recently made to facilitate
manufacturer input?
Mr. Merritt. Yes, thank you.
We've seen recent changes in the process to include more
reliance on industry standard test procedures and standards as
opposed to creating their own, which may not be as generally
accepted.
We've also seen some recent changes in terms of what I
mentioned earlier, having multiple rounds of specification open
for comment which allows manufacturers to be fully heard.
I would support Ms. Callahan's comments that perhaps making
that more consistent across the board to allow more
transparency would be a good thing. I think we should do that.
Mr. Welch. All right. Thank you. I have got time for one
more but that, I appreciate.
Mr. Johnson, the cost and the timeline of third party
certification is a burden. You think it slows product
development. But I have heard the third party certification
body states it only takes about 2 weeks to certify new product
and $3,500 to do the necessary work. Is that accurate, in your
view?
Mr. Johnson. The cost and the time can certainly vary. But
I think it sounds about right and I would stress that that 2
weeks is a big deal when your product is out on the market for
only a few months.
Mr. Welch. OK. I thank all the witnesses.
Mr. Chairman, I yield back and I think we've got a lot to
work with here.
Mr. Olson. You betcha. Gentleman yields back.
The chair now calls upon the member from the Commonwealth
of Virginia, Mr. Griffith, for 5 minutes.
Mr. Griffith. I thank my friend very much and appreciate
it.
Mr. McGuire, I have heard you testify today that the
Association of Home Appliance Manufacturers' position is to
move Energy Star for home appliances from EPA to DOE.
I have a constituent glass company that has had a very
positive experience with the windows program at EPA. Do you see
any challenges in keeping certain programs like the windows
program at EPA while moving the home appliances program to DOE?
Mr. McGuire. Sir, my answers would be that for 13 of its 21
years of existence Energy Star program for home appliances--
home appliances were at DOE and not EPA. So I don't see any
issues with appliances being shifted back to where they started
from. Other products are not.
EPA and DOE both have had responsibilities in the program
and the important thing about appliances is that the efficiency
levels and the testing is so integrally tied to the standards
and test procedures. The expertise at DOE is there to deal with
that. So we may be a unique case in terms of how our standards
and Energy Star requirements are intertwined.
Mr. Griffith. I am going to go a little off the subject
matter but I am going to ask you some questions based on some
communication I have gotten from a constituent who has spoken
to me numerous times about this problem and it deals with our
Energy Star program and that is that she's not completely
convinced that what we are doing is actually beneficial in the
long term and she brings up her washing machine.
That is her issue. Anita of Tazewell County has asked me to
ask these questions over the course of the last year or so
because she believes that in order to get a higher efficiency
rating that her top loader washing machine was designed so that
it didn't put as much water into the machine and she didn't
feel like her clothes were getting as clean.
And so what happens when somebody doesn't feel like their
clothes are getting as clean you figure out some way. I have
heard stories of other people who have done more loads of wash
so they put less clothes into the machine.
In her case, she babysits the machine, as she told me, and
she has a contraption hooked up with her garden hose and she
adds additional water to the washing machine because the
machine--apparently if you interrupt the cycle at a certain
point doesn't realize that you're putting more water in and
it'll heat all the water.
And it seems to me that maybe we ought to be looking at a
total efficiency and not just the energy rating because if
people are doing more loads of laundry or stopping the machine
after it's gotten started and filled up to a certain point and
adding additional water to the machine doesn't seem to be very
efficient.
I should note that I do have a picture here--probably can't
get picked up on the camera--of Anita with her device filling
in the washing machine with additional water.
So what do you say to folks like Anita who say, wait a
minute? In fact, the heading on her email was, get the EPA out
of my laundry room--it's destroying our consumer washing
machines.
Mr. McGuire. Well, we take her concerns very seriously and,
as I mentioned earlier, the law that governs how the standards
are set says you have to balance energy efficiency with cost
effectiveness and the performance of the product.
And so this problem can occur at both the standard level
and Energy Star. At some point, there is a diminishing return
on the energy savings and the performance of the product.
We saw that 3 years ago with dishwashers where the proposed
standard level would not clean a load of dishes. And so to have
Energy Star level above and beyond that made no sense.
That's why those decisions need to be made at DOE and be
based on fact. So we want consumers to be happy with our
products. We want our products to work, and that requires that
people who set standards and develop test procedures understand
how these products work and the laws of physics.
Mr. Griffith. I appreciate it.
Mr. Johnson, I think you touched on this a little bit in
some of your testimony earlier too, not directly but close to
it. Do you have something to add to that?
Mr. Johnson. Only that our products are using zero amount
of water today.
[Laughter.]
We are very efficient in the energy sense, of course, and
take great pride in this program. I want to make sure it
continues. Are open minded if Congress should decide to move
this energy efficiency program to the Department of Energy. We
will work hard to make sure it's successful.
We do have questions. We have relationships. We are used to
doing business with the EPA. But, again, these relationships
can be redeveloped. There's a lot of passion behind the
program. We want to carry that wherever it goes.
Mr. Griffith. I appreciate it and yield back.
Mr. Olson. Gentleman yields back.
The chair now calls upon the gentleman from the home of the
Hawkeyes, Mr. Loebsack, for 5 minutes.
Mr. Loebsack. Thank you, Mr. Chair, and they had a great
victory over Ohio State last weekend, too.
I didn't realize when I got elected to Congress that there
would be so much levity at these hearings sometimes. Thank you
for your comment about water. I appreciate that.
I do want to follow up with one of my previous colleague's
questions, if I may, Mr. Johnson. I am not sure that you
completely addressed Mr. McNerney's question about what's a
good track record. How do we define that, in your case?
Mr. Johnson. Sure. A good track record of compliance in my
mind is certainly one where there's no egregious examples of
failure--of producing Energy Star-qualified products but not
quite meeting the requirements. And I am not talking about
paperwork violations. I am talking about egregious acts.
So when I say 100 percent track record of compliance, I am
taking that characterization directly from EPA at the time it
instituted third party certification for everybody.
Mr. Loebsack. Right. Does anybody else want to comment on
that particular issue? Your thought about that? Because that's
part of what we are talking about here. Did you want to say
something, Mr. Merritt?
Mr. Merritt. I would just add that we have seen instances
in the lighting industry, of vendors claiming Energy Star
compliance that did not have Energy Star compliant bulbs or
products. So we consider the cost and timing of third party
certification to be worth it in order to protect the brand.
Mr. Loebsack. To avoid fraud and abuse in the first
instance, right? I have to say, I think the Energy Star program
has saved consumers money. It has lowered greenhouse gas
emissions, as was mentioned by Ms. Castor. I think it's been a
great program. I have a lot of appliances that are Energy Star
and they save us a lot of money every month. Part of the issue,
of course, is the up front costs for some of these.
But, I think it's a great idea. And one of my colleagues
already mentioned UL--Underwriters Laboratories. It is a
company that does third party certification. We can't forget
that they're in some people's districts as well and UL is in my
district.
They've got a lab in Newton, Iowa, and they employ over a
hundred folks, and I think that's something that we do need to
take into account when we are making policy. Obviously, we are
talking about energy savings. We are talking about making sure
we are doing the right thing from a regulatory standpoint.
But I think we do have to look at the bigger picture, too,
when it comes to jobs. After all, that's a big part of what we
are trying to do here in the Congress--make sure that we create
jobs, save jobs and do the right thing as far as our
constituents are concerned and the country is concerned on that
front, too.
So I did want to bring that up as well. I also want to
agree with some of my colleagues that, I guess to use the word
agnostic that I think Mr. Welch used, that's how I am about
sort of transferring this to the Department of Energy, so long
as we can do the right thing, so long as we can make sure that
we have compliance and that there isn't the fraud and abuse.
I think that's the most important thing and I do want to
reiterate, you know, when we talk about the cost of regulations
and the cost of government, moving from one agency to another
there can be a lot of costs associated with that and I just
want to make sure that we understand that before any decision
gets made to move these obligations from one department to
another. It is not simple. It may be theoretical but we have to
thinking about it pragmatically as well.
Ms. Callahan, did you want to address also the issue of
transparency and discipline? I know that Mr. Merritt did but
would you like to add to that at all?
Ms. Callahan. Sure. What I would like to say in front of
that, though, is I was looking through my papers to see how
many jobs are actually in your district that are related to
energy efficiency. There are 2.2 million jobs in the U.S. that
are within the energy efficiency arena. So I think you make a
very good point there.
With respect to transparency and certification, we want to
make sure that there's a balance and that consumers are
protected and that they can continue to trust in the label. If
we can find ways to make the program less costly for compliance
and relying on third party certifications on industry standards
versus having EPA or DOE create their own, we want that.
We want to take down the cost in the program. But it has to
be balanced with making sure that we keep the integrity of that
Energy Star label intact.
Mr. Loebsack. Ultimately for the sake of consumers.
Ms. Callahan. Right.
Mr. Loebsack. That's the bottom line here.
Ms. Callahan. Exactly.
Mr. Loebsack. Well, thank you so much. I really appreciate
the panel and thank you, Mr. Chair, and I yield back the
balance of my time. Thank you.
Mr. Olson. Gentleman yields back.
The chair now calls upon the gentleman from Missouri, Mr.
Long, for 5 minutes.
Mr. Long. Thank you, Mr. Chairman. And Mr. Chairman, how
are you feeling today?
Mr. Olson. Very good. Thank you.
Mr. Long. How are your math skills today?
Mr. Olson. They're what they were when I walked in here. So
I thought they were pretty good but you've got something for
me.
Mr. Long. I have been working on a mathematical equation
here. Eleven minus one would be how much?
Mr. Olson. I believe that is 10. I am sure you're talking
about the World Series.
Mr. Long. Ten. That's what I have gotten to and I was just
trying to figure out how many more World Series championships
the St. Louis Cardinals have won than the Houston Astros.
[Laughter.]
You have now answered my question. Thank you.
[Laughter.]
I want to start down on the end with Mr. McGuire and I have
a question for everyone. I just want to move down the row and
get a quick response to my question.
One of the goals of the voluntary Energy Star program it
set out an energy policy after 2005 is to reduce pollution,
which we all want. Like Johnny Morris Bass Pro Shops in the
Seventh District of Missouri says, we all live downstream--we
all want to reduce pollution.
Mr. McGuire, start with you and coming down the line. Can
any of you tell me what effect or how it would hurt if to move
from EPA back to DOE where this program was originally? And
there's been a lot of talk today about moving it and why they
moved it in 2009 and how hard it would be to move it back when
the ones that are arguing to not move it back are the ones that
moved it in 2009.
But can you give me any reason why moving it to the
Department of Energy for an Energy Star program would have any
effect on pollution, good or bad, compared to EPA?
Mr. McGuire. It would not impact it.
Mr. Long. OK.
Ms. Callahan. I want to make sure that we are clear. Joe
and the appliance manufacturers are looking at moving back the
appliance portion. Energy Star program is much bigger and
broader than that.
We believe that it would do damage to move the entire
program, which is what's in the discussions draft now, back
over from EPA to the DOE program.
Mr. Long. In what regard? What way?
Ms. Callahan. Well, because there's 25 years of history, of
databases, of partnership relation and management, brand
management that are going on and people are relying on that
program and on how it's being administered. And to pick that up
and move it will have costs associated with it.
Mr. Long. It was the 25 years administrated under--right?
Ms. Callahan. Pardon?
Mr. Long. It was the 25 years you're talking about?
Ms. Callahan. With the EPA. This has been a shared program
since it was created----
Mr. Long. Right.
Ms. Callahan [continuing]. In 1992 and that--a large
portion of the program has been always over at the
Environmental Protection Agency.
Mr. Long. Right. Thank you.
Mr. Merritt. So as I mentioned during my testimony, our
primary concern is continuing the viability and smooth
operation of this program. We would be concerned that any
change that would disrupt that operation and the implementation
of the specifications of the marketplace could actually reduce
its effectiveness, which would increase electrical consumption,
which would affect pollution, if you want to make that
connection.
Mr. Drew. From AHRI's perspective, our comments would echo
those of Mr. Merritt and Ms. Callahan. We've successfully
operated this program within the EPA's structure for numerous
years and the idea that if it was disruptive moving it from DOE
to EPA initially, why wouldn't it be just as disruptive moving
it back if not more so at this point in time with a much larger
program at stake?
Mr. Johnson. I don't have a view on the pollution impacts.
I tend to doubt it would have an impact. We are not agnostic
about moving it to DOE. We understand the reasons why.
If Congress decides to do so we'll work hard to make sure
it's successful. We are used to doing business at EPA. That's
where our relationships are. That's not to say we can't
recreate success over at DOE.
Mr. Long. Mr. Johnson, the discussion draft and change of
provision that would make the requirements of the
Administrative Procedure Act apply to actions taken under
Energy Star. The critics of this provision say it could damage
the program by slowing it down. As the maker of products that
need to get to the market quickly do you see this as a problem?
Mr. Johnson. I see it as a potential problem. We certainly
want to maintain program agility and flexibility. That's really
important for the fast-moving consumer tech sector. But I think
there are ways to do that while bringing on perhaps a few more
checks and balances. Process aspects of the APA perhaps could
be applied to the program. Third party oversight within the
federal government such as a role for OMB is something to
consider as well.
So on this provision we'd welcome working with the
committee to maybe target this a little more appropriately for
our sector.
Mr. Long. OK. Thank you, and thank you all for being here,
for your testimony today.
Mr. Chairman, I yield back.
Mr. Olson. Gentleman yields back and I want to inform the
gentleman that I just got a text from Mayor Allen Owen of
Missouri City, Texas, the Show-Me City. He says, please come
down to our victory parade this Saturday barbecue in Missouri
City for our Houston Astros, the world champs. He said yes,
it's our first but we have to start somewhere.
[Laughter.]
I now yield 5 minutes to the gentleman from Maryland, Mr.
Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman. Thanks to the panel.
I was curious what happens other places. I am sure you're
familiar with these kinds of incentive programs or Energy Star
like initiatives in other countries or have some sense of that
and I am interested how we compare to that, whether the
analogous regime around labeling energy efficient products is
mandatory in other places, voluntary. So I just want to get
some context for that as we kind of figure out what the best
way to do this is here.
And then I am also interested in any interplay that occurs
in terms of manufacturing products that get an Energy Star
rating here pursuant to this program as those products go into
Canada or into Europe or other countries what's happening--is
Energy Star being converted into some other rating that's given
in those countries, et cetera.
So I am just trying to get a little bit of a peripheral
vision on the issue and anybody who feels competent to answer
the question I invite them to do that. Yes?
Ms. Callahan. So the Energy Star program is really
recognized globally as the gold standard for public-private
partnerships in this area and in fact it is licensed and used
in the European Union, Canada, Japan, Ireland, Liechtenstein,
Norway, Switzerland, and Thailand, and the government of Canada
has weighed in to encourage the Congress to continue the
program and continue funding to the program. They're in
opposition to the administration's request to eliminate the
program. It really is the gold standard around the world.
Mr. Sarbanes. Any other comments? Yes.
Mr. McGuire. The Energy Star program in Canada is licensed
to the NRCAN, Natural Resources Canada, by the Energy Star
program. So they will adhere to the specifications for the most
part that happen in the U.S.
Our members are very familiar with it. I would note that in
Canada the Energy Star program is housed within the appliance
standards program of Natural Resources Canada, similar to what
we are suggesting be again the case for DOE.
Mr. Sarbanes. Go ahead.
Mr. Johnson. Sure. It is very important to us, the consumer
technology industry, to have policies and programs for energy
efficiency that are generally aligned and harmonized around the
world. Energy Star is an example of something like that. We
also have these industry-led voluntary agreements that have
been picked up in three regions of the world as well. So we
appreciate when there is that globalization of an approach
that, again, for us is innovation friendly.
Mr. Sarbanes. Sounds like the U.S. and the Energy Star
program is a global leader in setting standards like this and
driving that kind of label other places. Is there any
competing? I mean, you mentioned some countries and some parts
of the world.
Are there some competing energy efficiency labelling
programs out there? Or would you say that Energy Star is up
here and everybody else is down here?
Mr. Johnson. I can respond to that. There are a large
number of standards in labelling programs around the world and
that is actually part of the challenge that we have.
Look in the back of a product, you see examples of many
different kinds of labels, maybe not for energy but that's what
I am talking about is a proliferation of labels.
It is so much easier for either a small or a large company
that wants to sell around the world to have one test, one
designation, one label, an aligned program. That's what we
strive for in the tech industry.
Mr. Sarbanes. Has Canada, for example, or other countries
that use the Energy Star rating, have they offered up any
testimony that you're aware of or perspective? Have they
weighed in at all about the discussion that we are having here
in terms of the--any changes to the program? Do they have
anxieties about it or are they just kind of sitting back and
watching?
Mr. McGuire. We've discussed it with NRCAN and they don't
have any anxieties that I know of. They were more of in a
listening mode. But they certainly are aware of what we're
suggesting.
Ms. Callahan. We've had no discussion with them on the
discussion draft. Where I know their concerns lie is in keeping
the program funded and not eliminating the program.
Mr. Sarbanes. Great. Thanks very much. I yield back.
Mr. Olson. Gentleman yields back.
The chair now calls upon the gentleman with the home of the
Hidden Lake Gardens, Mr. Walberg, for 5 minutes.
Mr. Walberg. You've done your homework on the victorious
Michigan State Spartans as well.
I appreciate the hearing today. Mr. McGuire and Mr.
Johnson, I'd like your comments on what has been the experience
of your member companies when it comes to having opportunities
to comment on actions taken under Energy Star and access to the
data used by the government on which to base its decisions and
is there room for improvement?
Mr. McGuire.
Mr. McGuire. Thank you, sir.
It has been our experience that at EPA they are very
inconsistent with demonstrating the data that they have used to
make their decisions and responding to suggestions and data
that we have submitted and providing a consistent amount of
time for us to comment.
So there are question marks left at the end of the day and
that is why we feel that applying some Administrative Procedure
Act process improvements would make it more repeatable and
understandable for the people that have to make the investments
in their products for the consumers to benefit from the energy
efficiency gains.
Mr. Walberg. Be a little more specific. Under the
Administrative Procedures Act, where would you go with that?
Mr. McGuire. A specified period for comments--that you have
this many days to comment and that if a decision is reached
that it might result in you--a specification you feel
unwarranted or not justified by the facts that you would have
the ability to appeal that to someone else in the agency other
than the person that made the decision.
We are not talking about loading up litigation. We are
talking about due process so that we can understand how the
decision was made.
Mr. Walberg. OK. Mr. Johnson.
Mr. Johnson. I have similar comments. Our members'
experience in some Energy Star product categories has been good
and not so good in others. I think there definitely is room for
improvement.
We want data-driven outcomes. We have experienced outcomes
with Energy Star specifications that don't seem linked so much
to the data as to maybe a feeling or a passion in a different
direction. So some amount of the rigor of the APA may be
appropriate to guarantee certain checks and balances and time
lines. However, as I mentioned earlier, we don't encumber the
program. So we have to be, I think, selective at least for our
sector in determining what of the APA makes the most sense and
then what else might be a good check or a balance against
outcomes here.
Mr. Walberg. But you believe that we could improve upon the
opportunities for the manufacturer input without slowing the
program down?
Mr. Johnson. I think we can. Yes.
Mr. Walberg. OK. Mr. McGuire?
Mr. McGuire. I think with certain processes added that are
included in the Administrative Procedure Act it can be
improved.
Mr. Walberg. OK. What's your reaction to the
administration's FY 2018 budget request which zeroed out the
Energy Star program? If you answered that earlier before I got
here, forgive me.
Mr. McGuire. I did. We oppose zeroing out the program. We
want it to be maintained and appropriately funded.
Mr. Walberg. Mr. Johnson?
Mr. Johnson. CTA doesn't have a position on budgetary
matters but in the situation where on one hand you have
elimination of the program, on the other hand you have status
quo, don't touch a thing, we are kind of in the middle.
There's room for improvement. Let's work on that.
Mr. Walberg. Thank you. I yield back.
Mr. Olson. Gentleman yields back.
We've saved the best for last. The chair calls upon Mr.
Tonko of New York for 5 minutes.
Mr. Tonko. Mr. Chair, I appreciate that assessment.
Welcome to our witnesses. Energy Star is a program that
benefits consumers, manufacturers, and the environment. We've
heard all the statistics about the program's success so I won't
belabor the point.
But it is clear that the Energy Star label, which is
recognized by 90 percent of consumers, is trusted. Supporters
of the discussion draft have discussed how increasing
transparency and accountability are important to the future of
the program. But I believe the most important issue to maintain
the integrity of the program is without a doubt upholding its
well-respected brand with consumers.
We should not take consumer support for the brand as a
given. Ms. Callahan, a question for you--and before I do that,
let me state what an honor it is to serve on the board of
Alliance to Save Energy in my pre-congressional days and now in
my congressional tenure. So I thank you for that.
Ms. Callahan. Thank you. We really appreciate your
leadership up on Capitol Hill but we miss you a lot. When you
were a fiduciary board member we saw a lot more of you.
Mr. Tonko. There you go.
So the question, and I will ask this of all, if we could
kind of stick to a yes or no--do you agree that upholding the
integrity of the Energy Star label is essential to the success
of the program?
Ms. Callahan. Yes.
Mr. Tonko. Mr. McGuire?
Mr. McGuire. Yes.
Mr. Drew. Yes.
Mr. Johnson. Yes.
Mr. Tonko. Thank you. And in March 2010, GAO found the
Energy Star program in a report that was shared to be
vulnerable to fraud and abuse. In this report, there were many
concerns expressed and at that point many products were able to
be self-certified.
So in 2011, EPA responded to GAO's report and required
third party certification. Ms. Callahan, if we go back to self-
certification and these issues reemerge, do you think a future
report like this one I am holding would hurt the Energy Star
brand?
Ms. Callahan. I absolutely believe it would hurt the Energy
Star brand to have a report like that. It hurt it the last
time. It would hurt it again.
Mr. Tonko. Mr. Merritt, do you agree?
Mr. Merritt. I do.
Mr. Tonko. Mr. Drew, the Air Conditioning, Heating and
Refrigeration Institute is a certification body for testing
products. Are certification bodies also responsible for
conducting after-market verification testing?
Mr. Drew. We do not only certification testing for all new
products entering the market. We also do annual verification
testing done on a random basis selected from that manufacturer
every year.
Mr. Tonko. Thank you.
And there's been a lot of discussion at this hearing about
third party certification and the removal of third party
certification. If that were done, who would be responsible for
market surveillance? Anyone.
Ms. Callahan. I guess I will answer. The market
surveillance and after-market verification is currently the
responsibility of the EPA and I would presume that that would
continue.
Mr. Tonko. OK. So if we didn't have that third party
certification falling to the EPA, that would require additional
spending for the EPA, which has already been threatened with
some budgetary cuts. So I think we need to see that one or what
it is.
Mr. McGuire, were you going to----
Mr. McGuire. I was just going to say EPA's third party
verification requirement is a responsibility they put on their
partners. So that AHRI and AHAM do the verification--third
party verification testing with independent laboratories each
year. So those costs are being borne by the manufacturers, the
partners, not the public, not by EPA.
Ms. Callahan. Can I clarify that?
Mr. Tonko. Sure.
Ms. Callahan. There are significant costs, though, that EPA
does bear to certify these third party accreditors and also the
verification of the project in the marketplace. So there are
very significant costs and EPA has that up on its website.
Mr. Tonko. Thank you.
And in the 2010 GAO report, EPA officials stated that
limited resources made it difficult to do after-market product
verification, not to mention at that point consumers may have
already bought a fraudulent product.
Mr. Merritt, is that why you do not support removing third
party certification in conjunction with the warranty provision?
Mr. Merritt. That's very much part of it. Essentially,
third party certification prior to listing ensures the
integrity of the results. Relying on post-market certification,
then there's a lottery that many bad actors are willing to
enter. Their odds of getting caught are very low.
Mr. Tonko. Thank you. I will just add that according to one
certification body some types of products failed about 15
percent on first time model submissions. So Energy Star
succeeds because it is truly a partnership between industry and
our government.
Removing third party certification would place all the
burden on the government review submitted information,
potentially conduct after-market verification, and could result
in eroding trust in the program. Decades have been spent
building consumer recognition and confidence in the Energy Star
label. I would encourage us not to put that at risk.
And with that, Mr. Chair, I yield back.
Mr. Olson. The gentleman yields back.
Seeing that there are no further members wishing to ask
questions, I'd like to thank all of our witnesses again for
being here today and thank you for your patience. Lots of
comments about my love for my Houston Astros and also an
impromptu math lesson from Mr. Long.
[Laughter.]
I have 18 documents I would like to submit for the record
and very briefly, statements in support of H.R. 3777 from
Congressman Buddy Carter, EPA testimony of the Energy Star
Reform Act discussion draft, DOE's statement on ESTAR of Acting
Secretary Daniel Simmons, a letter from the American Council of
Independent Laboratories, a letter from the U.S. Green Building
Council, a letter from the American Public Gas Association, a
letter from the U.S. real estate industry, a letter from the
Underwriters' Association, American Council for an Energy-
Efficient Economy, comments on the Energy Reform Act
discussion, a letter from Spire, e4TheFuture comments on the
Energy Reform Act Discussion Draft, the National Electrical
Manufacturers Association--NEMA's--comments on the Energy Star
Reform Act, NEMA's comments on proposed language changes, a
letter from the High Performance Building Coalition, a letter
from Lowe's, a letter from the Air Conditioning Contractors of
America, a letter from the ranking members to the chairman, and
the Geostudy on the Energy Star Program.
Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Olson. Pursuant to committee rules, I remind members
that they have 10 business days to submit additional questions
for the record. As for the witnesses, have the responses to us
within 10 days as well upon receipt of the questions.
Without objection, the subcommittee is adjourned.
[Whereupon, at 12:28 p.m., the committee was adjourned.]
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