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Jack Goldman.
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Jack Goldman Discusses
the Recent DOE Ruling
WASHINGTON, D.C.
Ed. Note: At the end of the day last Friday, February 8, the U.S. Court of Appeals for the D.C. Circuit sided with the Hearth, Patio & Barbecue Association (HPBA) and the National Propane Gas Association (NPGA) on a Petition for Review filed against two Final rules issued by the Department of Energy (DOE). The court, finding that the DOE exceeded its authority in regulating a new class of products without following required procedure, struck the definition of "vented hearth heater" from the DOE rulemakings.
We asked Jack Goldman, president and CEO of the HPBA, to discuss and explain that ruling, which affects everyone in the hearth industry. His explanation is a reminder that court rulings are seldom black and white. This one is no exception.
Hearth & Home: First, congratulations! You must be very pleased with the ruling.
Jack Goldman: "Yes. Sometimes people listen (laughs)."
Right, and it only takes a couple of years and a couple of million dollars.
Goldman: "Right. I know."
Most likely you can't collect attorney's fees because it's a government agency, correct?
Goldman: "That's pretty much it. Generally, it just isn't worth the cost. It would be almost like a separate trial. Plus, how do you document the money the industry has wasted to change designs and other things requiring expenditures."
Please tell us what the ruling said.
Goldman: "The ruling said that the statute did not give the Department of Energy (DOE) the authority to define decorative gas fireplaces and gas log sets as appliances covered by the statute. In other words, the statute did not give them the authority to regulate these appliances.
"So they threw out the entire definition of vented hearth heaters, because you couldn't just keep it in. When the Court asked us what relief we wanted, we didn't say, 'Throw out heater-rated efficiency standards.' We said 'Keep those. We've never argued with those. But you should throw out the definition affecting decorative gas logs.'
"Then, toward the end of the hearing, one of the Judges basically said, 'Well, how do we do that without throwing it all out?' And that is what they wound up doing.
"Essentially they had a definition that distinguished between heater-rated and decorative gas fireplaces, but because decorative was wrong, they reasoned, 'How can we just keep the heater-rated definition either.' So they threw the whole thing out.
"The efficiency numbers are still in the regulations. So, by the court striking the entire definition, nothing can be regulated now, but when DOE gets back to it, we think they are going to at least regulate heater-rated appliances because they already have the numbers for them. They just have to come up with a definition."
So the efficiency standard is no longer in place with a deadline of April 15?
Goldman: "It's not because, first, they have to define what is covered, and then what number do we have to meet. Both pieces have to be in place to have a regulation."
You seem to imply that the DOE will come back at this again.
Goldman: "They will at the least come back and do something for heater rated. In fact the court sort of hinted that they should just use what we told them to use years ago, which was the ANSI Z21 standard as the definition, because there is a standard governing heater-rated appliances.
"Then, if they want to regulate decorative fireplaces and gas log sets, they actually have to go through a two-step approach. The statute first requires them to make a showing that it should be a covered product. They never did that before, so they have to go back and do that. Then they would have to decide how to regulate them.
"Now, for heater-rated fireplaces the DOE actually came up with efficiency numbers; that is really what they are supposed to do. The statute does not let them require design changes, and that is, in fact, what they did to decorative appliances. The court specifically said, 'You can't do that.'
"So the DOE is going to have a problem if they come back against decorative fireplaces or gas log sets because efficiency is a silly number for these appliances and they can't regulate the design. If they say, there can be no standing pilotlights, that's a design change. They can't make us do that. Even if they get through the first step of saying they are covered, they still aren't allowed to regulate the design."
So are you saying that decorative products, going forward, are basically immune?
Goldman: "No, because the DOE is sort of like a rabid dog. They are going to come back with something. I don't know what. I don't want to give anyone the impression that they have a free ride from this point forward.
"When we met with Barton Day (HPBA's attorney in this case), we recognized that the open questions for us are, what are they going to do next and when? Because of our experience with the DOE in the past, we cannot rule out bad faith or even going against the court's decision. That is being highly distrustful, but they've earned that.
"They may have something in their back pocket already, and when the decision officially goes into effect this Friday they may have something ready to issue to circumvent what the Court did and then force us to go back to the court. This is just my speculation, but, unfortunately, we can't rule it out by saying, 'They're going to now behave like law abiding people.' Because they have not done that."
So for heater-rated appliances, can you go forward with the efficiency standard?
Goldman: "No. Heater-rated does not have a deadline until we again redefine 'heater rated.' The numbers are there, but you don't have the class defined. Right now there is no regulation for any of our products. But we expect them to come back soon with a definition of heater-rated and, once they do that, they would have to set a new date of when this is all in effect, then they would be regulated.
"Manufacturers have been testing their products to see if they meet the numbers, and that kind of work is probably worth doing. The court didn't tell the DOE to change anything there and they haven't, although we are being very careful in what we tell the industry because we don't have complete knowledge of what the DOE will do on heater-rated and how that would affect the April 15 deadline. Or it might take them a while to even figure out what to do, in which case there will be a deadline but it won't be this April.
"And you probably thought there would be clear-cut answers."
Yes, but it seems as if what will happen with heater-rate appliances is still in limbo.
Goldman: "Right, but decorative products are not going to be regulated, at least not soon. Although it's not out of the realm of chance that they will be putting some emergency rule-making into play next week. You just don't know with them and we've learned not to assume anything.
"As of right now, there are no appliances regulated. The other thing is the DOE can appeal the case in one of three ways. They can go to the court and ask for certain clarifications if in their opinion things are not clear. Having read the opinion, I don't think that's going to be an issue. The court was pretty clear; they were pretty angry at the DOE.
"The second thing is they can ask for the entire court to hear the case. This was before three judges of the Court of Appeals; the Court of Appeals normally has 16 members. That never works when it's a three-to-nothing decision, but this was a two-to-one decision. Nevertheless, that is something that most likely would not happen, but it is a possibility.
"The third is they could go to the Supreme Court and that is even a lower possibility because usually the Supreme Court handles controversial decisions and this was not controversial. It's very clear - the DOE screwed up and the Court slapped them.
"But the DOE was given roughly 45 days as of this Friday to make up its mind as to whether or not they will appeal. That is one thing they could do. The other thing they could do is to decide, at some point, to regulate the industry and that could be right away or sometime in the future. It makes it very difficult for our members. You know, what do they do now?
"If you make a heater-rated appliance you know what the numbers are going to be. So you can actually test to a number if you make it or not."
There has been a major impact already. Manufacturers with whom we've spoken in the past two or three weeks really are not coming out with any new products.
Goldman: "They can't. They're just hustling to get out their current products under these new numbers. That's what they've been focusing on. Some manufacturers have decided that what they have been marketing as heater-rated until now, maybe they should just call them decorative because they can't make the design fit fast enough to prove their efficiency.
"Between glass fronts and the DOE efficiency standard they have just been hustling to keep their existing products out there and legal."
Bottom Line: If manufacturers want to know what to do, what do you tell them?
Goldman: "I can't give them a clear answer. I can say, 'As of right now there are no standards for you to comply with, but if the DOE shoots back with a definition of heater-rated right away, then it's possible that you may have to comply with the heater-rated standards sooner than later, but I can't tell you when."
And coming back with a proper definition of heater-rated can't be that difficult, can it?
Goldman: "Well, if they pick the Z2188 definition, they have it. We've been suggesting that since 2006. So they have it in the record, it's easy. Their concern was that companies would define themselves out of that by taking out thermostats. The only difference between Z2150 for decorative appliances and the Z2188 heater-rated is that the heater-rated ones have thermostats and the decorative ones don't. That's always been the problem from the DOE's perspective. There are companies doing that very thing."
The whole industry could use a little breather right now, for about a year.
Goldman: "Oh, could they ever. And the thing you have to ask is, 'What got into them?' What has been motivating the DOE? If you're trying to save natural gas and propane, this isn't the way to do it. It hardly makes a difference."
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