Zero Zone, Inc. v. United States Department of Energy

832 F.3d 654, 46 Envtl. L. Rep. (Envtl. Law Inst.) 20137, 2016 U.S. App. LEXIS 14541, 2016 WL 4177217
CourtCourt of Appeals for the Seventh Circuit
DecidedAugust 8, 2016
Docket14-2147, 14-2159 & 14-2334
StatusPublished
Cited by36 cases

This text of 832 F.3d 654 (Zero Zone, Inc. v. United States Department of Energy) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zero Zone, Inc. v. United States Department of Energy, 832 F.3d 654, 46 Envtl. L. Rep. (Envtl. Law Inst.) 20137, 2016 U.S. App. LEXIS 14541, 2016 WL 4177217 (7th Cir. 2016).

Opinion

RIPPLE, Circuit Judge.

TABLE OF CONTENTS

I.Background... 661

A.Statutory and Regulatory Context. . .661

1. Energy Policy and Conservation Act... 661

2. Energy Policy Act of 2005... 663

3. 2009 Final Rule... 663

4. American Energy Manufacturing Technical Corrections Act.. .663

B. The New Standards Rule... 664

C. The 2014 Test Procedure Rule.. .666

D. Petitions for Review...667

II. Discussion... 667

A. Engineering Analysis... 669

1. Notice and Comment.. .669

2. Compressors... 671

3. Insulation Foam Thickness... 673

4. Validation... 674

B. Economic Analysis... 675

1. Elasticity.. .675

2. Environmental Benefits... 677

3. Cost-Benefit Analysis... 678

4. Anticompetitive Effects... 680

C. Regulatory Flexibility Analysis... 683
D. Cumulative Regulatory Burden ...685

1. EPA Significant New Alternatives Policy Program... 685

2. ENERGY STAR Program... 686

E. 2014 Test Procedure Rule... 686
1. Conformity to Industry Standards ...687

2. Operation of the Rule... 688

3. Procedural Challenges... 689 Conclusion... 690

The United States Department of Energy (“DOE”) published two final rules aimed at improving the energy efficiency of commercial refrigeration equipment (“CRE”). 1 The first rule adopted new ener *661 gy efficiency standards for CRE. 79 Fed. Reg. 17,726 (Mar. 28, 2014) (the “New Standards Rule”). The second rule, issued a month later, clarified the test procedures that DOE uses to implement those standards. 79 Fed. Reg. 22,278 (Apr. 21, 2014) (the “2014 Test Procedure Rule”).

Petitioners Zero Zone, Inc. (“Zero Zone”), a small business specializing in CRE, and Air-Conditioning, Heating and Refrigeration Institute (“AHRI”), a trade association of CRE manufacturers, petitioned for review of both rules. Petitioner North American Association of Food Equipment Manufacturers (“NAFEM”), another trade association of CRE manufacturers, petitioned for review of the first rule. AHRI and Zero Zone moved to consolidate the cases, and we granted the motion. 2

Petitioners challenge both the decision-making process and the substance of the final rules. Upon review of those challenges, we conclude that DOE acted in a manner worthy of our deference. The New Standards Rule is premised on an analytical model that is supported by substantial evidence and is neither arbitrary nor ea-pricious. DOE conducted a cost-benefit analysis that is within its statutory authority and is supported by substantial evidence. Its methodology and conclusions were not arbitrary or capricious. It also gave appropriate consideration to the rule’s effect on small businesses and the role of other agency regulations. DOE similarly acted within its authority, and within reason, when it promulgated the 2014 Test Procedure Rule. For these reasons, we deny the petitions in their entirety.

I

BACKGROUND

A. Statutory and Regulatory Context
1. Energy Policy and Conservation Act

The Energy Policy and Conservation Act (“EPCA”), Pub. L. No. 94-163, §§ 321-339, 89 Stat. 871, 917-32 (1975) (codified as amended at 42 U.S.C. §§ 6201-6422) was enacted in part to improve the energy efficiency of specific types of equipment and appliances. § 2(5), 89 Stat. at 874. Congress enacted the *662 EPCA in the wake of the 1973-1974 embargo of petroleum exports to the United States by the Organization of Arab Petroleum Exporting Countries. S. Rep. No. 94-26, at 26 (1975). It viewed the embargo as presenting a need for “legislation which would facilitate the reduction of the nation’s petroleum consumption through energy conservation.” Id. at 27; see also H.R. Rep. No. 94-340, at 1 (1975) (“This legislation is directed to the attainment of the collective goals of increasing domestic supply, conserving and managing energy demand, and establishing standby programs for minimizing this nation’s vulnerability to major interruptions in the supply of petroleum imports.” (emphasis added)).

As originally enacted, the EPCA authorized the Federal Energy Administration (“FEA”) — the predecessor to DOE 3 — to implement voluntary “energy efficiency improvement target[s]” that would encourage manufacturers to decrease the energy consumption of their equipment. Pub. L. No. 94-163, § 325, 89 Stat. 923-26. However, Congress determined shortly thereafter that, “[u]nder the target approach, there would be little incentive by a manufacturer to exceed a target, and to do so might place a given manufacturer at a competitive disadvantage.” H.R. Rep. No. 95-496, at 45 (1977). It therefore amended the EPCA to impose mandatory energy conservation standards. National Energy Conservation Policy Act, Pub. L. No. 95-619, § 422, 92 Stat. 3206, 3259 (1978). As amended, the EPCA directs DOE to review these standards and implement new ones when appropriate. 42 U.S.C. §§ 6313(c), 6316(e), 6295(m).

When establishing new energy conservation standards, DOE must follow certain statutory requirements. First, standards may not “increase[ ] the maximum allowable energy use” of any individual unit. Id. § 6295(o)(l). Second, standards must be “designed to achieve the maximum improvement in energy efficiency” and be “technologically feasible and economically justified.” Id. § 6295(o)(2)(A). The EPCA explains that:

In determining whether a standard is economically justified, the Secretary shall, after receiving views and comments furnished with respect to the proposed standard, determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering—
(I) the economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard;
(II) the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered products which are likely to result from the imposition of the standard;

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
832 F.3d 654, 46 Envtl. L. Rep. (Envtl. Law Inst.) 20137, 2016 U.S. App. LEXIS 14541, 2016 WL 4177217, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zero-zone-inc-v-united-states-department-of-energy-ca7-2016.