[Federal Register Volume 84, Number 38 (Tuesday, February 26, 2019)]
[Proposed Rules]
[Pages 6095-6107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03270]


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DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2019-BT-STD-0002]


Energy Conservation Program: Energy Conservation Standards for 
Direct Heating Equipment

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

ACTION: Request for information.

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SUMMARY: The U.S. Department of Energy (``DOE'') is initiating an 
effort to determine whether to amend the current energy conservation 
standards for direct heating equipment. Under the Energy Policy and 
Conservation Act of 1975, as amended (``EPCA''), DOE must periodically 
review these standards and publish either a notice of proposed 
rulemaking (``NOPR'') to propose new standards for direct heating 
equipment or a notice of determination that the existing standards do 
not need to be amended. This request for information (``RFI'') solicits 
information from the public to help DOE determine whether amended 
standards for direct heating equipment would result in significant 
energy savings and whether such standards would be technologically 
feasible and economically justified. DOE welcomes written comments from 
the public on any subject within the scope of this document (including 
topics not raised in this RFI).

DATES: Written comments and information are requested and will be 
accepted on or before April 12, 2019.

ADDRESSES: Interested persons are encouraged to submit comments using 
the Federal eRulemaking Portal at http://www.regulations.gov. Follow 
the instructions for submitting comments. Alternatively, interested 
persons may submit comments, identified by docket number EERE-2019-BT-
STD-0002, by any of the following methods:
    1. Federal eRulemaking Portal: http://www.regulations.gov. Follow 
the instructions for submitting comments.
    2. Email: [email protected]. Include the docket number 
EERE-2019-BT-STD-0002 in the subject line of the message.
    3. Postal Mail: Appliance and Equipment Standards Program, U.S. 
Department of Energy, Building Technologies Office, Mailstop EE-5B, 
Energy Conservation Standards RFI for Direct Heating Equipment, Docket 
No. EERE-2019-BT-STD-0002, 1000 Independence Avenue SW, Washington, DC, 
20585-0121. If possible, please submit all items on a compact disc 
(``CD''), in which case it is not necessary to include printed copies.
    4. Hand Delivery/Courier: Appliance and Equipment Standards 
Program, U.S. Department of Energy, Building Technologies Office, 950 
L'Enfant Plaza SW, 6th Floor, Washington, DC, 20024. Telephone: (202) 
287-1445. If possible, please submit all items on a CD, in which case 
it is not necessary to include printed copies.
    No telefacsimilies (faxes) will be accepted. For detailed 
instructions on submitting comments and additional information on this 
process, see section III of this document.
    Docket: The docket for this activity, which includes Federal 
Register notices, comments, and other supporting documents/materials, 
is available for review at http://www.regulations.gov. All documents in 
the docket are listed in the http://www.regulations.gov index. However, 
some documents listed in the index, such as those containing 
information that is exempt from public disclosure, may not be publicly 
available.
    The docket web page can be found at http://www.regulations.gov/#!docketDetail;D=EERE-2019-BT-STD-0002. The docket web page contains 
instructions on how to access all documents, including public comments, 
in the docket. See section III of this document for information on how 
to submit comments through http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Dr. Stephanie Johnson, U.S. Department 
of Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, 
DC, 20585-0121. Telephone: (202) 287-1943. Email: 
[email protected].
    Mr. Eric Stas, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. 
Telephone: (202) 586-5827. Email: [email protected].
    For further information on how to submit a comment or review other 
public comments and the docket, contact the Appliance and Equipment 
Standards Program staff at (202) 287-1445 or by email: 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
    A. Authority and Background
    B. Rulemaking Process
II. Request for Information and Comments
    A. Products Covered by This Process
    1. Unvented Heaters
    2. Vented Heaters
    B. Market and Technology Assessment
    1. Product Classes
    2. Technology Assessment
    C. Screening Analysis
    D. Engineering Analysis
    1. Baseline Efficiency Levels
    2. Maximum Available and Maximum Technologically Feasible Levels
    3. Manufacturer Production Costs and Manufacturing Selling Price
    E. Mark-Up Analysis
    1. Distribution Channels
    2. Mark-Ups
    F. Energy Use Analysis
    1. Sample Development
    2. Energy Use Calculations
    G. Life-Cycle Cost and Payback Period Analysis
    1. Total Installed Cost
    2. Operating Costs
    H. Shipments Analysis
    I. Manufacturer Impact Analysis
    J. Other Energy Conservation Standards Topics
    1. Market Failures

[[Page 6096]]

    2. Market-Based Approaches to Energy Conservation Standards
III. Submission of Comments

I. Introduction

A. Authority and Background

    The Energy Policy and Conservation Act of 1975, as amended 
(``EPCA'' or ``the Act''),\1\ Public Law 94-163 (42 U.S.C. 6291-6317, 
as codified), among other things, authorizes DOE to regulate the energy 
efficiency of a number of consumer products and industrial equipment. 
(42 U.S.C. 6291-6317, as codified) Title III, Part B \2\ of EPCA 
established the Energy Conservation Program for Consumer Products Other 
Than Automobiles, which sets forth a variety of provisions designed to 
improve energy efficiency. These products include direct heating 
equipment (DHE), the subject of this document. (42 U.S.C. 6292(a)(9)) 
EPCA prescribed energy conservation standards for these products and 
directed DOE to conduct two cycles of rulemakings to determine whether 
to amend these standards. (42 U.S.C. 6295(e)(3) and (4))
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    \1\ All references to EPCA in this document refer to the statute 
as amended through America's Water Infrastructure Act of 2018, 
Public Law 115-270 (Oct. 23, 2018).
    \2\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
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    Under EPCA, DOE's energy conservation program consists essentially 
of four parts: (1) Testing, (2) labeling, (3) Federal energy 
conservation standards, and (4) certification and enforcement 
procedures. Relevant provisions of the Act specifically include 
definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293), 
labeling provisions (42 U.S.C. 6294), energy conservation standards (42 
U.S.C. 6295), and the authority to require information and reports from 
manufacturers (42 U.S.C. 6296).
    Federal energy efficiency requirements for covered products 
established under EPCA generally supersede State laws and regulations 
concerning energy conservation testing, labeling, and standards. (42 
U.S.C. 6297) DOE may, however, grant waivers of Federal preemption in 
limited instances for particular State laws or regulations, in 
accordance with the procedures and other provisions of EPCA. (42 U.S.C. 
6297(d))
    DOE completed the first of the required rulemaking cycles in 2010 
by publishing a final rule on April 16, 2010 (``April 2010 final 
rule'') that adopted amended performance standards for certain DHE 
(i.e., vented home heating equipment) manufactured on or after April 
16, 2013. 75 FR 20112. In the April 2010 final rule, DOE did not issue 
standards for unvented home heating equipment, a subset of DHE, finding 
that such standards would produce insignificant energy savings. Id at 
20130. Additionally, DOE completed a second rulemaking cycle for DHE by 
issuing a final determination to not amend standards for vented home 
heating equipment and to not to adopt standards for unvented home 
heating equipment on October 17, 2016 (``October 2016 final 
determination''). 81 FR 71325. The current energy conservation 
standards for DHE are located in title 10 of the Code of Federal 
Regulations (``CFR'') part 430, section 32(i)(2). The currently 
applicable DOE test procedures for unvented and vented DHE appear at 10 
CFR part 430, subpart B, appendix G and appendix O, respectively.
    In the October 2016 final determination, DOE concluded that energy 
conservation standards should not be amended for DHE. DOE determined 
that the DHE market characteristics at the time were largely similar to 
those during the analysis for the April 2010 final rule, and that the 
technologies available for improving DHE energy efficiency had not 
advanced significantly since the publication of the April 2010 final 
rule. In addition, DOE determined that the conclusions reached in the 
April 2010 final rule regarding the benefits and burdens of more 
stringent standards for DHE were still relevant to the DHE market. 
Therefore, DOE concluded that amended energy conservation standards 
would not be economically justified. 81 FR 71325, 71325 (Oct. 17, 
2016).
    EPCA also requires that, not later than 6 years after the issuance 
of any final rule establishing or amending a standard, DOE evaluate the 
energy conservation standards for each type of covered product, 
including those at issue here, and publish either a notice of 
determination that standards do not need to be amended, or a NOPR 
including new proposed energy conservation standards (proceeding to a 
final rule, as appropriate). (42 U.S.C. 6295(m)(1)) EPCA further 
provides that, not later than 3 years after the issuance of a final 
determination not to amend standards, DOE must publish either a notice 
of determination that standards for the product do not need to be 
amended, or a NOPR including new proposed energy conservation standards 
(proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B)) 
DOE must make the analysis on which the determination is based publicly 
available and provide an opportunity for written comment. (42 U.S.C. 
6295(m)(2)) In making a determination, DOE must evaluate whether more-
stringent standards would: (1) Yield a significant savings in energy 
use and (2) be both technologically feasible and economically 
justified. (42 U.S.C. 6295(m)(1)(A)) DOE is publishing this RFI to 
collect data and information to inform its decision consistent with its 
obligations under EPCA.

B. Rulemaking Process

    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products. EPCA requires that any new or 
amended energy conservation standard be designed to achieve the maximum 
improvement in energy or water efficiency that is technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) To 
determine whether a standard is economically justified, EPCA requires 
that DOE determine whether the benefits of the standard exceed its 
burdens by, to the greatest extent practicable, considering the 
following seven factors:
    (1) The economic impact of the standard on the manufacturers and 
consumers of the affected products;
    (2) The savings in operating costs throughout the estimated average 
life of the product compared to any increases in the initial cost, or 
maintenance expenses;
    (3) The total projected amount of energy and water (if applicable) 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the products 
likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary of Energy (Secretary) considers 
relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

    DOE fulfills these and other applicable requirements by conducting 
a series of analyses throughout the rulemaking process. Table I.1 shows 
the individual analyses that are performed to satisfy each of the 
requirements within EPCA.

[[Page 6097]]



       Table I.1--EPCA Requirements and Corresponding DOE Analysis
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            EPCA requirement                Corresponding DOE analysis
------------------------------------------------------------------------
Technological Feasibility..............   Market and Technology
                                          Assessment.
                                          Screening Analysis.
                                          Engineering Analysis.
Economic Justification:
    1. Economic impact on manufacturers   Manufacturer Impact
     and consumers.                       Analysis.
                                          Life-Cycle Cost and
                                          Payback Period Analysis.
                                          Life-Cycle Cost
                                          Subgroup Analysis.
                                          Shipments Analysis.
    2. Lifetime operating cost savings    Mark-ups for Product
     compared to increased cost for the   Price Determination.
     product.                             Energy and Water Use
                                          Determination.
                                          Life-Cycle Cost and
                                          Payback Period Analysis.
    3. Total projected energy savings..   Shipments Analysis.
                                          National Impact
                                          Analysis.
    4. Impact on utility or performance   Screening Analysis.
                                          Engineering Analysis.
    5. Impact of any lessening of         Manufacturer Impact
     competition.                         Analysis.
    6. Need for national energy and       Shipments Analysis.
     water conservation.                  National Impact
                                          Analysis.
    7. Other factors the Secretary        Employment Impact
     considers relevant.                  Analysis.
                                          Utility Impact
                                          Analysis.
                                          Emissions Analysis.
                                          Monetization of
                                          Emission Reductions Benefits.
                                          Regulatory Impact
                                          Analysis.
------------------------------------------------------------------------

    As detailed throughout this RFI, DOE is publishing this document 
seeking input and data from interested parties to aid in the 
development of the technical analyses on which DOE will ultimately rely 
to determine whether (and if so, how) to amend the standards for direct 
heating equipment.

II. Request for Information and Comments

    In the following sections, DOE has identified a variety of issues 
on which it seeks input to aid in the development of the technical and 
economic analyses regarding whether amended standards for DHE may be 
warranted. Additionally, DOE welcomes comments on other issues relevant 
to this request for information that may not specifically be identified 
in this document. In particular, DOE notes that under Executive Order 
13771, ``Reducing Regulation and Controlling Regulatory Costs,'' 
Executive Branch agencies such as DOE are directed to manage the costs 
associated with the imposition of expenditures required to comply with 
Federal regulations. See 82 FR 9339 (Feb. 3, 2017). Pursuant to that 
Executive Order, DOE encourages the public to provide input on measures 
DOE could take to lower the cost of its energy conservation standards 
rulemakings, recordkeeping and reporting requirements, and compliance 
and certification requirements applicable to DHE while remaining 
consistent with the requirements of EPCA.

A. Products Covered by This Process

    The definitions for DHE were most recently amended in a test 
procedure final rule. 80 FR 792 (Jan. 6, 2015). This RFI covers those 
products that meet the definitions of ``direct heating equipment'' and 
``home heating equipment,'' \3\ as codified at 10 CFR 430.2 and defined 
as follows:
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    \3\ DOE notes that DHE is defined at 10 CFR 430.2 as ``vented 
home heating equipment'' and ``unvented home heating equipment''; 
however, the existing energy conservation standards apply only to 
product classes of vented home heating equipment. There are no 
existing energy conservation standards for unvented home heating 
equipment.
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    (1) ``Direct heating equipment'' means vented home heating 
equipment and unvented home heating equipment.
    (2) ``Home heating equipment, not including furnaces'' means vented 
home heating equipment and unvented home heating equipment.
1. Unvented Heaters
    Unvented heaters are those products that meet the definitions for 
``unvented home heating equipment,'' as codified at 10 CFR 430.2. DOE 
defines unvented heaters and the various sub-types of unvented heaters 
as follows:
    (1) ``Unvented home heating equipment'' means a class of home 
heating equipment, not including furnaces, used for the purpose of 
furnishing heat to a space proximate to such heater directly from the 
heater and without duct connections and includes electric heaters and 
unvented gas and oil heaters.
    (2) ``Electric heater'' means an electric appliance in which heat 
is generated from electrical energy and dissipated by convection and 
radiation and includes baseboard electric heaters, ceiling electric 
heaters, floor electric heaters, portable electric heaters, and wall 
electric heaters.
    (3) ``Primary heater'' means a heating device that is the principal 
source of heat for a structure and includes baseboard electric heaters, 
ceiling electric heaters, and wall electric heaters.
    (4) ``Supplementary heater'' means a heating device that provides 
heat to a space in addition to that which is supplied by a primary 
heater. Supplementary heaters include portable electric heaters.
    (5) ``Baseboard electric heater'' means an electric heater which is 
intended to be recessed in or surface mounted on walls at floor level, 
which is characterized by long, low physical dimensions, and which 
transfers heat by natural convection and/or radiation.
    (6) ``Ceiling electric heater'' means an electric heater which is 
intended to be recessed in, surface mounted on, or hung from a ceiling, 
and which transfers heat by radiation and/or convection (either natural 
or forced).
    (7) ``Floor electric heater'' means an electric heater which is 
intended to be recessed in a floor, and which transfers by radiation 
and/or convection (either natural or forced).
    (8) ``Portable electric heater'' means an electric heater which is 
intended to stand unsupported, and can be moved from place to place 
within a structure.

[[Page 6098]]

It is connected to electric supply by means of a cord and plug, and 
transfers heat by radiation and/or convention (either natural or 
forced).
    (9) ``Wall electric heater'' means an electric heater (excluding 
baseboard electric heaters) which is intended to be recessed in or 
surface mounted on walls, which transfers heat by radiation and/or 
convection (either natural or forced) and which includes forced 
convectors, natural convectors, radiant heaters, high wall or valance 
heaters.
    (10) ``Unvented gas heater'' means an unvented, self-contained, 
free-standing, non-recessed gas-burning appliance which furnishes warm 
air by gravity or fan circulation.
    (11) ``Unvented oil heater'' means an unvented, self-contained, 
free-standing, non-recessed oil-burning appliance which furnishes warm 
air by gravity or fan circulation.
    Issue A.1 DOE requests comment on the definitions currently 
applicable to unvented heaters and whether any of the definitions 
should be revised, and if so, how. Please provide a rationale for any 
suggested change. DOE notes that floor electric heaters are not 
currently listed among the other types of heaters included in the 
definition of a ``primary heater.'' DOE understands that floor electric 
heaters have similar heat output as the types of heaters listed in the 
definition of ``primary heater'' and may provide the primary source of 
heat in small dwellings. DOE requests comment on whether floor electric 
heaters should be specifically defined and also included in the 
definition of ``primary heater.''
2. Vented Heaters
    Vented heaters are those products that meet the definitions for 
``vented home heating equipment,'' as codified at 10 CFR 430.2. DOE 
defines vented heaters and the various sub-types of vented heaters as 
follows:
    (1) ``Vented home heating equipment'' or ``vented heater'' means a 
class of home heating equipment, not including furnaces, designed to 
furnish warmed air to the living space of a residence, directly from 
the device, without duct connections (except that boots not to exceed 
10 inches beyond the casing may be permitted) and includes: vented wall 
furnace, vented floor furnace, and vented room heater.
    (2) ``Vented floor furnace'' means a self-contained vented heater 
suspended from the floor of the space being heated, taking air for 
combustion from outside this space. The vented floor furnace supplies 
heated air circulated by gravity or by a fan directly into the space to 
be heated through openings in the casing.
    (3) ``Vented room heater'' means a self-contained, free standing, 
non-recessed, vented heater for furnishing warmed air to the space in 
which it is installed. The vented room heater supplies heated air 
circulated by gravity or by a fan directly into the space to be heated 
through openings in the casing.
    (4) ``Vented wall furnace'' means a self-contained vented heater 
complete with grilles or the equivalent, designed for incorporation in, 
or permanent attachment to, a wall of a residence and furnishing heated 
air circulated by gravity or by a fan directly into the space to be 
heated through openings in the casing.
    (5) ``Unvented home heating equipment'' means a class of home 
heating equipment, not including furnaces, used for the purpose of 
furnishing heat to a space proximate to such heater directly from the 
heater and without duct connections and includes electric heaters and 
unvented gas and oil heaters.
    Issue A.2 DOE requests comment on whether the definitions 
applicable to DHE require any revisions, and if so, how those 
definitions should be revised. Please provide a rationale for any 
suggested change. DOE also requests feedback on whether the sub-
category definitions currently in place are appropriate or whether 
further modifications are needed. If these sub-category definitions 
need modifying, DOE seeks specific input on how to define these terms.
    Issue A.3 DOE requests comment on whether additional product 
definitions are necessary to close any potential gaps in coverage 
between product types. DOE also seeks input on whether such products 
currently exist in the market or whether they are being planned for 
introduction.

B. Market and Technology Assessment

    The market and technology assessment that DOE routinely conducts 
when analyzing the impacts of a potential new or amended energy 
conservation standard provides information about the DHE industry that 
will be used in DOE's analysis throughout the rulemaking process. DOE 
uses qualitative and quantitative information to characterize the 
structure of the industry and market. DOE identifies manufacturers, 
estimates market shares and trends, addresses regulatory and non-
regulatory initiatives intended to improve energy efficiency or reduce 
energy consumption, and explores the potential for efficiency 
improvements in the design and manufacturing of the subject products. 
DOE also reviews product literature, industry publications, and company 
websites, as well as information from trade journals, government 
agencies, and trade organizations. Additionally, DOE routinely conducts 
interviews with manufacturers to improve its assessment of the market 
and available technologies for DHE.
1. Product Classes
    When evaluating and establishing energy conservation standards, DOE 
may divide covered products into product classes by the type of energy 
used, or by capacity or other performance-related features that justify 
a different standard. (42 U.S.C. 6295(q)) In making a determination 
whether capacity or another performance-related feature justifies a 
different standard, DOE must consider such factors as the utility of 
the feature to the consumer and other factors DOE deems appropriate. 
Id.
    For DHE, the current energy conservation standards specified in 10 
CFR 430.32(i)(2) are based on 11 product classes divided by equipment 
type (i.e., wall, floor, or room), heat circulation type (i.e., fan or 
gravity), and input capacity. Table II.1 lists the current product 
classes for DHE.

      Table II.1--Current Direct Heating Equipment Product Classes
------------------------------------------------------------------------
      DHE type         Heat circulation type       Input rate, Btu/h
------------------------------------------------------------------------
Wall...............  Fan.....................  <=42,000.
                                               >42,000.
                     Gravity.................  <=27,000.
                                               >27,000 and <=46,000.
                                               >46,000.
Floor..............  All.....................  <=37,000.
                                               >37,000.
Room...............  All.....................  <=20,000.
                                               >20,000 and <=27,000.
                                               >27,000 and <=46,000.
                                               >46,000.
------------------------------------------------------------------------

    Issue B.1 DOE requests feedback on the current DHE product classes 
and whether changes to these individual product classes and their 
descriptions should be made or whether certain classes should be merged 
or separated. DOE further requests feedback on whether combining 
certain classes could impact product utility by eliminating any 
performance-related features or impact the stringency of the current 
energy conservation standard for these products. DOE also requests 
comment on separating any of the existing product classes and whether 
it would impact product utility by eliminating any performance-related

[[Page 6099]]

features or reduce any compliance burdens.
    Issue B.2 DOE seeks information regarding any other new product 
classes it should consider for inclusion in its analysis. Specifically, 
DOE requests information on the performance-related features (e.g., 
input capacity, equipment type, heater type, etc.) that provide unique 
consumer utility and data detailing the corresponding impacts on energy 
use that would justify separate product classes (i.e., explanation for 
why the presence of these performance-related features would increase 
energy consumption).
2. Technology Assessment
    In analyzing the feasibility of potential new or amended energy 
conservation standards, DOE uses information about existing and past 
technology options and prototype designs to help identify technologies 
that manufacturers could use to meet and/or exceed a given set of 
energy conservation standards under consideration. In consultation with 
interested parties, DOE intends to develop a list of technologies to 
consider in its analysis. That analysis will likely include a number of 
the technology options DOE previously considered during its most recent 
rulemaking for DHE. A complete list of those prior options appears in 
Table II.2. DOE has conducted a preliminary review and did not identify 
any new options.
---------------------------------------------------------------------------

    \4\ See chapter 3, section 3.3.2.2 in the April 2010 final rule 
technical support document (TSD) published during the rulemaking 
process, document #149 on https://regulations.gov in docket ID EERE-
2006-STD-0129.

 Table II.2--Previously Considered Technology Options for Direct Heating
     Equipment From the April 2010 Final Rule and October 2016 Final
                            Determination \4\
------------------------------------------------------------------------
                           Technology options
-------------------------------------------------------------------------
Increased heat exchanger surface area
Multiple flues
Multiple turns in flue
Direct vent (concentric)
Increased heat transfer coefficient
Electronic ignition
Thermal vent damper
Electrical vent damper
Power burner
Induced draft
Two-stage and modulating operation
Improved fan or blower motor efficiency
Increased insulation
Condensing
Condensing Pulse Combustion
Air circulation fan
Sealed combustion
------------------------------------------------------------------------

    Issue B.3 DOE seeks information on the technologies listed in Table 
II.2 regarding their applicability to the current market and how these 
technologies may impact the efficiency of DHE as measured according to 
the DOE test procedure. DOE also seeks information on how these 
technologies may have changed since they were considered in the October 
2016 Final Determination analysis. Specifically, DOE seeks information 
on the range of efficiencies or performance characteristics that are 
currently available for each technology option.
    Issue B.4 DOE seeks comment on other technology options that it 
should consider for inclusion in its analysis. DOE is particularly 
interested in information for any potential new technology options 
regarding their market adoption, costs, and any concerns with 
incorporating them into products (e.g., impacts on consumer utility, 
potential safety concerns, manufacturing/production/implementation 
issues).

C. Screening Analysis

    The purpose of the screening analysis is to evaluate the 
technologies that improve equipment efficiency to determine which 
technologies will be eliminated from further consideration and which 
will be passed to the engineering analysis for further consideration.
    DOE determines whether to eliminate certain technology options from 
further consideration based on the following criteria:
    (1) Technological feasibility. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    (2) Practicability to manufacture, install, and service. If it is 
determined that mass production of a technology in commercial products 
and reliable installation and servicing of the technology could not be 
achieved on the scale necessary to serve the relevant market at the 
time of the compliance date of the standard, then that technology will 
not be considered further.
    (3) Impacts on equipment utility or equipment availability. If a 
technology is determined to have significant adverse impact on the 
utility of the equipment for significant subgroups of consumers, or 
result in the unavailability of any covered equipment type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as equipment 
generally available in the United States at the time, it will not be 
considered further.
    (4) Adverse impacts on health or safety. If it is determined that a 
technology will have significant adverse impacts on health or safety, 
it will not be considered further.

10 CFR part 430, subpart C, appendix A, sections 4(a)(4) and 5(b).

    Technology options identified in the technology assessment are 
evaluated against these criteria using DOE analyses and inputs from 
interested parties (e.g., manufacturers, trade organizations, and 
energy efficiency advocates). Technologies that pass through the 
screening analysis are referred to as ``design options'' in the 
engineering analysis. Technology options that fail to meet one or more 
of the four criteria are eliminated from consideration.
    Additionally, DOE notes that the four screening criteria do not 
directly address the proprietary status of technology options. DOE only 
considers potential efficiency levels achieved through the use of 
proprietary designs in the engineering analysis if they are not part of 
a unique pathway to achieve the efficiency level (i.e., if there are 
other non-proprietary technologies capable of achieving the same 
efficiency level).
    Table II.3 summarizes the technology options that DOE screened out 
in the April 2010 final rule, and the applicable screening criteria.

[[Page 6100]]



            Table II.3--Previously Screened Out Technology Options From the April 2010 Final Rule \5\
----------------------------------------------------------------------------------------------------------------
                                                    EPCA Criteria (X = basis for screening out)
                                 -------------------------------------------------------------------------------
                                                       Practicability to
   Screened technology option        Technological       manufacture,      Adverse impact on  Adverse impacts on
                                      feasibility        install, and       product utility    health and safety
                                                            service
----------------------------------------------------------------------------------------------------------------
Increased heat transfer           ..................                  X
 coefficient....................
Power burner....................  ..................                  X
Condensing Pulse Combustion.....                  X
Improved fan or blower motor      ..................                  X
 efficiency.....................
----------------------------------------------------------------------------------------------------------------

    Issue C.1 DOE requests feedback on what impact, if any, the 
screening criteria described in this section would have on each of the 
technology options listed in Table II.2 with respect to DHE. Similarly, 
DOE seeks information regarding how these same criteria would affect 
any other technology options not already identified in this document 
with respect to their potential use in DHE.
---------------------------------------------------------------------------

    \5\ See chapter 4, section 4.2.2 in the April 2010 final rule 
TSD published during the rulemaking process, document #149 on 
https://regulations.gov in docket ID EERE-2006-STD-0129.
---------------------------------------------------------------------------

    Issue C.2 With respect to the screened out technology options 
listed in Table II.3, DOE seeks information on whether these options 
should, based on current and projected assessments regarding each of 
them, remain screened out under the screening criteria described in 
this section. With respect to each of these technology options, what 
steps, if any, could be (or have already been) taken to facilitate the 
introduction of each option as a means to improve the energy 
performance of DHE?

D. Engineering Analysis

    The engineering analysis estimates the cost-efficiency relationship 
of products at different levels of increased energy efficiency 
(``efficiency levels''). This relationship serves as the basis for the 
cost-benefit calculations for consumers, manufacturers, and the Nation. 
In determining the cost-efficiency relationship, DOE estimates the 
change in manufacturer production cost (``MPC'') associated with 
increasing the efficiency of products above the baseline, up to the 
maximum technologically feasible (``max-tech'') efficiency level for 
each product class.
    DOE historically has used the following three methodologies to 
generate incremental manufacturing costs and establish efficiency 
levels (``ELs'') for analysis: (1) The design-option approach, which 
provides the incremental costs of adding to a baseline model design 
options that will improve its efficiency; (2) the efficiency-level 
approach, which provides the relative costs of achieving increases in 
energy efficiency levels, without regard to the particular design 
options used to achieve such increases; and (3) the cost-assessment (or 
reverse engineering) approach, which provides ``bottom-up'' 
manufacturing cost assessments for achieving various levels of 
increased efficiency, based on detailed cost data for parts and 
material, labor, shipping/packaging, and investment for models that 
operate at particular efficiency levels.
    In the analysis for the April 2010 final rule, DOE analyzed four 
product classes that were representative of the 11 total classes. 
Specifically, for each type of DHE (i.e., wall fan, wall gravity, 
floor, room), DOE selected one ``representative'' input range for 
analysis and applied that analysis across all other input rate ranges 
for the given type of DHE. DOE developed a cost-efficiency relationship 
for each of these analyzed representative product classes that were 
used as the input for the downstream analyses conducted in support of 
that rulemaking. See chapter 5 of the April 2010 final rule TSD for the 
cost-efficiency curves developed in that rulemaking.
    Issue D.1 DOE requests comment on whether it is necessary to 
individually analyze all 11 product classes, or whether the approach of 
analyzing a representative sub-set of product classes is appropriate 
for any potential future DHE energy conservation standards rulemaking. 
For example, analysis on the gas wall fan less than or equal to 42,000 
Btu/h product classes may not be necessary if the analysis on the 
corresponding gas wall fan greater than 42,000 Btu/h product classes is 
applicable to both product classes. Additionally, DOE welcomes comment 
on potential approaches to apply the analyzed representative product 
class results to the other product classes, including the approach used 
for the April 2010 final rule. If it is necessary to individually 
analyze each of the 11 product classes (or more than the 11 classes), 
please provide information on why aggregating certain products is not 
appropriate. If this approach is not appropriate, what alternative 
approaches should DOE consider using and why? \6\
---------------------------------------------------------------------------

    \6\ See chapter 5, section 5.3 in the April 2010 final rule TSD 
published during the rulemaking process, document #149 on https://regulations.gov in docket ID EERE-2006-STD-0129.
---------------------------------------------------------------------------

1. Baseline Efficiency Levels
    For each product class that is analyzed, DOE selects a baseline 
model as a reference point against which any changes resulting from new 
or amended energy conservation standards can be measured. The baseline 
model in each product class represents the characteristics of common or 
typical products in that class. Typically, a baseline model is one that 
just meets the current minimum energy conservation standards and 
provides basic consumer utility.
    DOE uses baseline models for comparison in several phases of the 
analyses, including the engineering analysis, life-cycle cost (``LCC'') 
analysis, payback period (``PBP'') analysis, and national impact 
analysis (``NIA''). In the engineering analysis, to determine the 
changes in price to the consumer that result from amended standards, 
DOE compares the price of a baseline model to the price of a model at 
each higher efficiency level.
    If it determines that a rulemaking is necessary, consistent with 
this analytical approach, DOE tentatively plans to consider the current 
minimum energy conservations standards (which went into effect April 
16, 2013) to establish the baseline efficiency levels for each product 
class. The current standards for each product class are based on DHE 
type (wall, floor, or room), heat circulation type (fan or gravity), 
and input capacity. The current standards for DHE are found at 10 CFR 
430.32(i)(2).
    Issue D.2 DOE requests feedback on whether using the current 
established energy conservation standards for DHE are appropriate 
baseline efficiency levels for DOE to apply to each product class in 
evaluating whether to amend

[[Page 6101]]

the current energy conservation standards for these products. DOE 
requests data and suggestions to evaluate the baseline efficiency 
levels in order to better evaluate the potential for amending energy 
conservation standards for these products.
    Issue D.3 DOE requests feedback on the appropriate baseline 
efficiency levels for any newly analyzed product classes that are not 
currently in place or for any contemplated combined or separated 
product classes, as discussed in section II.B.1 of this document. For 
product classes that would be newly analyzed (if any), DOE requests 
energy use data to develop a baseline relationship between energy use 
and input capacity.
2. Maximum Available and Maximum Technologically Feasible Levels
    As part of DOE's analysis when considering potential amended 
standards, DOE determines the maximum available efficiency level and 
the maximum technologically feasible (``max-tech'') efficiency level 
for each product class analyzed. The maximum available efficiency level 
is the highest-efficiency model currently available on the market for 
that class. The max-tech efficiency level represents the theoretical 
maximum possible efficiency if all available design options are 
incorporated in a model. In some cases, models at the max-tech 
efficiency level are not commercially available because, although the 
level is technically achievable, manufacturers have determined that it 
is not economically feasible (either for the manufacturer to produce or 
for consumers to purchase). However, DOE seeks to determine the max-
tech level for purposes of its analyses. The current maximum available 
efficiencies for the 11 existing product classes are included in Table 
II.4, along with the maximum available efficiencies from the April 2010 
final rule and the October 2016 final determination.

                Table II.4--Maximum Available Efficiency Levels--Current and Previous Rulemakings
----------------------------------------------------------------------------------------------------------------
                                                                                       AFUE
                               Heat circulation  Input rate, Btu/-----------------------------------------------
           DHE type                  type               h                          October 2016
                                                                   April 2010 *         **          Current ***
----------------------------------------------------------------------------------------------------------------
Wall.........................  Fan.............  <=42,000.......              83              92              93
                                                 >42,000........     [dagger] 80              80              80
                               Gravity.........  <=27,000.......              80              80              72
                                                 >27,000 and         [dagger] 69              69              69
                                                  <=46,000.
                                                 >46,000........              69              70              70
Floor........................  All.............  <=37,000.......              57              57              57
                                                 >37,000........     [dagger] 58              58              58
Room.........................  All.............  <=20,000.......              59              71              71
                                                 >20,000 and                  63              66              66
                                                  <=27,000.
                                                 >27,000 and         [dagger] 81              68              68
                                                  <=46,000.
                                                 >46,000........              70              70              70
----------------------------------------------------------------------------------------------------------------
* Gas Appliance Manufacturers Associated Directory for Direct Heating Equipment downloaded March 2, 2009.
** Combination of Air-Conditioning, Heating, & Refrigeration Institute (AHRI) and DOE's Compliance Certification
  Management System (CCMS) databases downloaded on July 16, 2015.
*** Combination of AHRI and CCMS databases download on September 10, 2018.
[dagger] Representative product classes analyzed in the April 2010 final rule.

    In the April 2010 final rule, DOE determined max-tech efficiency 
levels using the technology options available at that time. For gas 
wall fan DHE with an input rate over 42,000 Btu/h, DOE identified a 
max-tech efficiency level design with induced draft combustion, 
resulting in an AFUE of 80 percent. For gas wall gravity DHE with an 
input rate over 27,000 Btu/h and up to 46,000 Btu/h, DOE identified 70 
percent AFUE as a theoretical max-tech level, which was achievable with 
an improved heat exchanger design and electronic ignition. For gas 
floor DHE with an input rate over 37,000 Btu/h, DOE identified the max-
tech efficiency level as 58 percent AFUE, which DOE stated could be 
reached using an improved heat exchanger design. For gas room DHE with 
an input rate over 27,000 Btu/h and up to 46,000 Btu/h, DOE identified 
a theoretical max-tech efficiency level of 83 percent AFUE, which 
manufacturers could achieve using an electronic ignition and improved 
heat exchanger. 75 FR 20112, 20145-20146 (April 16, 2010).
    In the October 2016 final determination, DOE noted that condensing 
gas wall fan DHE models with input rates at or below 42,000 Btu/h had 
become available, and DOE considered this the max-tech level for gas 
wall fan DHE. Based on information obtained during manufacturer 
interviews and a manufacturer production cost found through a teardown 
analysis performed for the proposed determination (81 FR 21276, 21280 
(April 11, 2016)), DOE determined that condensing technology was not 
economically justified for gas wall fan DHE at that time. 81 FR 71325, 
71328 (Oct. 17, 2016). During manufacturer interviews conducted leading 
up to the proposed determination, manufacturers indicated that 
condensing models are significantly more expensive to produce than non-
condensing models, which DOE confirmed through its teardown analysis, 
which showed a 23 percent manufacturing cost increase for condensing 
units. Manufacturers also indicated that shipments were so low as to be 
negligible, and DOE noted that only one manufacturer produced a 
condensing gas wall fan DHE at that time. DOE stated in the final 
determination that manufacturers would need to make substantial 
investments in order to produce these units on a scale large enough to 
support a Federal minimum standard and that severe manufacturer impacts 
would be expected if an energy conservation standard were adopted at a 
level met through use of condensing technology. Therefore, DOE 
concluded the condensing technology option would not be economically 
justified at that time when analyzed for the Nation as a whole. Id. In 
DOE's preliminary research for this RFI, it found that 2 out of the 4 
manufacturers of gas wall fan DHE currently make products incorporating 
condensing technology.
    Issue D.4 DOE seeks input on whether the maximum available

[[Page 6102]]

efficiency levels are appropriate and technologically feasible for 
consideration as possible energy conservation standards for the 
products at issue, and if not, why not. DOE also seeks input on whether 
other maximum efficiency levels are possible with technologies, or 
combinations of technologies, not currently incorporated in available 
designs.
    Issue D.5 DOE seeks feedback on what design options would be 
incorporated at a max-tech efficiency level, and the efficiencies 
associated with those levels. As part of this request, DOE also seeks 
information as to whether there are limitations on the use of certain 
combinations of design options.
3. Manufacturer Production Costs and Manufacturing Selling Price
    As described at the beginning of this section, the main outputs of 
the engineering analysis are cost-efficiency relationships that 
describe the estimated increases in manufacturer production cost (MPC) 
associated with higher-efficiency products for the analyzed product 
classes. For the April 2010 final rule, DOE developed the cost-
efficiency relationships by estimating the efficiency improvements and 
costs associated with incorporating specific design options into the 
assumed baseline model for each analyzed product class. 75 FR 20112, 
20147-20149 (April 16, 2010).
    Issue D.6 DOE requests feedback on how manufacturers would 
incorporate the technology options listed in Table II.2 to increase 
energy efficiency in DHE beyond the baseline. This includes information 
on the order in which manufacturers would incorporate the different 
technologies to incrementally improve the efficiencies of products. DOE 
also requests feedback on whether the increased energy efficiency would 
lead to other design changes that would not occur otherwise. DOE is 
also interested in information regarding any potential impact of design 
options on a manufacturer's ability to incorporate additional functions 
or attributes in response to consumer demand.
    Issue D.7 DOE also seeks input on the change in MPC associated with 
incorporating each particular design option. Specifically, DOE is 
interested in whether and how the costs estimated for design options in 
the April 2010 final rule have changed since the time of that analysis. 
DOE also requests information on the investments necessary to 
incorporate specific design options, including, but not limited to, 
costs related to new or modified tooling (if any), materials, 
engineering, and development efforts to implement each design option, 
and manufacturing/production impacts.
    Issue D.8 DOE requests comment on whether certain design options 
may not be applicable to (or incompatible with) specific product 
classes.
    To account for manufacturers' non-production costs and profit 
margin, DOE applies a non-production cost multiplier (the manufacturer 
mark-up) to the MPC. The resulting manufacturer selling price (``MSP'') 
is the price at which the manufacturer distributes a unit into 
commerce. For the April 2010 final rule, DOE used a manufacturer mark-
up of 1.35 for all DHE. See chapter 5 of the April 2010 final rule TSD.
    Issue D.9 DOE requests feedback on whether a manufacturer mark-up 
of 1.35 is appropriate for all DHE.

E. Mark-Up Analysis

    The mark-ups analysis develops appropriate mark-ups (e.g., for 
wholesalers, mechanical contractors, general contractors) in the 
distribution chain (i.e., how the products are distributed from the 
manufacturer to the consumer) and sales taxes to convert the 
manufacturer sales prices (``MSP'') derived in the engineering analysis 
to consumer prices, which are then used in the LCC and PBP analyses and 
other analyses. At each step in the distribution channel, companies 
mark up the price of the equipment to cover business costs and profit 
margin.
1. Distribution Channels
    In generating end-user price inputs for the LCC analysis and NIA, 
DOE must identify distribution channels (i.e., how the products are 
distributed from the manufacturer to the consumer) and estimate 
relative sales volumes through each channel. Two different markets 
exist for DHE: (1) Replacements and new owners,\7\ and (2) new 
construction. DOE intends to use similar distribution channels in its 
analysis as found in the April 2010 final rule. DHE is mainly a 
replacement product.\8\ For replacement and new owner applications, 
most sales go through distributors to contractors, and then to 
consumers as follows:
---------------------------------------------------------------------------

    \7\ New owners are defined as existing buildings that acquire a 
DHE for the first time during the analysis period. An example of new 
owner for DHE would be someone with an addition to an existing house 
where it would not be feasible to extend the house's primary heating 
system to the new space.
    \8\ The Air-Conditioning, Heating, and Refrigeration Institute 
(AHRI) stated that less than 5 percent of DHE sales are for new 
construction projects. AHRI, Comment #7 for RFI for Energy 
Conservation Standards for Energy Conservation Standards for Direct 
Heating Equipment and Pool Heaters (April 27, 2015) (Available at: 
https://www.regulations.gov/document?D=EERE-2015-BT-STD-0003-0007) 
(Last accessed Oct. 2, 2018).

Manufacturer [rarr] Wholesaler [rarr] Mechanical Contractor [rarr] 
---------------------------------------------------------------------------
Consumer

    In new home applications, most sales go through distributors to 
contractors hired by the builder as follows:

Manufacturer [rarr] Wholesaler [rarr] Mechanical Contractor [rarr] 
General Contractor [rarr] Consumer

    Issue E.1 DOE requests information on the existence of any 
distribution channels that are used to distribute the products at issue 
into the market. DOE also requests data on the fraction of DHE sales in 
the residential sector that go through any identified channels.
2. Mark-Ups
    To develop mark-ups for the parties involved in the distribution of 
the equipment, DOE plans to primarily utilize: (1) The Heating, Air 
Conditioning & Refrigeration Distributors International (``HARDI'') 
2013 Profit Report \9\ (for wholesalers) and 3. U.S. Census Bureau 2012 
Economic Census data \10\ on the residential building construction 
industry (for general contractors and mechanical contractors). DOE also 
plans to use the 2005 Air Conditioning Contractors of America's 
(``ACCA'') Financial Analysis on the Heating, Ventilation, Air-
Conditioning, and Refrigeration (``HVACR'') contracting industry \11\ 
to disaggregate the mechanical contractor mark-ups into replacement and 
new construction markets. DOE will also consider updates to any of 
these materials that may publish during DOE's evaluation.
---------------------------------------------------------------------------

    \9\ Heating, Air Conditioning & Refrigeration Distributors 
International (HARDI), 2013 HARDI Profit Report (Available at: 
http://hardinet.org/) (Last accessed Oct. 2, 2018).
    \10\ U.S. Census Bureau, 2012 Economic Census Data (Available 
at: http://www.census.gov/econ/) (Last accessed Sept. 12, 2018).
    \11\ Air Conditioning Contractors of America (ACCA), Financial 
Analysis for the HVACR Contracting Industry (2005) (Available at: 
http://www.acca.org/store/) (Last accessed Oct. 2, 2018).
---------------------------------------------------------------------------

    In addition to the mark-ups, DOE will derive State and local taxes 
from data provided by the Sales Tax Clearinghouse.\12\ These data 
represent weighted-average taxes that include county and city rates. 
DOE will derive shipment-weighted-average tax values for each region 
considered in the analysis.
---------------------------------------------------------------------------

    \12\ Sales Tax Clearinghouse Inc., State Sales Tax Rates Along 
with Combined Average City and County Rates. 2018 (Available at; 
http://thestc.com/STrates.stm) (Last accessed Oct. 2, 2018).
---------------------------------------------------------------------------

    Issue E.2 DOE requests recent data and recommendations regarding 
data sources to establish the mark-ups for the

[[Page 6103]]

parties involved with the distribution of DHE.

F. Energy Use Analysis

    DOE conducts an energy use analysis to identify how products are 
used by consumers, and thereby determine the energy savings potential 
of energy efficiency improvements. DOE uses the annual energy 
consumption and energy-savings potential in the LCC and PBP analysis to 
establish the operating costs savings at various product efficiency 
levels. DOE will estimate the annual energy consumption of direct 
heating equipment at specified energy efficiency levels across a range 
of applications, household types, and climate zones. The annual energy 
consumption includes use of natural gas, liquefied petroleum gas (LPG 
(i.e., propane)), and electricity.
1. Sample Development
    DOE intends to base the energy use analysis on key characteristics 
from the Energy Information Administration's (``EIA'') 2015 Residential 
Energy Consumption Survey (``RECS'') \13\ for the subset of residential 
buildings that use DHEs. DOE also plans to include in its analysis DHE 
used in the commercial sector using EIA's 2012 Commercial Building 
Energy Consumption Survey (``CBECS'').\14\
---------------------------------------------------------------------------

    \13\ Energy Information Administration (EIA), 2015 Residential 
Energy Consumption Survey (RECS) (Available at: https://www.eia.gov/consumption/residential/) (Last accessed Oct. 2, 2018).
    \14\ Energy Information Administration (EIA), 2012 Commercial 
Building Energy Consumption Survey (CBECS) (Available at: http://www.eia.gov/consumption/commercial/) (Last accessed Oct. 2, 2018).
---------------------------------------------------------------------------

    RECS and CBECS data include information on the DHE type, physical 
characteristics of buildings, fuels used, energy consumption and 
expenditures, and other relevant characteristics.\15\ Based on RECS 
2015 and CBECS 2012 data, DOE will develop a representative population 
of buildings for DHE. In addition, DOE intends to review other data 
sets (e.g., data from the 2016 Residential Building Stock Assessment 
for the Northwest,\16\ 2014 Commercial Building Stock Assessment for 
the Northwest,\17\ 2015 Residential Statewide Baseline Study of New 
York State,\18\ 2006 California Commercial End-Use Survey,\19\ and 2009 
Residential Appliance Saturation Study \20\) to compare these to the 
RECS 2015 and CBECS 2012 data for the corresponding region.
---------------------------------------------------------------------------

    \15\ From RECS 2015, DOE intends to use households listed as 
using primary gas heating equipment from ``built-in room heater 
burning gas, oil, or kerosene'' (138 home sample is estimated to 
represent 2.8 million homes in 2015) and ``built-in floor/wall 
pipeless furnace'' (41 home sample is estimated to represent 0.8 
million homes in 2015) and as secondary gas heating equipment from 
``some other equipment'' (221 home sample is estimated to represent 
4.2 million homes in 2015).
    \16\ Northwest Energy Efficiency Alliance (NEEA), Residential 
Building Stock Assessment (2016) (Available at: https://dev.neea.org/data/residential-building-stock-assessment) (Last 
accessed Oct. 2, 2018).
    \17\ Northwest Energy Efficiency Alliance (NEEA), Commercial 
Building Stock Assessment (2014) (Available at: https://dev.neea.org/data/commercial-building-stock-assessments) (Last 
accessed Oct. 2, 2018).
    \18\ New York State Energy Research and Development Authority 
(NYSERDA), Residential Statewide Baseline Study of New York State 
(July 2015) (Available at: https://www.nyserda.ny.gov/About/Publications/Building-Stock-and-Potential-Studies/Residential-Statewide-Baseline-Study-of-New-York-State) (Last accessed Oct. 2, 
2018).
    \19\ California Energy Commission (CEC), 2006 California 
Commercial End-Use Survey (2006) (Available at: http://www.energy.ca.gov/ceus/2006_enduse.html) (Last accessed Oct. 2, 
2018).
    \20\ California Energy Commission (CEC), 2009 Residential 
Appliance Saturation Study (RASS) (2009) (Available at: http://www.energy.ca.gov/appliances/rass/) (Last accessed Oct. 2, 2018).
---------------------------------------------------------------------------

    Issue F.1 DOE requests comment on the overall method to determine 
the building sample for direct heating equipment and whether other 
factors should be considered in developing the building sample. In 
addition, DOE requests information on the installation applications of 
DHE, including, but not limited to the fraction of DHEs that are 
installed in residential and commercial applications, as well as how 
many DHE are typically installed per building.
2. Energy Use Calculations
    To determine the site energy consumption by the DHEs installed in 
the building, DOE intends to use a methodology based on the energy use 
equations from the DOE test procedure for DHEs (10 CFR part 430, 
subpart B, appendix O, section 4.6). For each household or building in 
the sample, DOE plans to use RECS 2015 and CBECS 2012 reported heating 
energy consumption to estimate the heating load of the housing unit or 
building.\21\ The estimation of heating loads requires data on the 
existing DHE characteristics (such as DHE type, fuel type, equipment 
size, and efficiency of the DHE). DOE intends to assign DHE 
characteristics of existing systems based on the distributions of DHE 
provided in historical versions of the AHRI model certification 
directory \22\ and any other available historical data. The estimation 
of heating loads also requires calculating the electricity consumption 
of the blower (when applicable), because heat from the blower 
contributes to heating the housing unit. A large fraction of DHE are 
used as secondary heating equipment; therefore, DOE intends to adjust 
the house heating load for households that use the direct heating 
equipment as secondary heating equipment by using the reported fraction 
of heating energy consumption attributable to secondary heating 
products in RECS 2015. To complete the analysis, DOE plans to calculate 
the energy consumption of more energy efficient DHE alternatives 
replacing the existing DHE.
---------------------------------------------------------------------------

    \21\ The heating load represents the amount of heating required 
to keep a housing unit comfortable throughout an average year.
    \22\ AHRI, Directory of Certified Product Performance for Direct 
Heating Equipment (Available at: https://www.ahridirectory.org/) 
(Last accessed Oct. 2, 2018).
---------------------------------------------------------------------------

    Issue F.2 DOE requests comment on the overall method to determine 
energy use of direct heating equipment and if other factors should be 
considered in developing the energy use methodology.

G. Life-Cycle Cost and Payback Period Analysis

    DOE plans to conduct LCC and PBP analyses to evaluate the economic 
impacts on residential and commercial consumers of potential standards 
for DHEs. The effect of new or amended standards on residential and 
commercial consumers usually involves a reduction in operating cost and 
an increase in purchase cost.
    DOE intends to analyze the potential for variability by performing 
the LCC and PBP calculations on a representative sample of residential 
and commercial consumers. DOE plans to utilize the sample of buildings 
developed for the energy use analysis. DOE plans to model uncertainty 
in many of the inputs to the LCC and PBP analysis using Monte Carlo 
simulation and probability distributions. As a result, the LCC and PBP 
results will be presented as distributions of impacts compared to the 
no-new-standards case (i.e., the case without amended standards).
    Inputs to the LCC and PBP analysis are categorized as: (1) Inputs 
for establishing the purchase expense, otherwise known as the total 
installed cost, and (2) inputs for calculating the operating costs. 
Each type of input is discussed in the paragraphs that follow.
1. Total Installed Cost
    The primary inputs for establishing the total installed cost are 
the baseline customer price, incremental customer price increases 
resulting from a potential standard, and installation costs. Baseline 
prices and standard-level price increases will be determined by 
applying mark-ups to manufacturer selling price estimates and sales 
tax.
    The installation cost is added to the customer price to arrive at a 
total

[[Page 6104]]

installed cost. DOE intends to develop installation costs using the 
most recent RS Means data available.\23\ DOE also intends to use 
regional labor costs to more accurately estimate installation costs by 
applying the appropriate regional labor cost from RS Means to each 
sampled DHE installation.
---------------------------------------------------------------------------

    \23\ RS Means, 2018 Mechanical Cost Data (Available at: https://www.rsmeans.com/products/books.aspx) (Last accessed Oct. 2, 2018).
---------------------------------------------------------------------------

    In conducting its analyses, DOE intends to utilize an installation 
cost methodology that is customized for each DHE product class. For 
DHEs in new owner installations or new construction, DOE plans to 
include costs such as adding gas piping, putting the DHE in place, and 
additional set-up. For replacement cases, in addition to the costs 
considered for new installations, DOE also plans to include the 
installation cost associated with disconnecting and removing the old 
DHE, as well as removal/disposal and permit fees, if applicable. In 
addition, DOE intends to assess whether installation costs vary with 
equipment efficiency, including design options that require a new 
electrical outlet (many existing DHE installations currently do not 
have electrical power input) or condensing DHE units that require new 
PVC venting and condensate withdrawal.
    Issue G.1 DOE seeks input on any available installation cost data 
for DHEs. DOE also seeks input on the approach it intends to use to 
develop DHE installation costs, specifically, its intention to use the 
most recent RS Means Mechanical Cost Data.
2. Operating Costs
    The primary inputs for calculating the operating costs of DHEs are 
energy consumption, equipment efficiency, energy prices, maintenance 
and repair costs, equipment lifetime, and discount rates. Both 
equipment lifetime and discount rates are used to calculate the present 
value of future operating costs.
    The product energy consumption is the site energy use associated 
with providing space heating to the room of a building. DOE intends to 
utilize the site energy use calculation methodology described in 
section II.F of this document to determine product energy use. DOE also 
plans to assess the potential applicability of the ``rebound effect'' 
in the energy consumption for DHE. A rebound effect occurs when a 
product that is made more efficient is used more intensively, so that 
the expected energy savings from the efficiency improvement may not 
fully materialize. However, at this time, DOE is not aware of any 
information about a rebound effect for DHE.
    Issue G.2 DOE seeks comments and data on any rebound effect that 
may be associated with more-efficient DHE.
    The repair cost is the expense to repair or replace components of 
the covered product that have failed. The maintenance cost is the 
expense of regular scheduled product maintenance to ensure the 
continued operation of the covered product over time. These costs cover 
all labor and material costs associated with the repair or maintenance. 
DOE intends to develop repair and maintenance costs using the most 
recent RS Means data available \24\ and manufacturer literature.
---------------------------------------------------------------------------

    \24\ RS Means, 2018 Facilities Maintenance & Repair Cost Data 
(Available at: https://www.rsmeans.com/products/books.aspx) (Last 
accessed Oct. 2, 2018).
---------------------------------------------------------------------------

    DOE intends to assess whether repair or maintenance costs vary with 
equipment efficiency and product class. In addition, DOE plans to 
consider the cases in which the equipment is covered by warranty, 
service, and/or maintenance agreements. More specifically, DOE intends 
to account for the maintenance cost associated with the manufacturer-
recommended annual maintenance prior to the heating season.
    DOE will determine the repair cost using an approach that reflects 
the cost and the service life of the components that are likely to 
fail. DOE plans to consider component repair costs that might fail 
during the lifetime of the product, including the pilot ignition, 
electronic ignition, circulating blower, and induced draft fan.
    Issue G.3 DOE requests feedback and data on whether maintenance 
costs differ in comparison to the baseline maintenance costs for any of 
the specific technology options listed in Table II.2 and Table II.3. To 
the extent that these costs differ, DOE seeks supporting data and the 
reasons for those differences.
    Issue G.4 DOE requests information and data on the frequency of 
repair and repair costs by product class for the technology options 
listed in Table II.2 and Table II.3. DOE is also interested in whether 
consumers simply replace the products when they fail as opposed to 
repairing them.
    Issue G.5 DOE also seeks comment on the extent to which repair or 
maintenance costs are covered by warranty, service, and/or maintenance 
agreements.
    Equipment lifetime is the age at which a unit is retired from 
service. DOE intends to conduct a literature review of DHE lifetime 
data together with any stakeholder lifetime data to develop a Weibull 
probability distribution to characterize DHE lifetime.\25\
---------------------------------------------------------------------------

    \25\ A Weibull probability distribution is a continuous 
distribution function typically used in reliability engineering and 
equipment failure analysis. If the data are available, DOE also 
plans to take into account differences in DHE lifetime based on 
usage and application.
---------------------------------------------------------------------------

    Issue G.6 DOE requests product lifetime data and information on 
whether product lifetime varies based on DHE product class, 
application, or efficiency.
    DOE measures LCC and PBP impacts of potential standard levels 
relative to a no-new-standards case that reflects the likely market in 
the absence of amended standards. DOE plans to develop efficiency 
market shares (i.e., the distribution of product shipments by 
efficiency) for DHEs, for the anticipated year in which compliance with 
any potential amended standards would be required. DOE is not aware of 
any shipment data to estimate the market shares of different DHE energy 
efficiency levels in the no-new-standards case. DOE is particularly 
interested in receiving such data. If no market share data become 
available, DOE intends to use data on the number of DHE models at 
different energy efficiency levels, as reported in DOE's compliance 
certification database,\26\ historical versions of the AHRI model 
certification directory,\27\ and from manufacturer literature.
---------------------------------------------------------------------------

    \26\ U.S. Department of Energy, Compliance Certification 
Database: Unfired Hot Water Storage Tanks--Commercial (Available at: 
https://www.regulations.doe.gov/certification-data/products.html) 
(Last accessed Oct. 2, 2018).
    \27\ AHRI, Directory of Certified Product Performance for Direct 
Heating Equipment (Available at: https://www.ahridirectory.org/) 
(Last accessed Oct. 2, 2018).
---------------------------------------------------------------------------

    Issue G.7 DOE requests information on the DHE market, including but 
not limited to, the current market share by different efficiency level 
and by product class, similar historical data, and information on 
expected future trends in the efficiency of DHEs.

H. Shipments Analysis

    DOE develops shipments forecasts of DHE to calculate the national 
impacts of potential amended energy conservation standards on energy 
consumption, net present value (``NPV''), and future manufacturer cash 
flows. DOE shipments projections are based on available historical data 
broken out by product class, input capacity, and efficiency. Current 
sales estimates allow for a more accurate model that captures recent 
trends in the market. From the April 2010 final rule, DOE has DHE 
historical shipment data from AHRI for

[[Page 6105]]

wall furnaces from 1990 to 1998 and from 2000 to 2006, for floor 
furnaces from 1990 to 2007, and for room heaters from 1990 to 2005.\28 
29\ DOE has limited disaggregated shipments for fan and gravity wall 
furnaces and by input capacity.\30\
---------------------------------------------------------------------------

    \28\ AHRI, AHRI Shipments Data, March 3, 2008. (Note: 1990-2006 
Wall furnaces data disaggregated by vented wall furnaces and direct-
vent wall furnaces).
    \29\ AHRI, AHRI Floor Furnace Supplemental Shipments Data, March 
11, 2008.
    \30\ AHRI, AHRI Wall Furnace Supplemental Shipments Data, May 
19, 2008. (Note: 2002-2006 shipments for wall gravity furnace over 
27 to 46 kBtu/h and wall fan furnace above over 42 kBtu/h only).
---------------------------------------------------------------------------

    Issue H.1 DOE requests annual sales data (i.e., number of 
shipments) for each DHE product class from 2008-2018.
    An example table of the types of data requested for 2008-2018 
shipments can be found in Table II.5. Interested parties are also 
encouraged to provide additional shipment data as may be relevant 
including data before 2008.

                                                                  Table II.5--Summary Table of Shipments--Related Data Requests
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                 Annual shipments (number sold)
             Equipment type                Heat circulation type        Input rate, Btu/h     --------------------------------------------------------------------------------------------------
                                                                                                 2008     2009     2010     2011     2012     2013     2014     2015     2016     2017     2018
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Wall...................................  Fan......................  <=42,000.................
                                                                    >42,000..................
                                         Gravity..................  <=27,000.................
                                                                    >27,000 and <=46,000.....
                                                                    >46,000..................
Floor..................................  All......................  <=37,000.................
                                                                    >37,000..................
Room...................................  All......................  <=20,000.................
                                                                    >20,000 and <=27,000.....
                                                                    >27,000 and <=46,000.....
                                                                    >46,000..................
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    If disaggregated fractions of annual sales are not available at the 
product type level, DOE requests more aggregated fractions of annual 
shipments at the category level.
    Issue H.2 If available, DOE requests the same information in Table 
II.5 by efficiency.

I. Manufacturer Impact Analysis

    The purpose of the manufacturer impact analysis (``MIA'') is to 
estimate the financial impact of new or amended energy conservation 
standards on manufacturers of DHE, and to evaluate the potential impact 
of such standards on direct employment and manufacturing capacity. The 
MIA includes both quantitative and qualitative aspects. The 
quantitative part of the MIA primarily relies on the Government 
Regulatory Impact Model (``GRIM''), an industry cash-flow model adapted 
for each product in this analysis, with the key output being the 
industry net present value (``INPV''), which is used to assess the 
financial impacts of a potential standard. The qualitative part of the 
MIA addresses the potential impacts of energy conservation standards on 
manufacturing capacity and industry competition, as well as factors 
such as product characteristics, impacts on particular subgroups of 
firms, and important market and product trends.
    As part of the MIA, DOE intends to analyze impacts of potential 
amended energy conservation standards on subgroups of manufacturers of 
covered products, including small business manufacturers. DOE uses the 
Small Business Administration's (``SBA'') small business size standards 
to determine whether manufacturers qualify as small businesses, which 
are listed by the applicable North American Industry Classification 
System (``NAICS'') code.\31\ Manufacturing of consumer DHE is 
classified under NAICS 333414, ``Heating Equipment (except Warm Air 
Furnaces) Manufacturing,'' and the SBA sets a threshold of 500 
employees or less for a domestic entity to be considered as a small 
business. This employee threshold includes all employees in a 
business's parent company and any other subsidiaries.
---------------------------------------------------------------------------

    \31\ Available online at: http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf.
---------------------------------------------------------------------------

    One aspect of assessing manufacturer burden involves examining the 
cumulative impact of multiple DOE standards and the product-specific 
regulatory actions of other Federal agencies that affect the 
manufacturers of a covered product or equipment. While any one 
regulation may not impose a significant burden on manufacturers, the 
combined effects of several existing or impending regulations may have 
serious consequences for some manufacturers, groups of manufacturers, 
or an entire industry. Assessing the impact of a single regulation may 
overlook this cumulative regulatory burden. In addition to energy 
conservation standards, other regulations can significantly affect 
manufacturers' financial operations. Multiple regulations affecting the 
same manufacturer can strain profits and lead companies to abandon 
product lines or markets with lower expected future returns than 
competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    Issue I.1 To the extent feasible, DOE seeks the names and contact 
information of any domestic or foreign-based manufacturers that 
distribute DHE in the United States.
    Issue I.2 DOE identified small businesses as a subgroup of 
manufacturers that could be disproportionally impacted by amended 
energy conservation standards. DOE requests the names and contact 
information of small business manufacturers, as defined by the SBA's 
size threshold, that distribute DHE products in commerce in the United 
States. In addition, DOE requests comment on any other manufacturer 
subgroups that could be disproportionally impacted by amended energy 
conservation standards for DHE. DOE requests feedback on any potential 
approaches that could be considered to address impacts on 
manufacturers, including small businesses.

[[Page 6106]]

    Issue I.3 DOE requests information regarding the cumulative 
regulatory burden impacts on manufacturers of DHE associated with: (1) 
Other DOE standards applying to different products that these 
manufacturers may also make and (2) product-specific regulatory actions 
of other Federal agencies. DOE also requests comment on its methodology 
for computing cumulative regulatory burden and whether there are any 
flexibilities it can consider that would reduce this burden while 
remaining consistent with the requirements of EPCA.

J. Other Energy Conservation Standards Topics

1. Market Failures
    In the field of economics, a market failure is a situation in which 
the market outcome does not maximize societal welfare. Such an outcome 
would result in unrealized potential welfare. DOE welcomes comment on 
any aspect of market failures, especially those in the context of 
amended energy conservation standards for DHE.
2. Market-Based Approaches to Energy Conservation Standards
    As part of its regulatory reform efforts, DOE published a request 
for information discussing key issues and requesting feedback on 
market-based approaches to energy conservation standards. 82 FR 56181 
(Nov. 28, 2017). DOE requests comment on how market-based approaches to 
energy conservation standards might impact standards for these 
products, and specifically seeks comment on any considerations with 
respect to DHE.
    In addition to the issues identified earlier in this document, DOE 
welcomes comment on any other aspect of energy conservation standards 
for DHE not already addressed by the specific areas identified in this 
document.

III. Submission of Comments

    DOE invites all interested parties to submit in writing by April 
12, 2019, comments and information on matters addressed in this notice 
and on other matters relevant to DOE's consideration of amended energy 
conservations standards for DHE. After the close of the comment period, 
DOE will review the public comments received and may begin collecting 
data and conducting the analyses discussed in this RFI.
    Submitting comments via http://www.regulations.gov. The http://www.regulations.gov web page requires you to provide your name and 
contact information. Your contact information will be viewable to DOE 
Building Technologies Office staff only. Your contact information will 
not be publicly viewable except for your first and last names, 
organization name (if any), and submitter representative name (if any). 
If your comment is not processed properly because of technical 
difficulties, DOE will use this information to contact you. If DOE 
cannot read your comment due to technical difficulties and cannot 
contact you for clarification, DOE may not be able to consider your 
comment.
    However, your contact information will be publicly viewable if you 
include it in the comment or in any documents attached to your comment. 
Any information that you do not want to be publicly viewable should not 
be included in your comment, nor in any document attached to your 
comment. Persons viewing comments will see only first and last names, 
organization names, correspondence containing comments, and any 
documents submitted with the comments.
    Do not submit to http://www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (``CBI'')). Comments submitted 
through http://www.regulations.gov cannot be claimed as CBI. Comments 
received through the website will waive any CBI claims for the 
information submitted. For information on submitting CBI, see the 
Confidential Business Information section.
    DOE processes submissions made through http://www.regulations.gov 
before posting. Normally, comments will be posted within a few days of 
being submitted. However, if large volumes of comments are being 
processed simultaneously, your comment may not be viewable for up to 
several weeks. Please keep the comment tracking number that http://www.regulations.gov provides after you have successfully uploaded your 
comment.
    Submitting comments via email, hand delivery, or postal mail. 
Comments and documents submitted via email, hand delivery, or postal 
mail also will be posted to http://www.regulations.gov. If you do not 
want your personal contact information to be publicly viewable, do not 
include it in your comment or any accompanying documents. Instead, 
provide your contact information on a cover letter. Include your first 
and last names, email address, telephone number, and optional mailing 
address. The cover letter will not be publicly viewable as long as it 
does not include any comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via postal mail 
or hand delivery, please provide all items on a CD, if feasible, in 
which case it is not necessary to submit printed copies. No 
telefacsimilies (faxes) will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, written in English, and free of any defects or 
viruses. Documents should not contain special characters or any form of 
encryption, and, if possible, they should carry the electronic 
signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email, postal mail, or hand delivery two well-marked copies: one copy 
of the document marked ``confidential'' including all the information 
believed to be confidential, and one copy of the document marked ``non-
confidential'' with the information believed to be confidential 
deleted. Submit these documents via email or on a CD, if feasible. DOE 
will make its own determination about the confidential status of the 
information and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by or available from other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person which would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time, and (7) why 
disclosure of the information would be contrary to the public interest.

[[Page 6107]]

    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).
    DOE considers public participation to be a very important part of 
the process for developing energy conservation standards. DOE actively 
encourages the participation and interaction of the public during the 
comment period in each stage of the process. Interactions with and 
between members of the public provide a balanced discussion of the 
issues and assist DOE in the process. Anyone who wishes to be added to 
the DOE mailing list to receive future notices and information about 
this process or would like to request a public meeting should contact 
Appliance and Equipment Standards Program staff at (202) 287-1445 or 
via email at [email protected].

    Signed in Washington, DC, on February 13, 2019.
Steven Chalk,
Acting Deputy Assistant Secretary for Energy Efficiency, Energy 
Efficiency and Renewable Energy.
[FR Doc. 2019-03270 Filed 2-25-19; 8:45 am]
BILLING CODE 6450-01-P