What You Need to Know
- Key takeaway #1
The U.S. Department of Energy (DOE) increased its pursuit of Energy Policy & Conservation Act (EPCA) violations in 2023, more than doubling the number of cases it brought against manufacturers and importers for alleged violations of energy and water conservation standards.
- Key takeaway #2
Publicly available enforcement data indicates DOE more frequently pursued industry-wide investigations, and penalized those companies that failed to certify otherwise compliant products more harshly than in recent years.
- Key takeaway #3
EPCA compliance programs and internal assessments are key tools for manufacturers and importers to mitigate compliance risk of enforcement and reduce penalty exposure in the event DOE enforcement personnel identify potential non-compliance.
Introduction
The DOE in 2023 significantly increased its enforcement activity against manufactures and importers alleged to have violated EPCA's energy and water conservation standards and related certification requirements, based on available public information. As we previously flagged, the substantial rise in enforcement activity comes as the Biden Administration increasingly focuses on EPCA as a means of achieving environmental policy objectives, including reducing carbon emissions. The Department has continued its enforcement efforts in 2024 and early data from this year sheds light on the Department's enforcement priorities.
Background
As described in more detail here, the DOE has promulgated mandatory energy and water efficiency standards for over types of 60 consumer and commercial/industrial products, including external power supplies, battery chargers, refrigerators, microwave ovens, and numerous lighting and plumbing products. Companies that fail to meet those minimum standards could be liable for penalties of up to $560 per unit of product sold or made available for sale, which can result in significant penalty exposure for manufacturers and importers. DOE will also often require manufacturers or importers to discontinue sales and remove all non-compliant products from the stream of commerce, and even companies that fail to certify their products can be assessed a civil penalty of $560 per day, although the Department will typically propose a maximum civil penalty for certification violations that is 25% of the penalty permitted by statute.
EPCA Enforcement Trends in 2023
Based on public information, DOE settled over 46 EPCA cases in 2023, more than doubling the number of enforcement actions it resolved in 2022. Of those 46, DOE issued 11 civil penalties for violations of underlying conservation standards, and 35 civil penalties to companies that failed to properly certify their products, compared to only 5 companies being assessed penalties for failures to certify their products in 2022. DOE data indicates that 21 of the 35 certification violations in 2023 involved refrigeration and freezer products. Since the start of 2024, DOE has resolved 7 certification violations involving a variety of products, including large-diameter ceiling fans, battery chargers, refrigerators and refrigerator-freezers, showerheads and water closets.
Other Trends – Increased Litigation and Legislative Activity
In addition to increased enforcement activity, 2023 and 2024 have also seen an overall increase in EPCA-related legal activity, including litigation and legislative proposals. Last year, in Cal. Rest. Ass'n v. Berkeley, restaurant organizations successfully challenged the City of Berkley, California's ban on gas-stove hookups on the theory that the City's ban was preempted by EPCA. More recently, in Am. Gas Ass'n, et al., vs. U.S. Dep't of Energy, the American Gas Association and other industry groups filed a petition with the D.C. Circuit challenging recent energy efficiency standards for gas furnaces and commercial water heaters.
At the same time, House Republicans have introduced multiple bills—H.R. 7645, H.R. 7700, H.R. 7626, H.R. 6192—to amend EPCA and prohibit DOE from enforcing more stringent efficiency standards for a variety of products, including clothes washers and dryers, refrigerators and freezers, room air conditioners, and dishwashers. Although the proposals have not yet been voted on by the House of Representatives, the uptick in EPCA-related legislative activity is notable and may portend more substantial revisions to EPCA in the event Republicans win the Presidency and both houses of Congress this fall.
Conclusion
As both the volume and breadth of the DOE's EPCA enforcement activity continues to grow, manufacturers and importers of covered products may wish to enhance (or if not currently in place, establish) EPCA compliance programs. These programs include, for example, establishing procedures to evaluate and document product compliance before introducing those products into the U.S. stream of commerce, as well as periodic assessments of these programs, internal compliance with the program, and ongoing product compliance. Having these programs in place can help manufacturers and importers manage non-compliance and penalty risk, as well as serve as a potentially mitigating factor should non-compliance nevertheless occur.
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