Grace Period for Regional Standards Inventory Sell-Through

For split system and single package central air conditioners, equipment that meets to the previous minimum standard and was manufactured before January 1, 2015, may be legally installed in all regions until June 30, 2016. This “sell-through” period will prevent 13 SEER equipment from being stranded in the Southeast and Southwest regions after the compliance date.

New Labels on Equipment

The OEMs have agreed to amend their internal model protocols to create North-only and Southeast and Southwest-only basic models for testing and rating purposes. This means that condensing units intended for installation in the North will have a nameplate that includes text that says “Only for installation in the North region”. This will make it easier for a contractor, homeowner, home inspector, or anyone else to quickly identify a condensing unit that was installed in the wrong location.

Definitions

A contractor will be defined as: A person (other than a manufacturer or distributor) who sells to and/or installs for an end user a central air conditioner subject to regional standards.

A dealer will be defined as: A type of contractor, generally with a relationship with one or more specific manufacturers.

In this case a “person” can be an individual or a company. This definition is written to cover the act of selling or installing. Anyone whose actions meet this definition will be considered the contractor. So a homeowner or individual who obtains a 13 SEER unit and installs it in the Southeast or Southwestern regions will be considered a contractor, regardless of their profession.

The reason for both definitions is that dealer is a term used in the Code of Federal Regulations, whereas, contractor is not defined in a way to fit with regional standards enforcement.

Violations and Prohibited Acts

The law passed by Congress in 2007 granting the DOE the authority to set regional standards for HVAC equipment was poorly drafted. Despite what is seemingly obvious, it is not currently a violation for a contractor to install a non-compliant split system or single package central air conditioner in a state covered by regional standards.

The only prohibited act in the law states “it shall be unlawful for any manufacturer or private labeler to knowingly sell a product to a distributor, contractor, or dealer with knowledge that the entity routinely violates any regional standard applicable to the product.”

This means that contractors in the Southeast or Southwest currently can’t be penalized for installing 13 SEER systems where the new regional standards go into effect on January 1, 2015; instead, civil penalties will be assessed on the OEMs if they are found to knowingly sell equipment to routine violators.

“Knowingly” is defined as having actual knowledge of, or the presumption of having knowledge deemed to be possessed by a reasonable man who acts in the circumstances, including knowledge obtainable upon the exercise of due care.

“Routine violator” is not defined in the law.

Once a contractor is determined to be a routine violator, OEMs and distributors will be forbidden from selling that contractor any of the following: split system central air conditioners, split system heat pumps, single package air conditioners, single package heat pumps, small duct, high velocity systems, space constrained air conditioners, and space constrained heat pumps. Notice this list includes product categories not subject to regional standards. This is, in effect, a “death penalty” for any contractor found to be a routine violator.

Unfortunately the working group could not remove this prohibited act from the law, but the enforcement plan allows an upstanding contractor to avoid this severe penalty except in the extreme case while still discouraging illegal installations.

That starts with defining a “violation” for contractors. The following common sense definition has been proposed for insertion into the Code of Federal Regulations: “It shall be a violation for any contractor or dealer to knowingly sell to and or install for an end user a residential central air conditioner covered by regional standards with the knowledge that such product shall be installed in violation of any regional standards to the product.”

This definition of a violation would be used by DOE in determining whether a contractor rises to the level of a routine violator, based on several factors, including: the frequency of the violations, percentage of violation vs. all installs, intent, evidence of training to the regional standards, as well as other factors.

Record Keeping Requirements

The enforcement plan would require that contractors to maintain certain records about the equipment they install in the Southeast and/or Southwest regions for a period of five years. The records could be maintained in electronic or paper form. They records would be reviewed by DOE only upon request. If the request is ignored, DOE does have subpoena authority to go after the records.

The information maintained would be: manufacturer, model and serial number  of the outdoor unit, and the manufacture and model number of the indoor unit on a split system central air conditioner. DOE would also require the location of the installation, including street address, city, state, and zip code; and date of the installation, and the party from which the unit was purchased, including company or individual’s name, address, and phone number.  Most contractors are already recording this information in some format or another.

The DOE is expected to release the enforcement plan in the coming weeks for public comment. Most of the stakeholders who would comment were present at the working group meetings or part of the working group. There is expected to be some discussion during the comment period but the plan should be finalized and in place by April of next year.