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HARDI Announces Settlement with DOE in Regional Efficiency Standards Lawsuit

Columbus, Ohio- Heating, Air-Conditioning and Refrigeration Distributors International (HARDI) announced today that a settlement has been reached in the long-running lawsuit regarding Regional Efficiency Standards for residential gas furnaces and central air-conditioners finalized by the Department of Energy (DOE) in October 2011. The settlement, which will take effect upon judicial approval, would remand the efficiency standards for gas furnaces, forcing the DOE to begin the process for assessing efficiency standards anew and to do so in a more transparent manner. The increase and regionalization in the standards for central air-conditioners will remain, but the DOE has allowed for a “sell-through” period of 18-months and agreed not to penalize HVACR distributors as part of the enforcement of the Regional Standard. Additionally, the DOE has agreed to engage in a process to review the regulatory processes that established the Regional Efficiency Standards.

The settlement signifies a victory for HVACR distributors, who intervened in the lawsuit challenging the standards, citing DOE’s abuse of process in utilizing a regulatory procedure which ignored the input of distributors and other stakeholders. HARDI President Royce Henderson (Charles D. Jones Company) stated, “Our goal from the start has been twofold. The first was to provide relief to our members who faced damages as a result of DOE’s actions. The second has been to fix the process, so this will never happen again. We believe this settlement accomplishes both goals to the greatest extent possible.”

HARDI was represented in the lawsuit on a pro-bono basis by Cause of Action, a non-profit, nonpartisan government accountability organization. “We cannot thank the talented folks at Cause of Action enough. They have given a voice to the many small businesses that make up HARDI and have helped hold the DOE accountable,” said Henderson.

HARDI Executive Vice-President and Chief Operating Officer Talbot Gee said, “While of course not perfect, this notably favorable outcome is entirely owed to the exemplary leadership of our Board of Directors, Policy Task Force and HVAC Council who, for multiple years now, have put aside competitive interests, endured sometimes intense pressure from suppliers and customers, and have maintained the foresight to focus on what’s in the best interest of HVAC distributors and our industry today, tomorrow and in years beyond.”

Steve Porter (Johnstone Supply), Co-Chair of HARDI’s Committee on Government and Trade Relations stated, “This settlement protects distributors from significant damage associated with stranded inventory and confirms our belief that distributors should not be penalized for the enforcement of this standard. Had HARDI not been engaged in this lawsuit, this settlement would not be possible.”

Gee added, “In addition to the positive results which many believed to be unattainable just years ago, this issue has also enabled our industry to come back together and lay the foundation for a formidable three-legged-stool representing all aspects of the HVACR supply chain.”

Henderson acknowledged his predecessors’ work leading up to this settlement. “Richard Cook (Johnson Supply), Bud Mingledorff (Mingledorff’s Inc.) and Brian Cobble (G.W. Berkheimer Co.) deserve praise for guiding us through much of this process, which was uncharted territory for HARDI.”

Regional Standards Settlement Fact Sheet:

  1. The energy efficiency standard for residential gas furnaces in the Northern Region (Insert states) has been remanded. The Department of Energy (DOE) will begin the process of assessing a new standard and has agreed to use a more transparent process. It is likely that a new furnace standard will not be established until 2021-2022. Until a new standard is established, a national standard of 80% AFUE is the law of the land.
  2. On January 1, 2015 the efficiency standard for central air-conditioners in the South will be 14-SEER. In the Southwest, that standard will be 14-SEER with a 12.2 EER (for 1 to 3.5 tons) and 11.7 EER (for 4 and 5 tons).
  3. Distributors in the South and Southwest will have 18 months (July 1, 2016) to sell any inventory of 13-SEER equipment manufactured before January 1, 2015.
  4. DOE has agreed not to assess civil penalty upon distributors for violations related to the enforcement of regional efficiency standards for central air-conditioners and heat pumps.
  5.  DOE will present a proposal for a negotiated rulemaking regarding the enforcement of the regional standard to the Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC). If approved by ASRAC, DOE will attempt to use a negotiated rulemaking as a means to determine an effective enforcement scheme by engaging all interested parties, gathering data, and attempting to reach consensus amongst all stakeholders.
  6. DOE agrees to evaluate and assess the usage of the Direct Final Rule process, which was used to establish the Regional Efficiency Standards and was the focus of the lawsuit challenging the standards.

For more information regarding the settlement and HARDI Advocacy, go to http://www.hardinet.org/advocacy