United States: Manufacturers Beware: DOE's Program Of Compliance With Energy And Water Conservation Standards Comes To Life!

Unknown to many manufacturers of appliances, energy-consuming devices and water fixtures, there are a host of energy conservation standards that regulate the performance of these products. While the energy conservation standards originated with the Energy Policy and Conservation Act of 1975 (EPCA), which invested the U.S. Department of Energy (DOE) with the authority to issue and enforce energy and water conservation regulations,1 the DOE has only taken significant enforcement action within the last few years. The DOE published a notice of this enforcement initiative in the Federal Register on October 14, 2009. Since then the level of activity by the DOE has escalated and is capable of exacting a huge impact on companies that become the target of an enforcement program effort. This Alert highlights key details of these energy-conservation enforcement regulations of which manufacturers of appliances, energy-consuming devices and water fixtures should be aware.

These regulations apply to both U.S. and foreign manufacturers of products, but they do not affect consumers or retail-market inventories. They cover large numbers of consumer and commercial products.2

Both domestic and foreign manufacturers of covered products must certify to the DOE that their covered products comply with the applicable energy conservation standards. Certification of the covered product is necessary before the manufacturer distributes its covered product in commerce in the United States, and must be renewed annually. According to the EPCA, to distribute a product in commerce means "to sell in commerce, to import, to introduce or deliver for introduction into commerce, or to hold for sale or distribution after introduction into commerce."3 Certification requires the manufacturer to have the covered product tested by a DOE-accredited testing facility and to submit those test results, along with a certification report and compliance statement to the DOE for review and approval.

As mentioned above, the DOE can exercise its enforcement authority when a manufacturer has strayed from careful compliance with these regulations. The DOE uses third-party buyers and testers to purchase and evaluate covered products that are distributed in commerce. If the DOE finds that a covered product is not certified, or otherwise does not meet the energy conservation standards, the DOE can issue to the manufacturer a Notice of Noncompliance Determination, which requires the manufacturer to cease the distribution of the covered product, provide notification of the determination to all entities to whom it has shipped the covered product and supply the DOE with significant amounts of data concerning such distribution. Additionally, the DOE may seek civil penalties of up to a maximum amount of $200 per unit distributed in commerce per day, which can quickly accumulate where thousands of units have been sold over a number of years—leading to an assessment in the millions of dollars. The $200 per-unit penalty applies to all covered products, from the inexpensive fluorescent lamp to the very-expensive commercial air conditioning unit. The potential for extremely large penalty assessments is real and apparent from the actions already taken by the DOE against domestic and foreign manufacturing companies.4

However, when assessing and setting a civil penalty, the DOE has issued advisory guidance that indicates that it will take into account the manufacturer's specific circumstances, such as the company's size, reason for noncompliance, compliance history, ability to pay, self-reporting and corrective actions taken. Where a manufacturer can demonstrate that it possesses one or more of these potentially mitigating circumstances, the DOE can reduce maximum penalty amounts for settlement purposes. Some examples include $1,499,600 to $82,478 for fluorescent lamp ballasts; $56,761,200 to $4,562,838 for refrigerators and freezers; and $1,191,400 to $31,400 for air conditioners. Nevertheless, the risk of large penalties exists and options to appeal the penalty are limited (i.e., federal court proceeding).


1. See 42 U.S.C. § 6291 et seq. (2012); 10 C.F.R. Parts 429, 430 and 431 (2013).

2. These regulations cover residential refrigerators, refrigerator-freezers and freezers; room air conditioners; central air conditioners and heat pumps; residential water heaters; residential furnaces and boilers; dishwashers; residential clothes washers; residential clothes dryers; direct heating equipment; conventional cooking tops, conventional ovens and microwave ovens; pool heaters; fluorescent lamp ballasts; general service fluorescent lamps, general service incandescent lamps and incandescent reflector lamps; faucets; showerheads; water closets; urinals; ceiling fans; ceiling fan light kits; torchieres; bare or covered (no reflector) medium base compact fluorescent lamps; dehumidifiers; class A external power supplies; battery chargers; candelabra base incandescent lamps and intermediate base incandescent lamps; electric motors; commercial refrigerators, freezers and refrigerator-freezers; commercial heating, ventilating and air conditioning equipment; commercial water heating equipment; automatic commercial ice makers; commercial clothes washers; distribution transformers; illuminated exit signs; traffic signal modules and pedestrian modules; commercial unit heaters; commercial pre-rinse spray valves; mercury vapor lamp ballasts; refrigerated bottled or canned beverage vending machines; walk-in coolers and walk-in freezers; and metal halide lamp ballasts and fixtures.

3. 42 U.S.C. § 6291(16).

4. For example, the DOE has assessed civil penalties of $500,000 for showerheads; $350,400 for fluorescent light bulbs; $270,100 for refrigerators; and $231,090 for air conditioners.

For further information about this Alert, please contact Sheila Slocum Hollis, Dennis Hough, any member of our Energy, Environment and Resources Practice Group or the attorney in the firm with whom you are regularly in contact.

This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.

Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. The Duane Morris Institute provides training workshops for HR professionals, in-house counsel, benefits administrators and senior managers.

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