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September 11, 1991


Gerhard A. Gesell, United States District Judge.

The opinion of the court was delivered by: GESELL

This case returns to the Court after having been remanded to the defendant, Department of Energy ("DOE"), for further consideration in light of the Court's decision in Civil Action No. 89-1315 ("GAMA I "). Gas Appliance Manufacturers Association, Inc. v. Secretary of Energy, 722 F. Supp. 792 (D.C.C. 1989).

 Plaintiffs in the current action, as in GAMA I, include the Gas Appliance Manufacturers Association ("GAMA") -- a national trade association representing virtually all of the U.S. manufacturers of commercial and residential gas water heaters -- as well as five members of GAMA that together account for over two-thirds of the commercial and residential storage water heaters sold in the U.S. Plaintiffs claim that the revised interim water heater standby loss requirements, which DOE has promulgated pursuant to 42 U.S.C. §§ 6831-40, see 55 Fed. Reg. 23841-81, are arbitrary, capricious, and impracticable. Plaintiffs therefore request that the Court vacate those requirements or, in the alternative, remand once again to DOE for still further proceedings. The issues are before the Court on cross-motions for summary judgment, which have been fully briefed and argued. The relevant material facts are not in dispute.


 The Energy Conservation Standards for New Buildings Act of 1976, 42 U.S.C. §§ 6831-40, requires the Department of Energy, in consultation with other government agencies and representatives from the building community and consumer groups, to develop and promulgate voluntary energy consumption standards. After analyzing proposed standards "in terms of energy efficiency, stimulation of use of nondepletable sources of energy, institutional resources, habitability, economic cost and benefit, and impact on affected groups," 42 U.S.C. § 6839, DOE is first to issue interim voluntary performance standards. Although the statute terms this first set of standards "interim," 42 U.S.C. § 6835 makes the interim standards binding on all federal building construction; the heads of federal agencies responsible for the construction of federal buildings are required to assure that "any Federal building meets or exceeds the applicable interim performance standards . . . ." 42 U.S.C. § 6835. At the same time, DOE and other federal agencies must work to "facilitate the implementation of such standards by State and local governments." 42 U.S.C. § 6839. For nonfederal buildings, the voluntary performance standards are to be "developed solely as guidelines." 42 U.S.C. § 6833(a)(4).

 During the twelve-month period after promulgation of the interim standards, DOE is further directed by statute to "conduct a demonstration project utilizing such standards in at least two geographical areas in different climatic regions of the country." 42 U.S.C. § 6833(a)(1), (2). Based on those demonstration projects, DOE must report to Congress its findings and conclusions in regard to the effect that the interim standards would have "on the design, construction costs, and the estimated total energy savings" of commercial and residential buildings. Id. Only then will final voluntary performance standards be promulgated. According to DOE, the demonstration projects required by the statute are already in progress. See Def. Memo. at 3.


 As described in GAMA I, DOE promulgated the interim standards required by statute in 1989. See 54 Fed. Reg. at 4538. The particular section of those standards at issue in both GAMA I and the present case set standby loss requirements for gas, oil, and electric commercial storage water heaters. Standby loss is the amount of heat that a water heater loses through its jacket, fittings, controls, and elsewhere, while the water heater is simply holding heated water without either further heating or dispensing it. The standby loss requirements propounded by the interim rule that was discussed in GAMA I were based in large part on standards developed by the American Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc. ("ASHRAE"). See GAMA I, 722 F. Supp. at 795.

 GAMA contended in GAMA I that the standby loss requirements issued by DOE were not cost-efficient in that the amount of capital that would have to be expended to develop complying water heaters -- if complying water heaters could be developed at all -- would far outweigh any potential energy savings. Moreover, GAMA argued that DOE had acted arbitrarily and capriciously by failing to respond adequately to GAMA's comments and by providing insufficient justification on the record for its adoption of the ASHRAE standards as the interim rules. See GAMA I, 722 F. Supp. at 794.

 After reviewing the record, this Court in GAMA I held that DOE had indeed failed to fulfill its obligations under the Administrative Procedure Act, 5 U.S.C. § 553, 701 et seq, and under the Energy Conservation Standards for New Buildings Act of 1976, 42 U.S.C. §§ 6831-40. As a result, the Court remanded the interim standby loss requirements for commercial storage water heaters to DOE and directed principally that DOE "provide a statement of reasons for adoption of standby loss criteria, with attention to the relevant statutory requirements, including those dealing with practicability, cost-benefit analysis, and impact on affected groups." GAMA I, 722 F. Supp. 798.

 Subsequent to the remand order, DOE on November 30, 1989, published a preliminary Statement of Reasons for Adoption of Standby Loss Criteria. See 54 Fed. Reg. 49724. The plaintiffs, among others, submitted comments and critiques relating to the Preliminary Statement, and on June 12, 1990, DOE published a revised final interim rule that somewhat modified the standby loss requirements from what they had been before GAMA I. *fn1" See 55 Fed. Reg. at 23841-81. GAMA and the other plaintiffs have challenged the revised standby loss requirements on essentially the same grounds as they did the initial standby loss requirements in GAMA I.


 As in GAMA I, the Court has jurisdiction over this matter pursuant to the APA, 5 U.S.C. §§ 553, 701 et seq, and can review the interim rule as a final agency action, regardless of whether the interim standard may differ from the final standard to be promulgated after the demonstration projects are completed. See, e.g., Mid-Tex Electric Cooperative, Inc. v. FERC, 262 App. D.C. 61, 822 F.2d 1123 (D.C.Cir. 1987); GAMA I, 722 F. Supp. at 794 n. 1. *fn2"

 DOE has also now raised the issue of standing. DOE contends that plaintiffs have not suffered any injury or shown that they will suffer a distinct and certain harm as the result of DOE's actions. As the Court found in GAMA I, however, the "potential injury to GAMA's member firms is substantial if the challenged rule is upheld." 722 F. Supp. at 794. At the least, plaintiffs will have to modify, or perhaps even overhaul, their manufacturing processes in order to conform to the new standards, which few if any of the plaintiffs will be able to satisfy with existing water heater models. whether or not plaintiffs will be able to recoup their investments over time does not negate the fact that, for those firms competing for government ...

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