[Federal Register Volume 80, Number 154 (Tuesday, August 11, 2015)]
[Rules and Regulations]
[Pages 48004-48010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19643]


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DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EERE-2015-BT-STD-0017]
RIN 1904-AD55


Energy Conservation Program for Consumer Products: Definitions 
and Standards for Grid-Enabled Water Heaters

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

ACTION: Final rule.

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SUMMARY: Congress created a new definition and energy conservation 
standard for grid-enabled water heaters in the Energy Efficiency 
Improvement Act of 2015, which amended the Energy Policy and 
Conservation Act of 1975 (EPCA). The Department of Energy (DOE) is 
publishing this final rule to place in the Code of Federal Regulations 
(CFR) the energy conservation standards, and related definitions, and 
to explain its interpretation of the new language. This final rule will 
implement these amendments to EPCA.

DATES: Effective Date: August 11, 2015.

FOR FURTHER INFORMATION CONTACT: 
    Ms. Ashley Armstrong, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 
1000 Independence Avenue SW., Washington, DC, 20585-0121. Telephone: 
(202) 586-6590. Email: [email protected].
    Ms. Johanna Hariharan, U.S. Department of Energy, Office of the 
General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC, 
20585-0121. Telephone: (202) 287-6307. Email: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Introduction
    A. Authority
    B. Background
    C. New Legislation
II. Summary of Final Rule
    A. Standards for Grid-Enabled Water Heaters
    B. Enforcement Provisions for Grid-Enabled Water Heaters

[[Page 48005]]

III. Procedural Issues and Regulatory Review
    A. Review Under the Administrative Procedure Act
    B. Review Under Executive Orders 12866 and 13563
    C. Review Under the Regulatory Flexibility Act
    D. Review Under the Paperwork Reduction Act
    E. Review Under the National Environmental Policy Act of 1969
    F. Review Under Executive Order 13132
    G. Review Under Executive Order 12988
    H. Review Under the Unfunded Mandates Reform Act of 1995
    I. Review Under the Treasury and General Government 
Appropriations Act, 1999
    J. Review Under Executive Order 12630
    K. Review Under the Treasury and General Government 
Appropriations Act, 2001
    L. Review Under Executive Order 13211
    M. Review Under the Information Quality Bulletin for Peer Review
IV. Approval of the Office of the Secretary

I. Introduction

    The following section briefly discusses the statutory authority DOE 
is interpreting in this rule, as well as some of the relevant 
historical background related to the establishment of standards for 
residential water heaters.

A. Authority

    Part B of Title III of the Energy Policy and Conservation Act \1\ 
(42 U.S.C. 6291 et seq.; hereinafter ``EPCA''), establishes the 
``Energy Conservation Program for Consumer Products Other Than 
Automobiles,'' under which the Department of Energy (and in some cases 
the statute) sets energy conservation standards for a variety of 
products called ``covered products.'' \2\ Covered products generally 
include water heaters. (42 U.S.C. 6292(a)(4)) \3\ EPCA authorizes the 
Department of Energy (``Department'' or ``DOE'') to implement EPCA by 
``prescrib[ing] amended or new energy conservation standards'' for 
covered products, establishing test protocols for measuring products' 
performance vis [agrave] vis conservation standards, setting labeling 
requirements, etc. (42 U.S.C. 6293, 6294, 6295, 6296) The Department is 
authorized to ``issue such rules as [it] deems necessary to carry out 
the provisions'' of EPCA. (42 U.S.C. 6298)
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    \1\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvement Act of 2015, 
Public Law 112-210 (Apr. 30, 2015).
    \2\ For editorial reasons, upon codification in the U.S. Code, 
Part B was re-designated Part A.
    \3\ The statute excludes ``those consumer products designed 
solely for use in recreational vehicles and other mobile 
equipment.'' 42 U.S.C. 6292(a).
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    The Energy Efficiency Improvement Act of 2015 (EEIA 2015) (Pub. L. 
114-11-210) was enacted on April 30, 2015. Among other things, Title II 
of EEIA 2015 adds the definition of ``grid-enabled water heaters'' to 
EPCA's energy conservation standards for residential water heaters. 
These products are intended for use as part of an electric thermal 
storage or demand response program. Among the criteria that define 
``grid-enabled water heaters'' is an energy-related performance 
standard that is either an energy factor specified by a formula set 
forth in the statute, or an equivalent alternative standard that DOE 
may prescribe. In addition, EEIA's amendments to EPCA direct DOE to 
require reporting on shipments and activations of grid-enabled water 
heaters and to establish procedures, if appropriate, to prevent product 
diversion for non-program purposes.

B. Background

    EPCA prescribed energy conservation standards for residential water 
heaters and directed DOE to conduct rulemakings to determine whether to 
amend these standards. Pursuant to 42 U.S.C. 6295(m), DOE must also 
periodically review its already established energy conservation 
standards for a covered product. Under this requirement, DOE would need 
to undertake its periodic review no later than six years from the 
issuance of a final rule establishing or amending a standard for a 
covered product.
    On April 16, 2010, DOE published a final rule in the Federal 
Register amending the energy conservation standards for residential 
water heaters for a second time (hereinafter ``April 2010 final 
rule''). 75 FR 20111. The updated standards maintained the existing 
product structure, dividing water heaters based on the type of energy 
used (i.e., gas, oil, or electricity) and whether the water heater is a 
storage, instantaneous, or tabletop model, but also differentiated 
standard levels for electric and gas-fired storage water heaters based 
on whether the rated storage volume is greater than 55 gallons, or less 
than or equal to 55 gallons. Compliance with the energy conservation 
standards contained in the April 2010 final rule was required starting 
on April 16, 2015.
    Table I.11 presents the Federal energy conservation standards for 
residential water heaters, amended in the April 2010 final rule, which 
are set forth in 10 CFR 430.32(d).

Table I.1--Amended Federal Energy Conservation Standards for Residential
           Water Heaters Established by April 2010 Final Rule
------------------------------------------------------------------------
                                         Energy factor as of April 16,
         Product description                          2015
------------------------------------------------------------------------
Gas-fired Water Heater...............  For tanks with a Rated Storage
                                        Volume at or below 55 gallons:
                                        EF = 0.675-(0.0015 x Rated
                                        Storage Volume in gallons).
                                       For tanks with a Rated Storage
                                        Volume above 55 gallons: EF =
                                        0.8012-(0.00078 x Rated Storage
                                        Volume in gallons).
Oil-fired Water Heater...............  EF = 0.68 - (0.0019 x Rated
                                        Storage Volume in gallons).
Electric Water Heater................  For tanks with a Rated Storage
                                        Volume at or below 55 gallons:
                                        EF = 0.960-(0.0003 x Rated
                                        Storage Volume in gallons).
                                       For tanks with a Rated Storage
                                        Volume above 55 gallons: EF =
                                        2.057-(0.00113 x Rated Storage
                                        Volume in gallons).
Tabletop Water Heater................  EF = 0.93-(0.00132 x Rated
                                        Storage Volume in gallons).
Instantaneous Gas-Fired Water Heater.  EF = 0.82-(0.0019 x Rated Storage
                                        Volume in gallons).
Instantaneous Electric Water Heater..  EF = 0.93-(0.00132 x Rated
                                        Storage Volume in gallons).
------------------------------------------------------------------------

    After DOE issued the April 2010 final rule, several stakeholders 
expressed concern about April 2010 final rule's effect on electric 
thermal storage (ETS) programs. Utilities use ETS programs, sometimes 
also known as load shifting or demand response programs, to manage peak 
demand load by limiting the times when certain appliances are

[[Page 48006]]

operated. In certain water-heater based ETS programs, a utility 
typically controls a water heater remotely to allow operation only when 
electricity demand is during off-peak hours. During that off-peak 
operation, the electricity consumed is stored by the water heater as 
thermal energy for use during peak hours when the utility prevents the 
water heater from using electricity.
    Stakeholders told the Department that large-volume water heaters 
are important for water heater-based ETS programs because a larger-
volume product permits the storage of enough hot water to satisfy a 
consumer's needs through the peak hours. Utility companies also 
asserted that ETS programs are feasible only with electric resistance 
water heaters, as opposed to heat pump water heaters. In light of these 
two conditions, stakeholders said, the April 2010 final rule could 
impair water heater-based ETS programs because the rule effectively 
precludes the manufacture of large-volume electric resistance heaters. 
The minimum energy factor that the Department set for electric water 
heaters above 55 gallons is higher than electric resistance heaters can 
meet.
    In February 2013, DOE proposed a rule that would have established a 
mechanism for utilities and water heater manufacturers to request 
exemptions from the new standards for large-volume electric water 
heaters. The Department then commissioned studies of the performance of 
electric heaters with heat pumps (a technology capable of satisfying 
the new standard) in ETS programs. After receiving reports that 
concluded heat pumps are technically feasible in existing ETS programs, 
the Department withdrew its proposed rule on April 3, 2015.

C. New Legislation

    Congress enacted EEIA 2015 to address the use of large capacity 
electric resistance water heaters in thermal storage and demand 
response systems operated by electric utilities. Specifically, EEIA 
2015 amended EPCA to establish a category of water heater called ``grid 
enabled water heaters.'' As detailed below, a ``grid enabled water 
heater'' is defined as an electric resistance water heater made after 
April 16, 2015, with a tank over 75 gallons, an activation lock 
installed at manufacture, and a label. The water heater must also 
satisfy an energy-efficiency criterion--either an ``energy factor'' 
determined by a certain formula or ``an equivalent alternative standard 
prescribed by the Secretary and developed pursuant to'' 42 U.S.C. 
6295(e)(5)(E). A manufacturer can provide the activation key for a 
grid-enabled heater only to a utility using it in a thermal storage or 
demand response program. In addition, DOE is to require manufacturers 
to report data on their sales of grid-enabled heaters, and the 
Department can in appropriate circumstances establish procedures to 
prevent product diversion for non-program purposes. These provisions 
regarding grid-enabled water heaters will remain in effect unless and 
until DOE determines that they do not require a separate efficiency 
requirement or that efforts to prevent diversion of the water heaters 
are ineffective. Finally, in making standards in general for electric 
water heaters, DOE must consider the impact on thermal storage and 
demand response programs.
    While not explicit on the face of the statute, DOE interprets EEIA 
2015 as having established a category of water heaters subject to their 
own energy conservation standard. It is apparent that Congress intended 
to ensure the continued availability of certain large capacity electric 
resistance water heaters for use in utility operated thermal storage 
and demand response programs. To do so, Congress defined a separate 
grouping of water heaters for this use and stated the energy 
conservation standard that would be applicable to water heaters in this 
group. Congress also made clear that DOE is to monitor that such water 
heaters are used only for the purpose stated and that DOE could take 
steps to address diversion to other uses of water heaters within this 
category, including a determination that separate energy conservation 
standards are no longer necessary.
    In that Congress clearly intended to ensure continued availability 
of certain large capacity water heaters for use in ETS and demand 
response programs, DOE notes that its interpretation of EEIA 2015 is 
consistent with the intended outcome of its earlier rulemaking. DOE's 
existing standards, which took effect on April 16, 2015, would require 
a residential electric resistance water heater with a capacity over 55 
gallons to have an energy factor that is currently achievable for an 
electric heater only by using heat pump technology, and not solely by 
use of electric resistance elements. Stakeholders had told DOE they 
considered large-capacity electric resistance heaters important for ETS 
programs and urged DOE to amend the standard to permit continued 
manufacture of the heaters for that purpose. As such, Congress enacted 
EEIA 2015 to remedy this issue through establishing a separate grouping 
of water heaters, ensuring that grid-enabled water heaters would be 
used only for ETS programs.
    Table I.2 presents the below presents the new standards Congress 
laid out in EEIA 2015 for grid-enabled water heaters.

   Table I.2--Amended Federal Energy Conservation Standards for Grid-
             Enabled Water Heaters Established by EEIA 2015
------------------------------------------------------------------------
                                         Energy factor as of April 30,
         Product description                          2015
------------------------------------------------------------------------
Grid-Enabled Water Heaters...........  For tanks with a Rated Storage
                                        Volume above 75 gallons: EF =
                                        1.061-(0.00168 x Rated Storage
                                        Volume in gallons).
------------------------------------------------------------------------

II. Summary of Final Rule

    DOE is placing the new energy conservation standards and related 
definitions for grid-enabled water heaters into 10 CFR part 430 
(``Energy Conservation Program for Consumer Products''). This final 
rule codifies EEIA 2015, which established the energy conservation 
standards for grid-enabled water heaters on April 30, 2015 to permit 
the continued manufacture of grid-enabled water heaters after that 
date, provided the water heaters meet the criteria established in the 
amendment. DOE is also explaining its interpretation of some of the new 
language in EPCA regarding grid-enabled water heaters. DOE reads the 
new provisions as establishing a category of water heaters called 
``grid-enabled water heaters'' and setting an energy conservation 
standard for those products. DOE notes that continued manufacture of 
grid-enabled water heaters has been legal under EPCA since April 30, 
2015, and that this notice simply places that language into DOE's 
codified regulations. This notice also provides a summary of the 
amendments

[[Page 48007]]

EEIA 2015 made to EPCA, with respect to grid-enabled water heaters.

A. Standards for Grid-Enabled Water Heaters

    The EEIA 2015 amendments to EPCA became effective on April 30, 
2015. The new provisions constitute the new 42 U.S.C. 6295(e)(6), 
appended to the subsection that details the standards program for 
residential water heaters. As amended, EPCA defines a ``grid-enabled 
water heater'' as an electric resistance water heater that:
    (I) Has a rated storage tank volume of more than 75 gallons;
    (II) is manufactured on or after April 16, 2015;
    (III) has an energy factor of not less than 1.061 minus the product 
of 0.00168 times the tank's rated storage volume (in gallons); or an 
equivalent alternative standard prescribed by the Secretary and 
developed pursuant to paragraph (5)(E);
    (IV) is equipped at the point of manufacture with an activation 
lock; and
    (V) has a label meeting certain criteria for permanence and states, 
using text set by the statute, that the water heater is intended only 
for use as part of an electric thermal storage or demand response 
program.
    DOE at this time declines to develop such an equivalent standard 
through a lengthy notice and comment rulemaking process, and is 
therefore codifying the standard established in Sec.  
6295(e)(6)(A)(ii)(III)(aa) as an energy factor of not less than 1.061 
minus the product of 0.00168 times the tank's rated storage volume (in 
gallons).
    EPCA, as amended, also defines an ``activation lock'' as a control 
mechanism that is locked by default and must be activated with an 
activation key to enable the product to operate at its designed 
specifications and capabilities. A manufacturer can provide the 
activation key for the activation lock on a grid-enabled heater only to 
a utility or other company that operates an electric thermal storage or 
demand response program that uses such grid-enabled water heater.
    EPCA also mandates the Department to require each grid-enabled 
water heater manufacturer to report annually the quantity of grid-
enabled water heaters shipped each year. Likewise, operators of demand 
response and/or thermal storage systems must report the quantity of 
grid-enabled water heaters that are activated, using Energy Information 
Agency (EIA) forms, or another mechanism that DOE creates through a 
notice-and-comment rulemaking. At this time, DOE declines to develop 
another mechanism through a notice-and-comment rulemaking. DOE must 
treat all information received under these provisions as confidential 
business information.
    The EEIA 2015 instructs the Department to publish in 2017 and 2019 
analyses of the manufacturer and operator data to assess the extent to 
which shipped products are put into use in demand response and thermal 
storage programs. If DOE finds that sales of the products exceed by 15 
percent or greater the numbers activated annually, it can establish 
procedures to prevent product diversion for non-program purposes.
    Pursuant to EEIA 2015, the preceding provisions remain in effect 
until the Secretary determines that grid-enabled water heaters do not 
require a separate efficiency requirement or that sales exceed 
activations by more than 15 percent and procedures to prevent product 
diversion for non-program purposes would not be adequate. The statute 
also states that in carrying out this section with respect to electric 
water heaters, DOE must consider the impact on thermal storage and 
demand response programs. DOE is to require that grid-enabled water 
heaters be equipped with communication capability to participate in 
ancillary services programs if such technology is available, practical, 
and cost-effective.

B. Enforcement Provisions for Grid-Enabled Water Heaters

    EEIA 2015 also amended EPCA's list of prohibited acts in 42 U.S.C. 
6302(a) to include additional authority for DOE to enforce standards 
for grid-enabled water heaters so they are used exclusively in ETS 
programs. Under EPCA, certain actions, including activating an 
activation lock, distributing an activation key, or otherwise enabling 
a grid-enabled water heater to operate, with the knowledge that the 
grid-enabled water heater will not be used as part of an electric 
thermal storage or demand response program. In addition, removing a 
grid-enabled water heater label, or rendering it unintelligible, is 
also prohibited.

III. Procedural Issues and Regulatory Review

A. Review Under the Administrative Procedure Act

    This final rule provides DOE's interpretation of EEIA 2015, and is 
not subject to the requirement to provide prior notice and an 
opportunity for public comment pursuant to authority at 5 U.S.C. 
553(b)(A). To the extent that this final rule codifies, verbatim, EEIA 
2015, DOE finds good cause to waive the requirement to provide prior 
notice and an opportunity for public comment as such procedure is 
unnecessary in that DOE has no authority to amend the statute.

B. Review Under Executive Orders 12866 and 13563

    This final rule is not a ``significant regulatory action'' under 
section 3(f) of Executive Order 12866, ``Regulatory Planning and 
Review.'' 58 FR 51735 (Oct. 4, 1993). Accordingly, DOE is not required 
under section 6(a)(3) of the Executive Order to prepare a regulatory 
impact analysis (RIA) on today's rule and the Office of Information and 
Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) 
is not required to review this rule.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563. 76 FR 3281 (Jan. 21, 2011). Executive Order 13563 is 
supplemental to and explicitly reaffirms the principles, structures, 
and definitions governing regulatory review established in Executive 
Order 12866. To the extent permitted by law, agencies are required by 
Executive Order 13563 to: (1) Propose or adopt a regulation only upon a 
reasoned determination that its benefits justify its costs (recognizing 
that some benefits and costs are difficult to quantify); (2) tailor 
regulations to impose the least burden on society, consistent with 
obtaining regulatory objectives, taking into account, among other 
things, and to the extent practicable, the costs of cumulative 
regulations; (3) select, in choosing among alternative regulatory 
approaches, those approaches that maximize net benefits (including 
potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity); (4) to the extent 
feasible, specify performance objectives, rather than specifying the 
behavior or manner of compliance that regulated entities must adopt; 
and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, the Office of Information and Regulatory Affairs has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated

[[Page 48008]]

behavioral changes. For the reasons stated in the preamble, DOE 
believes that this final rule is consistent with these principles, 
including the requirement that, to the extent permitted by law, 
benefits justify costs and that net benefits are maximized.

C. 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 (IRFA) 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 the General 
Counsel's Web site (http://energy.gov/gc/office-general-counsel). DOE 
is revising the Code of Federal Regulations to incorporate, without 
substantive change, energy conservation standards prescribed by 
Congress in the Energy Efficiency Improvement Act of 2015. Because this 
is a technical amendment for which a general notice of proposed 
rulemaking is not required, the analytical requirements of the 
Regulatory Flexibility Act do not apply to this rulemaking.

D. Review Under the Paperwork Reduction Act

    Manufacturers of residential water heaters, including grid-enabled 
water heaters, must certify to DOE that their products comply with any 
applicable energy conservation standards. In certifying compliance, 
manufacturers must test their products according to the DOE test 
procedures for residential water heaters, including any amendments 
adopted for those test procedures. DOE has established regulations for 
the certification and recordkeeping requirements for all covered 
consumer products and commercial equipment, including residential water 
heaters. 76 FR 12422 (March 7, 2011). The collection-of-information 
requirement for the certification and recordkeeping is subject to 
review and approval by OMB under the Paperwork Reduction Act (PRA). 
This requirement has been approved by OMB under OMB control number 
1910-1400. Public reporting burden for the certification is estimated 
to average 30 hours per response, including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    The Energy Efficiency Improvement Act of 2015 also requires 
manufacturers of grid-enabled water heaters to report to DOE annually 
the quantity of grid-enabled water heaters that the manufacturer ships 
each year. It also requires operators of demand response and/or thermal 
storage systems to report annually the quantity of grid-enabled water 
heaters activated for their programs.

E. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (NEPA) of 1969, 
DOE has determined that the rule fits within the category of actions 
included in Categorical Exclusion (CX) B5.1 and otherwise meets the 
requirements for application of a CX. See 10 CFR part 1021, App. B, 
B5.1(b); 1021.410(b) and Appendix B, B(1)-(5). The rule fits within the 
category of actions because it is a rulemaking that clarifies the 
applicability of energy conservation standards for consumer products, 
and for which none of the exceptions identified in CX B5.1(b) apply. 
Therefore, DOE has made a CX determination for this rulemaking, and DOE 
does not need to prepare an Environmental Assessment or Environmental 
Impact Statement for this rule. DOE's CX determination for this 
proposed rule is available at http://cxnepa.energy.gov/.

F. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism.'' 64 FR 43255 (Aug. 10, 1999) 
imposes certain requirements on Federal 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 
to 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. EPCA governs and 
prescribes Federal preemption of State regulations as to energy 
conservation for the products that are the subject of today's final 
rule. States can petition DOE for exemption from such preemption to the 
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) No 
further action is required by Executive Order 13132.

G. 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,'' 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 standard and promote simplification and burden reduction. 61 FR 
4729 (Feb. 7, 1996). 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 final rule meets 
the relevant standards of Executive Order 12988.

H. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a regulatory action likely to result in a rule that may cause the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector of $100 million or more in any one year 
(adjusted annually for inflation), section

[[Page 48009]]

202 of UMRA requires a Federal agency to publish a written statement 
that estimates the resulting costs, benefits, and other effects on the 
national economy. (2 U.S.C. 1532(a), (b)) The UMRA 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 UMRA. 62 FR 12820. 
DOE's policy statement is also available at http://energy.gov/gc/office-general-counsel.
    This final rule does not contain a Federal intergovernmental 
mandate, and will not require expenditures of $100 million or more on 
the private sector. Accordingly, no further action is required under 
the UMRA.

I. 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 final 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.

J. Review Under Executive Order 12630

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

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

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516, note) provides for Federal 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 (Feb. 22, 
2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 
2002). DOE has reviewed this final rule under the OMB and DOE 
guidelines and has concluded that it is consistent with applicable 
policies in those guidelines.

L. 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 OIRA 
at OMB, a Statement of Energy Effects for any proposed significant 
energy action. A ``significant energy action'' is defined as any action 
by an agency that promulgates 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 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. This final rule 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.

M. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 
2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as scientific information the 
agency reasonably can determine will have, or does have, a clear and 
substantial impact on important public policies or private sector 
decisions. 70 FR 2667.
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation using 
objective criteria and qualified and independent reviewers to make a 
judgment as to the technical/scientific/business merit, the actual or 
anticipated results, and the productivity and management effectiveness 
of programs and/or projects. The ``Energy Conservation Standards 
Rulemaking Peer Review Report'' dated February 2007 has been 
disseminated and is available at the following Web site: 
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

IV. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
rule.

List of Subjects in 10 CFR Part 430

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Household appliances, Imports, 
Intergovernmental relations, Small businesses.

    Issued in Washington, DC, on August 4, 2015.
Kathleen B. Hogan,
Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and 
Renewable Energy.

    For the reasons set forth in the preamble, DOE amends part 430 of 
chapter II, of title 10 of the Code of Federal Regulations, to read as 
set forth below:

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
1. The authority citation for part 430 continues to read as follows:

    Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.


0
2. Section 430.2 is amended by adding the definitions of ``activation 
lock'' and ``grid-enabled water heater'' in alphabetical order to read 
as follows:


Sec.  430.2  Definitions.

* * * * *
    Activation lock means a control mechanism (either by a physical 
device directly on the water heater or a control

[[Page 48010]]

system integrated into the water heater) that is locked by default and 
contains a physical, software, or digital communication that must be 
activated with an activation key to enable to the product to operate at 
its designed specifications and capabilities and without which the 
activation of the product will provide not greater than 50 percent of 
the rated first hour delivery of hot water certified by the 
manufacturer.
* * * * *
    Grid-enabled water heater means an electric resistance water heater 
that--
    (1) Has a rated storage tank volume of more than 75 gallons;
    (2) Is manufactured on or after April 16, 2015;
    (3) Is equipped at the point of manufacture with an activation lock 
and;
    (4) Bears a permanent label applied by the manufacturer that--
    (i) Is made of material not adversely affected by water;
    (ii) Is attached by means of non-water-soluble adhesive; and
    (iii) Advises purchasers and end-users of the intended and 
appropriate use of the product with the following notice printed in 
16.5 point Arial Narrow Bold font: ``IMPORTANT INFORMATION: This water 
heater is intended only for use as part of an electric thermal storage 
or demand response program. It will not provide adequate hot water 
unless enrolled in such a program and activated by your utility company 
or another program operator. Confirm the availability of a program in 
your local area before purchasing or installing this product.''
* * * * *

0
3. Section 430.32 is amended by revising paragraph (d) to read as 
follows:


Sec.  430.32  Energy and water conservation standards and their 
compliance dates.

* * * * *
    (d) Water heaters and grid-enabled water heaters--(1) Water 
heaters. The energy factor of water heaters shall not be less than the 
following for products manufactured on or after the indicated dates.

----------------------------------------------------------------------------------------------------------------
                                                            Energy factor as of    Energy factor as of April 16,
           Product class                Storage volume        January 20, 2004                 2015
----------------------------------------------------------------------------------------------------------------
Gas-fired Storage Water Heater....  >=20 gallons and       0.67-(0.0019 x Rated   For tanks with a Rated Storage
                                     <=100 gallons.         Storage Volume in      Volume at or below 55
                                                            gallons).              gallons: EF = 0.675-(0.0015 x
                                                                                   Rated Storage Volume in
                                                                                   gallons).
                                                                                  For tanks with a Rated Storage
                                                                                   Volume above 55 gallons: EF =
                                                                                   0.8012-(0.00078 x Rated
                                                                                   Storage Volume in gallons).
Oil-fired Storage Water Heater....  <=50 gallons.........  0.59-(0.0019 x Rated   EF = 0.68-(0.0019 x Rated
                                                            Storage Volume in      Storage Volume in gallons).
                                                            gallons).
Electric Storage Water Heater.....  >=20 gallons and       0.97-(0.00132 x Rated  For tanks with a Rated Storage
                                     <=120 gallons.         Storage Volume in      Volume at or below 55
                                                            gallons).              gallons: EF = 0.960-(0.0003 x
                                                                                   Rated Storage Volume in
                                                                                   gallons).
                                                                                  For tanks with a Rated Storage
                                                                                   Volume above 55 gallons: EF =
                                                                                   2.057-(0.00113 x Rated
                                                                                   Storage Volume in gallons).
Tabletop Water Heater.............  >=20 gallons and       0.93-(0.00132 x Rated  EF = 0.93-(0.00132 x Rated
                                     <=120 gallons.         Storage Volume in      Storage Volume in gallons).
                                                            gallons).
Instantaneous Gas-fired Water       <2 gallons...........  0.62-(0.0019 x Rated   EF = 0.82-(0.0019 x Rated
 Heater.                                                    Storage Volume in      Storage Volume in gallons).
                                                            gallons).
Instantaneous Electric Water        <2 gallons...........  0.93-(0.00132 x Rated  EF = 0.93-(0.00132 x Rated
 Heater.                                                    Storage Volume in      Storage Volume in gallons).
                                                            gallons).
----------------------------------------------------------------------------------------------------------------
Note: The Rated Storage Volume equals the water storage capacity of a water heater, in gallons, as certified by
  the manufacturer.

    Exclusions: The energy conservation standards shown in this 
paragraph do not apply to the following types of water heaters: Gas-
fired, oil-fired, and electric water heaters at or above 2 gallons 
storage volume and below 20 gallons storage volume; gas-fired water 
heaters above 100 gallons storage volume; oil-fired water heaters above 
50 gallons storage volume; electric water heaters above 120 gallons 
storage volume; gas-fired instantaneous water heaters at or below 
50,000 Btu/h; and grid-enabled water heaters.
    (2) Grid-enabled water heaters. The energy factor of grid-enabled 
water heaters, as of April 30, 2015, shall not be less than 1.06-
(0.00168 x Rated Storage Volume in gallons).
* * * * *
[FR Doc. 2015-19643 Filed 8-10-15; 8:45 am]
BILLING CODE 6450-01-P