A Free-Market Energy Blog

Gas Furnace Rule: Beware of “Scorched Gas” Policy

By Mark Krebs -- January 28, 2013

“Hurrah” to the American Public Gas Association (APGA), a small trade group that was willing to step-up to U.S. Department of Energy (DOE) and other special-interest organizations that want energy efficiency at any cost to the American consumer. The APGA/DOE Furnace Rule Settlement prevented the unintended consequences of regulatory overreach by allowing consumers choices between regulated and unregulated (and less regulated) products.

This post, following APGA’s piece at MasterResource last week, provides historical background on the subject of energy efficiency regulations in order to better understand the significance of this settlement.

From EPCA (1975) to EISA (2007)

In 1975, the Energy Policy and Conservation Act (EPCA) was enacted largely as a Federal response to the Arab oil embargoes. EPCA was amended by the National Appliance Energy Conservation Act of 1987 and the Energy Policy Act of 1992 etc., etc.

The 1975 EPCA establishes nationwide energy efficiency minimum standards for certain consumer and commercial products including heating, ventilation and air conditioning (HVAC) equipment; appliances such as washers and dryers, ranges, and refrigerators; and plumbing fixtures such as faucets and showerheads. Ever since, such minimum standards have been based upon metered energy (e.g., 3,412 Btu/kWh); a factor that gives a major head start for electric appliances.

With every revision, more and more appliances were added to the list and more and more authority was given to the Department of Energy (DOE) for carrying out its ever expanding mission. The Energy Independence and Security Act of 2007 (EISA) was especially expansive of such authority.

According to a DOE press release on February 26, 2007, DOE proposed language in EISA calling for “regional standards” (Sec. 306) and “expedited rulemaking” by “interested persons” (Sec. 308) to fast-track the development of mandatory “energy efficiency” minimums for appliances through “consensus” (i.e., Direct Final Rulemaking). This language was incorporated and included the following statement:

The Secretary shall withdraw the direct final rule if the Secretary receives 1 or more adverse public comments relating to the direct final rule.

DOE’s proposal was endorsed by the National Electrical Manufacturers Association (NEMA) and the American Council for an Energy-Efficient Economy (ACEEE) per a press release on May 15,2007.

On December 19, 2007, EISA was enacted into public law. On October 13, 2009, “interested persons” recommended consensus/regional standards. On January 15, 2010, these “interested persons” submitted their proposal to DOE.

According to statements made by DOE’s Kathleen Hogan to the Senate on March 10, 2010:

Section 308 of EISA [Energy Independence and Security Act of 2007] permits DOE to issue direct final rules in cases where a fairly representative group of stakeholders (including manufacturers, States, and efficiency advocates) jointly submit a recommended standard and no adverse public comments are received. (emphasis added)

On June 27, 2011, two Federal Register documents were published with the same title and Docket Number: EERE-2011-BT-STD-0011. This opened the proposed rule to public comments.

Many adverse comments were filed. All of these are available for review at regulations.gov by searching for Docket Number EERE–2011–BT–STD–0011 or RIN 1904–AC06.

The basic problems cited included the following:

1. Gas utilities were excluded from this “consensus” of “interested parties.”

2. Scientific integrity and due diligence were sacrificed for the sake of expediency.

3. The proposed “energy efficiency improvements” and underlying analyses were highly biased against the direct use of natural gas and failed to pass transparency/repeatability requirements.

However, the DOE dismissed all such adverse comments and concluded that there was sufficient consensus to finalize their findings and move forward with implementation.

A War on Gas?

The APGA challenged this in court on the basis of the above listed problems. Now, certain “interested persons” who petitioned the DOE for this “expedited rulemaking” for “regional standards” have indicated plans to retaliate via a 95% minimum efficiency rule.

According to at least some of these select “interested persons,” there is no role for the direct use of natural gas and only a short-term/limited role for natural gas to displace coal in centralized power generation as a back-up for renewables. Evidence supporting this assertion includes the following Natural Resources Defense Council (NRDC) documents:

· The Role of Natural Gas in America’s Energy Mix (June 2012)

· A Responsible Energy Plan for America (April 2005) at chapter 3, p. 17

Apparently, such policies don’t go far enough to combat global warming. According to a statement in the Direct Final Rule (DFR) attributable to ACEEE (at Federal Register /Vol. 76, No. 123 /Monday, June 27, 2011 /Rules and Regulations 37445):

DOE would have to set standards that force consumers to retrofit their homes to accommodate more-efficient products.

If allowed by Congress, who knows what form of enforcement “interested persons” could come up with; perhaps mandatory home energy audit/inspections. Policies like this are already underway via EISA Sec. 433.

As long as DOE (and their clientele) are allowed to propose their own self-serving legislation, more of the same should be expected.


An engineer by training, Mark Krebs has been involved with energy efficiency design and program evaluation for more than twenty years. He has served as an expert witness in dozens of energy-efficiency filings, which he summarized in a Public Utilities Fortnightly article, “It’s a War Out There: A Gas Man Questions Electric ‘Efficiency’” (December 1996).


  1. Eddie Devere  

    The DOE is a very large organization. Does anybody know what part of DOE is in charge of these efficiency standards?
    Also, does anybody know if the legislation mentioned in the article (EPCA in 1975 & EISA in 2007) have been upheld by U.S. Courts? And if so, what part of the constitution allows the US gov’t to regulate the efficiency of furnaces?
    This whole things seems silly.
    BTW, on a similar topic, it looks like a US District Court has overturned the EPA’s mandate on advanced biofuels. This is good news for those people who believe that a free market is the best way to _____ (fill in the blank…grow life, reduce human poverty, increase human happiness, increased human creativity, etc…)


  2. mkrebs  


    That would be DOE’s office of “Energy Efficiency & Renewable energy.”

    As for your legal questions, I am not a lawyer. That said, I’m unaware of any challenges to EPCA or EISA on the basis the Constitution. Sorry I can’t be of more help.



  3. Grant  

    The building technologies program runs efficiency standards for appliances and equipment. You can see the various standards here.



  4. Ray  

    These efficency standards always have unanticipated consequences. We have water efficient toilets that have to be flushed twice, high efficiency washing machines that don’t get you clothes clean so you have to wash your clothes twice, high efficiency dish washers that leave food on the dishes, etc.


  5. Ed Reid  

    Ray @ 4,

    Picky, picky, picky! Their intentions were good.


  6. Eddie Devere  

    Mark & Grant,
    Thanks for the information.
    I didn’t realize that DOE had any regulatory authority. I had always thought of DOE as an R&D agency, especially DOE/EERE. There’s a huge difference in my mind between an R&D agency and a regulatory agency. The two should be completely separate (or else there could be regulatory bias towards the research in the agency.)
    I believe in free markets, but I personally am okay with the government taxing me to pay for R&D into advanced technologies with long-time frames…such as nuclear fusion or advanced nuclear fission cycles. I’m not okay with the government setting regulations on the efficiency of appliances or furnaces.
    I understand the need for environment regulations (acid gases, particulates, toxic chemicals, etc…), but the regulatory agency should be completely separate from the R&D agency. In my opinion, the EPA should be the regulatory agency and the DOE should be the R&D agency (for advanced technologies with long-time frames and applied sciences.)


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