[Federal Register Volume 59, Number 187 (Wednesday, September 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-23958]


[Federal Register: September 28, 1994]


_______________________________________________________________________

Part V





Federal Trade Commission





_______________________________________________________________________



16 CFR Part 305



Rule Concerning Disclosure Regarding Energy Consumption and Water Use 
of Certain Home Appliances and Other Products Required Under the Energy 
Policy and Conservation Act (``Appliance Labeling Rule''); Rule
FEDERAL TRADE COMMISSION

16 CFR Part 305


Rule Concerning Disclosures Regarding Energy Consumption and 
Water Use of Certain Home Appliances and Other Products Required Under 
the energy Policy and Conservation Act (``Appliance Labeling Rule'')

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission (``Commission'') adds pool 
heaters, instantaneous water heaters, and heat pump water heaters to 
the list of products covered by the Commission's Appliance Labeling 
Rule (``Rule''). This action is being taken because amendments to the 
Energy Policy and Conservation Act (``EPCA'') added pool heaters to the 
list of covered products for which the Commission must consider 
labeling requirements, and because the Department of Energy (``DOE'') 
promulgated final test procedures for the two types of water heaters at 
issue that triggered an obligation under EPCA for the Commission to 
consider labeling requirements for them.

EFFECTIVE DATE: December 29, 1994.

FOR FURTHER INFORMATION CONTACT: James Mills, Attorney, 202-326-3035, 
Division of Enforcement, Federal Trade Commission, Washington, DC 
20580.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Statutory Authority for Labeling Pool Heaters, Instantaneous Water 
Heaters, and Heat Pump Water Heaters

    The National Appliance Energy Conservation Act (``NAECA 87'')\1\ 
amended EPCA\2\ by, among other things, adding pool heaters (which 
include spa and hot tub heaters and heaters for similar applications--
for convenience, the Commission will refer to these products as ``pool 
heaters'') to the list of appliances for which DOE must establish 
minimum efficiency standards and testing procedures. EPCA requires the 
Commission to consider labeling requirements for any covered products 
for which DOE has prescribed a final test procedure.\3\
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    \1\Pub. L. 100-12, 101 Stat. 103 (1987).
    \2\Pub. L. 94-183, 89 Stat. 871, 42 U.S.C. 6291 et seq. (Dec. 
22, 1975).
    \3\42 U.S.C. 6294(b)(1)(B).
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    NAECA 87 also amended EPCA by adding definitions, in section 
321,\4\ for some of the products enumerated as ``covered products'' in 
section 322,\5\ including a definition for water heaters that 
subdivided the category into three subcategories--storage-type units, 
instantaneous units, and heat pump units.\6\ In 1989, DOE amended its 
definition for water heaters to be consistent with the NAECA 87 
amendments,\7\ and, in 1990, refined its test procedure for water 
heaters so it would apply to some (but not all) of the different kinds 
of instantaneous water heaters and heat pump water heaters that are 
currently being produced, as well as to storage-type units.\8\ 
Previously, DOE's definition (and test procedure) for water heaters 
applied only to conventional storage-type heaters. The Commission's 
current labeling Rule, like the previous version of the DOE rule, 
defines water heaters only as storage-type units.\9\ Thus, these other 
products did not come within the Rule's definition of water heater.
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    \4\42 U.S.C. 6291.
    \5\42 U.S.C. 6292.
    \6\42 U.S.C. 6291 (27).
    \7\54 FR 6062, 6075 (Feb. 7, 1989).
    \8\55 FR 42162, 42169-77 (Oct. 17, 1990).
    \9\16 CFR 305.3(d).
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    EPCA provides that, after DOE prescribes a final test procedure 
applicable to a product category covered under EPCA,\10\ the Commission 
must initiate a proceeding to consider labeling requirements for that 
category. Because of DOE's publication of a final test procedure for 
pool heaters, the Commission commenced a proceeding to consider 
labeling rules for pool heaters. Further, because DOE amended its 
definition for water heaters in section 430.2 of Subpart A (General 
Provisions) of its rules,\11\ to include instantaneous water heaters 
and heat pump water heaters, and amended Appendix E to Subpart B of 
Part 430--the test procedure for these products--so the energy usage of 
most of these new products can be determined, the Commission also 
initiated a proceeding to consider requiring labeling for these water 
heaters.
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    \10\42 U.S.C. 6293(b) gives DOE the authority (1) to prescribe 
test procedures for new products, and (2) to amend existing test 
procedures if amended test procedures would more accurately or fully 
measure energy consumption.
    \11\The applicable DOE rules are codified at 10 CFR Part 430 
(1994). The language in Sec. 305.3 of the Commission's Rule 
(``Description of covered products to which this part applies) is 
based on the definitions in Sec. 430.2 of Subpart A of DOE's rules.
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B. Regulatory History

    On February 9, 1993, the Commission published a Notice of Proposed 
Rulemaking (``NPR'') in the Federal Register soliciting comment on a 
proposal to require EnergyGuide labels on pool heaters, instantaneous 
water heaters, and heat pump water heaters.\12\ As required by 
EPCA,\13\ this rulemaking was conducted pursuant to section 553 of the 
Administrative Procedure Act (``APA'').\14\ Section 553(b)(3) of the 
APA provides the Commission with the option of publishing the substance 
of a proposed rule instead of specific proposed rule language. The 
Commission exercised this option and sought comment on the substance of 
the proposed amendments to the Rule, except for specific definitions 
for each of the proposed new product categories.
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    \12\58 FR 7852.
    \13\42 U.S.C. 6306(a)(1).
    \14\5 U.S.C. 553.
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    In accordance with EPCA,\15\ the NPR afforded interested persons 
the opportunity to present their views in writing and orally at a 
public hearing. The Presiding Officer did not receive any requests for 
an oral presentation, so no hearing was held. During the comment 
period, which extended from February 9 through April 26, 1993, the 
Commission received eight comments.\16\ These comments are from two 
appliance manufacturers, one appliance industry trade association, two 
public utilities, one utility trade association, one state energy 
office, and one public interest group.\17\ Part II, below, discusses 
the issues on which comments were sought, the comments received, and 
the amendments the Commission is adopting today in response to them. 
The amended Rule sections appear in ``Text of Amendments.''
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    \15\42 U.S.C. 6306(a)(1).
    \16\The comments are found on the Public Record at the FTC in 
Washington, D.C. under Rulemaking Record Number R611004 (Appliance 
Labeling Rule). They are grouped under Category E (Pool and Water 
Heater Proceeding--Industry Comments) and Category EE (Pool and 
Water Heater Proceeding--Comments from Other Sources). Other 
material submitted to the Public Record in this proceeding can be 
found under Category A (Public Notices and Petitions).
    \17\The commenters were: Thermo-Dynamics Boiler Company 
(``Thermo''), E-1; Paloma Industries, Inc. (``Paloma''), E-2; The 
Gas Appliance Manufacturers Association (``GAMA''), E-3; Washington 
Gas, EE-1; The California Energy Commission (``CEC''), EE-2; The 
American Council for an Energy Efficient Economy (``ACEEE''), EE-3; 
The American Gas Association (``AGA''), EE-4; Arkansas Louisiana Gas 
Company (``ALG''), EE-5.
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    In the NPR, the Commission initially concluded that the provisions 
of the Regulatory Flexibility Act relating to an initial Regulatory 
Flexibility Act analysis were not applicable to the proceeding and that 
a regulatory analysis was not necessary because the amendments, if 
promulgated, would not have a significant economic impact on a 
substantial number of small entities. The NPR sought comment, however, 
on the effects of the proposed amendments on small businesses to assist 
the Commission in determining whether a final Regulatory Flexibility 
Act analysis was necessary.\18\ The Commission also initially concluded 
that, although the proposed amendments would expand the Rule's existing 
recordkeeping and reporting requirements to include manufacturers of 
products not covered before, the effect would be de minimis because so 
few companies would be affected and the resulting increase in burden 
hours would be so small. The Commission decided, therefore, not to ask 
the Office of Management and Budget to adjust the clearance for the 
Rule under the Paperwork Reduction Act. To substantiate the accuracy of 
its reporting burden estimate, however, the Commission requested 
comment on the extent of the reporting burden associated with these 
amendments.\19\ Parts III and IV, below, discuss the comments on these 
issues and the Commission's final determinations with respect to the 
requirements of the Regulatory Flexibility Act and the Paperwork 
Reduction Act, respectively.
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    \18\See 58 FR 7855.
    \19\Id.
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II. Discussion of Comments and Disposition of Issues

    As discussed in more detail in Parts II.A and B, below, the NPR 
proposed definitions for each of the three product categories that are 
based on EPCA and/or Part 430 of the Code of Federal Regulations 
(``CFR''), which is the section of CFR in which DOE's test procedures 
are codified. In addition, the NPR solicited comment with respect to 
each category regarding: the feasibility of labeling the product; the 
appropriateness of the proposed definition; what energy usage 
descriptor to require on the labels; what sub-categories, if any, to 
establish for purposes of ranges of comparability; and, what format to 
require for the labels.\20\
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    \20\As is discussed in the sections below on each category, the 
NPR also solicited comment on some issues that were specific to one 
category only.
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A. Pool Heaters

1. Feasibility of Labeling
    The Commission is required to prescribe a labeling rule for the 
categories of products listed in EPCA,\21\ which now include pool 
heaters, unless it determines that labeling the product is ``not 
technologically or economically feasible.''\22\ The NPR asked for 
comment on this issue, emphasizing that the question was whether 
labeling pool heaters would be economically or technologically 
infeasible (as distinct from testing, which manufacturers and importers 
must do in order to comply with DOE's minimum efficiency standards 
program).\23\
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    \21\42 U.S.C. 6294(a)(1) and (b)(5); 42 U.S.C. 6292(a).
    \22\42 U.S.C. 6294(a)(1). During the original rulemaking, the 
Commission determined that clothes dryers, television sets, kitchen 
ranges and ovens, humidifiers and dehumidifiers, and home heating 
equipment other than furnaces should be exempted from the 
requirements of the Rule on this basis and, in some cases, because 
labeling them would not assist consumers in making purchasing 
decisions. 44 FR 66466, 66467-69 (Nov. 19, 1979). This second 
criterion for exemption provided by EPCA relates only to a few 
products. Pool heaters are not among them. 42 U.S.C. 6294(a)(2).
    \23\See 10 CFR 430.62.
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    Three comments addressed this issue. CEC stated that labeling these 
products is both economically and technologically feasible and that the 
value to consumers of the label information greatly outweighs the 
labeling cost to industry. CEC pointed out that manufacturers currently 
provide energy efficiency information on pool heaters to DOE and CEC, 
but not to the purchaser.\24\ ACEEE and ALG also supported labeling 
requirements for pool heaters without elaboration.\25\ The record does 
not indicate that labeling of pool heaters would be technologically or 
economically infeasible. Accordingly, the Commission has determined to 
amend the Rule to include labeling requirements for the pool heater 
category.
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    \24\CEC, EE-2, 2.
    \25\ACEEE, EE-3, 1; ALG, EE-5, 1.
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2. Definition for ``Pool Heater''
    The NPR explained that the EPCA/DOE definition of pool heaters is 
not limited to products of any particular fuel type.\26\ The DOE test, 
however, covers only gas- and oil-fired products.\27\ Although the 
majority of pool heaters are currently gas-fired (with some oil-fired), 
electric resistance and heat pump pool heaters are also being 
manufactured. Because the DOE test covers only gas- and oil-fired pool 
heaters, the NPR proposed amending the Rule to cover only these two 
types of products. The Rule's coverage is necessarily limited by the 
definitions and test procedures in Subpart B of DOE's rules (i.e., in 
the absence of a DOE test procedure for determining energy usage, 
compliance with the Rule is impossible). The NPR proposed, therefore, 
adopting the EPCA/DOE definition of ``pool heater'' along with a 
proviso stating that the Rule's scope is limited to those products 
within the definition for which there is a DOE-prescribed test for 
measuring energy usage.
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    \26\See 58 FR 7853. Section 321(a)(25) of EPCA (42 U.S.C. 
6291(a)(25)) defines ``pool heater'' as follows: ``The term `pool 
heater' means an appliance designed for heating nonpotable water 
contained at atmospheric pressure, including heating water in 
swimming pools, spas, hot tubs and similar applications.''
    \27\Although DOE uses the EPCA definition of pool heater in its 
regulations at 10 CFR 430.2, and in its test procedure for pool 
heaters (Appendix P to Part 430 of 10 CFR), the procedure pertains 
only to gas- and oil-fired heaters.
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    Two comments addressed the proposed definition. ACEEE stated that 
the Commission's adoption of the definition in section 430.2 of DOE's 
rule with the proposed proviso would be acceptable.\28\ CEC agreed that 
the Rule should be amended to include the language in section 430.2, 
but opposed the addition of the proviso, stating that DOE has 
developed, but not yet published, an all-inclusive test method, and 
that the American Society of Heating, Refrigerating and Air-
Conditioning Engineers (``ASHRAE'') has appointed a committee to 
develop a test for gas, oil, electric, and heat pump pool heaters.\29\
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    \28\ACEEE, EE-3, 1.
    \29\CEC, EE-2, 2, 4.
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    The Commission has determined to amend the Rule to include the 
definition of pool heaters as that term is defined in EPCA and by DOE 
(in section 430.2 of Subpart A). The definition is followed by a 
proviso stating that the Rule's application is limited to those 
products for which there is a DOE-prescribed test. See section 305.3(o) 
in ``Text of Amendments,'' below. The Commission recognizes, as CEC 
pointed out, that there may eventually be a test procedure for all 
types of these products. However, the Commission's authority here to 
require labels is limited to products for which DOE has published final 
test procedures. If DOE amends the test procedure to include electric 
resistance and/or heat pump pool heaters, the Commission will then 
initiate a rulemaking proceeding to consider whether the Rule should be 
amended to cover those products.
3. Energy Usage Descriptor
    EPCA requires that labels on covered products disclose estimated 
annual operating cost, as determined by DOE test procedures, unless DOE 
determines that disclosure of estimated annual operating costs is not 
technologically feasible, or the Commission determines that such 
disclosure is not likely to assist consumers in making purchasing 
decisions or is not economically feasible. In this event, the 
Commission shall require disclosure of a different useful measure of 
energy consumption, again determined in accordance with DOE test 
procedures.30 Labels also must disclose the range of estimated 
annual operating costs, or the alternate measure of energy consumption 
required for those covered products.31
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    \3\042 U.S.C. 6294(c). For most product categories, the Rule 
originally required that estimated annual operating costs in 
dollars, and related information, be disclosed on labels and in 
retail sales catalogues. The Commission recently amended the Rule, 
however, to require an energy consumption figure (KWH per year for 
electrically-fueled products, therms per year for gas-fueled 
products, and gallons per year for oil- and propane-fired products) 
for the products that originally had to bear labels disclosing 
estimated annual operating cost. See 59 FR 34014 (July 1, 1994).
    \3\142 U.S.C. 6294(c)(1)(B).
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    A disclosure of estimated annual operating cost is not appropriate, 
however, for all product categories. For example, three product 
categories (room air conditioners, furnaces, central air conditioners) 
have usage cycles that depend on disparate climate conditions across 
the United States. In past rulemaking proceedings, the Commission has 
determined for these products that ``average'' energy cost would not be 
likely to assist consumers in making purchasing decisions. Therefore, 
the required disclosure on labels for these products is an energy 
efficiency rating (``EER'').32 The corresponding cost information 
also must be disclosed on the label for room air conditioners, and on 
fact sheets or in an industry directory for furnaces and central air 
conditioners.
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    \3\2See 44 FR 66466, 66470 (Nov. 19, 1979; furnaces and room air 
conditioners); 52 FR 46888, 46889 (Dec. 10, 1987; central air 
conditioners). When promulgating the test procedures, DOE, as 
required by EPCA, developed two measures of energy consumption for 
each appliance category: (1) Estimated dollar cost of operation, and 
(2) the energy factor, a measure of the useful output of an 
appliance's services divided by the energy input. For climate 
control equipment, under the Commission's Rule, the energy factor 
must be an energy efficiency rating. The acronyms used in the DOE 
tests and by the industry (``EER'' for room air conditioners, 
``SEER'' for central air conditioners and the cooling function of 
heat pumps, ``AFUE'' for furnaces, and ``HSPF'' for the heating 
function of heat pumps) must be used in advertising and on fact 
sheets and labels.
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    The energy efficiency measurement in EPCA that applies to pool 
heaters is ``thermal efficiency.''33 This measurement is also the 
energy usage descriptor that is derived from the DOE test 
procedure.34 The current DOE test has no methodology for deriving 
estimated annual operating cost or any energy usage measurement other 
than thermal efficiency. To obtain information about what possible 
current or future disclosures may be appropriate for labels on pool 
heaters, the NPR solicited comment on whether the measure of energy 
consumption to be disclosed on pool heater labels should be thermal 
efficiency, without additional cost information, or whether it should 
be some other disclosure. Because DOE might amend its test procedure to 
include a way to measure annual energy consumption (and, therefore, 
cost), the NPR also asked whether it would be technically or 
economically feasible to disclose estimated annual operating cost, and 
whether operating cost information would be likely to assist consumers 
in making purchasing decisions.35
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    \3\342 U.S.C. 6291(a)(26). ``The term `thermal efficiency of 
pool heaters' means a measure of the heat in the water delivered at 
the heater outlet divided by the heat input of the pool heater as 
measured under test conditions specified in section 2.8.1 of the 
American National Standard for Gas Fired Pool Heaters, Z21.56-1986, 
or as may be prescribed by the Secretary [of DOE].'' The thermal 
efficiency rating is expressed as a percent.
    \3\4See Appendix P to Part 430 of 10 CFR.
    \3\5On August 23, 1993, DOE proposed amending Appendix P to Part 
430 of 10 CFR (the pool heater test procedure) to include procedures 
to measure annual energy consumption. An annual energy consumption 
figure would enable manufacturers to calculate estimated annual 
operating cost. See 58 FR 44538 at 44571. See also 59 FR 10464, 
10519 (March 4, 1994).
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    There was little agreement on these issues among the four comments 
that addressed them. Washington Gas stated that estimated annual 
operating cost is difficult to measure because the usage of pool 
heaters varies from region to region and depends on consumers' 
preferences. It recommended requiring a disclosure of hourly energy 
consumption along with thermal efficiency for comparison with other 
heaters.36 CEC recommended requiring a disclosure of both thermal 
efficiency and estimated annual operating cost. AGA and ALG favored the 
disclosure of estimated annual operating cost.\37\ Both expressed 
concern that thermal efficiency alone could mislead consumers because 
the different costs of operation between fuels would not appear on the 
label.38
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    \36\Washington Gas, EE-1, 1.
    \37\CEC, EE-2, 3.
    \38\AGA, EE-4, 2-4; ALG, EE-5, 1.
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    As noted above, the DOE test for pool heaters does not currently 
contain a final procedure for measuring estimated annual operating cost 
for these products, so the Commission cannot now require disclosure of 
operating cost. In the absence of such a procedure, the Commission 
determines that the most useful information available for consumers is 
thermal efficiency. Accordingly, the Commission amends the Rule to 
require that thermal efficiency be disclosed as the energy usage 
descriptor for these products. See sections 305.2(i) and 
305.11(a)(5)(ii)(C)-(E) and (G) of ``Text of Amendments,'' below. If, 
and when, DOE amends its test procedure to contain provisions for the 
determination of estimated annual operating cost, the Commission might 
consider amending the Rule to require the disclosure of estimated 
annual operating cost.
4. Sub-Categories for Ranges of Comparability
    Under the Rule, each required label on a covered appliance must 
show, in addition to the energy usage of the appliance itself, a range, 
or scale, indicating the range of energy costs or efficiencies for all 
models of a size or capacity comparable to the labeled model. To 
accomplish this, the Rule contains appendices that list sub-categories 
for each product category divided by fuel type and capacity 
groupings.39
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    \3\9For example, water heaters are divided into four sub-
categories by fuel--natural gas, propane, electric, and oil. Each of 
these sub-categories is further divided into increments of capacity 
expressed in first hour ratings. Thus, a label on a gas-fired water 
heater with a first hour rating of 37 gallons will disclose the 
range of energy usage of all gas-fired water heaters with first hour 
ratings of between 35 and 40 gallons.
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    NAECA 87 established a minimum efficiency standard for pool 
heaters, but it did not create any size or capacity sub-category beyond 
``pool heaters.''40 The DOE standard also does not create sub-
categories.41 The NPR solicited information on whether, for 
purposes of ranges of comparability under the Commission's Rule, there 
should be one category encompassing both fuel types, or two categories, 
one for each of the two fuel types--oil-fired and gas-fired models--for 
which there is currently an applicable DOE test procedure.
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    \4\0See 42 U.S.C. 6295(e)(2).
    \4\1See 10 CFR 430.32(k).
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    One comment addressed this question. CEC suggested that gas- and 
oil-fired pool heaters are sufficiently similar to be included in one 
group.42 The Commission agrees that gas- and oil-fired pool 
heaters are similar from a minimum efficiency standards perspective 
(the standard is the same for both--a thermal efficiency of no less 
than 78%). However, since 1980, the Commission has grouped products by 
different fuel types for purposes of the ranges of comparability. The 
Commission finds that this is the clearest and most informative way of 
presenting the ranges to consumers. Accordingly, the Commission amends 
the Rule to include separate ranges of comparability for gas-fired and 
oil-fired pool heaters. See revised Appendices J1 and J2 in ``Text of 
Amendments,'' below.
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    \4\2CEC, EE-2, 2-3.
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5. Label Format
    The Commission recognizes that pool heaters are sometimes not seen 
by consumers before purchase. They are often purchased as the result of 
a pool installation professional's recommendation and are ordered from 
industry brochures or specification sheets. The NPR, therefore, 
solicited comment on whether amendments requiring labels for pool 
heaters should require a ``conventional'' product-specific label 
approach for these products or another labeling format. 
``Conventional'' product-specific labels contain all the required 
energy use information and are used for refrigerators, refrigerator-
freezers and freezers, water heaters, dishwashers, clothes washers, and 
room air conditioners.43 The NPR also asked for comment on whether 
it would be more useful to require that pool heaters be labeled with a 
label like the one required for central air conditioners. For these 
products, the Commission requires a product-specific label, but with 
only some of the required energy usage information. Other required 
information must be disclosed on separate fact sheets or in an 
industry-produced directory.44
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    \4\3See 16 CFR 305.11(a)(5). The required information includes: 
the name of the manufacturer, the model number and capacity of the 
product, the energy consumption of the product, the appropriate 
range of energy usage for similarly sized products, a statement that 
the information is based on U.S. government tests, and a statement 
disclosing cost of operation based on a national average utility 
rate.
    \4\416 CFR 305.11(a)(5)(iii) and (c). The label on the product 
discloses the energy efficiency of the labeled unit and the range of 
efficiencies for all similar products, and it directs consumers to 
ask for further information on fact sheets or in directories. The 
fact sheets and directories must disclose information on cost of 
operation. In recent amendments to the Rule the Commission also 
adopted this disclosure approach for furnaces. See 58 FR 34014, 
34016 (July 1, 1994).
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    Two comments addressed the issue of label type and format. CEC 
favored a conventional label for pool heaters.45 ACEEE suggested a 
simplified label with a requirement for disclosure of comprehensive 
information on a fact sheet, in an industry directory, or in marketing 
materials.46 As discussed in Part II.A.3, above, the only measure 
of energy usage that can be derived through the current DOE test for 
these products is thermal efficiency. Therefore, requiring 
manufacturers to disclose ``other information'' through other formats 
would be inappropriate. Moreover, without a method for determining 
estimated annual operating cost, the Commission cannot require the 
``Operating Cost Statement'' that is standard on ``conventional'' 
labels. Consequently, the Commission is amending the Rule to require 
that labels for pool heaters disclose the thermal efficiency of the 
product in the format of the ``conventional'' label for room air 
conditioners, but without the ``Operating Cost Statement.'' See the 
Sample Label for pool heaters in ``Text of Amendments,'' below.
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    \4\5CEC, EE-2, 3.
    \4\6ACEEE, EE-3, 1.
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B. Instantaneous Water Heaters and Heat Pump Water Heaters

    Instantaneous water heaters heat water as it is needed, rather than 
heating it in a tank and keeping it hot while storing it. An advantage 
to this approach to water heating is that there is no standby loss with 
the associated increased cost and loss of efficiency.47 
Instantaneous water heaters can heat water by means of oil, natural 
gas, or electric resistance, although there are few, if any, oil-fired 
instantaneous water heaters in production. The DOE test procedure 
presently contains test methodologies only for gas- and oil-fired 
models and not for electric.48
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    \4\7Standby loss refers to the energy that is used to keep water 
hot in the storage tank of a storage type water heater while hot 
water is not being used.
    \4\8See 10 CFR Part 430, Subpart B, Appendix E. If DOE were to 
prescribe a test procedure for electric instantaneous water heaters, 
the Commission would initiate a rulemaking proceeding to consider 
labeling them.
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    Heat pump water heaters are similar to small room air conditioners. 
They extract heat from the air around them but, instead of exhausting 
it to the outside, they use the heat to increase the temperature of the 
water in a conventional storage tank. They exhaust the resulting cool 
air into the surrounding area.
1. Feasibility of Labeling
    The NPR asked whether labeling (as distinct from testing) 
instantaneous and heat pump water heaters would be economically or 
technologically infeasible.49 Five comments addressed this issue. 
Washington Gas recommended deferring consideration of labeling heat 
pump water heaters until more information is available on the effects 
that the climate conditioning of the space around the heat pump water 
heater have on the product's energy consumption.50 The other four 
comments favored requiring EnergyGuide labels on both types of water 
heaters.51 GAMA repeated its consistent position that labeling of 
all water heaters, including instantaneous water heaters and heat pump 
water heaters, is not technologically infeasible, but is of little 
benefit to consumers because water heaters are not usually purchased 
off a showroom floor. GAMA acknowledged, however, that if the 
requirement to label storage water heaters is to continue, then 
instantaneous water heaters and heat pump water heaters also should be 
labeled.52 CEC, ACEEE, and ALG all favored a labeling requirement 
for both types of water heaters without qualification.53
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    \4\9See 58 FR 7856.
    \5\0Washington Gas, EE-1, 1. Because the DOE test is conducted 
in a controlled environment that requires a constant temperature for 
the space in which the heat pump water heater operates, this 
consideration, while relevant to the issue of the product's energy 
usage in actual service, is not relevant to the values that will 
appear on the EnergyGuide labels, which are for comparing the energy 
usage of competing products, not disclosing actual energy usage in 
the home.
    \5\1GAMA, E-3, 2, 3; CEC, EE-2, 4, 6; ACEEE, EE-3, 2; ALG, EE-5, 
1.
    \5\2GAMA, E-3, 2, 3. In its recent review of the Rule, the 
Commission considered and rejected GAMA's suggestion to repeal 
labeling of water heaters. See 58 FR 34014, 24 (July 1, 1994).
    \5\3CEC, EE-2, 4, 6; ACEEE, EE-3, 2; ALG, EE-5, 1. CEC said, 
``Labeling of [instantaneous water heaters and heat pump water 
heaters] is both economically and technologically feasible. It has 
been done for storage water heaters for many years. It is only fair 
for it to be required for other types of water heaters.''
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    The record does not indicate that labeling for these products is 
technologically or economically infeasible. Most comments instead 
favored treating these water heaters like the type already covered by 
the Rule. Accordingly, the Commission amends the Rule to require 
EnergyGuide labels for instantaneous water heaters and heat pump water 
heaters. See section 305.3(d) of ``Text of Amendments,'' below.
2. Revised Definition of ``Water Heater,'' Including Definitions for 
Instantaneous Water Heaters and Heat Pump Water Heaters
    The NPR proposed amending the Rule to include the definitions for 
instantaneous water heater and heat pump water heater that appear in 
section 430.2 of DOE's rule, but with a proviso, like the one proposed 
for pool heaters, stating that the Rule's requirements are limited to 
those products for which there are DOE-prescribed test 
procedures.54 The definition in section 430.2 of DOE's rule is 
supplemented in the test procedure portions of DOE's rule (Appendix E 
to Subpart B of 10 CFR Part 430). In the NPR, the Commission reasoned 
that the proposed approach would allow the Commission to avoid 
repeating the definition limitations in DOE's Appendix E to Subpart B, 
as well as limitations inherent in the way the test procedure itself is 
written (for example, by the fact that the DOE test procedure presently 
does not contain a procedure for measuring the energy usage of electric 
instantaneous water heaters.)55
---------------------------------------------------------------------------

    \5\4See 58 FR 7853-54. The proposed definition would replace the 
definition of ``water heater'' currently in the Commission's Rule at 
16 CFR 305.3(d)(1-3).
    \5\558 FR 7854.
---------------------------------------------------------------------------

    Five comments addressed the proposed definition. ACEEE stated that 
the Commission's adoption of the definition in section 430.2 of DOE's 
rule with the proposed proviso would be acceptable.56 GAMA also 
favored adopting the section 430.2 definition and proviso.57 CEC 
stated that the Rule should be amended to include the language in 
section 430.2, but opposed the addition of the proviso, stating that 
DOE has developed, but not yet published, an all-inclusive test 
method.58 Paloma requested the Commission to adopt the definition 
for gas instantaneous water heaters from Appendix E rather than from 
section 430.2, because the Appendix E definition limits the size of the 
products to be covered.59 Washington Gas stated that instantaneous 
water heaters are used with and without a storage tank, and that the 
minimum flow rate of an instantaneous water heater should be defined if 
it is to be used without a storage tank.60
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    \5\6ACEEE, EE-3, 2.
    \5\7GAMA, E-3, 1.
    \5\8CEC, EE-2, 2, 4. The referenced proposed test method was 
announced by DOE on August 23, 1993, at 58 FR 44538, 44547-48, 
44571, along with proposed modifications to the test procedures for 
furnaces and vented home heating equipment. DOE sought comment on a 
new ``annual efficiency'' energy descriptor, which would be in 
addition to the current thermal efficiency descriptor and which 
would measure pilot light usage and electrical consumption. DOE also 
sought comment on procedures that would facilitate an estimation of 
annual operating cost for pool heaters (see also note 35). These 
proposed modifications to the DOE test procedure for pool heaters 
were referenced in a subsequent DOE proposal to amend the minimum 
efficiency standard for pool heaters. 59 FR 10464, 10519-21 (March 
4, 1994).
    \5\9Paloma, E-2, 1.
    \6\0Washington Gas, EE-1, 1. Because instantaneous water heaters 
are not tested under the DOE test procedure with a storage tank, the 
Rule will not address this issue.
---------------------------------------------------------------------------

    As with pool heaters, the Commission finds that the EPCA/DOE 
definition for these products appropriately describes the product to be 
covered by the labeling requirements. Therefore, the Commission amends 
the Rule to include the definition of water heaters as they are defined 
in EPCA and by DOE (in Sec. 430.2 of Subpart A). The definition is 
followed by a proviso stating that the Rule's application is limited to 
those products for which there is a DOE-prescribed test. See section 
305.3(d) in ``Text of Amendments,'' below.
    As with pool heaters, the Commission believes that a proviso of 
this type is more efficient than repeating, in the Rule's product 
definition, the further exceptions and limitations in the Appendix E 
definitions and/or the test procedure.61 Products not covered by 
the DOE test because of the limitations in the Appendix E definitions 
cannot be tested. To comply with the Commission's Rule, a manufacturer 
must be able to measure a product's energy usage in accordance with the 
appropriate DOE test procedure.62 Identifying specific limitations 
to the general definition in the Commission's Rule based on section 
430.2 of DOE's rule is not necessary because manufacturers are on 
notice that water heaters excluded from DOE test coverage do not have 
to be labeled under the Commission's Rule.
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    \6\1Again, because the definitions that create the further 
limitations in the test procedures are revised by DOE more often 
than the Sec. 430.2 definitions, the Commission definitions may 
become obsolete and the Commission would have to amend the Rule 
frequently to comport with any DOE revisions.
    \6\2See 42 U.S.C. 324(c)(1)(A).
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3. Energy Usage Descriptor
    The NPR asked whether the energy usage of instantaneous and heat 
pump water heaters should be expressed as an estimated annual operating 
cost, as it was at that time for conventional water heaters, or whether 
their energy usage should be expressed as an energy factor. The NPR 
also asked whether it would be technically or economically feasible to 
disclose estimated annual operating cost, or whether operating cost 
would not be likely to assist consumers in making purchasing 
decisions.63
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    \6\358 FR 7856. Since the NPR was published, the Commission, in 
a recent proceeding involving comprehensive amendments to the Rule, 
amended the disclosure requirements for water heaters from a 
disclosure of estimated annual operating cost and a cost grid to a 
disclosure of estimated annual energy consumption with an 
``operating cost disclosure statement.'' See 58 FR 34014, 34022-23 
(July 1, 1994).
---------------------------------------------------------------------------

    Six comments addressed the issue of which energy usage descriptor 
to require on labels for these two types of water heaters. Paloma, 
commenting only on instantaneous water heaters, recommended that the 
Rule require the disclosure of an energy factor for gas instantaneous 
water heaters.64 Washington Gas suggested the disclosure of 
estimated annual operating cost for both types of water heaters, but 
with special considerations that are not contemplated by the DOE test 
procedure.65
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    \6\4Paloma, E-2, 3-4. Paloma explained that its gas-fired 
instantaneous water heaters could be operated with a continuously-
burning pilot or with the consumer igniting the pilot each time hot 
water is required. Paloma requested that the Rule allow for 
disclosure on labels of the product's energy factor when the pilot 
is left on and when the pilot burns continuously. According to DOE 
engineering staff, the DOE water heater test is set up to provide 
only one measurement of energy usage--the energy usage of the 
product when it is set up to operate. For the test to measure energy 
usage of a water heater in both of two possible modes of operation, 
DOE would have to consider an amendment proceeding. The Commission's 
Rule can only require disclosure of DOE-test-derived information. 
Therefore, the Commission does not have the discretion to adopt 
Paloma's suggestion.
    \6\5Washington Gas, EE-1, 1. Stating that instantaneous water 
heaters are used with and without a storage tank, Washington Gas 
recommended requiring disclosure of the estimated annual operating 
cost for these products for use with and without a storage tank. 
Because the DOE test for instantaneous water heaters is not 
conducted with storage tanks, however, the Commission cannot require 
this type of disclosure. See note 60, above. Washington Gas also 
suggested that the estimated annual operating cost of heat pump 
water heaters be adjusted according to the change in the energy 
consumed in conditioning the space around the product. Again, 
because the DOE test is conducted in a constant environment and does 
not allow for this type of measurement, the Commission does not have 
the discretion to adopt this suggestion. See note 50, above.
---------------------------------------------------------------------------

    The four other comments addressed both categories. GAMA and ACEEE 
stated that the same descriptor should be required for instantaneous 
water heaters and heat pump water heaters that is required for storage 
water heaters.\66\ AGA commented that, if pool heaters, instantaneous 
water heaters, and heat pump water heaters are to be labeled, the 
required disclosure should be the estimated annual operating cost.\67\ 
CEC recommended that the Commission require energy factor, annual 
energy consumption, and annual cost of operation disclosures. CEC 
stated that the energy factor is needed because this is the measure 
upon which utility incentive programs are based, and that annual energy 
consumption and annual cost of operation are needed ``to fulfill FTC's 
Congressional mandate.''\68\
---------------------------------------------------------------------------

    \66\GAMA, E-3, 2, 3-4. At the time the NPR was published, energy 
usage descriptor for water heaters was estimated annual operating 
cost. The NPR proposed the disclosure of either estimated annual 
operating cost or energy factor for instantaeous water heaters. 
GAMA, therefore, envisioned the choice as between energy factor and 
estimated annual operating cost. ACEEE, EE-3, 2, 3. ACEEE assumed 
that heat pump water heaters would be disclosing estimated annual 
operating cost in this case, but did not make this assumption for 
instantaneous water heaters. As of December 28, 1994, however, the 
required disclosure of energy usage for water heaters will be the 
estimated annual energy consumption with an ``operating cost 
disclosure statement.'' See Note 63, above.
    \67\AGA, EE-4, 2-4.
    \68\CEC, EE-2, 5, 7.
---------------------------------------------------------------------------

    The Commission agrees with GAMA and ACEEE that the energy usage of 
instantaneous and heat pump water heaters should be expressed with the 
same descriptor (estimated annual energy consumption) that is used to 
disclose the energy usage of the storage-type water heaters currently 
covered by the Rule. This permits consumers to compare the energy usage 
of the various types of water heaters that could fulfill their needs. 
Accordingly, today's amendments will incorporate instantaneous water 
heaters and heat pump water heaters into the existing requirements to 
disclose estimated annual energy consumption. See section 305.3(d) of 
``Text of Amendments,'' below.
4. Sub-categories for Ranges of Comparability
    The NPR solicited comment about whether to include instantaneous 
water heaters in the three existing water heater ranges (one range each 
for electric, gas [including propane] and oil water heaters), or to 
establish a separate range category. The current ranges of 
comparability for water heaters are categorized on the basis of first-
hour rating.\69\ Under the DOE test, there is a method for calculating 
the equivalent of a first-hour rating for instantaneous water heaters. 
Therefore, these products could be included in the existing ranges and 
could be considered with conventional water heaters for range purposes. 
Because they have no storage tanks, however, and are different from 
conventional water heaters, the NPR sought public comment on whether a 
separate category would be more helpful to consumers than including 
these products in the existing water heater ranges.
---------------------------------------------------------------------------

    \69\The DOE test defines ``First Hour Rating'' as the amount of 
hot water the water heater can supply in one hour of operation. See 
10 CFR part 430, subpart B, Appendix E, 1.5.
---------------------------------------------------------------------------

    The DOE test also contains a provision by which a first-hour rating 
for heat pump water heaters can be calculated. Like instantaneous water 
heaters, therefore, heat pump water heaters could be included in the 
conventional water heater ranges. The NPR sought comment on whether it 
would be more helpful to consumers to include heat pump water heaters 
with conventional water heaters or to create a separate range category 
for them.
    Four commenters addressed the issue of range subcategories for 
these products. Paloma contended that gas instantaneous water heaters 
are so different from storage-type water heaters that they should be in 
a separate range category.\70\ GAMA and ACEEE stated, without 
elaboration, that instantaneous water heaters should be in the same 
range category as conventional storage water heaters.\71\ ACEEE thought 
that heat pump water heaters should be in the same range category as 
storage-type water heaters, but GAMA and CEC disagreed, recommending 
that they be in a separate range category.\72\
---------------------------------------------------------------------------

    \70\Paloma, E-2, 4.
    \71\GAMA, E-3, 2; ACEEE, EE-3, 2.
    \72\ACEEE, EE-3, 3; GAMA, E-3, 3-4; CEC, EE-2, 7.
---------------------------------------------------------------------------

    The Commission is creating separate sub-categories for each of 
these two types of water heaters, rather than including them in the 
existing ranges of comparability for water heaters. As noted in the 
comments, the technology of instantaneous and heat pump water heaters 
is different from that of storage-type water heaters. In addition, it 
is not likely that homeowners would substitute these new types of 
products ``one-to-one'' for conventional, storage-type units.\73\ The 
Commission has determined that it would be helpful for consumers 
looking for alternatives to conventional storage-type water heaters to 
have products using different technologies grouped separately. 
Accordingly, the Commission has determined to amend the Rule to create 
three new range sub-categories--one each for gas instantaneous water 
heaters (natural gas and propane), oil instantaneous water heaters, and 
heat pump water heaters. See Appendices D4-D6 in ``Text of 
Amendments,'' below.
---------------------------------------------------------------------------

    \73\For example, heat pump water heaters do not recover (reheat 
water after being drained of heated water) as quickly as comparably-
sized storage-type models, and instantaneous water heaters are more 
limited than comparable storage-type models as to how much hot water 
they can provide per unit of time (e.g., gallons per minute). 
Moreover, an instantaneous water heater which would (be gas-fired) 
that would be large enough to serve a small house would be 
disproportionately expensive to purchase when compared to comparable 
storage-type models. Thus, it is not likely that homeowners would 
substitute these new types of products ``one-to-one'' for 
conventional, storage-type units. This approach to ranges of 
comparability for the newly covered water heaters is consistent with 
the separate range groupings the Commission currently uses for home 
heating equipment; i.e., forced-air furnaces and boilers are 
separate sub-categories within the furnace category. See 59 FR 
34014, 34042-49 (July 1, 1904).
---------------------------------------------------------------------------

5. Label Size and Format for Instantaneous Water Heaters
    The NPR noted that, because the physical size of gas-fired 
instantaneous water heaters (they are often no larger than one to three 
cubic feet) is usually significantly smaller than most storage-type 
water heaters, the currently required 5 and \5/16\ inches by 7 and \3/
8\ inches label could be too large to fit on some of the smaller 
models.\74\ There is also the possibility that the surface temperature 
of the products could affect label adhesion. The NPR requested comment 
on whether the EnergyGuide label currently required for water heaters 
is appropriate for instantaneous water heaters and, if not, what would 
be better.\75\
---------------------------------------------------------------------------

    \74\Gas-fired instantaneous water heaters are usually larger 
than electric models, and some larger models could be used for 
whole-house applications in small houses. Electric instantaneous 
water heaters (for which labeling rules were not proposed in the 
NPR) are usually small and for limited point-of-use, as for a 
particular sink or shower.
    \75\58 FR 7854.
---------------------------------------------------------------------------

    Four comments responded to this request. Paloma contended that 
labeling on the front jacket of instantaneous water heaters is 
impossible because of the room taken up by other required labels and 
is, therefore, technologically infeasible. Paloma also contended that, 
because of the product's surface temperature, a paper label would be 
inappropriate. Paloma concluded that, under the circumstances, an 
aluminum label with special adhesive would be necessary, which would be 
an economic burden. Paloma recommended, therefore, a tag-type 
label.\76\ GAMA and CEC stated that the conventional label that is 
currently required would be appropriate for most models. Both commented 
that the issue of surface temperature is irrelevant because 
EnergyGuides are required on products only until they are sold, which 
would be before the water heater was fired for the first time. GAMA 
recommended allowing a hang-tag type label, as did Washington Gas.\77\
---------------------------------------------------------------------------

    \76\Paloma, E-2, 2.
    \77\GAMA, E-3, 2 (GAMA also recommended allowing the option of 
hang-tags for heat pump water heaters); CEC, EE-2, 5; Washington 
Gas, EE-1, 1.
---------------------------------------------------------------------------

    The Commission agrees with the comments that both conventional 
label types (i.e., paper, rather than aluminum) and hang-tag type 
labels will be appropriate for instantaneous water heaters. Hang-tags 
may be preferable in some instances, such as when the instantaneous 
heater is too small to accommodate conventional labels. Section 
305.11(a)(7) of the Rule currently allows for the use of hang-tags as 
long as they are affixed in such a way that they will be prominent to a 
consumer examining the product. Therefore, the Rule permits 
manufacturers of instantaneous and heat pump water heaters to exercise 
the hang-tag option.
6. Disclosure of Tank Size on Label for Heat Pump Water Heaters
    Heat pump water heaters are marketed in two ways. They can be sold 
as an integral unit that includes the heat pump and the storage tank, 
or they can be sold without a tank and hooked up with an existing water 
heater with the conventional heating system shut off. For those 
instances in which the heat pump water heater is sold without a tank, 
the DOE test calls for measurement of energy use with the heat pump 
water heater connected to a 47-gallon capacity storage tank. Thus, even 
when no tank is to be sold with the heat pump water heater, 
manufacturers will be able to determine the energy use figure to put on 
the label for comparative shopping purposes. The product's efficiency, 
however, could be affected by the size of the tank with which it is 
coupled. The NPR solicited comment, therefore, on whether the label 
should include a statement that determination of the heat pump water 
heater's efficiency is based on use with a 47-gallon tank and that its 
efficiency in the home may vary according to the size of the storage 
tank to which it is connected.
    Two comments addressed this issue. CEC stated that the statement 
that the efficiency of heat pump water heaters could be affected by the 
size of the tank with which it is coupled is only necessary in the case 
where the manufacturer does not supply the tank. CEC recommended that, 
in this case, the label should identify the size of the tank assumed 
for purposes of determining the energy factor.\78\ GAMA stated that the 
standby loss of the tank, not its size, is what is relevant. Thus, heat 
pump water heater labels should not state that the efficiency of the 
water heater could be affected by the size of the tank with which it is 
coupled. GAMA also contended that, given the limited ranges of sizes 
and standby losses of tanks coupled with heat pump water heaters, such 
a statement on the EnergyGuide would not be worthwhile from a consumer 
benefit standpoint.\79\
---------------------------------------------------------------------------

    \78\CEC, EE-2, 7.
    \79\GAMA. E-3, 3.
---------------------------------------------------------------------------

    The Commission agrees with GAMA that the effect on energy 
consumption will not be significant enough to require a disclosure on 
the EnergyGuide label. Thus, the Commission has determined not to 
require the statement described above concerning tank size.

III. Regulatory Flexibility Act

    In the NPR, the Commission concluded that the provisions of the 
Regulatory Flexibility Act relating to an initial Regulatory 
Flexibility Act analysis are not applicable because the Commission has 
determined that the amendments ``will not have a significant economic 
impact on a substantial number of small entities.''\80\ In the NPR, the 
Commission initially concluded that not many companies produce pool and 
spa heaters. The Commission stated that it had learned that most 
producers are not ``small entities'' as that term is defined in section 
601 of the Regulatory Flexibility Act and in the regulations of the 
Small Business Administration, found in 13 CFR 121.\81\ The Commission 
also stated that the market for heat pump water heaters is small, and 
that only a few companies, two of which are large entities, produce 
these products at present.\82\ The Commission noted that most 
instantaneous water heaters are produced abroad, and are imported by a 
very small number of small-sized importing firms.\83\
---------------------------------------------------------------------------

    \80\U.S.C. 603-605.
    \81\See 58 FR 7855.
    \82\Id.
    \83\Id.
---------------------------------------------------------------------------

    Because it appeared to the Commission that the amendments were not 
likely to have a significant impact on a substantial number of small 
entities within the meaning of the Regulatory Flexibility Act and the 
rules implementing it, the Commission concluded that a regulatory 
analysis was not necessary. The Commission, however, requested 
information in the NPR about the impact of the amendments on small 
entities to determine whether a final regulatory analysis was 
necessary.\84\
---------------------------------------------------------------------------

    \84\Id.
---------------------------------------------------------------------------

    No comments provided information about the effect of the amendments 
on small entities. Two comments, however, provided information on the 
numbers of entities involved in the manufacture or importation of pool 
heaters, instantaneous water heaters, and heat pump water heaters.\85\ 
According to these comments, there are six companies that produce pool 
heaters, twelve that either manufacture (at least three are foreign) or 
import instantaneous water heaters, and four that produce heat pump 
water heaters. Two of these companies make products in more than one 
category, so there are 20 companies in all. The Commission has 
determined that four of these 20 entities are ``small,'' as defined in 
the Small Business Administration's Size Standards.\86\ Of the other 
16, the Commission has determined that seven are not ``small.'' The 
Commission has not been able to determine the size of the remaining 
nine.\87\
---------------------------------------------------------------------------

    \85\GAMA, E-3, Appendices; CEC, EE-2, 3-4, 6, 7.
    \86\13 CFR 121.601.
    \87\To estimate the size of the companies, the Commission's 
staff researched the companies in standard reference materials, such 
as Dun and Bradstreet Information Services, Dun and Bradstreet 
Million Dollar Directory, Series A-F, G-O, P-Z (1993); Dun and 
Bradstreet, The Dun and Bradstreet Reference Book of American 
Business, Vol. 1-4 (July-Aug. 1993); National Register Publishing, 
1993 Directory of Corporate Alliance, Vol. 4 Who Owns Whom 
International and Private Companies (1993); and conducted informal 
inquiries with staff of the California Energy Commission.
---------------------------------------------------------------------------

    The Commission has no reason to believe that the amendments will 
have a substantial impact on a significant number of small entities. In 
light of this, the Commission concludes that the preparation of a final 
regulatory flexibility analysis is not necessary. Accordingly, the 
Commission certifies, under Section 605 of the Regulatory Flexibility 
Act,\88\ that the amendments announced today will not have a 
significant impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \88\5 U.S.C. 605(b).
---------------------------------------------------------------------------

IV. Paperwork Reduction Act

    The Rule contains reporting and recordkeeping requirements that 
constitute ``recordkeeping'' requirements as defined by 5 CFR 
1320.7(c), the regulation that implements the Paperwork Reduction Act 
(``PRA'').\89\ The NPR stated that the proposed amendments would expand 
the Rule's existing recordkeeping and reporting requirements to include 
manufacturers of products not previously covered. The NPR noted, 
however, that manufacturers would not have to maintain records beyond 
what they must already do in the ordinary course of business to comply 
with the reporting and recordkeeping requirements of DOE's minimum 
efficiency standards program. In addition, although the affected 
companies would have to report annually to the Commission the energy 
usage of the covered products they manufacture or import, the 
Commission estimated that no more than 50 companies would be affected, 
and that it would take each company fewer than 10 hours to comply. 
Because the resulting increase in burden hours would be de minimis, the 
NPR stated that the Commission would not request that the Office of 
Management and Budget (``OMB'') adjust the existing clearance for the 
Rule under the Paperwork Reduction Act. To substantiate the accuracy of 
the Commission's reporting burden estimate, however, the NPR requested 
comment on the extent of the reporting burden associated with these 
amendments.
---------------------------------------------------------------------------

    \89\44 U.S.C. 3501-3520.
---------------------------------------------------------------------------

    The only comment in response to this request was from CEC. CEC 
stated that manufacturers currently provide details of all models they 
sell to CEC, and that CEC is prepared to act as third-party certifier 
to the Commission at no charge to manufacturers. CEC therefore 
contended that manufacturers would not have to incur additional time or 
cost in reporting to the Commission.\90\
---------------------------------------------------------------------------

    \90\CEC, EE-2, 4, 6, 7. The comments also indicate that the 
number of companies affected by the amendments is far fewer that the 
50 the Commission initially estimated would be affected. See Part 
III, above.
---------------------------------------------------------------------------

    Since the NPR was published, the Commission initiated a proceeding 
to determine the manner and form of labeling plumbing products to 
disclose their water usage.\91\ In the section of the Federal Register 
notice in that proceeding discussing the applicability of the Paperwork 
Reduction Act to the proposed amendments, the Commission stated that 
the recordkeeping and reporting requirements of the Rule and the 
proposed amendments were being submitted to OMB and referred to a 
Notice of Application to OMB under the Paperwork Reduction Act that 
accompanied the notice.
---------------------------------------------------------------------------

    \91\58 FR 26715 (May 5, 1993).
---------------------------------------------------------------------------

    In the referenced Notice of Application, the Commission requested 
OMB clearance for the plumbing products amendments and for the 
amendments proposed in the NPR in the instant proceeding as well. This 
clearance request was published in the Federal Register for 
comment.\92\ This notice stated that the Commission estimated in the 
NPR that no more than 50 companies would be affected. Further, whatever 
amendments the Commission adopted would increase the information 
collection burden by no more than 500 hours. Adding this figure to the 
estimated additional burden resulting from the plumbing products 
amendments, the Commission estimated that the total increase in the 
information collection burden of the Appliance Labeling Rule would be 
1,000 hours.
---------------------------------------------------------------------------

    \92\58 FR 26786 (May 5, 1993).
---------------------------------------------------------------------------

    Neither the Commission nor OMB received comments on the 
application. On July 1, 1993, OMB approved the request and assigned 
control number 3084-0068 to the information requirements.

List of Subjects in 16 CFR Part 305

    Advertising, Energy conservation, Household appliances, Labeling, 
Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, 16 CFR is amended as 
follows:

PART 305--RULE CONCERNING DISCLOSURES REGARDING ENERGY CONSUMPTION 
AND WATER USE OF CERTAIN HOME APPLIANCES AND OTHER PRODUCTS 
REQUIRED UNDER THE ENERGY POLICY AND CONSERVATION ACT (``APPLIANCE 
LABELING RULE'')

    1. The authority citation for Part 305 continues to read as 
follows:

    Authority: 42 U.S.C. 6294.

    2. Section 305.2(i) is revised to read as follows:


Sec. 305.2  Definitions.

* * * * *
    (i) Energy efficiency rating means the following product-specific 
energy usage descriptors: annual fuel utilization efficiency (AFUE) for 
furnaces; energy efficiency ratio (EER) for room air conditioners; 
seasonal energy efficiency ratio (SEER) for the cooling function of 
central air conditioners and heat pumps; heating seasonal performance 
factor (HSPF) for the heating function of heat pumps; and, thermal 
efficiency (TE) for pool heaters, as these descriptors are determined 
in accordance with tests prescribed under section 323 of the Act (42 
U.S.C. 6293). These product-specific energy usage descriptors shall be 
used in satisfying all the requirements of this part.
* * * * *
    3. In Sec. 305.3, paragraph (d) is revised and paragraph (o) is 
added, to read as follows:


Sec. 305.3  Description of covered products to which this part applies.

* * * * *
    (d)(1) Water heater means a product which utilizes oil, gas, or 
electricity to heat potable water for use outside the heater upon 
demand, including--
    (i) Storage type units which heat and store water at a 
thermostatically controlled temperature, including gas storage water 
heaters with an input of 75,000 Btu per hour or less, oil storage water 
heaters with an input of 105,000 Btu per hour or less, and electric 
storage water heaters with an input of 12 kilowatts or less;
    (ii) Instantaneous type units which heat water but contain no more 
than one gallon of water per 4,000 Btu per hour of input, including gas 
instantaneous water heaters with an input of 200,000 Btu per hour or 
less, oil instantaneous water heaters with an input of 210,000 Btu per 
hour or less, and electric instantaneous water heaters with an input of 
12 kilowatts or less; and
    (iii) Heat pump type units, with a maximum current rating of 24 
amperes at a voltage no greater than 250 volts, which are products 
designed to transfer thermal energy from one temperature level to a 
higher temperature level for the purpose of heating water, including 
all ancillary equipment such as fans, storage tanks, pumps, or controls 
necessary for the device to perform its function.
    (2) The requirements of this Part are limited to those water 
heaters for which the Department of Energy has adopted and published 
test procedures for measuring energy usage.
* * * * *
    (o) Pool heater means an appliance designed for heating nonpotable 
water contained at atmospheric pressure, including heating water in 
swimming pools, spas, hot tubs and similar applications. The 
requirements of this part are limited to those pool heaters for which 
the Department of Energy has adopted and published test procedures for 
measuring energy usage.
* * * * *
    4. In Sec. 305.4, paragraphs (e)(2) and (3) are revised to read as 
follows:


Sec. 305.4  Prohibited acts.

* * * * *
    (e) * * *
    (2) Any covered product, other than central air conditioners, pulse 
combustion and condensing furnaces, fluorescent lamp ballasts, 
showerheads, faucets, water closets, urinals, pool heaters, 
instantaneous water heaters, or heat pump water heaters, if the 
manufacture of the product was completed prior to May 19, 1980. Any 
central air conditioner or any pulse combustion or condensing furnace 
if its manufacture was completed prior to June 7, 1988. Any fluorescent 
lamp ballast if its manufacture was completed prior to January 1, 1990. 
Any showerhead, faucet, water closet, or urinal if its manufacture was 
completed prior to October 25, 1994. Any pool heater, instantaneous 
water heater, or heat pump water heater if its manufacture was 
completed prior to December 29, 1994.
    (3) Any catalog or point-of-sale printed material distributed prior 
to May 19, 1980, pertaining to any covered products, other than central 
air conditioners, pulse combustion and condensing furnaces, fluorescent 
lamp ballasts, showerheads, faucets, water closets, urinals, pool 
heaters, instantaneous water heaters, or heat pump water heaters; any 
catalog or point-of-sale printed material distributed prior to June 7, 
1988, pertaining to any central air conditioners or pulse combustion or 
condensing furnaces; any catalog or point-of-sale printed material 
distributed prior to January 1, 1990, pertaining to any fluorescent 
lamp ballasts; any catalog or point-of-sale printed material 
distributed prior to October 25, 1994, pertaining to any showerheads, 
faucets, water closets, or urinals; and, any catalog or point-of-sale 
printed material distributed prior to December 29, 1994, pertaining to 
any pool heaters, instantaneous water heaters, or heat pump water 
heaters; except that any representations respecting the energy 
consumption, energy efficiency, or water use of any covered product or 
other consumer appliance product, or the cost of energy consumed or 
water used by such product, are subject to the requirements of 
paragraph (d) of this section.
* * * * *
    5. In Sec. 305.5, paragraph (a)(9) is redesignated as (a)(10), and 
a new paragraph (a)(9) is added, to read as follows:


Sec. 305.5  Determinations of estimated annual energy consumption, 
estimated annual operating cost, and energy efficiency rating, and of 
water use rate.

    (a) * * *
    (9) Pool heaters--Sec. 430.22(p).
* * * * *
    6. In Sec. 305.7, paragraphs (e) through (j) are redesignated as 
(f) through (k), and a new paragraph (e) is added, to read as follows:


Sec. 305.7  Determinations of capacity.

* * * * *
    (e) Pool heaters. The capacity shall be the heating capacity in 
Btu's per hour, rounded to the nearest 1,000 Btu's per hour, as 
determined according to Appendix P to 10 CFR Part 430, Subpart B.
* * * * *
    7. In Sec. 305.8, paragraphs (a)(1) and (b) are revised to read as 
follows:


Sec. 305.8  Submission of data.

    (a)(1) Each manufacturer of a covered product (except manufacturers 
of fluorescent lamp ballasts, showerheads, faucets, water closets, or 
urinals) shall submit annually to the Commission a report listing the 
estimated annual energy consumption (for refrigerators, refrigerator-
freezers, freezers, clothes washers, dishwashers, and water heaters) or 
the energy efficiency rating (for room air conditioners, central air 
conditioners, heat pumps, furnaces, and pool heaters) for each basic 
model in current production, determined according to Sec. 305.5 and 
statistically verified according to Sec. 305.6. The report must also 
list, for each basic model in current production: the model numbers for 
each basic model; the total energy consumption, determined in 
accordance with Sec. 305.5, used to calculate the estimated annual 
energy consumption or energy efficiency rating; the number of tests 
performed; and, its capacity, determined in accordance with Sec. 305.7. 
For those models that use more than one energy source or more than one 
cycle, each separate amount of energy consumption or energy cost, 
measured in accordance with Sec. 305.5, shall be listed in the report. 
Appendix K illustrates a suggested reporting format. Starting serial 
numbers or other numbers identifying the date of manufacture of covered 
products shall be submitted whenever a new basic model is introduced on 
the market.
* * * * *
    (b) All data required by Sec. 305.8(a), except serial numbers, 
shall be submitted to the Commission annually, on or before the 
following dates: 

------------------------------------------------------------------------
                                                            Deadline for
                         Products                               data    
                                                             submission 
------------------------------------------------------------------------
Refrigerators.............................................  Aug. 1.     
Refrigerator-freezers.....................................  Aug. 1.     
Freezers..................................................  Aug. 1.     
Central air conditioners..................................  July 1.     
Heat pumps................................................  July 1.     
Dishwashers...............................................  June 1.     
Water heaters.............................................  May 1.      
Pool heaters..............................................  May 1.      
Room air conditioners.....................................  May 1.      
Furnaces..................................................  May 1.      
Clothes washers...........................................  Mar. 1.     
Fluorescent lamp ballasts.................................  Mar. 1.     
Showerheads...............................................  Mar. 1.     
Faucets...................................................  Mar. 1.     
Water closets.............................................  Mar. 1.     
Urinals...................................................  Mar. 1.     
------------------------------------------------------------------------

     All revisions to such data (both additions to and deletions from 
preceding data) shall be submitted to the Commission as part of the 
next annual report period.
* * * * *
    8. In Sec. 305.11(a)(5)(ii), the heading and paragraphs 
(a)(5)(ii)(C) through (a)(5)(ii)(G) are revised to read as follows:


Sec. 305.11  Labeling for covered products.

    (a) * * *
    (5) * * *
    (ii) Labels for furnaces and pool heaters.
* * * * *
    (C) The annual fuel utilization efficiency for furnaces and the 
thermal efficiency for pool heaters are determined in accordance with 
Sec. 305.5.
    (D) Each furnace and pool heater label shall contain a generic 
range consisting of the lowest and highest annual fuel utilization 
efficiencies (for furnaces) or thermal efficiencies (for pool heaters) 
for all furnaces or pool heaters that utilize the same energy source.
    (E) Placement of the labeled product on the scale shall be 
proportionate to the lowest and highest annual fuel utilization 
efficiency ratings or thermal efficiency ratings forming the scale.
    (F) The following statement shall appear on furnace labels beneath 
the range(s) in bold print:

    Federal law requires the seller or installer of this appliance 
to make available a fact sheet or directory giving further 
information regarding the efficiency and operating cost of this 
equipment. Ask for this information.

    (G) A statement that the annual fuel utilization efficiency ratings 
or thermal efficiency ratings are based on U.S. Government standard 
tests is required on all labels.
* * * * *
    9. Section 305.14(a)(3) is revised to read as follows:


Sec. 305.14  Catalogs.

    (a) * * *
    (3) The energy efficiency rating for room air conditioners, central 
air conditioners, furnaces, and pool heaters.
* * * * *
    10. The headings for Appendices D1 through D3 are revised and new 
Appendices D4 through D6 are added, to read as follows:

Appendix D1 to Part 305--Water Heaters--Gas

* * * * *

Appendix D2 to Part 305--Water Heaters--Electric

* * * * *

Appendix D3 to Part 305--Water Heaters--Oil

* * * * *

APPENDIX D4 TO PART 305--WATER HEATERS--INSTANTANEOUS--GAS

    Range Information: 

------------------------------------------------------------------------
            Capacity                 Range of estimated annual energy   
---------------------------------  consumption (Therms/yr. and Gallons/ 
                                                   yr.)                 
                                 ---------------------------------------
                                  Natural gas therms/  Propane gallons/ 
        First hour rating                 Yr.                 Yr.       
                                 ---------------------------------------
                                     Low      High      Low       High  
------------------------------------------------------------------------
Less than 21....................  ........  ........  ........  ........
21 to 24........................  ........  ........  ........  ........
25 to 29........................  ........  ........  ........  ........
30 to 34........................  ........  ........  ........  ........
35 to 40........................  ........  ........  ........  ........
41 to 47........................  ........  ........  ........  ........
48 to 55........................  ........  ........  ........  ........
56 to 64........................  ........  ........  ........  ........
65 to 74........................  ........  ........  ........  ........
75 to 86........................  ........  ........  ........  ........
87 to 99........................  ........  ........  ........  ........
100 to 114......................  ........  ........  ........  ........
115 to 131......................  ........  ........  ........  ........
Over 131........................  ........  ........  ........  ........
------------------------------------------------------------------------

Appendix D5 to Part 305--Water Heaters--Instantaneous--Oil

    Range Information:

------------------------------------------------------------------------
                      Capacity                        Range of estimated
-----------------------------------------------------    annual energy  
                                                          consumption   
                                                         (Gallons/yr.)  
                  First hour rating                  -------------------
                                                         Low      High  
------------------------------------------------------------------------
Less than 21........................................  ........  ........
21 to 24............................................  ........  ........
25 to 29............................................  ........  ........
30 to 34............................................  ........  ........
35 to 40............................................  ........  ........
41 to 47............................................  ........  ........
48 to 55............................................  ........  ........
56 to 64............................................  ........  ........
65 to 74............................................  ........  ........
75 to 86............................................  ........  ........
87 to 99............................................  ........  ........
100 to 114..........................................  ........  ........
115 to 131..........................................  ........  ........
Over 131............................................  ........  ........
------------------------------------------------------------------------

Appendix D6 to Part 305--Water Heaters--Heat Pump

    Range Information:

------------------------------------------------------------------------
                      Capacity                        Range of estimated
-----------------------------------------------------    annual energy  
                                                       consumption (kWh/
                                                             yr.)       
                  First hour rating                  -------------------
                                                         Low      High  
------------------------------------------------------------------------
Less than 21........................................  ........  ........
21 to 24............................................  ........  ........
25 to 29............................................  ........  ........
30 to 34............................................  ........  ........
35 to 40............................................  ........  ........
41 to 47............................................  ........  ........
48 to 55............................................  ........  ........
56 to 64............................................  ........  ........
65 to 74............................................  ........  ........
75 to 86............................................  ........  ........
87 to 99............................................  ........  ........
100 to 114..........................................  ........  ........
115 to 131..........................................  ........  ........
Over 131............................................  ........  ........
------------------------------------------------------------------------

Appendices J and K to Part 305 [Redesignated as K and L]

    11. Appendices J and K to Part 305 are redesignated K and L, and 
new Appendices J1 and J2 are added, to read as follows:

Appendix J1 to Part 305--Pool Heaters--Gas

    Range Information: 

------------------------------------------------------------------------
                                       Range of thermal efficiencies    
                                                 (percent)              
  Manufacturer's rated heating   ---------------------------------------
           capacities                 Natural gas           Propane     
                                 ---------------------------------------
                                     Low      High       Low      High  
------------------------------------------------------------------------
All Capacities..................  ........  ........  ........  ........
------------------------------------------------------------------------

Appendix J2 to Part 305--Pool Heaters--Oil

    Range Information: 

------------------------------------------------------------------------
                                                       Range of thermal 
                                                         efficiencies   
       Manufacturer's rated heating capacities             (percent)    
                                                     -------------------
                                                         Low      High  
------------------------------------------------------------------------
All Capacities......................................  ........  ........
------------------------------------------------------------------------

Newly Redesignated Appendix L to Part 305 [Amended]

    12. Newly redesignated Appendix L to Part 305 is amended by the 
addition of a new Sample Label 10, to read as follows:
* * * * *

BILLING CODE 6750-01-P-M

TR28SE94.057


BILLING CODE 6750-01-P

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 94-23958 Filed 9-27-94; 8:45 am]
BILLING CODE 6750-01-P