ENERGY EFFICIENCY:

Fledgling DOE enforcement effort gets 'aggressive' with noncompliant manufacturers

The Department of Energy once used the honor system to enforce energy efficiency standards, relying on manufacturers to police each other when it came to keeping their appliances compliant.

It didn't go well.

Hundreds of thousands of products went unregulated over the years, with many companies neglecting to file the required paperwork on appliances such as air conditioners, refrigerators, toilets and light fixtures. Those reports that were submitted were rarely verified; DOE officials simply took manufacturers at their word.

Today, the department is trying to reverse that trend with a new division under the Office of the General Counsel. Created two years ago, the Office of Enforcement has filed about 50 cases against manufacturers for noncompliance and collected more than $600,000 in settlements.

That is a significant improvement over DOE's old habits, said Andrew deLaski, the executive director of the Appliance Standards Awareness Project.

"It was sort of on your honor, except your competitor might rat you out and then you'd be at risk of action," deLaski said. "That did happen occasionally, but there was no systematic enforcement by the agency. It was reliance on competitors to police each other, which has spotty results."

DOE now heralds its "aggressive" enforcement. Last week, the enforcement office announced 20 new cases with fines in the tens of thousands of dollars. Though stern, the notices offer a compromise: Companies can pay a $6,000 settlement if they file the necessary paperwork in 30 days.

Most companies, however, filed reports when the Office of Compliance gave companies a grace period in 2009. By early 2010, officials were flooded with reports for more than 600,000 products.

But deLaski said the office's real challenge will come from ensuring all that paperwork is accurate.

"The goal here is energy savings and compliance, and I think they're doing a good job of keeping their eye on that goal," he said. "But all that the recent actions tell us is who filled their paperwork properly."

DOE has just begun to test off-the-shelf products to ensure they follow federal law. It has also begun verifying products under the Energy Star program, which allows manufacturers to adhere labels on high-performing appliances.

Soon, the department plans to begin a rulemaking process to consider a more comprehensive verification program -- a process deLaski said he hopes will end in more transparency.

"The other piece of that is making sure that the results of verification testing is made public," deLaski said. "How do we have confidence that DOE is doing a thorough job? We can't unless they tell us what products they tested and what the results are."

Energy Star lawsuits

Manufacturers seem split on whether to welcome the new scrutiny or fight it.

According to DOE, companies who have been following the rules are pleased; enforcement means a more level playing field. But others have taken the issue to court.

In 2009, LG Electronics Inc. filed a lawsuit claiming DOE unfairly ordered the company to remove Energy Star labels from one of its popular refrigerators after changing the testing standards without warning. The department, LG claimed, suddenly included energy from fill tube and ice ejection heaters when determining the refrigerator's energy efficiency.

"This startling and arbitrary action will cause LG lasting, immediate, and irreparable harm to its reputation, its market share, and its relations with distributors, retailers, and others in the chain of commerce within this country," LG argued in its original complaint.

The two sides eventually came to a settlement last year, but only after LG was forced to remove the Energy Star label from one of its models.

Several other products also have failed Energy Star testing in the past year, including Electrolux Gibson's air conditioner, an Equator clothes washer and a Samsung refrigerator. A few have violated federal law; Air-Con International agreed to pay $10,000 after the Office of Enforcement discovered it had imported and illegally sold more than 1,900 air conditioners that failed to meet minimum efficiency standards.

A rule finalized in March will enable DOE to dig even deeper.

Though it did not change testing procedures, the rule imposed a new requirement that manufacturers submit more detailed compliance reports annually. Officials hope to modify the rule to extend the compliance date by 18 months for some manufacturers.

Manufacturers are already looking ahead to the next rulemaking. The Association of Home Appliance Manufacturers developed an energy verification program for home appliances and hopes DOE will look to the private sector.

"While DOE has not released its plans to develop its own continued energy testing program related to appliance standards, AHAM encourages both DOE and EPA to utilize third-party programs, such as AHAM's, to take advantage of these programs, which can save taxpayers money and avoid duplicative testing," spokeswoman Jill Notini said.

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