Document 3J2bpXBqGD8zd0mxYegNZrkMD

To: Snyder, Carolyn[Snyder.Carolyn@epa.gov]; Jackson, RyanOackson.ryan@epa.gov]; PolieyOffice[PolicyOffice@epa.gov] From: Trauger, Joe Sent: Thur 11/9/2017 4:35:58 PM Subject: AHRI Testifies on Future of EnergySTAR Program AHRI E&C Energy Star Testimony Chris Drew 11.7.17 Final.pdf Hello, AHRI Board Chairman, Chris Drew, recently testified before the House Committee on Energy and Commerce Subcommittee on Energy regarding a discussion draft to reform the ENERGY STAR program. HVACR manufacturers had a number of concerns about the draft legislative language - chief among those the possible disruption of a successful program. You will find our full comments attached, but it is our hope that the Administration will support this goal of maintaining the program for HVACR equipment as it is currently operating. It is our hope to continue to work with the Committee, and your agencies, to ensure the protection of this important program that it may remain an effective tool in advancing the development and use of energy efficient technologies. Thank you, and please feel free to reach out with any questions. Joe Trauger Senior Vice President of Policy and Government Relations Air-Conditioning, Heating, and Refrigeration Institute 2111 Wilson Blvd, Suite 500 Arlington, VA 22201 Phone: 703-293-4871 Mobile: 202-365-7927 E-mail: Jtrauqerfd)ai 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003661-00001 1 Certified Over 50 Years of Leadership in Environmental Stewardship, Energy Efficiency, Performance, and Customer Satisfaction. 17cv1906 Sierra Club v. EPA 6/22 Production ED 001523 00003661-00002 Testimony of Christopher Drew Executive Vice President of Burnham Holdings Inc. and Chairman of the Board of Directors, Air-Conditioning, Heating and Refrigeration Institute (AHRI) Before the House Committee on Energy and Commerce, Subcommittee on Energy and Power Hearing on Discussion Draft, ENERGY STAR Reform Act of 2017 November 7, 2017 17cv1906 Sierra Club v. EPA 6/22 Production ED 001523 00003662-00001 Chairman Upton, 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 (EPA) ENERGY STAR program.My name is Chris Drew, and I'm theExecutive Vice Presidentfor Burnham Holdings, Inc. I'm also Chairman of the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), an organization representingmore than 320 manufacturers of residential, commercial, and industrial air conditioning, space heating, water heating, and commercial refrigeration equipment and componentsfor sale in North America and around the worldAs an internationally recognized advocate for the industry, AHRI develops standards forand certifies the performance of many of these products. The heating, ventilation, air conditioning, refrigeration (H^CR), and water heater industryserves many basic requirements of the household, industry, and commercial sectors. These include home and building climate control, supply of hot water, and refrigeration for food, beverage, and industrial needs. Currently, the manufacturing part of theindustry employs 125,000 people in the United Statesproviding over $10 billion in labor compensation annually and iyesponsible for $44.6 billion in tobl industry output.1 When coupled with upstream suppliers, downstream distributors, and the contractor jobs associated with related installation, construction, aid maintenanceof this equipment our industry represents 1.29 million employees, and generates $256.7 billion in economic activity.2 As the association for manufacturers of HVACR and water heating equipmentAHRI represents over 90percent of the domestic industry and more than 70 percent of the global industry The EPA's ENERGY STAR program was established in 1992 to promote energ'pfficient products, including heating, air conditioning, water heating, and commercial refrigeration equipmentn various 1 An Economic Analysis of the U.S. HVACR and Water Heating Industry The Center for Manufacturing Research in Partnership with Inforum, July 1, 2017, pgl-6 2 n 2 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00002 categories, highly efficient productsthat meet the applicable ENERGY STAR specificationcan be recognized by the program andearn the right to use the very well-known yellow ENERGY STAR EnergyGuide label. ENERGY STAR itself has become its own brand, and 85 percent of consumers recognize it as a trustworthy brand.3 More than 7,400 partner organizations- including 160 of AHRI members, participate in the ENERGY STAR program.Products within our membershipcovered under the ENERGY STAR program include boilers, central air conditioners and air source heat pumps, commercial boilers, commercial ice makers, commercial refrigerators and freezers, commerci&water heaters, furnaces, geothermal heat pumps, light commercial HVAC, and noreolar electricand gas water heaters. The specificationsfor ENERGY STAR designation are continuously updated by the EPA in collaboration with its partners and variousstakeholders to ensure energy and financial savings for businesses and families buying ENERGY STAR products. As a manufacturer ofthermal and interior comfort solutions used in a wide range of residential, commercial, and industrial applications,Burnham Holdings participates in the ENERGY STAR program. Together with itssubsidiaries, our company is a market leader in the design, manufactue, and sale of boilers and related HVAC products and accessories, including: furnaces, radiators, and air condition^ systems. Products are manufactured at company operated facilities in the East, South, and Midwestern United States. I personally have found our working relationship with EPA to be generally positive and I would like the program to continueas a resource consumers can rely on and trust for information on the efficiency of the products they are considering for purchase. 3 https://www.energystar.gov/index.cfm?c=about.ab index%20 3 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00003 Central to today's discussion is a discussion draft (hereafter referred to as "draft") to reform thiNERGY STAR program, on which I will focus my commentstoday as Chairman of the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) Administration of ENERGY STAR AHRI believes the ENERGY STAR program should continue largely in its current form, but there are improvements in theimplementation ofthe program the Committee should consider While the draft contemplates moving the program from the EPA where it is currently housed to the Department of Energy, AHRI and its members have concernsabout that approach Chief among those concerns would be the disturbance of a successful program witha sudden re-assignment to a new agency. Though no doubt well-intentioned, the draft does not provide details as to how this could be accomplished without interruption or disruption. It is currently operated by a knowledgeableand dedicated staff in a way that generally ensures stakeholder inputand successful outcomes.There are several questions we could not answer with the draft in its current form, such ashow the responsibilitiesof the program could successfully be transferred from one agency to the other? What office withinthe Department of Energy (DOE) would take ownership? Would current institutional knowledge held by those who have run this program be lost? Would the current approved products and procedures be maintained? The HVACR industry would preferto maintain the program as it currently stands under the Office of Atmospheric Programs at the EPA,where it has been abb to operate successfullyfor our products since 1992. 4 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00004 The draft language also leaves much of the administrationof the program to the discretion of the Secretary of Energy, which raises questions aboutthe level of predictability this arrangement could mean for manufacturers. Most concerning is the prospect of theprogram bouncing back and forth between agencies depending on the prerogative of the agency heaobrthe President of the United States, when stability and certainty areso important to ENERGY STAR'S success. If the program is to be moved, which is not whatour industry would prefer,the Committee should provide clarity rather than ambiguity. To continue toensure robust participation fom equipment manufacturers, it isimperative that any reforms improve the program, and allow for it to continue where sucessful with as little disruption as possible. A great deal more specificity is needed as to the arrangement betweeitihe EPA and DOE, if the current Memorandum of Understanding (MOU) between the agencies/vere rescinded or amended HVACR manufacturers wouldoppose any arrangementthat leaves us without the predictability of knowing where the program is to be housed from one Administration to the next. Certification of Equipment AHRI has long urged the federal government torecognize voluntary certification programs for air conditioning, furnace, boiler, heat pump, refrigeration, and water heating products as a way to demonstrate compliance with federal energy efficiency and conservation standards and thiNERGY STAR program. Relying on industryconsensus certification programs reduces duplicative efforts between the federal government and industry, encouragescompliance with energy efficiency regulations, reduces regulatory burdens, and saves taxpayer dollars--all while enhancing market surveillance. 5 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00005 To maintain the program's success, the EPA relies on accredited thirefcarty voluntary certification programs to validate manufacturers' efficiency claims. These certification programs save businesses time and money, while ensuring a robust ENERGY STAR program ad safeguarding consumer protection. As part of its effort to strengthen the ENERGY STARprogram, the EPA created a path for recognizing these certification programs as Certification Bodies (CB*)to assist manufacturers with the EPA requirements for testing and reporting ENERGY STAR productsAHRI is currently a designated CB(See Qualification Chart below for process). This allows AHRI program participants to achieve significant savings by servirg various certification needs through AHRI verification testing. AHRI certification program participants can meet EPA ENERGY STAR certification and verification requirements without any additional testing on the products they wish to have ENERGY STAR labdd (see Table 1 for illustration of ENRGY STAR categories and AHRI certifications). Qualification Process Step 1: Establish partnership with EPA Step 2: Submission to AHRI Verification AHRI shall select at least 10 percent of each Participant's ENERG^STAR Basic ModelGroups or BMGs (that are registered or certified with AHRI) as part of the AHRI Annual Testing Requirement, with a minimum of one (1) model tested annually depending on the requirement of the AHRI Certification Program. Fees Annual testingfor ENERGY STAR program requirements is included in the AHRI Annual Participation Fee Invoice. Participant laboratory audit fees are not included in the AHRI Annual Participation fee. The Participant shall be invoiced separately for the audit. Table 1:4 4 https://www.energystar.gov/index.cfm?c=third party certification.tpc cert bodies 6 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00006 A;: GmmtnormTs arW A>r Souice HeM Piuvov j Commercial Ikiflers Coov-ivr-cia- k*r VHivm nei> Cc.'t'meJtjA: aiorfr and f?e^2er'.- | Comwcifil Water Heaters rumaces Ceofh^cftval Pumys L;e<?t Comtr.erc-ai HVAC .' :. j Commercial- Betters (CBLR) j - :: . r- :r- ; - r ' 7: *: , : ;; 'r'-::: 7 : - .'r: : !; :--;r I.*: j Commercial- 'Water Heaters (CWH) I . ' mm z- .' -t - ""? . ~ :* - . ' ;r teH. ;' .. 1 Hearets NonSc`ar Estcrra ind Non <sa5 : t': = :- ~ The draft neglects tospecify how the reassignment of the program would affect successful partnerships between voluntary industry certification programsand ENERGY STAR moving forward. This is central to ensuring we do not disrupt a successful program and maintain current participation fevels within the HVACR industry. These type of arrangements, as noted earlier, also save taxpayer dollars by avoiding duplicate testing and certification. The draft does includea promising improvementto allow for "good actors"-those thatare ENERGY STAR participantsand have complied with all requirements of the program for a period of at least 18 months --to be eligible foran exemption from additional EPAcertification requirementsas long as they remain in good standing Unfortunately, however, this only applies to products in the consumer, home, and office electronics productcategories. As an industry that prides itself on maintaining world-class voluntary performance standards and certification programs, we would hope this approach would bemade available to all the "good actors" that participate in the ENERGY STAR program.lf one of our goals isto preserve the partnershipsthat 7 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00007 industry currently utilizes for compliance, we se this area as an alternative option to improvdt. Were this section to be broadened to include all products, as thstated policy within the provision is to recognize those who are compliant with the programs and proved themselves trustworthy, and not based on a specific need of a product type, this would be a reasonable path to ensuring HVACR manufacturers do not receive disruption in this reform process. AHRI would also suggest "grandfathering" those products that have been in compliance for at Ieast8 months prior to the enactment of this languageCompliance assistance proposals such as this are beneficial to encouraging participation in the prograrpparticularly for small businesses. One of the purposes of ENERGY STAR is toaid consumers in purchasing of energy efficient products, and rewarding innovation and encouragng the manufacture of those products. The program can and should recognize participants that have demonstrated a sustained commitment to achieving this objective by providing relief from additional compliance burdensunless or until an infraction is found. Additional Regulatory Burden As participants in the ENERGY STAR program, we have often found the partnership with EPA to be productive and collaborative. Yef HVACR manufacturers havehad circumstanceswhen information was transmitted without time to provide substantive inputAHRI believes that public participation in the agency decision-making process is an essential mechanism b ensuring accountabilityand good results. As an industry, we value a predictable andtransparentregulatory process that allows forrobust industry engagement. 8 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00008 While the Administrative Procedure Act is the most commonly used method of ensuring stakeholder input, ENERGY STAR is not a regulatory process.lt is a voluntary prograrq and applying a full Administrative Procedures Act (APA) process vould likely create an unnecessary burden for a program like ENERGY STAR Ensuring proper stakeholder input and notification could easily be achieved througlagreeing on a process that is transparent and predictable, without the burdens APA would place on the agencynd participants. Use of APA would slow the processand make it more adversarid rather than cooperative which would have an adverse effect onhaving products labelled and available to consumers in a timely manner. Applying the APA could alsohave the unintended consequence of openingjp to lawsuits all determinations made by the ENERGY STAR program. Beyond Equipment The ENERGY STAR buildings programs and theirfocus on promoting a switch to higher efficiency equipment in homes and commercial buildingshas been a great success These programs should not be overlooked when considering reforms to ENERGY STARbecause of their incredible impact on the industry. In the most recent Energy Information Administration (EIA)Commercial Building Energy Consumption Survey (CBECS) of the 5.557 million commercial buildings in the United States^.094 million buildings constructed before 2008 have been renovated in some waywith HVAC upgrades being by far the most common building renovation project to improve energy consumption (1.101 million 9 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00009 more than half- have had an "HVAC equipment upgrade"f. One tool HVACR and water heating manufacturers believe has been an important catalyst to this renovation trend iPortfolio Manager. Portfolio Manager is EPA's free, online tool for building owBrs 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 to track energyuse, water consumption, and waste. Approximately 500,000 buildings, representing 44 billion square feet of commercial floor spacpuse EPA's benchmarkingtool. Half of the Fortune 100as well as the largest U.S. healthcare organizations, major league sports teams, colleges and universities, andeven entire cities use Portfolio Manager.6 EPA's Portfolio Manager benchmarking tool isthe industry standard for commercial real estate to comply with numerous "mandatory benchmarking" laws enacted at the state and local levelWithout Portfolio Manager, hundreds of thousands of buildings would lack a uniform, nationwide standard to comply wHit state and local energy regulation mandates! The ENERGY STAR label also has tremendous value for real estate businessesto gain competitive advantage in markets across the U.S.by branding their assets as leaders in innovation and energy efficient buildng technologies. Currently, 29,500 buildings representing 4.34 billion square feet of buildings, are ENERGY STAR certified. 5 https://www.eia.gov/consumption/commercial/data/2012/bc/pdf/b8.pdf, Renovations in buildings constructed before 2008 ' httpg_://yww.energystar,goy/bu|ldings/faciiitv-own 7 https://www,energyslar.gov/sites/default/files/topJs/ES.Goverrirnen'eFactsheet.09292017,pdf; and and-local-benchmarking-policies 10 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00010 The ENERGY STAR New Homes program helps families save on energy costby offering a labelling designation to ensureapplication of rigorous requirements to new home construction, giving consumers standards to deliver on better durability, better comfort, and reduced utility and maintenance costs. ENERGY STAR-certified homesare designed and builtwith a system-wide approach in mind,so that all energy efficiency systems and features work together to deliver better performancdOuality installation of these products in accordance with ACCA's 2015 HVAC Quality Installation Standardjs also essential for consumers to gain the full benefits of their highly efficient equipment The EPA has been working in concert with contractors and industry toensure consumers receive the full benefits of higHiy -efficient equipment by ensuring proper instalation and maintenance of their mechanici and water heating systems. The ENERGY STAR Buildings and Plantsprogram plays an important role in helping to encourage those energy saving renovations and overseeing the labelling program favored by real estateyhile the New Homes program gives consumers guidelines to help make more efficient systemwide choices. The current draft does not specify the adrrinistration of this program.ENERGY STAR is so much more than just consumer electronics, appliances, and HVACR equipment standards. HVACR manufacturers have concerns about how thesebuilding programs would continuein their current form were theyto be shifted to DOE. Stable Fundingfor ENERGY STAR Sufficient funding for ENERGY STAR is vital to the continued success of the prograrrmo matter where it resides within the federal government. Ibr U.S. manufacturers, the many employees involved in 11 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00011 producing and installing energyefficient equipment, and consumers that rely on these products daily adequate fundingto improveand protect the program mustbe ensured in legislation Other ENERGY STAR Program Improvements HVACR manufacturers are pleased to see the draft included the "no warranty" language which had been previously negotiated between industry and efficiency advocate representative^ has been a long-held position that the ENERGY Star program was notintendedto expose manufacturers to costly class-action lawsuits, and we believe this provision should remain in future versions oiny ENERGY STAR reform legislation. There are provisions not included in the draft that HVACR manufacturers believeshould be considered as the Committeeconsiders ways to improve the current program. For instance, if the goal of ENERGY STAR is to recognize top performing products, there should be a justification process established to determine when and at what level the ENERGY STAR program sets a new specification for products. This processcould be focused on capturing aspecified percentage of the marketplace that would justify its placement into the ENERGY SAR program. Reliance on industry input, vetting, and certification directories to establish the new specification ratings would help in capturing the desired percentage of the market. A cost- benefit analysis may also be helpful in this determination. Secondly, current warranty requirements for ENERGY STAR products should be removed. Specifically, ENERGY STAR has certain warranty requirements established for qualified water heaters that do not 12 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00012 directly impact the ENERGY STAR rating or the performance othe product. ENERGY STAR should maintain its focus on promoting high energy efficiency and saving consumers moneyather than involve itself in business decisions such aswarranty requirements on products Finally, the agency responsible foradministration of the ENERGY STAR program should be required to use industry consensus test procedures for certification testing to ENERGY STAR specifications wire available. In addition, duplicative test procedures should be removed where they exist. Thisvould make the ENERGY STAR testing process more streamlined and less burdensomn manufacturers Conclusion The ENERGY STAR programis a proven and successful tool in advancing the development and use of energy efficient technologies.The program provides real value to consumers in the form of energy savings, a universally recognized brand to help consumersnake educated decisions about the products they purchase, and the financial incentives tied to ENERGY STAR equipment by utilities tit reward the installation of high efficiency equipment. All of these factors help manufacturers, consumers and the environment. I want to thank the committee members andstaff for being so inclusive of stakeholders and inviting comments on this discussion draft. We look forward to working with youto improve the ENERGY STAR program and the regulatory environment generally for HVACR and water heating manufacturers. 13 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00003662-00013