An Energy Star Update
As we near the final weeks of the second session of the 113th Congress it remains uncertain whether an energy bill will be enacted. The bill introduced last year by Senators Shaheen and Portman is believed to be the most likely energy bill to move through Congress. Its primary focus is energy efficiency, and AHAM strongly supports a House bill introduced this year by Representatives Latta (R-OH) and Welch (D-VT) which we hope will be incorporated into the Shaheen-Portman bill or other energy measure on its way through Congress. The Latta-Welch bill would make clear that DOE and EPA, which jointly administer and enforce the program, have the exclusive ability to regulate Energy Star.
In the 20 years that the Energy Star program has operated, it has grown substantially in its impact on the market. As the voluntary program has grown in popularity with consumers, EPA has in turn put in place stringent pre-market and market surveillance testing requirements to verify energy claims by product manufacturers. AHAM administers several such verification programs for home appliances. These programs are recognized and supported by EPA and the Department of Energy. This bill would also preempt wasteful and often unnecessary class action litigation where EPA has made a determination as to whether compensation to consumers is required, based on the circumstances that led to a product’s disqualification, and in some cases may have already subjected the company to enforcement penalties.
As background, in recent years, lawyers have begun filing class action lawsuits when a product is disqualified from the program. These lawsuits threaten consumer interests as they fatally undermine the Energy Star program by making robust voluntary participation cost-prohibitive. In many instances, these suits have been filed without any basis for alleging injury to consumers; many disqualifications under Energy Star for products that no longer meet the set efficiency levels are caused by technical violations or are relatively minor and have little real-world impact. In negotiating and approving the corrective action plans required of manufacturers in the event of disqualification, EPA is in the best position to determine whether consumers have been adversely impacted in a way that justifies compensation by the manufacturer.
The disqualification process is straightforward. Under the Energy Star verification testing program, if a product is determined to be non-compliant, EPA engages the manufacturer and determines whether to officially disqualify the product from the Energy Star program. If the product is disqualified, the manufacturer must draft a corrective action plan addressing the disqualification and setting forth proposed actions it will take, including removing the Energy Star logo from the affected units and from related advertising, adopting preventive measures, and, if appropriate, providing compensation to consumers.
In administering the program, DOE and EPA strike a balance between maintaining the reliability and integrity of the Energy Star logo while keeping compliance costs low and encouraging broad participation. Despite these efforts, manufacturers who voluntarily participate in Energy Star have become targets of class action lawyers.
If the ability of class action plaintiffs’ to pile on with expensive litigation after the EPA has resolved any programmatic enforcement issues is left unchecked, manufacturers may be forced to withdraw from Energy Star entirely or reduce their current levels of participation, which would likely result in fewer Energy Star products available to consumers. This threatens to erode the effectiveness of the program, thereby harming both consumers and manufacturers and undermining the efficiency gains of the last 20 years. Manufacturers, consumers and the government have a strong interest in preserving the strength and breadth of the current program. Action by the Congress, through the Energy Star Program Integrity Act, provides the protections needed to do just that.
Ultimately, the Energy Star Program Integrity Act would be a win/win for manufacturers, consumers and the government. It preserves the gains made by the Energy Star program to date, and protects the interests of all who participate in the program and who benefit from its success.