[Federal Register Volume 69, Number 203 (Thursday, October 21, 2004)]
[Rules and Regulations]
[Pages 61974-61985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17732]


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DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 431

[Docket No. EE-RM/TP-99-480]
RIN 1904-AA95


Energy Efficiency Program for Certain Commercial and Industrial 
Equipment: Test Procedures and Efficiency Standards for Commercial 
Water Heaters, Hot Water Supply Boilers and Unfired Hot Water Storage 
Tanks

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy.

ACTION: Direct final rule.

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SUMMARY: Pursuant to Part C of title III of the Energy Policy and 
Conservation Act (EPCA), the Department of Energy (DOE or the 
Department) promulgates a rule prescribing test procedures to rate the 
energy efficiency of commercial water heaters and hot water supply 
boilers. For these products and unfired hot water storage tanks, the 
rule also prescribes relevant definitions and recodifies existing 
energy conservation standards, so that they are located contiguous with 
the test procedures that DOE promulgates today.

EFFECTIVE DATE: This direct final rule is effective December 20, 2004, 
unless significant adverse or critical comments are received by 
November 22, 2004. If the effective date is delayed, a timely notice 
will be published in the Federal Register. The incorporation by 
reference of certain publications listed in this rule is approved by 
the Director of the Federal Register as of December 20, 2004.

ADDRESSES: You may submit comments, identified by docket number EE-RM/
TP-99-480 and/or RIN number 1904-AA95, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include EE-RM/TP-99-460 and/or RIN 1904-AA9, 
in the subject line of the message.
     Mail: Ms. Brenda Edwards-Jones, U.S. Department of Energy, 
Building Technologies Program, Mailstop EE-2J, Direct Final Rule for 
Test Procedures and Efficiency Standards For Commercial Water Heaters, 
Hot Water Supply Boilers and UnFired Hot Water Storage Tanks; EE-RM/TP-
99-480 and/or RIN 1904-AA95, 1000 Independence Avenue, SW., Washington, 
DC 20585-0121. Telephone: (202) 586-2945. Please submit one signed 
paper original.
     Hand Delivery/Courier: Ms. Brenda Edwards-Jones, U.S. 
Department of Energy, Building Technologies Program, Room 1J-018, 1000 
Independence Avenue, SW., Washington, DC 20585.
    Instructions: All submissions received must include the agency name 
and docket number or Regulatory Information Number (RIN) for this 
rulemaking.
    Docket: For access to the docket to read background documents or 
comments received, go to the U.S. Department of Energy, Forrestal 
Building, Room 1J-018 (Resource Room of the Building Technologies 
Program), 1000 Independence Avenue, SW., Washington, DC 20585, (202) 
586-9127, between 9 a.m. and 4 p.m., Monday through Friday, except 
Federal holidays. Please call Ms. Brenda Edwards-Jones at the above 
telephone number for additional information regarding visiting the 
Resource Room. Please note: the Department's Freedom of Information 
Reading Room (formerly Room 1E-190 at the Forrestal Building) is no 
longer housing rulemaking materials.

FOR FURTHER INFORMATION CONTACT: Mohammed Khan, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Forrestal 
Building, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-
0121, (202) 586-7892, FAX (202) 586-4617, e-mail: 
[email protected] or Francine Pinto, Esq, U.S. Department of 
Energy, Office of General Counsel, Forrestal Building, GC-72, 1000 
Independence Avenue, SW., Washington, DC 20585, (202) 586-7432, e-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: This direct final rule incorporates, by 
reference, into subpart G of part 431, test methods contained in an 
industry test standard referenced by the American Society of Heating, 
Refrigerating, and Air-Conditioning Engineers, Inc. (ASHRAE) and the 
Illuminating Engineering Society of North America (IES) Standard 90.1 
(``ASHRAE/IES Standard 90.1'') for commercial water heaters and hot 
water supply boilers. The industry test standard is American National 
Standards Institute Standard Z21.10.3-1998 (ANSI Z21.10.3-1998), ``Gas 
Water Heaters Volume III Storage Water Heaters, with Input Ratings 
Above 75,000 Btu per Hour, Circulating and Instantaneous, ANSI 21.10.3-
1998, CSA 4.3-M98, and its Addenda, ANSI Z21.103a-2000, CSA 4.3a-M00.'' 
DOE is incorporating by reference the ``Method of Test'' subsections of 
sections 2.9 and 2.10 in ANSI Z21.10.3-1998, CSA 4.3-M98 and the 
sections referenced there, including sections 2.1.7, 2.3.3, 2.3.4, 2.30 
and Figure 3.
    Copies of these standards are available for review in the resource 
room of the Building Technologies Program, room 1J-018 at the U.S. 
Department of Energy, 1000 Independence Avenue, SW., Washington, DC 
20585, between the hours of 9 a.m. and 4 p.m., Monday through Friday, 
except Federal holidays. Please call Ms. Brenda Edwards-Jones at (202) 
586-2945, for additional information regarding visiting the resource 
room.
    You can purchase copies of the ASHRAE Standard and the standard 
incorporated by reference from Global Engineering Documents, 15 
Inverness Way East, Englewood, CO 80112, http://global.ihs.com/.

I. Introduction
    A. Authority
    B. Background
    C. Summary of the Direct Final Rule
II. Discussion
    A. General
    B. Commercial Instantaneous Water Heaters and Hot Water Supply 
Boilers--Definitions and Scope of Coverage
    1. Instantaneous Water Heaters
    2. Hot Water Supply Boilers
    a. Definition--Use and Nature of the Product
    b. Definition--Maximum Input Rating
    c. Effective Date of Requirements
    C. Commercial Water Heaters and Hot Water Supply Boilers--Test 
Procedures for the Measurement of Energy Efficiency
    1. Gas-fired Water Heaters
    2. Booster Water Heaters
    3. Standby Loss Test Procedure
    4. Oil-fired Water Heaters
    5. Electric Water Heaters
    D. Commercial Unfired Hot Water Storage Tanks
    E. Effect of Amended Test Procedure on Measured Energy 
Efficiency
III. Final Action
IV. Procedural Requirements
    A. Review Under Executive Order 12866
    B. Review Under the Regulatory Flexibility Act
    C. Review under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Uniform Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001

[[Page 61975]]

    K. Review Under Executive Order 13211
    L. Review Under Section 32 of the Federal Energy Administration 
Act of 1974
    M. Congressional Notification
    N. Approval by the Office of the Secretary

I. Introduction

A. Authority

    Title III of the Energy Policy and Conservation Act (EPCA) sets 
forth a variety of provisions designed to improve energy efficiency of 
various products and equipment. Part B of title III (42 U.S.C. 6291-
6309) provides for the ``Energy Conservation Program for Consumer 
Products other than Automobiles.'' Part C of Title III (42 U.S.C. 6311-
6317) provides for a program similar to Part B which is entitled 
``Certain Industrial Equipment'' and which includes commercial air 
conditioning equipment, packaged boilers, water heaters, and other 
types of commercial equipment.
    DOE publishes today's direct final rule pursuant to Part C which 
specifically provides for definitions, test procedures, labeling 
provisions, energy conservation standards, and authority to require 
information and reports from manufacturers. (See 42 U.S.C. 6311-6317) 
With regard to test procedures, Part C generally authorizes the 
Secretary of Energy to prescribe test procedures that are reasonably 
designed to produce results which reflect energy efficiency, energy use 
and estimated operating costs, and that are not unduly burdensome to 
conduct. (42 U.S.C. 6314)
    With respect to some commercial equipment for which EPCA prescribes 
energy conservation standards under EPCA section 342, including water 
heating products, section 343(a)(4)(A) provides: ``the test procedures 
shall be those generally accepted industry testing procedures or rating 
procedures developed or recognized by the Air-Conditioning and 
Refrigeration Institute or by the American Society of Heating, 
Refrigerating and Air Conditioning Engineers, as referenced in ASHRAE/
IES Standard 90.1 and in effect on June 30, 1992.'' (42 U.S.C. 
6314(a)(4)(A)) Further, if such an industry testing or rating procedure 
is amended, DOE must revise its test procedures to be consistent with 
the amendment, unless the Secretary determines, based on clear and 
convincing evidence, that to do so would not meet certain general 
requirements spelled out in the statute for test procedures. (42 U.S.C. 
6314(a)(4)(B)) Before prescribing any test procedures for such 
equipment, the Secretary must publish them in the Federal Register and 
afford interested persons at least 45 days to present data, views and 
arguments. (42 U.S.C. 6314(b)) Effective 360 days after a test 
procedure rule applicable to covered commercial equipment, such as 
water heaters, is prescribed, no manufacturer, distributor, retailer or 
private labeler may make any representation in writing or in broadcast 
advertisement respecting the energy consumption or cost of energy 
consumed by such equipment, unless it has been tested in accordance 
with the prescribed procedure and such representation fairly discloses 
the results of the testing. (42 U.S.C. 6314(d)) Finally, under the 
terms of Part C of title III of EPCA, the Secretary is authorized to 
require manufacturers of covered commercial equipment to submit 
information and reports for a variety of purposes, including ensuring 
compliance with requirements. (See 42 U.S.C. 6316(b))

B. Background

    DOE began implementation of Part C of title III of EPCA by 
establishing 10 CFR part 431. Part 431 is entitled ``Energy Efficiency 
Program for Certain Commercial and Industrial Equipment.'' Eventually, 
part 431 will include commercial heating, air conditioning and water 
heating products. It will consist of: test procedures, Federal energy 
conservation standards, labeling, and certification and enforcement 
procedures. Today DOE proposes amendments to part 431 in order further 
to implement Part C of title III of EPCA.
    As a first step in the process that led to today's direct final 
rule, the Department convened public workshops on April 14 and 15, 
1998, and October 18, 1998, to solicit views and information from 
interested parties to aid in developing proposed rules that would 
address test procedures, certification and enforcement procedures, and 
EPCA's coverage for this equipment. The workshop discussions and 
comments focused on the following issues for commercial water heating 
products specifically:

    (1) The test procedure to incorporate by reference for testing 
commercial water heaters;
    (2) Proposed test procedures for testing unfired hot water storage 
tanks;
    (3) Definition and coverage of hot water supply boilers;
    (4) Coverage of instantaneous water heaters;
    (5) Coverage and test procedures for heat pump water heaters; and
    (6) Coverage of waste heat recovery water heaters.

    After considering both oral and written comments the Department 
published a Notice of Proposed Rulemaking and Public Hearing 
(``proposed rule'' or ``NOPR'') to implement the energy efficiency 
standards and test procedures mandated by EPCA for commercial water 
heaters, hot water supply boilers and unfired hot water storage tanks. 
65 FR 48852 (August 9, 2000) The NOPR requested data, comments, and 
information regarding the proposed regulations. The Department held a 
public workshop/hearing (the ``public hearing'') on September 20, 2000, 
to receive oral comments. The Department accepted written comments 
until October 23, 2000.
    In formulating today's direct final rule, the Department considered 
the comments received, and has incorporated recommendations where 
appropriate. The Department received comments with respect to the 
Department's position as presented in the NOPR only as to (1) The 
definition and coverage of instantaneous water heaters and hot water 
supply boilers, (2) a test procedure for booster water heaters, (3) 
certain details of the test procedures for other water heaters and (4) 
unfired storage tank test procedures. These comments are discussed in 
Section II.
    For water heaters and unfired hot water storage tanks, energy 
conservation standard levels were not at issue in these proceedings. 
The NOPR merely proposed to recodify into the Department's regulations 
on efficiency requirements the standard levels that had been 
established in section 342(a) of EPCA for this equipment. For hot water 
supply boilers, in the NOPR the Department stated its intent to adopt 
the standard levels in Addendum n to ASHRAE/IES Standard 90.1-1989, 
which differ from the levels applicable to this equipment under section 
342(a) of EPCA. Subsequent to issuance of the NOPR, in a separate 
proceeding, the Department promulgated a regulation (10 CFR 431 subpart 
Q) to adopt as Federal standards some of the efficiency levels 
contained in amendments to ASHRAE/IES Standard 90.1 for this water 
heating equipment. (66 FR 3336, 3356 ( January 12, 2001)). These 
Federal standards became effective on October 29, 2003, replacing 
corresponding standards in EPCA.

C. Summary of the Direct Final Rule

    Today's rule incorporates the following for commercial water 
heating equipment: (1) Definitions, including some clarifications of 
EPCA's coverage, (2) energy efficiency test procedures, and (3) energy 
conservation standards.
    The definitions largely incorporate language from EPCA. In 
addition, the

[[Page 61976]]

rule specifically provides that instantaneous water heaters that heat 
water to 180[deg]F or higher are covered as commercial equipment. And 
``hot water supply boiler'' is defined as proposed in the NOPR, in 
terms of its physical features and how the manufacturer intends the 
equipment to be used.
    The rule prescribes the sections of ANSI Standard Z21.10.3-1998 set 
forth above, with some minor modifications, as the prescribed testing 
methodologies for water heaters (including booster water heaters) and 
hot water supply boilers. (Until one year from the publication of this 
rule, however, manufacturers of hot water supply boilers with 
capacities of less than 10 gallons may use either this test procedure, 
or, if they comply with the efficiency standards for commercial 
packaged boilers as described below, the test procedure for such 
boilers.) Because a new Federal energy conservation standard, which is 
a design rather than a performance standard, recently went into effect 
for unfired hot water storage tanks, the Department has not adopted a 
test procedure for this equipment.
    Today's rule includes energy conservation standards so that they 
and the test procedures for commercial water heating equipment will be 
located contiguous to one another in DOE's regulations. The standards 
are as follows: (1) For electric storage water heaters and gas 
instantaneous water heaters with capacities of less than 10 gallons the 
currently applicable minimum energy efficiency levels prescribed by 
section 342(a) of EPCA; (2) for hot water supply boilers with 
capacities of less than 10 gallons, the efficiency levels set forth in 
the NOPR; and (3) for the remaining commercial instantaneous water 
heaters and hot water supply boilers, for storage water heaters and for 
unfired hot water storage tanks, the new levels that became effective 
on October 29, 2003.\1\ Until one year from publication of this rule, 
hot water supply boilers with capacities of less than 10 gallons may 
comply with either the efficiency standards prescribed for them in this 
rule or with the standards prescribed for commercial packaged boilers.
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    \1\ Subpart Q includes no amendments to the minimum efficiency 
levels prescribed in EPCA for electric storage water heaters and for 
gas-fired instantaneous water heaters with capacities less than 10 
gallons, and prescribed in Addendum n to ASHRAE/IES Standard 90.1-
1989 for hot water supply boilers with such capacities. Hence, 
today's rule incorporates these efficiency levels. The Department 
has under review the minimum levels for the latter two products, and 
previously decided not to adopt an amended level for electric 
storage water heaters. See 66 FR at 3350, 3352, and 3356. 
Furthermore, today's rule includes no standby loss standards for 
electric instantaneous water heaters that have storage capacity. 
EPCA appears to prescribe no standards for this product, and hence 
the Department proposed none in the NOPR. Nevertheless, ASHRAE/IES 
Standard 90.1-1999 contained amended standard levels for electric 
resistance water heaters greater than 12 kW, which apply to both 
electric storage and electric instantaneous water heaters, and the 
Department is obligated to consider and will consider whether to 
adopt those levels for the instantaneous products.
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    Finally, because the Department believes that EPCA neither 
prescribes nor mandates efficiency standards or test procedures for 
waste heat recovery water heaters, today's direct final rule does not 
cover this equipment. This rule also does not provide a test procedure 
for commercial heat pump water heaters. The Department understands that 
ASHRAE has published a new standard (ANSI/ASHRAE 118.1-2003) which 
prescribes a method of test for commercial heat pump water heaters. The 
Department will evaluate whether to adopt it in the future.

II. Discussion

A. General

    Representatives of eight organizations, comprising trade 
associations (the American Gas Association and the Gas Appliance 
Manufacturers Association (GAMA)), manufacturers (A.O. Smith Water 
Products Co. (A.O. Smith) and Bock Water Heaters), private research/
consulting entities (the Gas Technology Institute, Arthur D. Little, 
Inc., and BR Laboratories, Inc.), and a State government energy agency 
(the California Energy Commission (CEC)), attended the public hearing 
on September 20, 2000. The American Society of Testing and Materials 
(ASTM) did not attend the public hearing but submitted written 
comments. GAMA and CEC also submitted written statements in advance of 
the hearing, and GAMA submitted written comments after the hearing.
    The following discusses issues on which comments were presented 
during and after the public hearing.

B. Commercial Instantaneous Water Heaters and Hot Water Supply 
Boilers--Definitions and Scope of Coverage

1. Instantaneous Water Heaters
    In the DOE test procedure for residential water heaters, Appendix E 
to Subpart B of 10 CFR Part 430, the definition of gas fired 
instantaneous water heaters excludes equipment designed to heat water 
to 180 [deg]F or higher, or with storage volumes of two gallons or 
more. During the workshops held prior to the issuance of the NOPR, GAMA 
stated that such products are not designed or marketed for consumer/
residential applications, regardless of their input ratings, and that 
they should be subject to the energy efficiency standards that apply to 
commercial water heaters. 65 FR 48854.
    The Department stated in the preamble to the NOPR that the 
Department concurs that these products are generally distributed for 
commercial or industrial use, and rarely if ever for use by individual 
consumers. 65 FR 48855. In addition, the NOPR's proposed definition of 
``instantaneous water heater'' stated that this product must be ``a 
commercial HVAC & WH product.'' 65 FR 48864. DOE defined the latter 
term, in a related NOPR, 64 FR 69598, 69610 (December 13, 1999), by 
reference to section 340(1) of EPCA, which in essence provides that a 
product is covered as a commercial product under the statute if it is 
distributed for commercial or industrial use, and not to any 
significant extent for personal or individual use. Thus, the NOPR's 
proposed test procedures and energy conservation standards for 
``instantaneous water heaters,'' 65 FR 48864 and 48866, would 
implicitly apply to all instantaneous water heaters that heat water to 
temperatures of 180 [deg]F and higher.
    During the public hearing, however, GAMA claimed that the NOPR 
addressed this issue inadequately. (GAMA, Tr. 118-119\2\)GAMA indicated 
that given the exclusion of these products from DOE's test procedure 
for consumer products, the Department should specifically include this 
product in its definitions for commercial equipment.
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    \2\ ``Tr.'' followed by a number or numbers, refers to a page or 
pages in the transcript of the September 20, 2000, public hearing in 
this matter.
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    As indicated above, the Department intends to cover all commercial 
instantaneous water heaters in today's direct final rule. DOE clarifies 
this point in the direct final rule by adding to the definition of 
instantaneous water heater language that specifically includes products 
that raise water temperature to 180 [deg]F or higher, and by 
substituting for ``commercial HVAC & WH product'' the term ``industrial 
equipment.'' This term is defined in section 340(2) of EPCA as 
including only equipment distributed to a significant extent for 
commercial or industrial use, and not for personal or individual use. 
See 42 U.S.C. 6311(2). The Department is also incorporating EPCA's 
definition of ``industrial equipment'' elsewhere into 10 CFR 431 so 
that it is more readily available to users of the rule.

[[Page 61977]]

2. Hot Water Supply Boilers
    The Department explained in detail in the preamble of the NOPR its 
intention to adopt amendments to ASHRAE/IES Standard 90.1-1989 
(contained in Addendum n to the Standard) with respect to hot water 
supply boilers, a type of packaged boiler that is used for service 
water heating. These amendments prescribed for hot water supply boilers 
the energy efficiency standards and test procedures that applied to 
commercial instantaneous water heaters under both ASHRAE/IES Standard 
90.1-1989 and EPCA. The Department proposed to adopt these amendments 
with limited modifications necessary to adapt them for use under EPCA. 
Such modifications consist primarily of defining ``hot water supply 
boiler'' in terms of the intrinsic characteristics of such a boiler, as 
well as the way the manufacturer markets the product. Further, the 
Department stated in the preamble to the NOPR that if a boiler is 
manufactured so that it can be used as either a hot water supply boiler 
or a hydronic heating boiler, it would have to meet the energy 
efficiency standards for, and be tested as, both types of products. 
Finally, the Department proposed that these requirements would become 
effective 60 days after the direct final rule is promulgated.
    The following discussion addresses the issues commenters raised as 
to the requirements for hot water supply boilers, relating to which 
equipment is covered and to the effective date of the requirements.
a. Definition--Use and Nature of the Equipment
    Pursuant to Addendum n, ASHRAE/IES Standard 90.1 states that a hot 
water supply boiler is ``a boiler used to heat water for purposes other 
than space heating,'' and applies the energy efficiency requirements 
specified for commercial instantaneous water heaters to hot water 
supply boilers used solely for heating potable water. The limited 
modifications the Department proposed in the NOPR for purposes of 
adopting Addendum n as a Federal requirement included defining certain 
equipment as a hot water supply boiler based on the equipment's 
features and how it is marketed, not how it is used. GAMA commented 
that DOE should limit its requirements for hot water supply boilers 
based on how products are actually used. The Department should adopt 
language identical to that in Addendum n to ASHRAE/IES Standard 90.1-
1989. (GAMA, No. 4 and No. 5 at p. 2)\3\
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    \3\ A notation in the form ``GAMA, No. 5 at p. 2'' identifies a 
written comment the Department received in this rulemaking 
subsequent to issuance of the NOPR. This notation refers to a 
comment (1) by GAMA, (2) in document number 5 in the docket in this 
matter, and (3) appearing at page 2 of document number 5. A notation 
without a page reference means that the comment appeared on the only 
page of a one page document.
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    The Department explained in the NOPR that it did not intend to 
adopt the provisions of Addendum n exactly as written because they 
apply to equipment, indeed to a unit of equipment, based on how it is 
used. EPCA imposes requirements on equipment as manufactured. The 
Department pointed out that basing requirements for boilers on how they 
will be used would be untenable for manufacturers, and unenforceable, 
because manufacturers cannot know how a purchaser will use a particular 
unit of equipment. The Department stated, and continues to believe, 
that the proposed definition of hot water supply boiler in terms of 
physical features that are a necessary part of the equipment, and of 
how the manufacturer intends that the equipment be used, implements the 
intent of Addendum n to apply requirements for commercial water heaters 
to boilers that provide service water heating. GAMA's comments address 
neither the reasons the Department set forth in the NOPR for declining 
to adopt the language of Addendum n nor the specific provisions the 
Department proposed in an effort to adhere to Addendum n as closely as 
possible. Thus, the Department is not adopting GAMA's suggestion that 
the direct final rule contain language identical to Addendum n.
    Accordingly, DOE adopts in today's direct final rule the approach 
proposed in the NOPR.
b. Definition--Maximum Input Rating
    In the NOPR the Department proposed to define hot water supply 
boiler, in part, as a packaged boiler with an input rating from 300,000 
Btu/hr to 12,500,000 Btu/hr. CEC commented that this rule should not 
exclude from coverage hot water supply boilers with inputs greater than 
12,500,000 Btu/hr. (CEC, No. 2FF at p. 2) This element of the proposed 
definition is taken verbatim from the delineation of this equipment in 
ASHRAE/IES Standard 90.1 and does not mean that equipment with inputs 
greater than 12,500,000 Btu/hr are excluded from coverage under EPCA. 
Rather, any packaged boiler having an input greater than 12,500,000 
Btu/hr, and otherwise having the characteristics of a ``hot water 
supply boiler,'' is covered by the provisions for packaged boilers.
c. Effective Date of Requirements
    The Department proposed that Addendum n's test procedures (ANSI 
Z21.10.3) and efficiency standards for hot water supply boilers would 
become effective as Federal requirements 60 days after publication of 
this rule, because the Department believed that manufacturers were 
already following the provisions of Addendum n (65 FR 48858). GAMA 
pointed out, however, that ``manufacturers have not had their hot water 
supply boilers tested for compliance with the requirements of Addendum 
n because * * * to our knowledge, there are few, if any * * * 
jurisdictions * * * that have adopted and are enforcing Addendum n.'' 
GAMA further stated that ``manufacturers could not be certain that DOE 
would adopt the Addendum n requirements as Federal standards because 
(1) it was not clear that hot water supply boilers would be deemed a 
Federally-covered product, since there is no mention of hot water 
supply boilers in EPACT; and (2) Addendum n is a requirement applicable 
to a specific application rather than to all products of a given 
type.'' (GAMA, No. 5 at pp. 1-2) Consequently, GAMA advocated that our 
adoption of the Addendum n requirements for hot water supply boilers 
become effective two years, rather than 60 days, after publication of 
this rule.
    Since publication of the NOPR, this issue has narrowed somewhat. In 
another rulemaking, the Department adopted as Federal standards for hot 
water supply boilers with capacities equal to or greater than 10 
gallons the efficiency levels prescribed in amendments to ASHRAE/IES 
Standard 90.1 for instantaneous water heaters. 66 FR at 3356. The 
Department adopted these standards in January 2001, and they apply to 
products manufactured on or after October, 29, 2003. For these 
products, therefore, no issue currently exists as to the effective date 
of efficiency standards. Still at issue, however, are the effective 
dates for (1) the test procedures that Addendum n prescribes for these 
larger capacity hot water supply boilers, and (2) both the test 
procedures and standards that Addendum n prescribes for hot water 
supply boilers with a capacity of less than 10 gallons.
    As to the test procedures for the larger capacity hot water supply 
boilers, the Department will adhere to the approach proposed in the 
NOPR. Effective 60 days after publication of today's rule, the

[[Page 61978]]

mandatory test procedure under EPCA for these products will become ANSI 
Z21.10.3, the test procedure prescribed for instantaneous water 
heaters. As just indicated, since October 29, 2003, these larger 
capacity hot water supply boilers have been subject to the same 
standards as water heaters, a requirement the Department adopted in 
January 2001. To assure compliance with these standards, DOE would 
expect manufacturers to have already begun determining the thermal 
efficiency and standby losses of these hot water supply boilers, using 
the ANSI test procedures or similar methods. And whether or not 
manufacturers are already using such testing methods, they have had 
over two years to prepare to use them. Moreover, a prescribed test 
procedure should be in place as soon as possible to permit uniform, 
accurate assessments of compliance with these standards. Therefore, the 
Department believes it is reasonable and necessary to provide that the 
new test procedure for hot water supply boilers with capacities equal 
to or greater than 10 gallons will become effective 60 days after 
publication of this rule.
    As to hot water supply boilers with capacities of less than 10 
gallons, the Department will not adhere to its proposed 60-day 
effective date. Instead, today's direct final rule provides that the 
new standards and test procedures applicable to these hot water supply 
boilers will become mandatory one year after publication of this rule. 
The Department believes this amount of lead time is warranted in light 
of the information GAMA provided as to the lack of compliance with 
Addendum n, and the time manufacturers may need to design and 
manufacture these smaller capacity hot water supply boilers to comply 
with the thermal efficiency standard that these products will now be 
required to meet. The Department recognizes that this is less than the 
two-year effective date requested by GAMA from publication of today's 
rule. But DOE believes the one-year effective date is reasonable for 
both manufacturers and purchasers for three reasons. First, the larger 
capacity hot water supply boilers are already subject to standards that 
use the thermal efficiency descriptor, and manufacturers either have 
begun or will shortly begin using the ANSI Z21.10.3 test procedure to 
measure compliance with these standards. Therefore, manufacturers will 
have experience in using the new descriptor and test procedure for hot 
water supply boilers and, for the smaller products, will need less lead 
time than advocated by GAMA. Second, from the standpoint of purchasers, 
and even manufacturers, a single approach should become mandatory for 
all hot water supply boilers as soon as possible so as to eliminate any 
confusion and inefficiency that might result from using different 
metrics to rate similar products. And third, as recognized by GAMA, 
manufacturers have been on notice since publication of the NOPR that 
the Department intended to apply to hot water supply boilers the 
efficiency requirements for instantaneous water heaters.
    DOE also notes that the smaller capacity hot water supply boilers 
would not be exempt from Federal efficiency standards during the period 
before the new requirements become effective for them. Rather they 
would still be subject to the requirements for commercial packaged 
boilers.
    Today's direct final rule will, however, allow products 
manufactured before such effective date to comply with the new 
requirements, reflecting the approach proposed in the NOPR for products 
manufactured before such requirements become mandatory. (65 FR at 
48866) Specifically, hot water supply boilers with capacities of less 
than 10 gallons, manufactured subsequent to October 28, 2003, and 
within one year of publication of this rule, could meet either the 
requirements adopted for these products in today's rule or the 
applicable requirements for packaged boilers.

C. Commercial Water Heaters and Hot Water Supply Boilers--Test 
Procedures for the Measurement of Energy Efficiency

1. Gas-Fired Water Heaters
    In the NOPR DOE stated its intention to incorporate by reference 
certain sections of ANSI Z21.10.3-1998 as the test procedure for 
commercial, gas-fired water heaters. None of the comments DOE received 
objected to this proposal, except in certain limited respects discussed 
below. Therefore, in today's direct final rule DOE is adopting the 
proposed test procedure for gas-fired water heaters, but with a minor 
modification concerning standby loss testing as described in section 
II-C-3 below.
2. Booster Water Heaters
    Booster water heaters are typically designed to take in water that 
is already heated by a service water heater and ``boost'' the 
temperature even higher, raising already hot water (110 to 140 [deg]F) 
up to a 180 [deg]F or higher. They are typically used for commercial 
dishwashing.\4\ CEC advocated that the Department reference a recently 
approved ASTM test procedure for booster water heaters, indicating that 
this procedure is more appropriate for such equipment than ANSI 
Z21.10.3. (CEC, No. 2FF at p. 2, Tr. 118) Opposing this suggestion, 
GAMA asserted that with respect to gas water heaters the ASTM procedure 
would be redundant to the ANSI Z21.10.3 procedures that the Department 
is adopting in this rulemaking. (GAMA, Tr. 120)
---------------------------------------------------------------------------

    \4\ In the NOPR, the Department indicated in effect that all 
instantaneous water heaters with storage volumes greater than two 
gallons and capable of heating water to temperatures of 180 [deg]F 
or higher are booster water heaters. (65 FR 48854-55). At the public 
hearing GAMA pointed out, however, that such instantaneous water 
heaters are not necessarily booster water heaters, and that the 
latter are a recently developed product specifically designed for 
use with commercial dishwashers, although in the past conventional 
commercial water heaters had been modified and installed to provide 
booster water heating. (Tr. 118-120).
---------------------------------------------------------------------------

    The ASTM test procedure that CEC proposed for adoption is not 
referenced by ASHRAE/IES Standard 90.1. Nor has evidence been presented 
that this test procedure validly measures compliance with the 
applicable efficiency standards mandated by EPCA. See Tr. 125-27. 
Furthermore, as indicated above, there is dispute as to whether the 
ASTM procedure is needed to test booster water heaters, in place of the 
procedure referenced in Standard 90.1, ANSI Z21.10.3.
    DOE has only limited authority to decline to adopt a test procedure 
referenced by ASHRAE/IES Standard 90.1 (42 U.S.C. 6314(a)) and the 
record does not clearly establish either that the ANSI test procedure 
is unsuitable for testing booster water heaters, or that the ASTM 
procedure is appropriate for use under the standard set forth in 42 
U.S.C. 6314(a). Therefore, the Department is not prepared to determine 
that the ANSI procedure for this equipment should not be adopted, or to 
conclude that the ASTM procedure would meet the standards of 42 U.S.C. 
6314(a)(4)(C). Accordingly, the Department is not adopting the ASTM 
test procedure, and the ANSI procedure will govern the testing of 
booster water heaters covered by EPCA. To the extent a manufacturer of 
a booster water heater, however, believes the product cannot be tested 
under ANSI Z21.10.3, or that the test procedure provides materially 
inaccurate comparative data, DOE's regulations will allow the 
manufacturer to ask DOE to waive the ANSI test procedures for one or 
more particular basic models and permit it to use the ASTM procedure 
instead.

[[Page 61979]]

    The Department is aware that ANSI updated Z21.10.3-1998 by issuing 
ANSI Z21.10.3-2001, and that the only change to the efficiency testing 
portions of the test procedure is that they provide methods 
specifically for testing booster water heaters. DOE will evaluate this 
latest version and decide whether to adopt it in the future.
3. Standby Loss Test Procedure
    In the NOPR the Department stated its intention to incorporate by 
reference section 2.10 of ANSI Z21.10.3-1998 as the standby loss test 
procedure for commercial water heaters and hot water supply boilers, 
with certain additional stipulations. DOE also pointed out that 
versions of ANSI Z21.10.3 prior to 1998 called for the standby loss 
test to terminate 48 hours after the initiation of data collection 
unless the water heater is in the heating mode at that time, in which 
case the test would continue until a ``cutout'' occurs (i.e., the 
thermostat acts to shut off the burner). Under ANSI Z21.10.3-1998, the 
standby loss test continues until the first cutout occurs after 24 
hours from the time that data collection is initiated.
    GAMA commented that the change was made to shorten the test 
procedure, but after its adoption manufacturers became aware that some 
water heaters, particularly certain new designs, do not experience this 
cutout until several days beyond the end of the 24 hours, well beyond 
the end of the 48 hour time period. According to GAMA, this can make 
the test quite long and burdensome. It suggested that DOE adopt the 
referenced test procedure with a modification that limits the duration 
of the standby loss test to the earlier of the first cutout that occurs 
after 24 hours from the time of initiation of data collection or the 
end of 48 hours from the initiation of data collection, as described 
above. (GAMA, No. 2EE at p. 4, Tr. 131-36, 137) CEC agreed with GAMA's 
proposal, characterizing it as a minor modification. (CEC, Tr. 136,138)
    The Department concurs in the need for the modification suggested 
by GAMA and CEC. The Department believes that the evidence in the 
record is clear and convincing that without the 48 hour termination 
provision, the standby loss test procedure in ANSI Z21.10.3-1998 can 
pose an undue burden on manufacturers, and therefore this modification 
meets the applicable EPCA requirements for test procedures. 
Consequently, this rule will incorporate section 2.10 of ANSI Z21.10.3-
1998 with the added requirement that the standby loss test will 
continue until the earlier of either, (1) the first cutout following 24 
hours from the initiation of data collection, or (2) 48 hours from the 
initiation of data collection if the water heater is not in the heating 
mode at that time.
    Finally, the Department believes GAMA is correct in stating that 
this modification would not alter the test results that would otherwise 
be produced under ANSI Z21.10.3-1998. (GAMA, Tr. at 135-36) To the 
extent, however, that a change in the test results is caused by 
limiting the duration of the standby loss test procedure to 48 hours, 
such change would simply tend to provide the same results as would have 
been obtained using previous versions of the ANSI Z21.10.3. This would 
realize DOE's original intent that adoption of the 1998 version of the 
test procedure not alter standby loss measurements. 65 FR 48859.
    The Department also notes that the measured standby loss using ANSI 
Z21.10.3 (percent standby loss per hour) must be converted to a 
quantity (Btu/hour) that is consistent with the energy efficiency 
standards listed in Section 431.110, so that manufacturers can 
determine whether their products comply with the applicable standard. 
Therefore, to provide a uniform method for determining compliance, the 
Department is stipulating the following standard conversion formula as 
part of today's rule:

SL (Btu per hour) = S (% per hour) x 8.25 (Btu/gal-F) x Measured Volume 
(gal) x 70 (degrees F)

The term ``S (% per hour)'' in this formula represents the standby loss 
as measured using ANSI Z21.10.3-1998. Since DOE has not previously 
proposed a conversion formula, DOE is publishing today's direct final 
rule to provide stakeholders an opportunity to comment on this issue.
4. Oil-Fired Water Heaters
    In the NOPR, the Department set forth its intention to adopt ANSI 
Z21.10.3-1998, with the adaptations specified for testing oil-fired 
water heaters in footnote e to Table 11.1 of ASHRAE/IES Standard 90.1-
1989 Addendum n, as the EPCA test procedure for this product. A.O. 
Smith asserted, however, that one of the adaptations--that the burner 
rate be adjusted so that fuel pump pressure would lie within +/-1 
percent of the manufacturer's specification--is unrealistic. (A.O. 
Smith, No. 3 at p. 1, Tr. 145-146) It recommended that instead the 
Department require the pump pressure to be within +/-10 percent of the 
manufacturer's specification.
    Just as the fuel pump establishes the pressure at which fuel is 
delivered to the burner of an oil-fired water heater, the gas pressure 
regulator serves that function on a gas-fired water heater. ANSI 
Z21.10.3-1998 requires that, during the test of a gas-fired water 
heater, the outlet pressure for the gas pressure regulator must be 
within +/-10 percent of that recommended by the manufacturer. Requiring 
that the pump pressure be within this range during the test of an oil-
fired appliance, as recommended by A.O. Smith, would appropriately 
allow the same magnitude of tolerance for the fuel pressure in this 
type of equipment as the test procedure already specifies for a gas-
fired appliance. DOE believes that this requirement would not affect 
the test results. Furthermore, DOE agrees with A.O. Smith that the +/-1 
percent tolerance would be very difficult to achieve.
    In sum, DOE believes the evidence in the record is clear and 
convincing that maintaining this tolerance for the fuel pump pressure 
in testing the efficiency of oil-fired water heaters would pose an 
undue burden on manufacturers. Therefore, today's direct final rule 
requires instead that the pressure be at a level of +/-10 percent of 
the manufacturer's specification for the equipment. DOE has determined 
that this tolerance level meets the requirements of 42 U.S.C. 
6314(a)(2).
5. Electric Water Heaters
    In the NOPR, DOE set forth its intent to adopt ANSI Z21.10.3-1998, 
with the adaptations specified for testing electric water heaters in 
footnote e to Table 11.1 of ASHRAE/IES Standard 90.1-1989 Addendum n, 
as the EPCA test procedure for this equipment. A.O. Smith asserted, 
however, that one of the adaptations--that the electrical supply 
voltage be maintained within +/-1 percent of the center of the voltage 
range specified on the water heater nameplate--is unnecessary and would 
require costly equipment. (A.O. Smith, No. 3 at p. 1, Tr. 140) A.O. 
Smith recommended that instead the Department require the electrical 
supply voltage to be maintained within +/-5 percent of the nameplate 
specification.
    This change would affect maintenance of the electrical supply but 
not the tolerance for measurement of electric energy consumed, since 
the test procedure would continue to require that such measurement be 
within a 1 percent tolerance. Thus, the change would not detract from 
the rigor of the test procedure. DOE also agrees with A.O. Smith that 
acceptance of its recommendation would not affect the test results and 
would ease the burden of testing this equipment.

[[Page 61980]]

    For these reasons, DOE believes the evidence in the record is clear 
and convincing that maintaining this +/-1 percent supply voltage 
tolerance in the test procedure for electric water heaters would pose 
an undue burden on manufacturers. Therefore, today's direct final rule 
requires instead that the supply voltage be maintained at a level of +/
-5 percent of the center of the voltage range specified on the 
nameplate. DOE has determined that this tolerance level meets the 
requirements of 42 U.S.C. 6314(a)(2).

D. Commercial Unfired Hot Water Storage Tanks

    Since ASHRAE/IES Standard 90.1 referenced no test procedure for hot 
water storage tanks as of the time EPACT was enacted, none was 
prescribed by statute. (42 U.S.C. 6314(a)(4)(A)) The Department 
proposed in the NOPR, therefore, to require that unfired hot water 
storage tanks having a storage capacity of 140 gallons or less be 
tested for heat loss according to a test procedure presented in the 
NOPR.
    Commenters expressed many concerns about the proposed test 
procedure. (e.g., A.O. Smith, No. 3 at p. 2, Tr. 149, 157-160; CEC, Tr. 
156, 163) However, this issue, and the concerns expressed in the 
comments, are now moot. The Department subsequently adopted, in another 
rulemaking, a requirement that unfired hot water storage tanks be 
insulated to at least R12.5, and it went into effect as a Federal 
standard on October 29, 2003, replacing the 6.5 Btu/hr per ft\2\ 
maximum heat loss requirement. 66 FR at 3356. Certain of the commenters 
had recommended that the Department adopt this requirement instead of 
its proposed test procedure. (GAMA, No. 2EE at p. 2, Tr. 151; AO Smith, 
No. 3 at p. 2) Given the adoption of this new standard, and the fact 
that a heat loss requirement is no longer in place for unfired hot 
water storage tanks, no need exists for a DOE test procedure to measure 
heat loss for this product. Moreover, ASHRAE/IES Standard 90.1-1999 
prescribes no test procedure for determining compliance with the new 
R12.5 insulation requirement, which is a design rather than a 
performance standard, and DOE believes none is necessary.
    For these reasons, today's direct final rule does not include a 
test procedure for unfired storage tanks.

E. Effect of Amended Test Procedure on Measured Energy Efficiency

    As to rulemakings to amend test procedures, section 323(e) of EPCA, 
42 U.S.C. 6293(e), provides that DOE shall determine whether the 
amended test procedure would alter the measured energy efficiency or 
measured energy use of any covered product as determined under the 
existing test procedure. If the amendment does alter such measured 
efficiency or energy use, the Secretary must determine the average 
efficiency or energy use level under the new test procedure of products 
that minimally complied with the applicable energy conservation 
standard prior to the test procedure amendment, and must set the 
standard at that level. (42 U.S.C. 6293(e)(2)) In addition, any 
existing model of a product that complied with the previously 
applicable standard would be deemed to comply with the new standard. 
(42 U.S.C. 6293(e)(3)) These provisions prevent changes in a test 
procedure from indirectly altering the applicable Federal energy 
conservation standard. They also prevent products that complied with 
standards using the previous test procedure from being forced out of 
compliance by the new test procedure.
    EPCA provides that the DOE test procedures for commercial water 
heating products shall be those industry test procedures recognized by 
ASHRAE and referenced in ASHRAE Standard 90.1 and in effect on June 30, 
1992. 42 U.S.C. 6341(a)(4)(A) For water heaters, the version of ASHRAE 
Standard 90.1 in effect on June 30, 1992, references the following: (1) 
For gas water heaters, ANSI Z21.10.3-1990, (2) for oil water heaters, 
ANSI Z21.10.3-1990, with certain modifications, and (3) for electric 
products, the standby loss provisions of ANSI Z21.10.3-1990 with 
certain modifications. From 1992 through 1998, ANSI issued six updated 
versions of Z21.10.3-1990, but only the 1998 version changed the energy 
efficiency and energy use testing provisions.\5\ The direct final rule 
adopts the relevant provisions of Z21.10.3-98 (including its changes to 
the test methods) as the test procedure for these products, along with 
the modifications just referred to for oil and electric products, and 
four additional changes to these test procedures. The portions of ANSI 
Z21.10.3-1998 that were contained in Z21.10.3-1990, as well as the 
modifications for oil and electric products, were all referenced in 
ASHRAE 90.1-1989 and in effect on June 30, 1992. Therefore, the statute 
itself sanctions the adoption of these provisions, and their adoption 
is not a change or amendment to the existing ``required'' test 
procedure for purposes of 42 U.S.C. 6293(e) when that section refers to 
an ``amended test procedure.'' In addition, of the changes to the test 
method that were incorporated in Z21.10.3-1998, and the four additional 
changes that DOE is including in this direct final rule, none would 
affect measured efficiency and only certain of the changes to the 
standby loss test in Z21.10.3 might affect measured energy use as 
determined under the previously existing test procedure. But DOE 
believes that any such effect on standby loss measurements would be de 
minimus. Therefore, DOE will not take further action under 42 U.S.C. 
6293(e) with regard to these changes.
---------------------------------------------------------------------------

    \5\ The ANSI Z21.10.3 test procedure provides a method for 
measuring thermal efficiency and a method for measuring standby 
loss, and both of these metrics are included in the standards for 
water heaters. The Department believes that, within the meaning of 
section 323(e) of EPCA, the thermal efficiency test method 
determines the ``measured energy efficiency'' of water heaters, and 
the standby loss test method determines the ``measured energy use.'' 
DOE refers here to the former as energy efficiency testing 
provisions, and the latter as energy use testing provisions.
---------------------------------------------------------------------------

    One of the changes in Z21.10.3-1998 to the standby loss test, for 
example, is specification of a lower tank water temperature. This 
reduction in tank water temperature allows for less heat energy loss to 
the surroundings and thus could affect standby loss. However, the 
equation that is used to calculate standby loss (as a percent per hour) 
effectively compensates for any possible affect on standby loss that a 
change in tank temperature could otherwise have. The change in tank 
temperature does not affect the measure of standby loss, and 
consequently does not alter measured energy use, as determined under 
the previously existing test procedure. Therefore, DOE will not take 
further action under 42 U.S.C. 6293(e) with regard to this change.
    Another test procedure amendment--one of the Department's four 
additional changes to the test method--relates to the duration 
requirement for the standby loss test. As discussed in Section II.C.3 
of this Direct Final Rule, the Department is adopting the standby loss 
test method in ANSI Z21.10.3-1998 with an added provision limiting the 
duration of that test. The Department believes that this modification 
would not alter the standby loss test results that would otherwise be 
produced under ANSI Z21.10.3-1998 or the previous version of this test 
method. Hence, this modification also does not alter measured energy 
use.
    With respect to hot water supply boilers, this direct final rule 
prescribes ANSI Z21.10.3 as the required test procedure, as DOE 
proposed in the NOPR. 65 FR 48865. This represents a change in the 
applicable test procedure for hot water supply boilers, because as

[[Page 61981]]

of June 30, 1992, ASHRAE 90.1 required a manufacturer to use one of the 
five test procedures for boilers that were referenced in 90.1. 
Furthermore, on January 12, 2001, DOE adopted new standards as Federal 
requirements for hot water supply boilers with capacities equal to or 
greater than 10 gallons. 66 FR 3336, 3356. In today's rule, the 
Department is adopting new standards for the smaller hot water supply 
boilers. These new standards change the metric used to measure the 
efficiency of this equipment from combustion efficiency to thermal 
efficiency. In addition, for larger equipment the new standards include 
a standby loss metric. Even if today's test procedure amendment does 
change the energy efficiency or energy use rating of any model of this 
equipment and would cause it not to comply with the current energy 
conservation standard, the standard for hot water supply boilers is now 
changed. As a result, the new standard will supersede the current 
standard and render irrelevant the ability or inability of any model to 
comply with the former standard based on determinations under the 
existing test procedure. Thus, any alteration in measured efficiency or 
energy use resulting from today's amendment to the test procedure would 
merely mean that the equipment in question does not meet the new 
standard.

III. Final Action

    DOE is publishing this direct final rule in order to allow 
stakeholders an opportunity to comment on revisions to this rule that 
have not had prior proposal. The direct final action will be effective 
December 20, 2004, unless significant adverse or critical comments are 
received by November 22, 2004. DOE views these revisions as 
noncontroversial and anticipates no significant adverse comments. 
However, in the event that significant adverse or critical comments are 
filed, DOE will withdraw the rule before the effective date. In the 
case of withdrawal of this action, the withdrawal will be announced by 
a subsequent Federal Register document. All public comments will then 
be addressed in a separate proposed rule which will be issued at a 
later date. Any parties interested in commenting on this rule should do 
so at this time. If no significant adverse comments are received, the 
public is advised that this rule will be effective December 20, 2004.

IV. Procedural Requirements

A. Review Under Executive Order 12866

    The Office of Information and Regulatory Affairs of the Office of 
Management and Budget (OMB) has determined that today's regulatory 
action is not a ``significant regulatory action'' under Executive Order 
12866, ``Regulatory Planning and Review,'' 58 FR 51735 (October 4, 
1993). Accordingly, this action was not subject to review under the 
Executive Order.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process (68 FR 7990). DOE has made its 
procedures and policies available on the Office of General Counsel's 
Web site: http://www.gc.doe.gov.
    DOE reviewed today's rule under the provisions of the Regulatory 
Flexibility Act and the procedures and policies published on February 
19, 2003, and certified in the NOPR that the proposed rule would not 
impose a significant economic impact on a substantial number of small 
entities. (64 FR 69597) DOE received no comments on this issue, and 
after considering the potential small entity impact of this direct 
final rule, DOE affirms the certification that this rule will not have 
a significant economic impact on a substantial number of small 
entities. Accordingly, DOE has not prepared a regulatory flexibility 
analysis for this rulemaking. DOE will transmit the certification and 
supporting statement of factual basis to the Chief Counsel for Advocacy 
of the Small Business Administration for review pursuant to 5 U.S.C. 
605(b).

C. Review Under the Paperwork Reduction Act

    This rulemaking will impose no new information or recordkeeping 
requirements. Accordingly, OMB clearance is not required under the 
Paperwork Reduction Act. (44 U.S.C. 3501 et seq.)

D. Review Under the National Environmental Policy Act

    DOE has determined that this rule falls into a class of actions 
that are categorically excluded from review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and the 
Department's implementing regulations at 10 CFR part 1021. 
Specifically, this rule amends an existing rule without changing the 
environmental effect of the rule being amended, and, therefore, is 
covered by the Categorical Exclusion in paragraph A5 to subpart D, 10 
CFR part 1021. Accordingly, neither an environmental assessment nor an 
environmental impact statement is required.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999) 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have federalism 
implications. The Executive Order requires agencies to examine the 
constitutional and statutory authority supporting any action that would 
limit the policymaking discretion of the States and carefully assess 
the necessity for such actions. The Executive Order also requires 
agencies to have an accountable process to ensure meaningful and timely 
input by State and local officials in the development of regulatory 
policies that have federalism implications. On March 14, 2000, DOE 
published a statement of policy describing the intergovernmental 
consultation process it will follow in the development of such 
regulations (65 FR 13735). DOE has examined today's rule and has 
determined that it does not preempt State law and does not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform'' (61 FR 4729, February 7, 1996), imposes on 
Federal agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general

[[Page 61982]]

standard and promote simplification and burden reduction. Section 3(b) 
of Executive Order 12988 specifically requires that Executive agencies 
make every reasonable effort to ensure that the regulation: (1) Clearly 
specifies the preemptive effect, if any; (2) clearly specifies any 
effect on existing Federal law or regulation; (3) provides a clear 
legal standard for affected conduct while promoting simplification and 
burden reduction; (4) specifies the retroactive effect, if any; (5) 
adequately defines key terms; and (6) addresses other important issues 
affecting clarity and general draftsmanship under any guidelines issued 
by the Attorney General. Section 3(c) of Executive Order 12988 requires 
Executive agencies to review regulations in light of applicable 
standards in section 3(a) and section 3(b) to determine whether they 
are met or it is unreasonable to meet one or more of them. DOE has 
completed the required review and determined that, to the extent 
permitted by law, this rule meets the relevant standards of Executive 
Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and tribal governments and the 
private sector. With respect to a proposed regulatory action that may 
result in the expenditure by State, local and tribal governments, in 
the aggregate, or by the private sector of $100 million or more 
(adjusted annually for inflation), section 202 of the Act requires a 
Federal agency to publish estimates of the resulting costs, benefits, 
and other effects on the national economy (2 U.S.C. 1532(a),(b)). The 
Act also requires a Federal agency to develop an effective process to 
permit timely input by elected officers of State, local, and tribal 
governments on a proposed ``significant intergovernmental mandate,'' 
and requires an agency plan for giving notice and opportunity for 
timely input to potentially affected small governments before 
establishing any requirements that might significantly or uniquely 
affect small governments. On March 18, 1997, DOE published a statement 
of policy on its process for intergovernmental consultation under the 
Act (62 FR 12820) (also available at http://www.gc.doe.gov). The rule 
published today does not contain any Federal mandate, so these 
requirements do not apply.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This rule would not have any impact on the autonomy or integrity of the 
family as an institution. Accordingly, DOE has concluded that it is not 
necessary to prepare a Family Policymaking Assessment.

I. Review Under Executive Order 12630

    DOE has determined pursuant to Executive Order 12630, 
``Governmental Actions and Interference with Constitutionally Protected 
Property Rights,'' 53 FR 8859 (March 18, 1988), that this regulation 
would not result in any takings which might require compensation under 
the Fifth Amendment to the United States Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 
2001

    The Treasury and General Government Appropriations Act, 2001 (44 
U.S.C. 3516, note), provides for agencies to review most disseminations 
of information to the public under guidelines established by each 
agency pursuant to general guidelines issued by OMB. OMB's guidelines 
were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines 
were published at 67 FR 62446 (October 7, 2002). DOE has reviewed 
today's notice of direct final rulemaking under the OMB and DOE 
guidelines and has concluded that it is consistent with applicable 
policies in those guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to the 
Office of Information and Regulatory Affairs (OIRA), Office of 
Management and Budget, a Statement of Energy Effects for any proposed 
significant energy action. A ``significant energy action'' is defined 
as any action by an agency that promulgated or is expected to lead to 
promulgation of a final rule, and that: (1) Is a significant regulatory 
action under Executive Order 12866, or any successor order; and (2) is 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy, or (3) is designated by the 
Administrator of OIRA as a significant energy action. For any proposed 
significant energy action, the agency must give a detailed statement of 
any adverse effects on energy supply, distribution, or use should the 
proposal be implemented, and of reasonable alternatives to the action 
and their expected benefits on energy supply, distribution, and use. 
Today's regulatory action would not have a significant adverse effect 
on the supply, distribution, or use of energy and, therefore, is not a 
significant energy action. Accordingly, DOE has not prepared a 
Statement of Energy Effects.

L. Review Under Section 32 of the Federal Energy Administration Act of 
1974

    Under Section 301 of the Department of Energy Organization Act 
(Pub. L. 95-91), the Department must comply with Section 32 of the 
Federal Energy Administration Act of 1974 (FEAA), as amended by the 
Federal Energy Administration Authorization Act of 1977. 15 U.S.C. 788. 
The Department stated in the NOPR the reasons why section 32 does not 
apply to the commercial standards incorporated into the proposed rule, 
except for its proposed test procedure for unfired hot water storage 
tanks. The Department received no comments on this issue.
    The rule published today does not include the test procedure for 
unfired hot water storage tanks, although it does incorporate the other 
standards that the NOPR proposed for incorporation. The Department 
continues to adhere to the view expressed in the NOPR that section 32 
of the FEAA does not apply to these standards.

M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of today's rule prior to its effective date. The report 
will state that it has been determined that the rule is not a ``major 
rule'' as defined by 5 U.S.C. 804(2).

N. Approval by the Office of the Secretary

    The Secretary of Energy has approved publication of today's rule.

List of Subjects in 10 CFR Part 431

    Administrative practice and procedure, Commercial products, Energy 
conservation, Incorporation by reference.

    Issued in Washington, DC, on July 27, 2004.
David K. Garman,
Assistant Secretary, Energy Efficiency and Renewable Energy.

0
For the reasons set forth in the preamble, part 431 of Chapter II of 
Title

[[Page 61983]]

10, Code of Federal Regulations is amended as set forth below:

PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND 
INDUSTRIAL EQUIPMENT

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1. The authority citation for Part 431 continues to read as follows:

    Authority: 42 U.S.C. 6311-6316.


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2. Subpart G is added to read as follows:
Subpart G--Commercial Water Heaters, Hot Water Supply Boilers and 
Unfired Hot Water Storage Tanks
Sec.
431.101 Purpose and scope.
431.102 Definitions concerning commercial water heaters, hot water 
supply boilers, and unfired hot water storage tanks.

Test Procedures

431.105 Materials incorporated by reference.
431.106 Uniform test method for the measurement of energy efficiency 
of commercial water heaters and hot water supply boilers (other than 
commercial heat pump water heaters).
431.107 Uniform test method for the measurement of energy efficiency 
of commercial heat pump water heaters [Reserved].

Energy Conservation Standards

431.110 Energy conservation standards and their effective dates.

Subpart G--Commercial Water Heaters, Hot Water Supply Boilers and 
Unfired Hot Water Storage Tanks


Sec.  431.101  Purpose and scope.

    This subpart contains energy conservation requirements for certain 
commercial water heaters, hot water supply boilers and unfired hot 
water storage tanks, pursuant to Part C of Title III of the Energy 
Policy and Conservation Act, as amended, 42 U.S.C. 6311-6316.


Sec.  431.102  Definitions concerning commercial water heaters, hot 
water supply boilers, and unfired hot water storage tanks.

    The following definitions apply for purposes of this subpart G, and 
of subparts J through M of this part. Any words or terms not defined in 
this section or elsewhere in this part shall be defined as provided in 
section 340 of the Act, 42 U.S.C. 6311.
    ASTM-D-2156-80 means the test standard published in 1980 by the 
American Society of Testing and Measurements and titled Method for 
Smoke Density in Flue Gases from Burning Distillate Fuels.
    Hot water supply boiler means a packaged boiler that is industrial 
equipment and that,
    (1) Has an input rating from 300,000 Btu/hr to 12,500,000 Btu/hr 
and of at least 4,000 Btu/hr per gallon of stored water,
    (2) Is suitable for heating potable water, and
    (3) Meets either or both of the following conditions:
    (i) It has the temperature and pressure controls necessary for 
heating potable water for purposes other than space heating, or
    (ii) The manufacturer's product literature, product markings, 
product marketing, or product installation and operation instructions 
indicate that the boiler's intended uses include heating potable water 
for purposes other than space heating.
    Instantaneous water heater means a water heater that has an input 
rating not less than 4,000 Btu/hr per gallon of stored water, and that 
is industrial equipment, including products meeting this description 
that are designed to heat water to temperatures of 180 [deg]F or 
higher.
    Packaged boiler means a boiler that is shipped complete with 
heating equipment, mechanical draft equipment and automatic controls; 
usually shipped in one or more sections and does not include a boiler 
that is custom designed and field constructed. If the boiler is shipped 
in more than one section, the sections may be produced by more than one 
manufacturer, and may be originated or shipped at different times and 
from more than one location.
    R-value means the thermal resistance of insulating material as 
determined based on ASTM Standard Test Method C177-97 or C518-91 and 
expressed in ([deg]F[middot]ft\2\[middot]h/Btu).
    Standby loss means the average hourly energy required to maintain 
the stored water temperature, expressed as applicable either (1) as a 
percentage (per hour) of the heat content of the stored water and 
determined by the formula for S given in Section 2.10 of ANSI Z21.10.3-
1998, denoted by the term ``S,'' or (2) in Btu per hour based on a 
70[deg] F temperature differential between stored water and the ambient 
temperature, denoted by the term ``SL.''
    Storage water heater means a water heater that heats and stores 
water within the appliance at a thermostatically controlled temperature 
for delivery on demand and that is industrial equipment. Such term does 
not include units with an input rating of 4,000 Btu/hr or more per 
gallon of stored water.
    Tank surface area means, for the purpose of determining portions of 
a tank requiring insulation, those areas of a storage tank, including 
hand holes and manholes, in its uninsulated or pre-insulated state, 
that do not have pipe penetrations or tank supports attached.
    Thermal efficiency for an instantaneous water heater, a storage 
water heater or a hot water supply boiler means the ratio of the heat 
transferred to the water flowing through the water heater to the amount 
of energy consumed by the water heater as measured during the thermal 
efficiency test procedure prescribed in this subpart.
    Unfired hot water storage tank means a tank used to store water 
that is heated externally, and that is industrial equipment.

Test Procedures


Sec.  431.105  Materials incorporated by reference.

    (a) The Department incorporates by reference the following test 
procedures into Subpart G of Part 431. The Director of the Federal 
Register has approved the material listed in paragraph (b) of this 
section for incorporation by reference in accordance with 5 U.S.C. 
552(a) and 1 CFR Part 51. Any subsequent amendment to this material by 
the standard-setting organization will not affect the Department test 
procedures unless and until the Department amends its test procedures. 
The Department incorporates the material as it exists on the date of 
the approval and a notice of any change in the material will be 
published in the Federal Register.
    (b) Test procedure incorporated by reference. American National 
Standards Institute (ANSI) Standard: ``Gas Water Heaters, Volume III, 
Storage Water Heaters with Input Ratings above 75,000 Btu per Hour, 
Circulating and Instantaneous, Z21.10.3-1998, CSA 4.3-M98, and its 
Addenda, ANSI Z21.10.3a-2000, CSA 4.3a-M00,'' IBR approved for Sec.  
431.105. The Department is incorporating by reference the ``Method of 
Test'' subsections of sections 2.9 and 2.10 in ANSI Z21.10.3-1998, CSA 
4.3-M98, and the sections referenced there, including sections 2.1.7, 
2.3.3, 2.3.4, 2.30 and Figure 3.
    (c) Availability of references.--(1) Inspection of test procedures. 
The test procedures incorporated by reference are available for 
inspection at:
    (i) National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ ibr--locations.html.

[[Page 61984]]

    (ii) U.S. Department of Energy, Office of Energy Efficiency and 
Renewable Energy, Hearings and Dockets, ``Test Procedures and 
Efficiency Standards for Commercial Water Heaters, Hot Water Supply 
Boilers, and Unfired Hot Water Storage Tanks,'' Docket No. EE-RM/TP-99-
480, Forrestal Building, 1000 Independence Avenue, SW., Washington, DC 
20585.
    (2) Obtaining copies of Standards. Anyone can purchase a copy of 
the standard incorporated by reference from Global Engineering 
Documents, 15 Inverness Way West, Englewood, CO 80112, or http://global.ihs.com/, or http://webstore.ansi.org/ansidocstore/.
    (d) Reference standards.--(1) General. The standards listed in this 
paragraph are referred to in the Department test procedures in this 
subpart, but they are not incorporated by reference. These sources are 
given here for information and guidance.
    (2) List of References. (i) ASTM Standard Test Method C518-91, 
``Standard Test Method for Steady-State Heat Flux Measurements and 
Thermal Transmission Properties by Means of the Heat Flow Meter 
Apparatus.''
    (ii) ASTM Standard Test Method C177-97, ``Standard Test Method for 
Steady-State Heat Flux Measurements and Thermal Transmission Properties 
by Means of the Guarded-Hot-Plate Apparatus.''
    (iii) ASTM Standard Test Method D2156-80, ``Method for Smoke 
Density in Flue Gases from Burning Distillate Fuels.''


Sec.  431.106  Uniform test method for the measurement of energy 
efficiency of commercial water heaters and hot water supply boilers 
(other than commercial heat pump water heaters).

    (a) Scope. This section covers the test procedures you must follow 
if, pursuant to EPCA, you are measuring the thermal efficiency or 
standby loss, or both, of a storage or instantaneous water heater or 
hot water supply boiler (other than a commercial heat pump water 
heater).
    (b) Testing and Calculations. Determine the energy efficiency of 
each covered product by conducting the test procedure(s), set forth in 
the two rightmost columns of the following table, that apply to the 
energy efficiency descriptor(s) for that product:

----------------------------------------------------------------------------------------------------------------
                                                    Use test setup,
                                    Energy           equipment and
           Product                efficiency         procedures in         With these additional stipulations
                                  descriptor       subsection labeled
                                                 ``Method of Test'' of
----------------------------------------------------------------------------------------------------------------
Gas-fired Storage and          Thermal           ANSI Z21.10.3-1998,    A. For all products, the duration of the
 Instantaneous Water Heaters    Efficiency.       Sec.   2.9**.          standby loss test shall be until
 and Hot Water Supply                                                    whichever of the following occurs first
 Boilers*.                                                               after you begin to measure the fuel and/
                                                                         or electric consumption: (1) The first
                                                                         cutout after 24 hours or (2) 48 hours,
                                                                         if the water heater is not in the
                                                                         heating mode at that time.
                               Standby Loss....  ANSI Z21.10.3-1998,    B. For oil and gas products, the standby
                                                  Sec.   2.10**.         loss in Btu per hour must be calculated
                                                                         as follows: SL (Btu per hour) = S (%
                                                                         per hour) x 8.25 (Btu/gal-F) x Measured
                                                                         Volume (gal) x 70 (degrees F).
                                                                        C. For oil-fired products, apply the
                                                                         following in conducting the thermal
                                                                         efficiency and standby loss tests:
                                                                        (1) Venting Requirements--Connect a
                                                                         vertical length of flue pipe to the
                                                                         flue gas outlet of sufficient height so
                                                                         as to meet the minimum draft specified
                                                                         by the manufacturer.
Oil-fired Storage and          Thermal           ANSI Z21.10.3-1998,    (2) Oil Supply--Adjust the burner rate
 Instantaneous Water Heaters    Efficiency.       Sec.   2.9**.          so that: (a) The hourly Btu input rate
 and Hot Water Supply                                                    lies within 2 percent of
 Boilers*.                                                               the manufacturer's specified input
                                                                         rate, (b) the CO2 reading shows the
                                                                         value specified by the manufacturer,
                                                                         (c) smoke in the flue does not exceed
                                                                         No. 1 smoke as measured by the
                                                                         procedure in ASTM-D-2156-80, and (d)
                                                                         fuel pump pressure lies within 10 percent of manufacturer's
                                                                         specifications.
                               Standby Loss....  ANSI Z21.10.3-1998,    D. For electric products, apply the
                                                  Sec.   2.10**.         following in conducting the standby
                                                                         loss test:
                                                                        (1) Assume that the thermal efficiency
                                                                         (Et) of electric water heaters with
                                                                         immersed heating elements is 98
                                                                         percent.
                                                                        (2) Maintain the electrical supply
                                                                         voltage to within 5 percent
                                                                         of the center of the voltage range
                                                                         specified on the water heater
                                                                         nameplate.
Electric Storage and           Standby Loss....  ANSI Z21.10.3-1998,    (3) If the set up includes multiple
 Instantaneous Water Heaters.                     Sec.   2.10**.         adjustable thermostats, set the highest
                                                                         one first to yield a maximum water
                                                                         temperature in the specified range as
                                                                         measured by the topmost tank
                                                                         thermocouple. Then set the lower
                                                                         thermostat(s) to yield a maximum mean
                                                                         tank temperature within the specified
                                                                         range.
----------------------------------------------------------------------------------------------------------------
*As to hot water supply boilers with a capacity of less than 10 gallons, these test methods become mandatory on
  October 21, 2005. Prior to that time, you may use for these products either (1) these test methods if you rate
  the product for thermal efficiency, or (2) the test methods in Subpart E if you rate the product for
  combustion efficiency as a commercial packaged boiler.
**Incorporated by reference, see Sec.   431.105.


[[Page 61985]]

Sec.  431.107  Uniform test method for the measurement of energy 
efficiency of commercial heat pump water heaters [Reserved].

Energy Conservation Standards


Sec.  431.110  Energy conservation standards and their effective dates.

    Each commercial storage water heater, instantaneous water heater, 
unfired hot water storage tank and hot water supply boiler \1\ must 
meet the applicable energy conservation standard level(s) as follows:
---------------------------------------------------------------------------

    \1\ Any packaged boiler that provides service water, that meets 
the definition of ``commercial packaged boiler'' in subpart E of 
this part, but does not meet the definition of `` hot water supply 
boiler'' in subpart G, must meet the requirements that apply to it 
under subpart E.

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                                                                                                          Energy conservation standard \a\ (products
                                                                                                        manufactured on and after October 29, 2003) \b\
                             Product                                              Size               ---------------------------------------------------
                                                                                                                                         Maximum standby
                                                                                                         Minimum thermal  efficiency         loss \c\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Electric storage water heaters...................................  All..............................  N/A..............................  0.30 + 27/Vm (%/
                                                                                                                                          hr)
Gas-fired storage water heaters..................................  <=155,000 Btu/hr.................  80%..............................  Q/800 + 110(Vr)
                                                                   >155,000 Btu/hr..................  80%..............................   1/2 (Btu/hr)
                                                                                                                                         Q/800 + 110(Vr)
                                                                                                                                          1/2 (Btu/hr)
Oil-fired storage water heaters..................................  <=155,000 Btu/hr.................  78%..............................  Q/800 + 110(Vr)
                                                                   >155,000 Btu/hr..................  78%..............................   1/2 (Btu/hr)
                                                                                                                                         Q/800 + 110(Vr)
                                                                                                                                          1/2 (Btu/hr)
Gas-fired instantaneous water heaters and hot water supply         <10 gal..........................  80%..............................  N/A
 boilers.                                                          >=10 gal.........................  80%..............................  Q/800 + 110(Vr)
                                                                                                                                          1/2 (Btu/hr)
Oil-fired instantaneous water heaters and hot water supply         <10 gal..........................  80%..............................  N/A
 boilers.                                                          >=10 gal.........................  78%..............................  Q/800 + 110(Vr)
                                                                                                                                          1/2 (Btu/hr)


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                  Product                                                        Size                       Minimum thermal insulation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unfired hot water storage tank.............................................  All........................................  R-12.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Vm is the measured storage volume and Vr is the rated volume, both in gallons. Q is the nameplate input rate in Btu/hr.
\b\ For hot water supply boilers with a capacity of less than 10 gallons: (1) the standards are mandatory for products manufactured on and after [Insert
  date one year after date the rule is published], and (2) products manufactured prior to that date, and on or after October 23, 2003, must meet either
  the standards listed in this table or the applicable standards in Subpart E of this Part for a ``commercial packaged boiler.''
\c\ Water heaters and hot water supply boilers having more than 140 gallons of storage capacity need not meet the standby loss requirement if (1) the
  tank surface area is thermally insulated to R-12.5 or more, (2) a standing pilot light is not used and (3) for gas or oil-fired storage water heaters,
  they have a fire damper or fan assisted combustion.

[FR Doc. 04-17732 Filed 10-20-04; 8:45 am]
BILLING CODE 6450-01-P