1975, when they were considering these efficiency standards they were supposed to consider that the technology was really feasible and that there was an economic justification for it. But today thats beginning to be blurred and we know, certainly, at epa when they consider it, they certainly dont consider whether its technologically feasible or economically justified. So if we wanted to have a more balanced approach what were trying to do is hear from people who are involved in this on a daily basis because the American Public when they go to the Appliance Store to buy an appliance, they dont understand all about this efficiency. They just know what the price is, and then some people are telling them well you are going to save money even though its a lot more, because of the electricity that will go down. And other people make the other argument. So one of our objectives today is to just try to get a better understanding of what is the reality of this. And thats why were here. So i want to thank all of you for joining us. And at this time id like to introduce the distinguished gentleman from illinois mr. Rush for his Opening Statement. I want to thank you, mr. Chairman, for holding todays hearing on the Home Appliance north efficiency standards under the department of energy stake holders perspect i. I want to welcome, mr. Chairman, all of our witnesses before the subcommittee here today. Mr. Chairman, since there are deo standards that we are addressing here today i think that it would definitely benefit the members of the subcommittee to also hear from the agency directly. And i hope that we can invite them to testify on this issue at a near date in the near future. Mr. Chairman, historically, Energy Efficiency has proven to me the low hanging fruit that has brought more parties together legislatively while also making our country safer, more secure, and more attentive to the impacts of Climate Change. Indeed, the story of Energy Efficiency, mr. Chairman s one that is filled with Success Stories that are really helpful to pay our country forward by making us more independent and more secure while also reducing the cost of energy both in our pocket books and its impact to our environment. In fact, mr. Chairman, by does own estimation, American Families saved close to 63 billion as a result of their energy bills going down. And this is the result of the these appliance standards that we are considering just in the year 2015 alone. The agency also forecasts, mr. Chairman, that standards issued since 2009 would save the American Consumer over 53 billion in utility costs and decreased common emissions by 2. 3 billion metric tons by the year 2030. Mr. Chairman, in addition to the Huge Energy Savings and the benefits to the environment, appliance and equipment standards also lead to additional investments in the work force and and ultimate creation of jobs. A 2011 report by the American Council for an Energy Efficient economy entitled, and i quote appliance and equipment efficiency standards, a money maker and a job creator, end of quote found that in the efficiency standards led to net job creation in every single state. The study also found that by 2020, appliance and equipment standards will contribute up to 387,000 annual jobs to the u. S. Economy. Mr. Chairman, while almost every effort by doe to establish or revise Energy Efficiency standards has been met with some type of opposition, traditionally, this issue has been pursued and i would commend both sides of this subcommittee they have been presumed in a bipartisan matter with contributions to the party put forward by our president s and by past congressmen even though those congressmen and the white house have been under the control of both republicans and democrats. It is my hope, mr. Chairman, that following todays hearing we will ultimately get back to that type of collaboration and that type of cooperation on this issue. Mr. Chairman, it is critically important that the federal government maintains its leadership role of promoting, encouraging, and enticing interested stakeholders to continue with the progress that has already been made in efficiency technologies so that we can continue to keep moving the Nations Energy policy forward. Mr. Chairman, i want to end my saying i look forward to todays hearing. Im looking forward to expert witnesses on the successes and the challenges that are facing this nation as it relates to Energy Efficiency appliance. With that i yield back. The gentleman yields back. At this time i recognize the gentleman from illinois, mr. Shimkus. Its important to hear from stakeholders because the stories that we we have been here may not always reflect the real world and we are hoping that you will give us whats going on on the ground. And so i want to we have been a little story to put this all in perspective, too. Congressman bosnia boston and i met with a Small Manufacturer about two months ago. And there subject to a d. O. E. Enforcement case. And of course because of the enforcement case, they have been told to stop selling a piece of equipment. This company spent several months trying to find out why a they and a Third Party Lab that tested the product why they met the standard, and why why when d. O. E. Got their hands on it they didnt meet the standard. So d. O. E. Tested the product seven months later. And not only and ill we have been the story of why d. O. E. Came to a different conclusion. But it is also under a new regulation than when the product was originally produced. So heres this fraudian, catch 22 world in which you all have to try to live in to try to catch up after a product has been manufactured to a new regulation, and then face the heavy hand of the federal government. So the company was not aware of section 2. 11 because it was not included in the proposed rule making. It was two lines in a large rule previously represented as not materially altering efficiency measures. This piece of equipment did not pass the automatic test. But it did pass the manual test. So this is a piece of equipment that you operate manually or you can hook up a thermostat and it will operate automatically. It did meet the standards for the manual test. It didnt meet the test for the automatic. D. O. E. Would never tell them why they failed the test until months later. Even when they asked for transparency, show us your work, tell us what you are doing. So this is a crazy world in which we live in. The federal governments there to help, not punish. Federal government is there to if they want to have efficiency and they want to encourage Movement Forward they should be insenting. They should not this Small Company its a Small Company has a proposed 241,000 penalty because d. O. E. Is now saying that they knowingly, knowingly kind of jimmied the efficiency standards where the equipment met the manual standard, didnt meet the automatic standard. Of course when you fall into this regime you cant sell your product. Its banned from being sold until this conflict gets resolved. Small Companies Just cant survive this type of work. It would be best, as we hear, im sure, similar stories about the struggles of maintaining it. Businesses go as they have to raise capital, assume risk, hoping to get a return. And while they are doing that, they create jobs. If the government we just want the government to be fair players in this system. If were going to create these new standards, give industry a chance to meet them. And dont play games of delay by not working with the industry and telling them why they failed to meet the standard. Or changing the rules for automatic or manual type systems. So im really looking forward to the hearing. I think its very, very important. And ive got questions when we come to it on to address the jobs debate, which i think people will find pretty problematic that these are now causing the loss of jobs in our country. And i yield back my time. Thia yields back. This time recognize gentleman from new jersey, mr. Pallone, for five minutes. Thank you mr. Chairman. The appliance and equipment efficiency Standards Program at the department of energy has been successful in reducing Energy Consumption and lower Consumers Energy bills. The program also has been beneficial to manufacturers making Energy Saving products more ubiquitous and leaving leveling i should say the Playing Field nationally. In fact, efficiency standards for consumer appliances and other products likely constitute the single most effective evident to reduce Energy Consumption in the United Statesle according to the energy department, americans saved 63 billion on their utility bills last year because of these standards. And this is also resulted in avoiding 2. 6 billion tons of Carbon Dioxide emissions which would equal the annual level of emissions from 543 million vehicles. These figures are staggering and highlight the benefits this program. Consumers save money and our environment is spared billions of tons of pollution every year. All of this began with enactment of the energy and conservation act which was signed into law by republican president gerald ford, a highlight republican. This started a trend because with an exception to the amendment to the statute under the carter administration, every major expansion of the appliance efficiency Standards Program has been signed into law by a republican president. While some of our witnesses and my colleagues on the other side of the aisle may lament the long list of appliance standards proposed by the Obama Administration, they should remember that depending on your point of view much of the credit or blame for the obama standards can be traced back to two laws signed by president george w. Bush. The Energy Policy act of 2005 and the Energy Independence and security act of 2007. And while the 2007 act was passed by a democratic congress, the Energy Policy act of 2005 was born out of a fully Republican Congress and authored by the former republican chairman of this committee. I dont know why i have to keep saying fully Republican Congress. Thats obviously not what i like. But the fact of the matter is that that most of this legislation was done by Republican Congress and president s. This underscores an important fact. For the past 40 years Energy Efficiency has been a by part san issue where republicans and democrats have come together to reduce Energy Consumption and save consumers money. Times have changed. Certainly there are few republicans who still understand the importance of Energy Efficiency. Mr. Mckinley has worked with mr. Welch to demonstrate trait the bipartisanship in this area is still alive to some degree. Regrettablebly that seems to be the only republican support for major efficiency legislation in this congress. Consider the recent house vote to go to congress on an Energy Package that would actually increase consumption by rolling back efficiency. Again, how times have changed. Could the fsht standard setting process use improvement . Of course it could. Because there is always room for improvement. Despite a revisionist view that disputes efficiency standards over new development the fact is that the standard setting process has always yielded some controversy from one industry participant or another. But these controversies were generally worked out and the results were better products, more efficiency, and often useful changes to the standard setting process. My concern is that improvements simply may not be possible in this current koung. Last year when we were working to forge a bipartisan compromise on furnace standards certain stake holds made me question the sincerity of the socalled reform efforts. Perhaps its a matter of perspective. What some stakeholders view as minor tweaks look an awful lot to me like a thorough getting of the Standards Program. Ultimately i believe a serious successful Energy Efficiency policy for our nation must address demand as well as supply. Thats why efficiency has traditionally been a concept that brought parties together. Mr. Chairman i hope one day well see that again. It doesnt seem like today is the day. Thank you. I yield back. Gentleman yields back. And that concludes the Opening Statements on our side. So at this time our first witness will be ms. Sofie miller who is a senior policy analyst at the George WashingtonUniversity Regulatory study center. Ms. Miller, thanks for being with us. And you will be given five minutes. Just make sure the microphone is on and its up close to you so we can hear every single word that you say. And you are recognized for five minutes. Well thank you, chairman whitfield. And rank member rush and member of the subcommittee for inviting me to share my expertise today. I appreciate the subcommittees interest in the department of energys Energy Conservation program as well as opportunities for congress to improve it. I am the senior policy analyst at the George WashingtonUniversity Regulatory study center where i analyze the effects of regulation on public welfare, including effect of do. E doughs Energy Efficiency standards on consumers specifically. Through my research i have identified ways in which these standards can harm consumers rather than benefiting them by limiting the products available and removing from the mark appliances that might best suit their needs. Does efficiency standards regulate most appliances in households. And as a result they affect almost all u. S. Consumers. These standards increase the prices of common appliances in exchange for reducing Consumers Energy and water bills in the future. While doe does estimate consumers receive large net benefits from this trade off it doesnt take into account the diversity of americans or that u. S. Households have different needs and prirchss when it comes to Household Appliances. As a result, one size fits all energy if thesy standards can deprive consumers of the act to make purchases that best suit their circumstances and constraints. In such cases these regulations are a cost to consumers rather than a benefit. For example, efficient dishwashers or clothes dryers save money in the long term the more frequently they are used and tend not to benefit households with lower frequency of use which includes couples or single residents such as the elderly. Doe calculated large benefits by estimating that a household operates its clothes washer 392 times per year or more than once a day on average. While this might be realistic for large families or households with small children, it does not represent every household. In fact, even after accounting to their lower energy bills, the standards ended up costing the nearly 70 of American Households that use clothes washers less frequently than six times per week. To illustrate from personal experience, a very efficient dishwasher made sense for my mother, who has nine children and used to run the dishwasher as must have as four times per day, if you can imagine that. But my current household of two, we run the dishwasher twice a week. In our case its not likely that a more efish and more expensive appliance is going to be worth the investment. In addition, efficiency standards are particularly costly for low income households. Wealthier americans can afford to wait years or even decades to recoup the higher cost of an efficient appliance while poor americans with less certain streams of income have higher opportunity costs. Doe calculates high benefits by using a relatively low time value of money which field studies find represents wealthier households. Changing does mole to reflect the actual time value of money to low and Median Income households shows that they encourage large net cost as a result of efficiency standards. When a paycheck has to cover rent, food, and other necessiti necessities, a very efficient appliance may not be affordable even if it does reduce electric bills in the fucht many families cannot borrow at the 3 rates that doe assumes. But Energy Cost Savings are not the only justification for these standards as more efficient appliances can also reduce Environmental Emissions but these environmental ben pits are quite small relative to the cost of the standards. The fact the cost outweighs the benefits by a factor of 3 to 1. By looking at the Environmental Standards alone. Doe wouldnt be able to in sum, the payoff will vary depending on a households income, size, and other characteristics such as geographic location. It is perfectly rational for individual households to prefer to purchase different appliances including those that do not meet doe standards. By taking away those choices, and preventing households from buying the appliance that best suits their individual needs, doe is imposing a cost on consumers and not a benefit. This is particularly true for low and Median Income americans and the elderly who bear the highest costs of appliance efficiency standards. Thank you all for your tight. I look forward your questions. Thank you ms. Miller, very much, for your Opening Statement. And our next witness this morning is mr. Joseph mcguire, who is the president and ceo of the association of Home Appliance manufacturers. Thanks for being with us. And you are recognized for five minutes. Chairman whitfield and turn your microphone on and get it close. Mr. Chairman and Ranking Member rush and members of the subcommittee, thank you for the opportunity to testify this morning. Membership includes more than 150 companies throughout the world. It employs tens of thousands of people in the United States. Our members produce more than 95 of the Household Appliances ship for sale in this country. I dont think there is any disagreement at this table that the appliance standards and Energy Star Programs have been successful. Energy efficiency gains across core Major Appliance categories are dramatic and undeniable. For example the most commonly purchased modern refrigerator uses the same amount of electricity as a 50 watt light bulb. A new clothes washer uses 73 less energy than it did in 1990 and half the water. I also want to make clear that our industry has been a support of these programs and had been be involved in rule makes and legislation programs to strengthen and improve the programs. I personally led the 200 plus organizations that initiated and supported the National ApplianceEnergy Conservation act. We strongly support federal standards and state reelse. While these programs are both successful they are both in need of modernization to recognize the success achieve and establish a framework for policies and programs focused on meaningful additional efficiency gains. Yes, there should still be federal standards that guarantee savings nationwide but absent Technological Breakthroughs a process geared towards continually ramp rachting up standards does not make sense for the environment, the consumer or the economy. But this will not happen under the current stts standards construct. Reform legislation is needed. Hr 8 is a practical step along that path offering modest sensible changes to epca that will require doe to follow procedures it agreed to with the organizations that advocated for reform in 1987. But more is needed. Today ahem is calling on congress to take further steps to modernize our National Energy fishsy law by ending mandatory sear serial rule making and mandating standards only when justified by qualified metrics. Requiring doe to meaningfully consider cumulative Regulatory Burden on product manufacturers. Mandating procedures regarding transparency and public engagement. No more black box analyses. Applying the procedure act to the energy star program. There have been 30 standards and amendments that apply to the amount of m. Products under the program and test revisions accompanying the standards. The reality is that for many product categories the relentless march of rule makings is not justified. Because Energy Savings beyond those already achieved are severelily diminished are products are nearing max numb efficiency under technology. Further regulations are likely to make a cost beyond an acceptable level and likely result in degraded performance and functionality. We saw this in the flawed proposed dishwasher deal last year whose pay back outlasted the progts live. Doe, to its credit, retracted the proposal. But it shouldnt take a national uproar for this to happen. The rule never should have been proposed. As for energy star, the program has drifted from its original of energy this drift must be considered in concert with the reality that the success of the program has essentially made it mandatory in the marketplace. Congress needs to bring this program under the much more traditional procedures and specific criteria of the administrative procedures act which applies to virtually every other program epa administers. It is also important that Congress Make clear that energy star is about Energy Efficiency only, not about epas ideas regarding quality, functionality, sustainability, other nonenergy factors. Our ultimate objective is to improve the u. S. Regulatory environment in measurable ways that foster a fair, more predictable, more open and more efficient regulatory landscape. As an industry, we will continue to live up to our responsibility to provide consumers with life enhancing products that deliver superior performance in energy and voorlal benefits. Our industry is very competitive, which drives not only innovation, but also reduces product costs through hundreds of millions of dollars in productivity improvements. Thats why Home Appliance prices dont keep up with the cpi. Not because of appliance standards. Productivity investments hide the fact that changing Product Design and materials to meet Energy Standards adds costs. Implying that the huge efforts in type and Capital Investments to achieve productivity somehow make Energy Efficiency free is a great misunderstanding. Mr. Chairman and members of the subcommittee, in summary we call on kong to modernize epka so it addresses current circumstances by recognizing the diminishing Energy Savings opportunities for many products, evaluating cumulative Regulatory Burdenen and the actual impact of past rules and sbrofg transparency in stake holder engagement. Thank you for the opportunity to testify. Thank you mr. Mcguire. Our next witness is ms. Elizabeth noll who is the lengths latiive director for energy and transportation at the national council. You are recognized for five minutes. G. Mr. Chairman, member of the subcommittee. Thank you for the opportunity to testify. This program sets dependable minimum levels of Energy Efficiency that all americans can count on to reduce their utility bills, the Carbon Pollution that harms human health while promoting innovation and new job. My name is Elizabeth Noll and im the director at nrdc. Nrdc has long supported Energy Efficiency standards and we are far from alone. We have successfully worked alongside many groups, including nema, ahri and a hem here today. And support was reiterated in a recent op ed we authored with the National Association of manufacturers. Lets not forget, the initial law was signed by ronald reagan, then expandsed and approved with broad bipartisan support. Why is that sponge support for efficiency standards . This program is wildly successful. Dplifring tremendous consumer and national benefits. It has broad and bipartisan support founded on a long history of collaboration and consensus building. And by all accounts, there is still huge potential for even more energy and financial savings now and in the future. To my first point, by every single measure, the Program Provides huge benefits n. Fact, National Appliance standards are the second biggest Energy Saving policy in u. S. History. Second only to vehicle fuel economy standards. Appliance standards are saving the typical u. S. Household about 500 per year on their utility bills. Last year alone, American Consumers saved 63 billion. And thanks to standards already on the books today, consumers and benefits will save almost 2 trillion on their energy bill due to improved appliance and equipment sold through 2035. Because these standards are cutting american Energy Consumption, it also reduces the need to burn polluting fossil fuels to run those appliances and equipment. Last year alone helped u. S. Avoid emissions of 300 million tons of Carbon Dioxide. Thats equivalent to the july pollution from billion 63 million cars. As i noted earlier, three republican president s have signed laws supporting Energy Efficiency standards. And for the First Time Since the early naents, the department of energy is up to date with its legal deadlines that congress enacted. In the spirit of consensus building and collaboration the agency has done more than every to to open up avenues to increase stake holder participation and collaboration of the 42 standards finalized since 2009, almost a quarter stemmed from consense success agreements negotiated with industry support. And those that arent negotiated go through a normal rule making process which includes multiple opportunities for input from industry. As a result, the vast majority of american Energy Efficiency standards go into effect without controversy. As noted in other testimony today, manufacturers much prefer a Single National standard over a state by state patchwork of requirements. Consumer groups, state governments, business groups, utilities all have engaged correctively and support the program. One might ask, are there more Energy Consumer and environmental savings to be achieved . Emphatically, yes. One example involves the Biggest Energy and pollution saver from a single standard in the agencys history which was completed in january for commercial roof top air conditioners, heat pumps and warm air furnaces. And it represents the third revision to this standard. This standard is expected to save 15 call drill onbtus of energy over a 30year period, which is nearly equivalent to the amount of energy in all of the colbourned to generate electricity in the United States in one year. A fourth coming report by the appliance standards awareness project and the mourn council for an Energy Efficiency economy find that the savings potential for federal stads that will be eligible for update in the next eight years exceeds what has been accomplished over the last eight. Its likely to open up new students for savings we cannot even contemplate today. Without standards, costeffective Energy Efficient opportunities will be lost leading to unnecessarily high energy bills, increased Energy Consumption, more harmful pollution, and uncertainty for manufacturers. There is no doubt that this Program Works and will continue to deliver Huge Consumer and environmental value now and into the future. Thank you for the tune to share my views. And i look forward to your questions. Thank you ms. Noll for your statement. At this thailand time id like to introduce mr. Kevin cosgriff who is the president and ceo of the National ElectricalManufacturers Association and thanks for being with us. And you are recognized for five minutes. Thank you mr. Chairman. Ranking member rush and members of the subcommittee for having us today. I am a he the president and ceo of the National ElectricalManufacturers Association some nearly 400 members that provide virtually everything in the electrical world. I appreciate this tune to talk about epka with the subcommittee. We have a central position in this dialogue given that 27 of the 63 covered product are made by nema members and an additional 30 products products contain components made by nema members. I have three main points i would like to make today. First, there are diminishing Energy Savings returns to multiple rule makings on the same product. Thats not saying that we dont believe in Energy Savings. Were just saying there is diminishing returns on multiple rule makings that ought to be considered. Future Energy Efficiency opportunities should include looking at energy use systems, not simply components or individual products. And lastly, serial regulation does over time limit consumer choice. First on diminishing returns. Epka was written 40 years ago and many of the covered products have since achieved then unimagined levels of efficiency. Several products have been through two or more different rule makings. And the epka statute requires the doe to determine whether standards are warranted on every single product every six years. This applies even to products that have reached the stage of regulatory maturity, as it were, that is the say the products for which cost Efficiency Energy improvements have reached their limtsds. Costeffective Energy Improvements have reached their limits. We should retire several of the mature covered products. By that i mean retire at the current level of efficiency. Not back slide. And that stakeholders including government should be given sufficient time to analyze the impact of a previous regulation before a new rule making cycle kicks off. Rarely has a product entered the market before the next rule process kicks off. There has not been enough time to really analyze the information in the real world to see if it works. My second point is that Energy Efficiency opportunities should begin looking at energy use systems. Epka was crafted for individual products. The challenge ahead i think is to build on this past industrys success with a new more holistic approach to savings opportunities. Individual products are increasingly interconnected and operated as a system rather than singularly. We suggest congress consider this to an when discussing Energy Savings. Think Energy Savings from a building versus Energy Savings from a lamp. Demands my third point is serial regulation impacts consumer choice. Demands from global competition, government regulation and consumer previous residence require manufacturers to print to remain relate. They must repeatedly clear hurdles to remain viable. They are the definition of having skin in the game. One tendency of epka however is over time it will trend towards eliminating certain products from the market. Under this type of regulatory scheme, there will be fewer and fewer choices offered to consumers. We assert that markets should drive and in fact are driving the Energy Efficient economy. One choice that markets can do without, however, is availability of products entering the United States that do not comply with u. S. Law and policy. This deprives consumers of Energy Efficient benefits and disadvantages lawabiding manufacturers. This is an area where the federal government especially can be helpful with policing up these imports. In conclusion, electrical manufacturers contribution to the Energy Efficiency economy has been diligent and i believe commendable. Throughout this effort, nema has made constructive proposeas to congress, to doe, and working with other stakeholders to advance Energy Efficiency where he believed it was justified and where the savings weve resisted regulation for the sake of simply doing something more when the benefits were insignificant or the costs were just too high. The 40yearold model of regulating energy use and single products has in many cases done its duty. But its diminishing returns are exacting an increasing cost for our industry and higher price for our consumers. The legislative overhaul that builds on the success of the last 40 years but allows us to all keep the Energy Efficiency economy moving forward is what we wish to support. We urge congress to seize this unique opportunity. Thank you. I look forward to your questions. Thank you, mr. Cosgrove. At this time our next witness is mr. Thomas eckman, who is the director of the Power Division of the northwest power and Conservation Council. Thanks for being with us. Youre recognized for five minutes. Thank you, mr. Chairman. My name is tom eckman. I am the director of power planning for the northwest power Conservation Council. Ill start way very quick thumbnail of who we are since there are in northwest delegates here. I thought it might be important to figure out why im here representing the northwest. The northwest power and Conservation Council was established under a congressional authorization of the northwest power conservation act of 1980, public law 96501. We are an interstate compact authorized by you folks here in congress to do power planning for the northwest. So we for the states of oregon, washington, idaho, and western montana we produce a 20year power forecast of needs and a Resource Plan to meet those needs for electricity. And our statutory requirement is were to treat Energy Efficiency as one of the resources we can rely on to meet those needs. Over the past three decades, 3 1 2, 35 years, weve produced seven different power plans. Were to update those plans every five years. We started back in 1982 with the first plan and called for costeffective Energy Efficiency to be a major component of that planning process as directed by congress. Over that past 35 years Energy Efficiency has been a very significant contributor to the northwest economy and to meeting our needs. In summary since 1980 the Northwest Region has saved enough electricity through codes and standards, utility programs to be equivalent of roughly six seattles in electricity annual electricity consumption, or more than 1 1 4 times the actual consumption of the state of oregon. So its a significant trigger. It roughly represents our second largest resource in the region. Its met 55 of low growth since 1980. We really believe in Energy Efficiency that is cost effective. The reason im here is to talk to you about the role that federal standards have played in making that happen and what they look like Going Forward. Over the past 35 years federal standards have basically produced 1 5 of the total savings weve been able to achieve. Energy codes about 20 and the remaining through rate payer funded utility programs. 1 5 of the savings turns out to be worth about 1 billion in annual savings out of the on an annual basis and saves about 5 Million Metric Tons of carbon off of our system. And we have a very clean system because half of our power comes from hydroelectricity. Thats a significant component. Its about 12 of our total emissions on an annual basis. On a Going Forward basis we looked at the federal standards that had been adopted between 2009 and 2014. Those standards alone will reduce our forecast low growth from 1. 1 to. 8 , about 30 reduction in low growth. Again saving significant consumer cost for a nur generation and saving consumer pain and agony from carbon emissions. We are here to support those standards because not only have they been of huge benefit to us but we have been involved in the negotiations that led to not only the federal standards but many of the standards that have been adopted since 1987. I am a member of the appliance standard rule making Advisory Committee that was appointed by d. O. E. To facilitate better communication between manufacturers and advocates for Energy Efficiency to begin to develop more transparent and open processes to engage in rulemaking. And since the advent of that committee, which was basically formed at the behest of the department itself because it understood that it could do a better job of rule maketiing th in a standard noticing and comment process. It cant always do a better job but in some instances, elizabeth noted that appliance rule making for airconditioners and package rooftop systems, those consensus agreements between manufactures and advocates have produced better standards, more regulatory certainty on behalf of the manufactures and greater compromise for facilities to implement standards on behalf 69 manufacturers. So i think those that particular improvement was not envisioned in the original statute but its a regulatory process that doe implemented on a voluntary basis and has improved immeasurably the transparency of the Standards Development process on a Going Forward basis. And i think that we can talk more about that in the time that you have questions for me. Ill stop there. Thank you. Thanks, mr. Eckman. And our next witness and last witness is mr. Steven euric, the president and ceo of the air Conditioning Heating and refrigeration institute. So thanks for being with us and youre recognized for five minutes. Thank you, chairman whitfield, Ranking Member rush and members of the subcommittee for inviting me to testify on this important topic. Im steve yurek and im president and ceo of the airConditioning Heating and refrigeration institute. We have 315 Member Companies that manufacture more than 90 of the Residential Commercial and Industrial Air conditioning, space heating water heating and commercial refrigeration equipment sold installed in north america. Our members employ over 100,000 people in manufacturing and more than 1 million american jobs when you include those involved in distribution, installation and maintenance of our equipment. I want to make it clear that our industry has a long record of leadership when it comes to innovation, Energy Efficiency and environmental stewardship. In fact, the equipment our members produce is 50 more efficient than it was just 20 years ago. But even as we innovate and develop the next generation of highly efficient equipment we always have in mind the needs of our customers who are after all the people who buy and use our equipment. We have three main concerns with the current statute that id like to discuss today. First, the Authority Congress set forth through setting efficiency standards, the Energy Policy conservation act is 40 years old. And it has not been updated to reflect new technologies and economic realities. Two, in addition to the impact in our industries, consumers are paying a heavy price both in real monetary costs and in comfort and safety. When new equipment costs more than consumers can afford, they find alternatives. Some of which compromise their comfort and safety while saving less energy and in some cases actually using more energy. Finally, american jobs are being lost in part because of the promulgation of ever more stringent efficiency regulations. And the worst thing is d. O. E. Admits that these regulations cost jobs. While the Clinton Administration issued six major efficiency rules during his eight years in office, the Current Administration issued eight major efficiency rules in 2014 alone. There are real consequences from this rush to regulate. Yes, complying with these rules cost my Member Companies millions and millions of dollars, but what is far more important, it should be far more worried to congress is that american jobs are being lost and consumers who are already feeling financially squeezed are being forced to pay more for products they rely on in their everyday lives from comfort cooling and heating to refrigeration to hot water. Epka requires that all efficiency standards meet the twin tests of technically feasible and economically justified and yet d. O. E. Has issued rules that use unrealistic assumptions in its analyses to justify higher efficiency levels. Ill give you a couple of examples. For commercial boilers d. O. E. Estimates the new standard would save just. 8 more energy than the existing standard but would cost manufacturers up to 24 million to comply. For residential boilers and commercial refrigeration equipment, d. O. E. Justified the Economic Impact of the higher efficiency levels by using the assumption that no matter how much the product increases in price, demand for that product would never decrease. Every time d. O. E. Issues a new rule, it issues a press release estimating the rules benefits and cost savings to consumers and Energy Savings for the nation based on theoretical models. D. O. E. Has never looked back to see what the energy saves actually were or if consumers actually ever benefitted from spending more money. And the current law does not even require such a review. Finally, d. O. E. Projects future job losses in several of its rule makings for our products. For example, in two separate rule makings for different types of commercial air conditioning units, d. O. E. Noted Small Business manufacturers would need to redesign their entire Product Offering or leave the market. D. O. E. Acknowledged in a potential scenario in which a rule making for commercial refrigeration equipment could cause all existing production to be moved outside of the United States resulting in a loss of over 3,500 jobs. Changes to epca should be implemented in phases with the collaboration of all stakeholders. I urge all members of the upcoming Conference Committee to ensure the technical corrections in hr8 remain part of the final energy bill. Broader epca reform should stress flexibility, enhanced technical and economic justifications and the process should be overhauled to maximize transparency and Stakeholder Engagement. Congress should require d. O. E. To convene stakeholders to discuss a new regulatory framework. Were ready to work with congress, d. O. E. And other regulatory stake holders on ways we can together fix and update this 40yearold law to create a new, more open process, conserve energy, help manufacturers remain competitive in the global marketplace, and benefit all consumers. I appreciate the chance to appear today and i look forward to answering any questions you might have and working with you as we move forward on this important issue. Thank you, mr. Yurek. And thank all of you very much for your testimony. We appreciate it. Ill recognize myself for five minutes of questions. Ms. Miller, the George WashingtonUniversity Regulatory study center, how old is this center . It began in 2009. 2009. Thats right. And you how long you have been there . Since 2012. 2012. Mmhmm. So if you were running for Public Office or you were going to some rotary club speaking somewhere around the country, could you categorically say that these efficiency regulations are saving consumers money because the reduction of electricity costs exceeds the additional cost of the new appliance . I would say that these standards have very different affects on different households based on some of the characteristics i mentioned and shs also some i that state as well in my written testimony. For instance, if you live in texas, maybe its more beneficial for you to have an Efficient Air conditioner but do uf care how efficient your furnace is . How often are you going to use it . In that case you may not save any money by getting an efficient furnace. So i would say that different situations so geographical area would have an impact on it. Absolutely. And then you indicated the use of the product obviously would have an impact on it and you mentioned i think that some elderly people who maybe use it less would have less benefit from it as well, is that correct . That is correct. And the Department Notes that in its analysis. So all of us make comments about, oh, this is going to save money and so forth, but it certainly is possible in many instances, i would assume, that lowincome people and elderly are harmed more by these regulations perhaps than they are benefitted. Would you agree with that . That seems to be the case. And the Department Also does acknowledge that there are negative impacts on those groups in its own analyses. Its not a view thats outside the mainstream. Originally, this started because of the arab oil embargo. The reason that this all started was because of trying to conserve the use of energy and certainly that has changed today because we have an abundance of energy in america. But today its become more of a Climate Change issue. Thats what people talk about, well, weve got to be more efficient. Less co2 and so forth. Mr. Mcgwire, you and mr. Cosgriff and mr. Yurek all touched on this, the need for reform. Mr. Mcgwire, you and mr. Koss grieve and mr. Yurek all touched on this, the need for reform. And you all made some pretty strong statements. You said that sometimes the product is not going to be as effective, its going to cost more to consumers. Its going to you reduce consumer choice. And one comment i would also make on hr8, which is our energy bill, one of the most controversial aspects of it related to the process that the d. O. E. Goes through in adopting these new standards. For example, they really are not transparent on this. The Data Analysis is not really available until they get ready to notice it. And so all we were saying in this one provision which was like we were turning the world upside down was we want d. O. E. To sit down with the manufacturers, the people who make these goods, and have a more open and transparent discussion with them. I mean, you would agree with that, right . We would agree with that, mr. Chairman. And actually, that process that youre describing used to be used by the department of energy where manufacturers would have an opportunity to test a product under a new standard or to even employ a new Test Procedure before you could determine whether a standard was appropriate. But what weve seen in the last several years is because so many rule makings are going on at the same time that d. O. E. Has not been able to go through this very thorough process of lets do a Test Procedure and make sure that works. The test can be repeatable and reproducible before we set a standard so the companies can see if you can test a product. Its very manufacturers spend an enormous amount of resources on compliance to these standards. The testing is very complicated. Right. These products are more sophisticated than they used to be. So you want to get that right. You dont want to mess that up. Right. And whats happened is the process has become conflated an its very difficult to understand whats happening sometimes. Mr. Cosgriff, would you agree with that basically . I would agree with that. Maybe think as mr. Mcgwire was answering your question, the product cycle of some of the products entering the market in our area, l. E. D. Lamps as an example, is in many cases less than a year. So if you miss one of these hurdles ive referred to, youve missed a product cycle. Thats a very big deal. And for a small or Mediumsized Company of which theres many making l. E. D. S, that could be fatal. Well, i have a lot of other questions but my time has already expired. Mr. Rush, youre recognized for five minutes. I want to thank again the panelists for your interesting testimony so far. Theres a question that i have, and there is an argument that while the efficiency standards have been very valuable at reducing energy costs and consumption, many of these standards have already reached their maximum efficacy, and we cannot squeeze any more juice from the grapes in a certain manner of speaking. Do you agree with the statement that many of these appliances are as efficient as they can reasonably become . Or is there no and theres no room to move forward with these new standards or do you believe theres some more costeffective standards and measures and pathways that we can implement in order to greater have more efficiency and cost savings . Thank you, congressman rush. Yes, i do think that there are more costeffective pathways to achieve greater Energy Savings that have yet to come. And id begin by just as i say today in my opening remarks the rule that was finalized just last year for commercial rooftop units represented the largest Energy Saving single standard in agency history. And that was the third time that that standard had been revised. And while this is going to deliver Huge Consumer and environmental value, it was nowhere near the most energyefficient technology thats commercially available. So it just suggests that there is still room to improve, and i would also note that as i mentioned in my opening remarks that the forthcoming report from aceee in the looks at the rules that will be up for revision in the next eight years and has shown that the Energy Savings opportunity from those rules will exceed that of which of those that were finalized in the last eight years. Again, just further suggesting that and some of those standards will be ones that will be products that have already had standards and have gone through revisions in the past. And i would finally would just say that standards increase innovation and that innovation, that technological innovation creates new product features, new design opportunities. Our refrigerators today have more features than ever before. And that also could unlock opportunities for increased Energy Savings. And that could form the baseline for future revisions to standards in the future. Yes, maam. I want to shift my focus. My office has had many conversations regarding Energy Efficiency standards for appliances and their impacts on low income families. One of the arguments that we hear quite often is that the cost of complying with new Energy Efficiency standards will have a disproportionate impact on lowincome consumers. How do you respond to this charge, and secondly, are there any benefits to lower income households if industry is forced to comply with the most current Energy Efficiency appliance standards . Thank you. I guess i would id begin by saying i know the impacts on low Income Customers is a priority of yoursor, as it is for nrdc. And minimum efficiency standards set a dependable level of Energy Efficiency that every american can count on. Our analysis suggests that appliance standards will save the average American Household including low income households 500 a year compared to before standards were set. So that is significant. And i agree that low income households pay a disproportionately higher portion of their income goes energy costs. In a recent report by nrdc and ac triple e shows that Energy Efficiency is a key strategy for reducing the Energy Burden that low income households face. I would say that is why groups like the National Consumers law center and texas rose and other consumer advocacy groups engage and are highly active in the standards setting process because of the important benefits that it serves for the low income populations that they support. Thank you, mr. Chairman. I yield back. Gentleman yields back. The chair will recognize at this point the gentleman from illinois, mr. Shimkus. Thank you, mr. Chairman. This is actually a very good panel. You know, there really is more that unites us than divides us on this whole debate. And i think thats true across the board. And first of all for mr. Mcgwire, mr. Cosgriff and mr. Yurek, youre saying theres a need for some reform, but youre not claiming that theres a desire to jettison Energy Efficiency standards, are you . No, not at all. Were supporters of the program. Let me im going to go quickly. Mr. Cosgriff in absolutely not. Mr. Yurek . No. So this is an example where we really can Work Together to get some sensible changes to affect folks like the narrative that i provided earlier today. There is that trap that people do fall into from big federal agencies and the rolling out of regs and, as the fluorescent light bulb case, mr. Cosgrove, they get caught in a trap and you dont want to miss a cycle of putting a product on the shelves because for a Small Company, that could be deadly. And ms. Noll, you did mention in the discussion with my colleague mr. Rush that we should the confusing thing is were not talking from a baseline of families. What is a family . What is a cost . I think ms. Miller mentioned it. Her cost and a twofamily household is different than a family im one of seven kids. Nine in the family. Grew up a lot different costs. A lot different projected savings. Dont you think that if were going to have this debate that the department of energy ought to help us define what is a family, what is a savings, and to have part of that transparency, miss noll . Thank you. I would say the department of energy does take into account many perspectives. But dont you think they should help define this so we could have a better, accurate discussion of what the savings are and who theyre saving . This amorphous savings is being disputed by economists based upon real data and real numbers. As many of the colleagues that i work with, we strive to find get better data the question is, shouldnt the department of energy help us define their savings . The answer is they dont. Mr. Yurek, following up on this question, dont you think they should do a better job, department of energy should help us define savings and costs . Yes, i think the process the d. O. E. Is in a bind in some ways by the statutory language of this 40yearold act and how theyre required to do the analysis. Theyre in a bind by the time frame in which they need to do all these rules. They dont have the time anymore because of all the rules that theyre involved in to do the deep analysis that they used to be able to do and confer with everybody. And they also have a court order saying they need to meet these deadlines. Lets go quickly to job losses. You highlighted it in part of your written testimony. Talk about the job losses. Shouldnt the d. O. E. Talk about that there is a loss of jobs . Especially as you get to this point of again, my colleague mr. Russia says how much juice are you squeezing from the grape . You identified that just in your testimony. Yes. I think thats one of the Economic Analysis that needs to be be done. I think they forget the purpose of this act is not to go to the maximum tech and maximum efficiency. Its to slowly raise the bottom so everybody can purchase that equipment and have those savings. Theres other programs such as mr. Mcguire mentioned related to energy star that are the pull to get the higher efficient and get people to buy that equipment. What were seeing now is that this program is being used to go to the max tech versus going to the minimal level where people get savings and benefits but dont have the cost arent you asking for a return to a collaborative approach with the department of energy, mr. Mcguire . Yes, we are. Mr. Cosgriff . More collaborative. Mr. Yurek. Yes. So i do have to applaud the doe. We have actually been pressuring them years and also the epa to say, tell us how this affects jobs so in this most recent proposal rule march 12, 2015, this is what it says, some large manufacturers have already begun moving production to lower cost countries. Short term, u. S. Job loss. This is the department of energy saying that. An amended standard that necessitates large increases in labor content or that requires large expenditures to retool facilities should cause other manufacturers to reevaluate production siting options. What that means is that if we squeeze too much my colleague mr. Rush, if we go too much, we lose jobs to overseas manufacturers, and that would be unfortunate. Thank you, i yield back my time. Gentlemans time has expired. The chair recognizes the Ranking Member of the full committee from new jersey for five minutes. Thank you, mr. Chairman. Ms. Noll, from listening to some of the people silting next to you on the panel and some of my colleagues on the other side, youd think that the standards process has suddenly become far more contentious than it used to be. In my Opening Statement i talked about the fact that the standard setting process has always yielded some controversy from one industry to another and thats not to say that complaints or controversies werent always important or even valid. But i just see some contention as inevitable part of any meaningful standard setting process no matter how well it functions. So while not every standard can be negotiated my sense is that there has been more consensus than ever before and that every Industry Trade represented here today has been involved and likely benefited from that consensus. So my question is, do you agree with me that there actually seems to have been more consensus in the standards setting process over the past eight years and of the rules finalized in the last eight years what percentage of those rules has been established through consensus negotiations, if you could. Good morning. Yeah, its interesting because i think about the number of rules and the number of negotiations that have taken place over the years, and theres so many to choose from. I mean, the last two revisions to home air conditioning standards went through a consensus process and landed a negotiated consensus outcome. And thats fantastic for consumers and the value of that is going to deliver to them and for the environment as well. So i think from my perspective i would say that the controversy is the exception and not the rule. You know, that we can demonstrate i think of the as i said in my opening remarks, of the 42 standards that have been finalized since 2009, almost a quarter of those stemmed from joint consensus negotiations. And thats not to say that every rule needs to or can come from a consensus or a negotiation. And those that didnt went through the normal rule making process. And with the exception of maybe a few standards have been without controversy and supported by stakeholders through the process and input. So, yeah, i would just encourage us not to characterize action as controversy at this point. Im a strong supporter of Energy Efficiency programs and again im confused by some of the claims being made by members of todays panel. I find it difficult to believe there are no more significant Energy Efficiency gains to Consumer Products unless you assume we cant improve on Current Technology or develop entirely new technologies that are more Energy Efficient. For example, tv went from tubes to liquid crystal displays to plasma to l. E. D. In a little over a decade. So are we truly done with refrigerators, dishwashers, air conditioners, furnaces, whatever . Our experience has been no. I mean, i think in the latest refrigerator standard revision this was the sixth time including the state standards that that standard had been revised. It represented about 20 to 30 improvement over the previous standard, and thats on par with other revisions, fully supported by manufacturers and stakeholders. And i think weve seen, you know, that that trajectory has held true. Refrigerators are now 75 more efficient. They have more product features, are 20 larger, and it costs half as much. I think the lighting revolution that weve seen take place is another example of i dont think in 2000 we could have predicted the number of choices and the efficiency that we would get from l. E. D. S today. So those are just a few examples of where this could be headed. Right. Several witnesses have referred to mandatory serial rule makings. My understanding of the law is that it mandates the review of a standard every six years. However, to my knowledge, the law doesnt require that the standard be updated every six years. So just to clarify, would you just answer yes or no to the following questions, okay . Does the law require a standard be reviewed every six years, yes or no . Once its gone through its statutory requirements, then yes its required to be reviewed every six years. Does the law mandate that a standard be updated every six years regardless of any other fact pattern . No. Does the d. O. E. Have to determine whether rule making is likely to result in significant savings before requiring a standard be updated . Yes. And does d. O. E. Have to determine whether rule making is likely to be technological feasible and costeffective before updating a standard . Yes. Okay. Thanks a lot. Thank you, mr. Chairman. The gentlemans time has expires. The chair uses the privilege of the vice chairman to recognize himself for five minutes. A hearty texas welcome to mrs. Miller, mr. Mcguire, miss noll, mr. Cosgriff, mr. Eckman, and mr. Yurek. In the initial time i have one question about air conditioning. Southeast texas, my home, exists in a climate we call 95 95. From early april to late september its 95 degrees fahrenheit with 95 humidity. Until 1902, the only job in that region was picking cotton and guarding prisoners in big state prisons. That provided very, very slow, low growth. And then this carrier invented the air conditioner in 1902. That single invention combined with oil being discovered at spittletop and beaumont and the 51mile Houston Ship Channel being built has put houston on track to be the nations Third Largest city sometime this decade. Federal actions affecting air conditioning gets the attention of all texans. Especially if two federal agents are in conflict. Weve seen that situation right now with airconditioners. D. O. E. As to higher efficiency standards for airconditioners. While epa is banning foam blowing agents from being used in airconditioners. So my only question is for you, mr. Mcguire and you mr. Yurek. Mr. Yurek first. Can companies comply with these conflicting standards . Can they comply with these . What are the challenges . First off, yes, they can comply with it. But how they comply with it is it costs a considerable lot of money in the conflict between the two statutes going into effect in and the needs to spend money on research and development and then once that the research and development is completed, they need to then retool their plants. Yes, they can do it. Its going to cost the big manufacturers that have the funds will have the ability to do it. There will be several of the Small Manufacturers that dont have the Funds Available that will go out of business either being acquired by the bigger ones or just leaving the area. Big guys pay, the small guys go away. Mr. Mcguire your thoughts. Can they survive . Can they work with these conflicting regulations from different departments . The industry can comply, but the problem is it takes a certain amount of time to do that. And the epa decisions, proposals on refrigerants is not being coordinated with d. O. E. On the efficiency standards. With the vast majority of Greenhouse Gas emission avoidance benefits come from the appliance standards, not reducing the changing the refrigerants. We have to deal with the fact that the Safety Standards in the u. S. Do not allow the type of refrigerants we have to go to yet and the amounts necessary. That requires a Safety Risk Assessment tests that companies are going. It takes a lot of time, sequence and investment for this to happen and it would be prudent for the two agencies to talk about this and reach a decision that makes sense for the environment and for the people that are making these products. Final question, sir. Do you believe the Obama Administration is meeting their own goals set with their executive orders to minimize the cumulative impact of these regulations . They said, lets make that lower. Does this achieve that, or is this in violation of that . We do not believe the d. O. E. Is in a proper analysis to the cumulative Regulatory Burden on manufacturers when theyre doing their appliance efficiency standards because theyre not taking into account the cost and investments that have been made for previous versions that havent been recouped as well as the investments that have to be made in alternative refrigerants. Mr. Yurek, your thoughts sir . I agree with mr. Mcguire in that that proper analysis has not been done and the burden on manufacturers is not being considered and actually has been ignored when raised in some of the rule makings related to commercial refrigeration equipment where we did raise epa changing the refrigerants that could be used at the same time efficiency regulations went into effect. Doe said they havent changed it yet so were using the current refrigerant. They issued the rule, six months later epa banned those refrigerants. Theres two different implementation dates, one is 2016 for the refrigerants and 2017 for the Energy Efficiency standards. You have to redesign twice in two different periods of time. Thank you. My time is expired. One word of warning. Dont mess with texas air conditioners. Chair recognizes the gentleman from california for five minutes. I thank the assistant chair. Mr. Cosgriff, i believe that you stated that many of the imported products are not held to the same standards as americanmade products. Is that right . I didnt say many. I said that we should be on guard to make sure that nonqualified products enter the stream of commerce inside the United States. So that must be happening then. Is that happening . Are products entering we receive information from our manufacturers routinely that they find products in the stream that dont by objective standards meet the standards of the United States of america. So u. S. Consumers are buying products made overseas that are potentially less efficient and cost american jobs at the same time. They might be, yes, sir. How can we remedy that situation . Neiman in the past has worked with congress in the past in the area for instance, customs and Border Security to make it available to their agents so they can know what theyre looking for, to be able to identify what constitutes a Valid Third Party certification mark, what might be a counterfeit and other tells that you might see in so this is an enforcement issue, not a trade rules issue. Mostly enforcement, yes, sir. Okay, very good. Mr. Eckman, please elaborate a little bit if you would on how the rule making process could be improved, the transparency of the rule making process could be improved. Ill go through a little bit of history so that the context is there. In mid2000s, d. O. E. Staff directed their consulting staff to sit down with advocates and manufacturers to help negotiate whitegood standard with aham folks so the technical staff that was supporting d. O. E. s rule making was appraised and involved in those negotiations that were informal at the time. They werent authorized by doe. We were handling those on the side. And that led to another process on electal transformers where both doe staff and their consultants got involved an finally doe established under the federal administrative procedures act a negotiated rule making group called a. Rac, appliance standards rule Advisory Committee. Which now oversees a series of requests that might come in from parties that want to enter into negotiations and through a regulatory process as opposed to a rule making through a standard comment process. And that has opened i think the doors to more consensus agreement. The agreement on major refrigeration products, the hvac equipment, pumps, and electrical transformers all came from those kinds of negotiations where theres a great deal more transparency interaction with the manufacturers, with advocates and d. O. E. Staff and its consultants because they can get down and talk face to face, roll the sleeves up in a meeting not in a very formal hearings type process. I think that has improved both the outcomes and the feelings that come out of those outcomes about we agree we cant get everything we need, but the compromise works for all of us. And that process to me is really central to in advancing the rule making process. Thank you. Mr. Cosgriff again, you mentioned that the or im going to ask this question. Do you believe that the current standards have room to drive more innovation . Do i believe the current standards have can drive more innovation. Can drive more innovation. I think the manufacturers are driving innovation. I think competition is driving innovation and i think standards have a part in that. But i wouldnt overstate what their part is. So if a product is at the low end of efficiency, then the standards are a welcome boost. If a product like a transformer is approaching 99 efficiency, im not sure what theyre accomplishing. Thank you. Ms. Noll, could you give some examples of efficiency improvements that are still possible . Yes, id be happy to. You know, i think that as we look at some of the products that are still that will be revised in the next eight years, theres standards for equipment and Household Appliances that have seen standards before. Water heaters is the likely potential opportunity for increased savings. As mr. Cosgrove just mentioned, distribution transformers, they ed may be reaching a high level of efficiency but all of the electricity that is produced in america goes through transformers so even half of a percent improvement there is going to be a Significant National benefit. So i do think that there is opportunities that still exist to improve through the standards process. Thank you, mr. Chairman. The chair recognizes the gentleman from ohio for five minutes. Thanks, mr. Chairman. And i also would like to echo that i think this is a great panel today and i really appreciate you all being here. Im kind of an expert. My wife and i in the last six weeks just bought a washer and dryer and the refrigerators next. But in northwest ohio we do make hvac. We make dishwashers. We make dryers. We make washing machines. We also make waffle irons. We make large mixers. And we also have a large freezer plant right in west central ohio. So we have a lot of things going on. Its very important to our economy, but mr. Mcguire, if i could start with you, youve been particularly critical of the proposed new standard for dishwashers. Can you explain what is wrong with the standard both in terms of the substance of the proposed rule as well as the process by which it has come about . Well, the proposed dish washerer standard from last year, first of all, it required a 20year payback to the consumer for a product whose useful life is 13 years. It reduced the amount of water that a dishwasher uses in a cycle from 5 gallons to 3. And the proposed rule did not go through any type of performance or consumer testing before it was issued. We did not get a chance to do that. We normally do in these rule makings. Let me interrupt. Why didnt you get to be part of that . D. O. E. Just didnt do that part of the process. They just went right to the rule without that type of testing. So once it was proposed, we did the testing and we demonstrated to d. O. E. And others that dishes were not cleaned and multiple product manufacturers products it did not clean the dishes. So the utility of the product was affected. The consumer payback was not there. And the Energy Savings was minimum. Less than a quad. 7 of one quad. Now, the current dishwasher standard thats in place today, that has a payback to the consumer of 12 years so that was already at the limit in terms of economic sense. There was no need for this fifth dishwasher standard. So it didnt it messed up the product. And it did not make sense for the consumer to buy such a product. So our view is that theres something wrong when the process spits something out like that. That has to be a product or a category where you dont do another rule making unless some quantifiable measure can show theres going to be a real significant savings in energy that wont harm the consumer. But under the current process, its very difficult to get does assumptions and other things that go into their analyses done by their contractors of the National Labs so thats part of the process change wed like to see. Just out of curiosity, when you were doing this testing when you were going from five gallons to three gallons, how much did that cost the industry . And what did that cost the consumer in the end . Well, how much did it cost the consumer . When you are doing the testing, going from five gallons to the three gallons you said, i was just curious, is there a cost to the industry that you had to do . Oh, sure. And overall, i assume that would go back to the consumer. Well, these tests that we did on this proposed rule were the standard didnt go into effect so those costs were absorbed by the companies. Thousands dollars to do these tests. But once the standard is in effect, in order to prove your compliance with the standard, you have to test your product before its submitted to the marketplace and then a regular routine Testing Market surveillance that our industry actually does some of that testing to police ourselves and to provide some information to the government. Those tests are very expensive, and the cost of compliance the tolerances are very, very tight. So manufacturers invest a lot to make sure their products meet the standards and the tests are sophisticated so its a costly part of being an appliance manufacturer. And those costs are going to the product like any other cost and are passed on to the consumer. Thank you. Mr. Yurek, im concerned about the economic effects that the administrations aggressive regulatory agenda has. Its my understanding that doe is implementing rules that set new standards for individual components in your members residential and Consumer Products such as the new standard for the efficiency of furnace stands. How does regulating a specific component on a large heating or cooling system add to the cost of a furnace or air conditioning system . We have a lot of concern and i think looking at this 40yearold law that its dealing with products and in some instances its going into the components in those products and pieces of equipment. Which is the wrong direction. Really what we should be looking at is how these products are put into the house or into the building and looking at an overall Systems Approach to efficiency to really look at the gains because if you start dictating and regulating the components, be it the compressor, now theyre looking at regulating the fans that go into the air conditioning and furnaces and others. Youre dictating how these products are designed. Once theyre put into the product, they might have weve shown in a case in a proposal out with the California Energy commission when they were doing this with air handlers, what they were proposing and the efficiency level for fans actually used more energy when applied in the air handler than being abe to design the overall product and the energy use of that air handler. And so we just want to make sure that this is done rationally and the current law doesnt give doe that kind of authority to look at the broader picture. I think we just need to step back and say, its 40 years old. Lets look at it and make some changz and make it better so we can actually get some Energy Savings out in the field and have consumers be able to afford the equipment. Thank you very much. Mr. Chairman, i yield back. The gentlemans time has expired. The chair recognizes the gentleman from vermont, mr. Welch, for five minutes. Thank you very much. This is a great panel. Appreciate it. Couple of things. We dont have a bill yet, right . So this is kind of an abstract discussion . And i thought mr. Shimkus kind of laid out the potential for cooperation here. I do like the notion of collaboration in the process because youve got folks at doe who are doing their best to implement efficiency standards. Youve got real world folks that are the manufacturers that have to contend with the very practical issues of implementation. I mean, ms. Noll, youre okay with that, right . Yes. I mean, i think standards are incredibly important. I dont think theyre everything. Mr. Cosgriff, you mentioned that the standard in some cases does spur innovation but if youve got something thats highly efficient then its not going to accomplish all that much. I mean, a lot of what youre saying sounds very reasonable to me. The jobs issue i think it really is all its not so much the jobs issue. I mean, air conditionings by the way is one of the most outrageous loss of jobs is with carrier leaving indiana to go down to three buck an hour wages in mexico, which i think is pretty appalling but has nothing to do with standards particularly since whatever it is thats mafr manufactured at 3 bucks an hour has to meet the standards before it can come back into this country, right . So youve got a level Playing Field as long as the standards apply to everywhere. But i do, as a strong, strong supporter of efficiency standards with mr. Mckenly, whos got a lot of experience in this, i feel that those of us who believe standards can work have to be extremely diligent in tryinging to address practical concerns as they come up. That makes sense to me. So ive heard the industry folks saying that youre not for unraveling them. You want them to be more practical. Yeah. Im not asking a lot of questions because i dont think theres that much disagree the and we dont have a bill. But i think one thing that would be helpful as part of this process would be to get the d. O. E. Folks in here and ask them what are some of perhaps the congressionally imposed burdens were imposing on them, where youre saying theyve got so many rules theyve got to deal with they dont have the time and space. The bottom line here, collaboration i think is really good. I think standards are absolutely essential. I mean, the Energy Efficiency savings that weve had have been tremendous in if theyre done right, it can save consumers money. Its not without impact. I mean, we all understand that. But there was a cost associated with requiring the automobile manufacturers install seat belts. That cost more money when you bought a car. But most of us think its about time. Mileage standards have been tremendous. That is a cost, but its really had an impact on the average mileage in our fleet. So really what im asking for is to take up mr. Shimkus on his observation that this is an area where theres some opportunity for us to cooperate, but that means not letting it get adversarial. If theres acknowledgment even from the people who are affected by this in ways that they think are a little too aggressive, to have some interaction with d. O. E. And us to try to figure out what are the process improvements we can make in order to get the benefits of regulation. Im just ask the industry people. Mr. Mcguire and mr. Yurek, is that a problem for you, the approach im talking about . Its not a problem. Weve used consensus many times in the past. But we think consensus ought to be to change the law so that the process requires these improvements and theyre not discretionary. Well, thats got to be a discussion theres no specifics here. So youre making we dont have a bill in front of us. There are some process improvements in the energy bill in conference, but the ones were talking about the major reforms arent, youre right ill tell you what would be helpful for me. If each of you did like a onepage bullet point assessment of convict katrina things that you think in the process would improve it. Then we can assess it, have a discussion, talk to d. O. E. , how does that work . Would it improve it or not . Whats the down side of it . Were just having this real abstract discussion here. And regulations i think are really important and can be really beneficial, but they also if theyre not done right can have a lot of downside to them with no upside. Ms. Noll, how about you . I would be happy to do that. I just would also encourage us to look at some of these where the process is working and i think dishwashers is an example of that where d. O. E. Heard from industry and Congress Granted them the authority to look at consumer utility and performance as one of the criteria. That would be helpful. For economic justification. Just as an scam. How its working and serving to protect consumers and also ensuring a balance both the impacts on manufacturers as well as the impacts on consumers and the environment and reducing our Energy Consumption. What about you gentlemans times expired. Im sorry, sir. Got to move on. I recognize the gentleman from West Virginia mr. Mckinley for five minutes. Thank you, mr. Chairman. Let me just build a little bit on some of the remarks that were made earlier about some of the credentials. Peter welch and i have had a wonderful working relationship. We both we chair the efficiency caucus. We put language into the Current Energy bill that were waiting to see whats going to happen in the senate. Weve been to the white house for signatures on Energy Efficiency bills. So this is something i think he and i really grasp fairly well this. Back when i was in private practice in engineering, we designed some of the first lead certified schools in office will buildings in West Virginia. Working with tonka over at Energy Efficiency with the turbines to create energy. Energy efficiency is one of the prime areas i like to play with and get involved in here. But i get to a point, theres a vast difference i want to play back a little bit on what my colleague and good friend bobby rush from illinois was talking about, the disparity of income when people are facing this. If you look at this, it poses a challenge for all of us. It really does for us. If you look at mississippi, my colleague here from harper, mississippi, their medium Family Income is 36,000 a year. In mississippi. 36,000 a year. But in maryland its over 70,000 per Family Income. So in those affluent states or neighborhoods, they make choices. They have choices. Youll probably if we went through the Motor Vehicle licensing we probably find they have more bmws and lexus cars there than we have in some other areas of the country or in neighborhoods. We have so cars are going to be different because people have choices. We have housing, different pricing for housing because people have choices for that. We have health care. When you go to the shangs under obamacare, there are different exchanges you get so people have choices. But when it comes to their major consumer appliance, they dont. For your air conditioning, your refrigerator, your range, your dishwasher, your furnace, all of these now have been mandated that this is the only one that they have available to them. Im troubled with that because of the diversity of income, their capability of doing it. Dont tell me its going to save me 500 a year because we understand the whole payback is so much longer on all these. So im wondering, is there a suggestion you all could make that might make it more palatable for people to be able to have a choice . So that theyre not confronted with this hard decision. I know of families that are trying to fix anything they can their equipment as much make it last as long as possible because they know that they cant afford the cost of the new one. So theyre spending a lot of money in repairs because they dont have a choice. They know what the cost is. That air conditioning costs the same in connecticut as it does in mississippi. Or that dish washer. So what would you suggest that we in congress could do to maybe ameliorate some of these differences so that the poor conditions or states that have trouble, how can they afford to have this cost . Congressman, i think this is a really important issue. I think its bring back the balance that was originally put out in the 40yearold law where it says technically feasible and economically justified. Right now the folk you us is too much on the technical feasible in saying, hey, my manufacturers manufacture products everywhere from the federal minimum to very high efficiency. Yes, we could go to the high efficiency but we need to look at the cost. And i think its bringing that balance back to that economic justification in saying, this law is intended to raise that floor slowly. People that have the incomes in maryland and other places are going to purchase the things with all the different bells and whistles on their refrigerators, their dishwashers, their air condition conditioner, and everything else, but theres a lot of people in this country, when you look at the cost now of the minimum Efficient Air conditioner, youre looking at 6,000 to 10,000 at a minimum that is done in an unplanned time because most of the time these units go out when the hottest day of the year or the furnace when it is the coldest day of the year. And the Federal Reserve just had a study last week that said over 47 of the American People have less than 400 in emergency cash available to them. So what are they going to do . They need that comfort. In the wintertime, they need the heat a lot of times for medical reasons. They need the cooling in the summer. And so its bring back that balance. You know, probably putting more of an emphasis on the economic justification versus the my time is expired. Could each the six of you, would you mind putting a little paper to me tor something that you would suggest that might be a solution to help out for families in depressed areas . Thank you very much. I yield back. Gentlemans time has expired. The chair recognizes the gentleman from new york for five minutes. Thank you, mr. Chair and thank you to our witnesses. Certainly were citing a 40year history here. Again to repeat what my colleague from vermont indicated, we have to look at some of the trade situations too where offshoring of jobs might have helped some families retain those jobs and be able to afford these items and this job loss thing i think is much more complex than just suggesting standards caused it. Our Energy Efficiency standards have improved products that benefit all of our constituents, many of these are not luxury goods but necessities found in nearly every home. Weve heard support for National Efficiency standards from manufacturers and consumers, and weve heard from industries, from states, from environmental groups that there is consiste y consistency, that this program has been a success. Im certainly open to improving the program but improvements cannot undermine the purpose of this program. And while we look for those improvements we should not lose sight of the fact that this program is incredibly successful while there have been a few contentious rules, it is my understanding that of the final rules issued since 2009 almost onequarter were the result of negotiated consensus agreements and only five have been subject to litigation. So to our witnesses, do you agree that many of these rules have been consensus driven . Yes. Yes, most of them as ms. Noll said, 25 of the rules in this administration have been through the consensus process. That means 75 of those 40 others have not. And i think we all support and would encourage that negotiation consensus process because theres more of that give and take that mr. Eckman talked about versus the notice in comment where you only have the adversarial is much more adversarial versus the negotiation. I think thats something we should look at. Okay. And i think its worth noting that doe has a history of working to improve the program, especially around increasing Stakeholder Engagement dating back to the 1990s. A few years ago doe established as i understand the appliance standards regulatory Advisory Committee which formalized the process for negotiated consensus rulemaking for the first time. And a number of our witnesses participate on these committees, which includes again our manufacturers, our trade associations, states, and consumer groups. Can anyone comment on this committees work and what you know, what it is as a positive what it might be as a positive step to formalize this process . Mr. Eckman . Yeah, i think it has improved the process a lot, particularly where theres a likelihood that both the manufacturers and the efficiency advocates and the doe Agency Personnel and consultants can come to a more flexible conclusion than would otherwise be provided. And i think thats its allowed for lots of horse trading that wouldnt occur as mr. Yurek said under the standard process that was rulemaking hearings process and file your report. So i think thats its been a huge advantage. Ive been a member since the committee was established. Weve had multiple work groups, seven different work groups, so far negotiating standards. They worked the best when both the parties that want to participate in that come before the committee and say, we think we can work this out. Give us a chance. If thats not possible or theres not really an issue everybody thinks we can do this through rule and comment, thats a much more expedient process. It takes a lot of time and energy to do the negotiations, as youre aware, but that turn out to be better rules as a consequence for everyone involved. I think supporting that on a continuing basis in process, that has a really has improved the process a lot. Does anyone else i would just want to note that on the 75 that werent consensus or joint negotiations does not mean that they werent going through the normal rule making process to deliver a superior outcome and only five of those rules have been litigated. I think that is still a very small number on the grand scheme of things. Thank you. Mr. Cosgrove . And to mr. Yureks point following up a little bit, when youre sitting around a table talking about technical things you better have the technical chops to have that conversation. So in this highly quantified algorithm that asrac and d. O. E. Consultants are using id like to see inside that. We have mathematicians. We can figure it out. I dont understand why we cant see what the Key Assumptions are and how those assumptions play inside the model they built and run through the computer. One of the things weve learned over the last 40 years i think is that this incoming tide has raised all the boats. This is a good news story. Now lets perfect it but lets do it in as scientific a way as possible and as transparent as possible. Anyone else . Mr. Mcgwire . Mr. Tonko the gentlemans time has expired. Make it quick. I recognize the gentleman from missouri mr. Long for five minutes. Thank you, mr. Chairman. Mr. Mcgwire, could you recommend to me what type of hair dryer would be the best purchase for my dishwasher so i can dry my dishes whenever the cycle is through . Ill provide that for the record. My dishes are not feeling the burn as they once did. Mr. Cosgrove, in some of the testimony given today the issue the department of energy coordinating better with another agency was mentioned as an area of improvement. Particularly in the area of making sure that imported products containing regulated components are held to the same standard as domestically manufactured products are on their own. What are your thoughts on how we can ensure a level Playing Field for u. S. Made components . There will be a number of things. I think clearly it may not be d. O. E. s responsibility but it would be their responsibility to make sure their fellow travelers, principally customs and similar policing functions, are aware of what the standards are, what to be looking for can you pull your mike a little closer . I think industry has a role in that too. We should step up and offer our technical expertise. Theres other distributors would have a role in that. Systems manufacturers will have a role in that. So its not going to be one easy solution, but we dont want those products in the stream or in the system. The Energy ConservationStandards Program requires department of energy to start a new rulemaking procedure on a product as part of a sixyear review cycle. Could you tell me generally how long it takes to fully comply with Energy Conservation standards for a product factoring in all of the cumulative rules including Test Procedures . Three years sticks in my mind. I think it would be different for different products. I mentioned lighting happens a little faster. If were doing a motor, meeting a motor efficiency standard, thats a bit more complex. Machines. So i think its different. Assuming its we have three years to get into compliance, and then that gives you three years of run time before the next rulemaking kicks off and d. O. E. Tends to, as youd expect and as they should, start that rulemaking early. So theyre able to comply with the law when they get to six years. Id also point out in the covered products for nema we know of only two times where the department has chosen for the costbenefit analysis to forego the rule. What are some of the challenges in complying with both the Energy Conservation standards and additional Test Procedures . Go ahead. Congressman, thats one of the interesting things that was the change when we made the serial rule part of i think it was 2005 amendments to epca, you have to review the standards every six years. The requirement is you review the Test Procedures every seven. And what were starting to see in a lot of our products, the Test Procedures arent complete for the products that theyre setting standards for. So as a matter of fairness we dont even know what the Test Procedures going to be and how our products are going to be measured. The information isnt there. And theyre setting efficiency standards at minimum levels. And so i think the interrelationship is very important. We need to know what the rules are, be able to evaluate what those rules are through testing our products and provide that information to d. O. E. Before they start setting the next standard. The same thing is the previous question mr. Cosgrove, our products its a fiveyear implementation time from the standard being set and when it becomes effective. And it takes the entire time to do it. What were seeing is even before in some cases the standards are put into effect were seeing the next round. And we saw that with residential air conditioners. The standard went into effect in january of 2015. The fall of 2014 they already started discussing the next round of efficiency. So youre looking at increasing the efficiency standards on this equipment even before the prior standard went into effect. Welcome to washington, d. C. Mr. Cosgrove, do you care to comment on that as far as what the challenges are . Theyre pretty much as mr. Urich said, its going to take us some additional time depending on the product. Okay. Thank you. Mr. Chairman, i yield back. The chair recognizes the gentleman from North Carolina mr. Hudson for five minutes. Thank you, mr. Chairman and thank the panel for being here today. Very informative discussion. Mr. Mcgwire, which of your appliances have been regulated multiple times . Do you believe were reaching a point of diminishing returns with this serial rulemaking . Virtually all of our products have been regulated multiple times. The current refrigerator standard thats been in effect since last year is the fourth version of that standard. Same for dishwashers. The rule i mentioned that was proposed last year was the fifth revision. We believe we hit the point of diminishing returns in the last tranche of standards negotiated through the consensus process. We think standards Going Forward for most of our products are not justified on the economics or the Energy Savings. Appreciate that. Mr. Long asked one of the other panelists about the issue of having the d. O. E. Propose new standards for some products while the underlying Test Procedures are also changing. Would you like to elaborate on how this is a problem for you . Its a major issue because a manufacturer cannot tell whether they what they have to do to comply with a new standard until they know how to test to it. Thats why the law as to the Test Procedures come first. But that process is a little out of whack right now. So we in the case of portable airconditioners, weve had to comment on a proposed standard before we knew what the final Test Procedure was. Thats really impossible to do. But thats what were forced to do under the current process thats being employed. That seems like its not serving the best interests of the people either. If we arent getting the true assessment of the results of these tests. Obviously i see why thats a mistake. Many of your manufacturers make several regulated products and face multiple rules. Whats the challenge . Maybe you can elaborate a little more for your Member Companies in terms of complying with all these different requirements simultaneously just in addition to sort of the testing thing we talked about. But just elaborate on that. The initial investment to gear up for a new standard as mr. Urich and cosgrove said is quite an investment to understand the Test Procedure and get your products qualified. But ongoing a manufacturer has to test and identify those products to the department of energy if you want your products to be energy star qualified, that requires a further upfront test as well as ongoing testing of a certain percentage of your products. So thats a pretty significant testing burden for the manufactur manufacturese manufacturese manufacturesers. And when the Test Procedures are under revision, it has to be very precise in order for you to design a product. What weve experienced is energy star sometimes will want a different Test Procedure than d. O. E. Requires for the standard. One of the benefits we found of negotiating the consensus is we would peg the Energy Standard requirement to the standard requirement with the single Test Procedure so manufacturers can plan that out. That hasnt always been the case. These are processes that used to be employed but havent been across the board in recent years. Thank you. Industry groups have repeatedly asked d. O. E. To establish separate product categories for condensing and noncondensing covered products only to have the d. O. E. Provide a response that condensing and noncondensing equipment provide the same utility to consumers, so theres no justification for establishing separate product categories. Is this another area that warrants an objective thirdparty review . Congressman, what youre talking about is the famous furnace rule. And there again its related to technology. This equipment is at a point where you have condensing and noncondensing and theres cost differences that are considerable between the two technologies. Right now we are at the highest level of noncondensing efficiency. And the rulemaking is looking at moving to a condensing requirement. I think the groups this would have been a rule that would have been great for negotiation because what weve seen over the years is that every rule thats come out has ended up in litigation. And to see if the groups could come together and reach a solution, i think would have been a better solution. Here right now in the midst of a notice and comment. D. O. E. Has just issued their proposed rule to o. M. B. For review. So well see what happens there. But having two separate product classes for condensing and noncondensing does not look like it will be something thats put forward. Looks like my times about expired. So ill yield back. The chair recognizes the gentleman from ohio mr. Johnson for five minutes. Thank you, mr. Chairman. And i want to thank the panel. I know youve been here a while already. For mr. Mcgwire, mr. Cosgrove and mr. Urich, how important is early Stakeholder Input for the rulemaking process . What are the additional challenges that you face when d. O. E. Issues a notice of proposed rulemaking without having consulted with you beforehand . Mr. Mcgwire, lets start with you. I think its very important from an effectiveness point of view. If the manufacturer hasnt had the ability to be in a dialogue with the government about the proposal and how they expect the efficiency requirements to be achieved and do some testing, then youre really dealing in a vacuum. This is what happened with the proposed dishwasher rule. Its very important. These are technical matters. Its very important that not only manufacturers are engaged, but also all stakeholders. This asrac process does do that. But the asrac process is useful once a decision has been made that will be a new standard. What were talking about is a change in the process for determining whether there should be a new standard. If there is going to be one, consensus is always the best. We feel we will do better as the advocates feel given a give and take, putting on the table, and not wondering where the data came from. Before we go any further i really want you guys to get the dishwasher rule right. Im the dishwasher at my house and if the dishwashers dont clean, ive got a real problem. Its going to be double work for me. Mr. Cosgrove, go ahead. I certainly agree with what my colleague says. I think what ive heard is listening to this conversation is at least by the manufacturers, this is not an assault on the standards. We want the energyefficient economy to thrive. Its good for business, as noll pointed out. That said, it can be more transparent. The department of energy has some true experts in their fields, but so do we. And it should be as was stated. Lets put the numbers on the table, and then lets bring in the Business People and say, okay, the cost of efficiency improvement goes like that, but then the efficiency curve is almost flat. At some point weve got to call enough. Got you. Thank you. Mr. Urich . I think its very important because industry has the information that this rules going to be based on. It has information on what technologys available. It has information on the cost. It has information on the products that are being sold today, both on the different efficiency levels. So if that conversation doesnt occur, what is the regulator looking at to make its decision on is there significant Energy Savings, can there be Energy Savings, and should we move forward with the rule . Its very necessary for that dialogue, and i think d. O. E. Would like to have that dialogue, but again they are tied by what u. S. Congress has put in the act in the serial rulemaking where youre mandating these rules every six years, and they just dont have the time to do a lot of times everything they need to do or like to do to get these rules out and also meet the court order from the 2nd circuit to make sure they meet all their deadlines. Lets continue with you, mr. Urich. The d. O. E. Has proposed new standards for some of your products while the underlying Test Procedure is also changing. Why is this a problem for you . Its a huge problem in that i sted earlier, yes, we need to know what the rules are, how our products can be measured. And again, its getting d. O. E. The right information. If the Test Procedures arent set, how do they know how products are performing out in the field . Is it safe to say its pretty dadgum hard to innovate when you dont know how youre going to be measured at the end of this . You dont know what the target is. You dont know what youre going to be measured on. If you dont know where youre going, any road will get you there. Okay. Mr. Chairman, im going to yield back 45 seconds. We thank the gentleman from ohio. The chair will recognize the gentleman from oklahoma mr. Mullin for five minutes. Thank you, sir. Thank you for having this meeting. Ill be honest, theres a few meetings we have in here that i had to study hard on because im not familiar with it. This is as i would say in my wheelhouse. I understand this situation extremely well. Ms. Noll, im going to talk to you for probably the remainder of the time. Because a couple of things you said, and i just want to set the record straight. One, you said huge savings that these Energy Savings standards the d. O. E. Has put out has put huge savings. That was your words, right . Based on what . Based on analysis