Setting a Standard for Inefficiency

For an agency that stresses efficiency, this may be the least efficient way to do business.

The Department of Energy proposed a rule in 2000 that called for increasing the energy efficiency of commercial water heaters. By Jan. 12, 2001, the final version of the rule was published, and it became effective last October.

So far, so good. Manufacturers said there was no controversy about increasing the energy efficiency of their heaters. They had the technology to meet the new standard. Unlike other energy efficiency standards, this one went uncontested.

But last summer companies found themselves stymied. They had no way to measure the efficiency of the water heaters because the agency had not completed a companion rule to update a mandatory test.

Realizing that they would not be in compliance with the efficiency rule without the new test, companies began lobbying the department to issue the companion rule. "We had visits to DOE. We called. They just can't seem to get this adopted," said Frank Stanonik, chief technical adviser with the Gas Appliance Manufacturers Association, which represents companies that make water-heating equipment.

Trying to light a fire under the agency did not work.

So manufacturers threw up their hands and six applied for waivers from compliance, which the department has begun granting. The procedure amounts to a mini-rulemaking: publishing the request, taking comment on it, and making a final determination. If granted, the waivers prescribe the proper test procedure on a case-by-case basis.

"They dropped the ball," said Timothy Shellenberger, senior vice president of product engineering for American Water Heater in Johnson City, Tenn., one of the companies recently granted a waiver.

For the companies involved, the process has been a textbook example of how the regulatory bureaucracy can lose track of time and paperwork. In this case, department officials said regulatory priorities shifted, leaving what should have been a fairly simple job undone.

The result, because of the waivers, is the effective delay of a rule that would have positive consequences for consumers -- money saved on more efficient water heaters. It also illustrates how an agency ends up spending as much time and effort managing exemptions as it would completing the final rule.