1). EPA and DOE Hav Made Progress in Their Ongoing to Implement Significant Chan the Energ y Star Program

Since agreeing to the MOU in 2009, EPA and DOE have made  considerable progress in their ongoing efforts to implement significant  changes to the Energy Star program, including expanding product te updating program requirements, and establishing a pilot progr am to  promote the most efficient Energy Star products. EPA Has Significantly Expanded Product Testing

EPA and DOE have taken steps to significantly expand product tes qualify products for the Energy Star label and verify that marketedting to  products continue to meet program requirements. cted not to renew their partnerships as  In 2010, EPA developed and instituted new testing procedures for  products to qualify for Energy Star recognition, as called for in the MOU. The new procedures took  effect on January 1, 2011. Unlike the verification testing program administered by EPA-recognized  certification bodies, DOE’s verification testing program is agency-funded. EPA Has Taken Initial Steps to Update the Program

As the lead agency responsible for managing the Energy Star brand, EPA  has taken steps to update program requirements by broadening the  number of included product categories as well as updating performance  specifications for existing products. EPA has  developed a schedule to review and update, as necessary, performance  specifications for all Energy Star product categories by calendar year  2013. EPA Is Conducting a Pilot Program to Promote the Most Efficient Energy Star Products

Under the 2009 MOU, EPA and DOE agreed to explore a SuperStar  program that would identify the most energy-efficient Energy Star-labeled  products in given categories. EPA will evaluate the program to determine whethe should continue beyond 2012, and if so, whether to include additional  products, EPA is still developing the specific evaluation criteria and its  plans for obtaining consumer feedback about the pilot program. Program Partne Generally Had Favorable Views ar the Energy St Program but Identified Several Areas of Concern

Program partners we contacted generally had positive views of the  Energy Star program and recently implemented changes but raised  primary concerns about the program’s ongoing changes. In particular, program partners raised three areas of concern: that the program may become less voluntary in nature, that EPA’s ongoing pilot program to  promote the most highly efficient products could diminish the value of  Star label, and that the cost of participating in the program is  Energy rising. The foremost strengths these and other program partners identified were  the overall strength of the Energy Star brand itself and its wide  recognition by American consumers. Most retail and manufacturing partners also told us that  the loss of the Energy Sta businesses. r program would be detrimental to their  Many of the program partners we spoke with also viewed the changes being implemented as a result of the MOU favorably, although their  perceptions varied. For example, many retail, state, and utility partners  told us they believe the new third-party testing and certification  procedures increase the program’s credibility. In addition, most program partners we contacted  told us they generally supported steps taken in the MOU to clarify  agencies’ roles and establish a single agency as the brand manager. First, program partners and  other interested parties expressed concern that the ongoing changes are  shifting the voluntary nature of the program to include elements of some  of  traditional regulatory programs but without the procedural safeguards  such programs. Given the importance of participating in  the program, representatives from a manufacturing association a raised concerns that the Energy Star program does not have an  independent administrative review process where adverse agency actions  lso  related to setting specifications and disqualifications can be reviewed  prior to seeking judicial review. Second, program partners we spoke with differed  on their views of EPA’s new pilot program to promote the most efficient  products. Some of these  partners raised concerns that creating two classes of Energy Star  products could diminish the value of the Energy Star label for  manufacturing partners whose products meet the standard Energy Star  specification but may not rank among the most efficient products. The Energy Star program’s success in  promoting energy-efficient products is widely recognized, and consum manufacturers, utilities, and federal and state agencies rely on it. Regarding our recommendation that the Administrator of  E PA assess the need to develop a process for independent review of  adverse agency decisions for the Energy Star program as it relates to  setting specifications and disqualifications to ensure decisions of the  program are fair and transparent, EPA neither agreed nor disagreed. Appendix I: Scope and Methodology

To determine the status of the Environmental Protection Agency’s (EPA)  and Department of Energy’s (DOE) implementation of changes to the  Energy Star program under its 2009 memorandum of understanding  (MOU), we reviewed the program’s authorizing legislation.
Why GAO Did This Study

American consumers, businesses, utilities, and federal and state agencies rely on the Energy Star product labeling program to identify more efficient products that lower their energy costs. Even with the program's successes, several reports by GAO and others have identified weaknesses in the Energy Star program. The program, which began in 1992 and was reauthorized in 2005, has been jointly administered by the Environmental Protection Agency (EPA) and the Department of Energy (DOE). In 2009, the agencies signed a memorandum of understanding (MOU) that outlined changes to address these weaknesses. The changes included identifying EPA as the lead agency, clarifying the roles and responsibilities of each agency, as well as instituting third-party testing of products. GAO was asked to examine (1) the status of EPA's and DOE's implementation of changes to the Energy Star program under the MOU and (2) program partners' views of the Energy Star program and changes that are under way. To examine the status of the changes, GAO reviewed guidance and eligibility criteria and interviewed various program partners to gather their views. The results of these interviews are not generalizable, but provided insights on changes to the Energy Star program.

What GAO Found

EPA and DOE have made considerable progress in their ongoing efforts to implement significant changes to the Energy Star program agreed to in the 2009 MOU. These changes include expanding product qualification and verification testing, updating program requirements, and piloting a program to promote the most efficient Energy Star products. In 2010, EPA developed and instituted new third-party certification procedures to qualify products for the Energy Star label. The new procedures took effect on January 1, 2011. As of May 2011, EPA had received about 10,000 new product submissions. In addition, EPA and DOE expanded their testing programs to verify that labeled products continue to meet program requirements. As part of these efforts, EPA is finalizing standard procedures for disqualifying products that fail the verification testing. EPA has also taken steps to update program requirements by broadening the number of product categories covered by the program and updating performance specifications for products that are already part of the program. Since 2009, EPA and DOE have finalized specifications for two new residential product categories and EPA is working on five additional product categories. EPA has a schedule to review and update the specifications for all existing product categories by 2013. In May 2011, EPA established a pilot program to recognize the most efficient products among those that qualify for the Energy Star label in seven product categories. As of August 2011, 78 models in five categories had received recognition as the most efficient products. The pilot program will run into 2012, when EPA will evaluate whether it should continue beyond 2012. Program partners we interviewed--including manufacturers, retailers, and utilities--generally had positive views of the Energy Star program but raised key concerns about the program's ongoing changes. Program partners cited the overall strength of the Energy Star brand itself and its wide recognition by American consumers and said that the loss of the program would be detrimental to their business. Further, these program partners told us they generally supported MOU steps taken to clarify agencies' roles and establish a single agency as the brand manager. However, program partners also raised three key concerns. First, program partners expressed concern that the ongoing changes are shifting the voluntary nature of the program to include elements of a more traditional regulatory program, but without the procedural safeguards of such programs. Specifically, many program partners told us that the Energy Star label is necessary to sell in many markets. Unlike traditional regulatory programs, however, Energy Star does not have an independent administrative review process where adverse agency decisions related to setting specifications and disqualifications can be reviewed prior to seeking judicial review. Program partners also identified a lack of transparency in EPA's key decisions, including how it sets performance specification levels. Second, many program partners told us the pilot program to identify the most efficient products may undermine the value of the Energy Star label and the program as a whole by creating two classes of Energy Star products. Third, some program partners raised concerns about the rising cost of participating in the program because of third-party certification testing, and some manufacturing partners said they are considering decreasing their participation because of the cost.

What GAO Recommends

GAO recommends the Administrator of EPA assess the need to develop a process for independent review of adverse decisions related to setting specifications and disqualifications. EPA neither agreed nor disagreed with this recommendation.