In an astonishing display of chutzpah, the Department of Energy has proposed to regulate computer servers as “consumer products” (link). Only in a bureaucrat’s mind could a computer server be considered a consumer product intended primarily “for personal use or consumption by individuals.” However noble DOE’s intentions, it simply does not have the authority to regulate here.
Some background. Under the Energy Policy and Conservation Act (EPCA), DOE is authorized to establish energy efficiency standards for “consumer products.” EPCA actually lists several consumer/household products for DOE to regulate, including air conditioners, light bulbs, refrigerators, washers and dryers, etc. The Act also authorizes DOE to add other “consumer products” to the list of regulated products if the average annual per-household energy use from such a product likely exceeds 100 kilowatt-hours.
EPCA, however, is very explicit in what constitutes a “consumer product” subject to potential regulation. It is defined as any article which (1) consumes energy and (2) “to any significant extent, is distributed in commerce for personal use or consumption by individuals; without regard to whether such article of such type is in fact distributed in commerce for personal use or consumption by individual.” In other words, a consumer product is a product similar to those actually listed in EPCA itself and is precisely what it sounds like – a product primarily intended for personal use by an individual or household. Indeed, the critical factor for adding an article as a regulated consumer product is its average household energy use. A consumer product is not one that is sold primarily to, or used primarily by, businesses or commercial establishments.
Yet, that is precisely what DOE has proposed to do with computer servers. Computer servers are not “to any significant extent” distributed for “personal use or consumption by individuals.” DOE’s proposed definition confirms this – a server is a “computer that provides services and manages network devices.” It is rare household or individual that employs such a computer server in his or her house, let alone purchases such an item. And DOE’s proposal does not even address the elephant in the room – whether servers are “consumer products” subject to possible regulation under EPCA. Instead, DOE focuses its analysis on the aggregate energy usage of servers, and then explicitly assumes that households use such servers. The proposal also ridiculously suggests that the growth in cloud computing somehow transforms servers into consumer products. Simply put, servers are commercial, not consumer, products and thus cannot be regulated as consumer products under EPCA.
In fact, in 2007, DOE was given authority to work with the Computer and Business Equipment Manufacturers Association to establish a voluntary testing and information program for commercial office equipment, which arguably would include computer servers. That Congress felt it needed to enact legislation to give DOE the power to develop voluntary standards for this category of products makes it abundantly clear that the Department has no authority to impose mandatory standards.
This is not the first time that DOE has attempted to reach beyond the powers that Congress gave it. As I previously reported, here, the D.C. Circuit vacated a DOE rule establishing energy standards for decorative fireplaces, concluding that DOE lacked authority to do so. Hearth, Patio & Barbecue Association v. U.S. Dep’t. of Energy, 706 F.3d 499 (D.C. Cir. 2013).
DOE has also taken positions regarding its enforcement authority that run contrary to those the EPCA specifies. For example, DOE claims that offering a product for sale constitutes “distribution in commerce,” despite the fact that the statutory definition of this phrase is limited to the sale, importation, delivery or introduction into commerce. (Among other things, the EPCA makes it unlawful to distribute in commerce any covered product that fails to meet energy standards). Nothing in the statute even suggests that offering a product for sale is an unlawful act. Contrast the coverage of the EPCA with the Consumer Product Safety Act, which makes it unlawful both to “distribute in commerce” and “offer for sale” certain consumer products that are not in conformity with consumer product safety rules.
There is little doubt that server facilities use large amounts of energy. There might be value to establishing minimum energy standards for servers. The problem, though, is that EPCA does not give DOE authority to do this.