[Federal Register Volume 84, Number 133 (Thursday, July 11, 2019)]
[Proposed Rules]
[Pages 33011-33022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14553]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 84, No. 133 / Thursday, July 11, 2019 /
Proposed Rules
[[Page 33011]]
DEPARTMENT OF ENERGY
10 CFR Parts 430 and 431
Energy Conservation Program for Appliance Standards: Energy
Conservation Standards for Residential Furnaces and Commercial Water
Heaters
AGENCY: Office of Energy Efficiency and Renewable Energy, U.S.
Department of Energy.
ACTION: Granting in part and denying in part a petition for rulemaking;
notice of proposed interpretive rule; request for comment.
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SUMMARY: This document responds to the petition for rulemaking
submitted on October 18, 2018 (Gas Industry Petition), by a number of
parties asking the Department of Energy (DOE) to issue an interpretive
rule and to withdraw related, previously published proposals. The Gas
Industry Petition was published in the Federal Register on November 1,
2018, for public review and input. After carefully considering the
public comments on the petition, DOE has decided to grant the request
for an interpretive rule. DOE has not made, and does not presently
propose, any changes or revisions to current policies, legal
requirements, or rulemakings with respect to condensing and non-
condensing products/equipment. Decisions about whether and how this
interpretation of the term ``feature'' in the context of condensing/
non-condensing products/equipment will apply to existing rulemakings
will be the subject of subsequent actions. Thus, DOE is denying the Gas
Industry Petitioners' request to withdraw its earlier proposed rules
for residential furnaces and commercial water heaters.
DATES: Written comments and information are requested on or before
September 9, 2019.
ADDRESSES: Interested persons are encouraged to submit comments,
identified by ``Energy Conservation Standards for Residential Furnaces
and Commercial Water Heaters,'' by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments.
Email: [email protected]. Include
Docket No. EERE-2018-BT-STD-0018 in the subject line of the message.
Submit electronic comments in WordPerfect, Microsoft Word, PDF, or
ASCII file format, and avoid the use of special characters or any form
of encryption.
Postal Mail: Appliance and Equipment Standards Program, U.S.
Department of Energy, Building Technologies Office, Mailstop EE-5B,
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.
Hand Delivery/Courier: Appliance and Equipment Standards Program,
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant
Plaza SW, Suite 600, 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, see
section VI of this document (Public Participation).
Docket: For access to the docket to read background documents, or
comments received, go to the Federal eRulemaking Portal at: http://www.regulations.gov/docket?D=EERE-2018-BT-STD-0018.
FOR FURTHER INFORMATION CONTACT: Ms. Sofie Miller, Senior Advisor, U.S.
Department of Energy, Office of Energy Efficiency and Renewable Energy,
1000 Independence Avenue SW, Washington, DC 20585. Telephone: (202)
586-5000. Email: [email protected].
Mr. Eris Stas, U.S. Department of Energy, Office of the General
Counsel, 1000 Independence Avenue SW, Washington, DC 20585. Telephone:
(202) 586-5827. Email: [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. Summary Description
A. Relevant Statutory Provisions
B. DOE's Historical Interpretation
C. The Gas Industry Petition
III. Response to Comments
A. Legal Authority
1. Legal Authority To Set Separate Product/Equipment Classes
Based Upon Condensing and Non-Condensing Technologies
2. Legal Authority To Set a ``Small'' Furnaces Product Class for
Mobile Home Furnaces
B. Fuel Switching
C. Analytical Issues
D. Market Trends
E. Consumer Impacts
F. Other Issues
IV. DOE's Proposed Revised Interpretation
V. Conclusion
VI. Public Participation
VII. Approval of the Office of the Secretary
I. Background
The Department sought public comments on the petition for
rulemaking submitted on October 18, 2018, by the American Public Gas
Association (APGA), Spire, Inc., the Natural Gas Supply Association
(NGSA), the American Gas Association (AGA), and the National Propane
Gas Association (NPGA), collectively referred to as the ``Gas Industry
Petitioners,'' asking DOE to: (1) Issue an interpretive rule stating
that DOE's proposed energy conservation standards for residential
furnaces and commercial water heaters would result in the
unavailability of ``performance characteristics'' within the meaning of
the Energy Policy and Conservation Act of 1975 \1\ (EPCA; 42 U.S.C.
6291 et seq.), as amended (i.e., by setting standards which can only be
met by condensing combustion technology products/equipment and thereby
precluding the distribution in commerce of non-condensing combustion
technology products/equipment) and (2) withdraw the proposed energy
conservation standards for residential furnaces \2\ and commercial
water heaters \3\ based upon
[[Page 33012]]
such findings. DOE published the petition in the Federal Register on
November 1, 2018 (83 FR 54883), which had a comment period scheduled to
close on January 30, 2019. DOE received two requests from interested
parties seeking an extension of the comment period in order to develop
additional data relevant to the petition. DOE granted those requests
through publication in the Federal Register of a document extending the
comment period on the notice of petition for rulemaking until March 1,
2019. 84 FR 449 (Jan. 29, 2019).
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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\ Standards for non-weatherized residential furnaces were
published in a notice of proposed rulemaking at 80 FR 13120 (March
12, 2015) (Docket No. EERE-2014-BT-STD-0031-0032) and in a
supplemental notice of proposed rulemaking at 81 FR 65720 (Sept. 23,
2016) (Docket No. EERE-2014-BT-STD-0031-0230).
\3\ Standards for commercial water heating equipment were
published in a notice of proposed rulemaking at 81 FR 34440 (May 31,
2016) (Docket No. EERE-2014-BT-STD-0042).
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The 90-day public comment period, including the 30-day extension to
submit comments, invited public input in order to better understand
stakeholder perspectives and increase transparency around a complex
issue involving DOE's legal authority. DOE received comments from a
variety of stakeholders, including representatives from gas industry
associations, the manufactured housing industry, efficiency advocates,
consumer advocates, State organizations and Attorneys General, and
individuals (mostly form letter comments). In general, the gas industry
associations and the manufactured housing industry supported the
petition, and the advocates and State officials opposed it.
Specifically, DOE received comment on the notice of petition from:
Air-Conditioning, Heating & Refrigeration Institute
(AHRI);
A.O. Smith Corporation (A.O. Smith);
Appliance Standards Awareness Project (ASAP)/American
Council for an Energy-Efficient Economy (ACEEE)/Alliance to Save Energy
(ASE)/Consumer Federation of America (CFA)/National Consumer Law Center
(NCLC) (ASAP et al. Joint Comment);
California Energy Commission (CEC);
Center for Efficient Living (CEL);
EarthJustice/National Resources Defense Council
(EarthJustice/NRCD Joint Comment);
Emissol LLC;
Indiana Manufactured Housing Association/Recreation
Vehicle Indiana Council (IMHA/RVIC Joint Comment);
Manufactured Housing Industry of Arizona (MHIA);
Manufactured Housing Institute (MHI);
Manufactured & Modular Home Association of Minnesota
(MMHAM);
Mississippi Manufactured Housing Association (MMHA);
Mitsubishi Electric US (Mitsubishi);
Mortex Products, Inc. (Mortex);
National Consumer Law Center/Consumer Federation of
America (NCLC/CFA Joint Comment);
National Electrical Manufacturers Association (NEMA);
National Multifamily Housing Council/National Apartment
Association/National Leased Housing Association (NMHC/NAA/NLHA Joint
Comment);
Natural Resources Defense Council (NRDC);
New Mexico Manufactured Housing Association (NMMHA);
Nortek Global HVAC (Nortek);
Northeast Energy Efficiency Partnerships (NEEP);
Northwest Energy Efficiency Alliance (NEEA);
Northwest Energy Efficiency Alliance/Northeast Energy
Efficiency Partnership/Pacific Gas and Electric/National Grid (NEEA/
NEEP/PG&E/National Grid Joint Comment);
Oliver Technologies, Inc.;
Pacific Gas and Electric Company (PG&E)/San Diego Gas and
Electric (SDG&E)/Southern California Edison (SCE) (CA IOUs Joint
Comment);
Plumbing-Heating-Cooling Contractors Association (PHCC);
Rheem Manufacturing Company (Rheem);
Southern Company;
Spire Inc./American Public Gas Association (APGA)/American
Gas Association (AGA)/National Propane Gas Association (NPGA)/Natural
Gas Supply Association (NGSA) (Gas Industry Petitioners Joint Comment);
State Attorneys General (of NY, DC, IL, ME, MA, MN, NJ,
OR, VT, and WA) and Corporation Counsel of New York City (Multi-State
AGs Joint Comment);
Suburban Propane;
Triple-T;
VEIC;
Weil-McLain;
Wisconsin Housing Alliance (WHA), and
22 individuals.
The comments were carefully and fully considered by DOE. DOE is
issuing this notice of proposed interpretive rule to provide the public
additional information about DOE's interpretation of EPCA's
``features'' provision \4\ in the context of condensing vs. non-
condensing furnaces and water heaters, as informed by public comments.
The following sections of this document set forth the relevant legal
authority, describe the Department's historical interpretation of
EPCA's ``features'' provision as applied to condensing vs. non-
condensing products/equipment, provide summary responses to significant
and recurring comments received through the public comment process, and
propose an interpretation of the relevant statutory provision.
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\4\ See 42 U.S.C. 6295(o)(4); 42 U.S.C.
6313(a)(6)(B)(iii)(II)(aa); 6316(a).
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This proposed interpretive rule does not change or revise any
current policies or legal requirements with respect to residential
furnaces and commercial water heaters. Decisions about whether and how
this interpretation will apply to existing products/equipment utilizing
condensing/non-condensing technology will be the subject of subsequent
actions.
II. Summary Description
A. Relevant Statutory Provisions
In this document, DOE explains its historical interpretation
regarding the evaluation of what constitutes a product ``feature''
which cannot be eliminated under EPCA, specifically in the context of
residential furnaces and commercial water heaters. For covered consumer
products, the key statutory provision at issue can be found at 42
U.S.C. 6295(o)(4), which provides that the Secretary may not prescribe
an amended or new standard under this section if the Secretary finds
(and publishes such finding) that interested persons have established
by a preponderance of the evidence that the standard is likely to
result in the unavailability in the United States in any covered
product type (or class) of performance characteristics (including
reliability), features, sizes, capacities, and volumes that are
substantially the same as those generally available in the United
States at the time of the Secretary's finding.
Where the Secretary finds such ``performance characteristics
(including reliability), features, sizes, capacities, and volumes''
(collectively referred to hereafter as ``features'') to exist, the
statute provides a potential remedy at 42 U.S.C. 6295(q)(1), which
provides that a rule prescribing an energy conservation standard for a
type (or class) of covered products shall specify a level of energy use
or efficiency higher or lower than that which applies (or would apply)
for such type (or class) for any group of covered products which have
the same function or intended use, if the Secretary determines that
covered products within such group--(A) consume a different kind of
energy from that consumed by other covered products within such group
(or class); or (B) have a capacity or other performance-related feature
which other products within such type (or class) do not have and such
feature justifies a higher or lower standard from that which applies
(or will apply) to other products within such type (or class). In
making a determination under 42 U.S.C. 6295(q)(1) concerning whether a
[[Page 33013]]
performance-related feature justifies the establishment of a higher or
lower standard, the Secretary shall consider such factors as the
utility to the consumer of such a feature, and such other factors as
the Secretary deems appropriate.
These provisions also apply to covered non-ASHRAE commercial and
industrial equipment through the provision at 42 U.S.C. 6316(a). (Under
the statute, ``ASHRAE equipment'' refers to small commercial package
air conditioning and heating equipment, large commercial package air
conditioning and heating equipment, very large commercial package air
conditioning and heating equipment, packaged terminal air conditioners,
packaged terminal heat pumps, warm-air furnaces, packaged boilers,
storage water heaters, instantaneous water heaters, or unfired hot
water storage tanks, which are addressed by the ASHRAE in Standard
90.1, Energy Standard for Buildings Except Low-Rise Residential
Buildings.)
ASHRAE equipment has its own separate statutory scheme under EPCA,
with the default situation being that DOE must adopt the level set
forth in ASHRAE Standard 90.1 unless the Department has clear and
convincing evidence to adopt a more-stringent standard (see 42 U.S.C.
6313(a)(6)). Under 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa), there is a
similar ``features'' provision which provides that the Secretary may
not prescribe an amended standard under the subparagraph if the
Secretary finds (and publishes the finding) that interested persons
have established by a preponderance of the evidence that a standard is
likely to result in the unavailability in the United States in any
product type (or class) of performance characteristics (including
reliability, features, sizes, capacities, and volumes) that are
substantially the same as those generally available in the United
States at the time of the finding of the Secretary. However, it is
noted that this provision contains the specific limitation that it
applies to an amended standard prescribed under this subparagraph
(i.e., when DOE is acting under its authority to set a more-stringent
standard). There is no companion ``features'' provision under 42 U.S.C.
6313(a)(6)(A), which is the provision that would apply when DOE is
adopting the levels set by ASHRAE. Congress was clearly aware of the
features issue, and it chose to act in the context of DOE standard
setting, but not ASHRAE standard setting. There is likewise no
companion provision to 42 U.S.C. 6295(q)(1) for ASHRAE equipment.
B. DOE's Historical Interpretation
With this statutory background in mind, in the March 12, 2015,
notice of proposed rulemaking (NOPR) for energy conservation standards
for residential furnaces, DOE set forth in detail its rationale for why
it did not considering the venting of non-condensing furnaces to
constitute a product ``feature'' under 42 U.S.C. 6295(o)(4). 80 FR
13120, 13137-13138.
As discussed previously, when evaluating and establishing energy
conservation standards, the statute requires DOE to divide covered
products into product classes by the type of energy used, by capacity,
or by other performance-related features that justify a different
standard. In making a determination whether a performance-related
feature justifies a different standard, DOE must consider factors such
as the utility to the consumer of the feature and other factors DOE
determines are appropriate. (42 U.S.C. 6295(q)) Historically, DOE has
viewed utility as an aspect of the product that is accessible to the
layperson and is based on user operation, rather than performing a
theoretical function. This interpretation has been implemented
consistently in DOE's previous rulemakings by determining utility
through the value the item brings to the consumer, rather than through
analyzing more complicated design features, or costs that anyone,
including the consumer, manufacturer, installer, or utility companies
may bear. DOE reasoned that this approach is consistent with EPCA
requiring a separate and extensive analysis of economic justification
for the adoption of any new or amended energy conservation standard
(see 42 U.S.C. 6295(o)(2)(A)-(B) and (3)).
Under EPCA, DOE has typically addressed consumer utility by
establishing separate product classes or otherwise taken action when a
consumer may value a product feature based on the consumer's everyday
needs. For instance, DOE has determined that it would be impermissible
under 42 U.S.C. 6295(o)(4) to include elimination of oven door windows
as a technology option to improve the energy efficiency of cooking
products.\5\ DOE reached this conclusion based upon how consumers
typically use the product: Peering through the oven window to judge if
an item is finished cooking, as opposed to checking the timer and/or
indicator light or simply opening the oven door to see if the item is
finished cooking. DOE has also determined that consumers may value
other qualities such as ability to self-clean,\6\ size,\7\ and
configuration.\8\ This determination, however, can change depending on
the technology and the consumer, and it is conceivable that certain
products may disappear from the market entirely due to shifting
consumer demand. DOE stated that it has determined such value on a
case-by-case basis through its own research, as well as public comments
received.
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\5\ 63 FR 48038, 48041 (Sept. 8, 1998).
\6\ 73 FR 62034, 62048 (Oct. 17, 2008) (separating standard
ovens and self-cleaning ovens into different product classes).
\7\ 77 FR 32307, 32319 (May 31, 2012) (creating a separate
product class for compact front-loading residential clothes
washers).
\8\ 75 FR 59469, 59487 (Sept. 27, 2010) (creating a separate
product class for refrigerators with bottom-mounted freezers).
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DOE offered a cautionary note that disparate products may have very
different consumer utilities, thereby making direct comparisons
difficult and potentially misleading. For instance, in a 2011
rulemaking, DOE created separate product classes for vented and
ventless residential clothes dryers based on DOE's recognition of the
``unique utility'' that ventless clothes dryers offer to consumers. 76
FR 22454, 22485 (April 21, 2011). This utility could be characterized
as the ability to have a clothes dryer in a living area where vents are
impossible to install (i.e., an apartment in a high-rise building). As
explained in that April 2011 direct final rule technical support
document, ventless dryers can be installed in locations where venting
dryers would be precluded due to venting restrictions.
But in another rulemaking, DOE found that water heaters that
utilize heat pump technology did not need to be put in a separate
product class from conventional types of hot water heaters that utilize
electric resistance technology, even though water heaters utilizing
heat pumps require the additional installation of a condensate drain
that a hot water heater utilizing electric resistance technology does
not require. 74 FR 65852, 65871 (Dec. 11, 2009). DOE found that
regardless of these installation factors, the heat pump water heater
and the conventional water heater still had the same utility to the
consumer: Providing hot water. Id. In both cases, DOE made its finding
based on consumer type and utility type, rather than product design
criteria that impact product efficiency. These distinctions in both the
consumer type and the utility type are important because, taken to the
extreme, each design differential could be designated a different
``product class'' and,
[[Page 33014]]
therefore, require different energy conservation standards.
DOE expressed concern that tying the concept of ``feature'' to a
specific technology would effectively lock-in the currently existing
technology as the ceiling for product efficiency and eliminate DOE's
ability to address technological advances that could yield significant
consumer benefits in the form of lower energy costs while providing the
same functionality for the consumer. DOE stated that it was very
concerned that determining features solely on product technology could
undermine the Department's Appliance Standards Program. DOE reasoned
that if it is required to maintain separate product classes to preserve
less-efficient technologies, future advancements in the energy
efficiency of covered products would become largely voluntary, an
outcome which seems inimical to Congress's purposes and goals in
enacting EPCA.
Turning to the product at issue in that rulemaking, DOE noted that
residential furnaces are currently divided into several product
classes. For example, furnaces are separated into product classes based
on their fuel source (gas, oil, or electricity), which is required by
statute. For that rulemaking, DOE analyzed only two product classes for
residential furnaces: (1) Non-weatherized gas-fired furnaces (NWGFs)
and (2) mobile home gas-fired furnaces (MHGFs). DOE did not
additionally separate NWGFs and MHGFs into condensing and noncondensing
product classes.
In that rulemaking, DOE tentatively concluded that the methods by
which a furnace is vented did not provide any separate performance-
related impacts, and, therefore, DOE had no statutory basis for
defining a separate class based on venting and drainage
characteristics. DOE reasoned that NWGF and MHGF venting methods did
not provide unique utility to consumers beyond the basic function of
providing heat, which all furnaces perform. The possibility that
installing a non-condensing furnace may be less costly than a
condensing furnace due to the difference in venting methods did not
justify separating the two types of NWGFs into different product
classes. Unlike the consumers of ventless dryers, which DOE had
determined to be a performance-related feature based on the
impossibility of venting in certain circumstances (e.g., high-rise
apartments), DOE reasoned that consumers of condensing NWGFs are
homeowners that may either use their existing venting or have a
feasible alternative to obtain heat. In other words, homeowners would
still be able to obtain heat regardless of the venting. In contrast,
DOE reasoned that a resident of a high-rise apartment or condominium
building that is not architecturally designed to accommodate vented
clothes dryers would have no option in terms of installing and enjoying
the utility of a dryer in their home unless he or she used a ventless
dryer.
As explained above, DOE's conclusion in the March 12, 2015 NOPR was
that the utility of a furnace involves providing heat to a consumer.
DOE reasoned that such utility is provided by any type of furnace, but
to the extent that a consumer has a preference for a particular fuel
type (e.g., gas), improvements in venting technology may eventually
allow a consumer to obtain the efficiency of a condensing furnace using
the existing venting in a residence by sharing venting space with water
heaters. DOE postulated that this update in technology significantly
would reduce the cost burden associated with installing condensing
furnaces and reduce potential instances of ``orphaned'' water heaters,
where the furnace and water heater can no longer share the same venting
(due to one unit being condensing and the other noncondensing). In
other words, when mature, this technology could allow consumers to
switch from a non-condensing furnace to a condensing furnace in a
greater variety of applications, such as urban row houses. For more
information, interested parties were asked to consult appendix 8L of
the NOPR TSD.
C. The Gas Industry Petition
As noted above, on October 18, 2018, DOE received a petition from
the Gas Industry Petitioners asking DOE to: (1) Issue an interpretive
rule stating that DOE's proposed energy conservation standards for
residential furnaces and commercial water heaters would result in the
unavailability of ``performance characteristics'' within the meaning of
the Energy Policy and Conservation Act of 1975, as amended (i.e., by
setting standards which can only be met by condensing combustion
technology products/equipment) and (2) withdraw the proposed energy
conservation standards for residential furnaces and commercial water
heaters based upon such findings. In their petition, the Gas Industry
Petitioners argue that DOE misinterpreted its mandate under section
325(o)(4) of EPCA by failing to consider as a ``feature'' of the
subject residential furnaces and commercial water heating equipment the
compatibility of a product/equipment with conventional atmospheric
venting systems and the ability to operate without generating liquid
condensate requiring disposal via a plumbing connection. Consequently,
the Gas Industry Petitioners assert that DOE's proposals would make
unavailable non-condensing products/equipment with such features, which
currently exist in the marketplace, in contravention of the statute.
The petition makes a number of technical, legal, and economic arguments
in favor of its suggested interpretation, and it points to DOE's past
precedent related to space constraints and differences in available
electrical power supply (and associated installation costs) as
supporting its call to find that non-condensing technology amounts to a
performance-related ``feature.'' Based upon these arguments, the Gas
Industry Petitioners conclude that DOE should issue an interpretive
rule treating non-condensing technology as a ``feature'' under EPCA,
withdraw its rulemaking proposals for both residential furnaces and
commercial water heaters, and proceed on the basis of this revised
interpretation.
III. Response to Comments
DOE received a number of comments on the Gas Industry Petition with
commenters both supporting the petition for rulemaking and opposing the
petition. Comments from gas industry associations, certain manufacturer
associations, and certain individual manufacturers generally expressed
support for the petition. Comments from efficiency advocacy
organizations, consumer advocacy organizations, other manufacturers,
and certain States and Attorneys General generally oppose it. The
following sections of this proposed interpretive rule summarize the
comments received on the Gas Industry Petition and provide DOE's
responses to those comments. DOE then proposes an interpretation
consistent with its statutory authority and that considers the comments
received along with all other available information. To aid in
organizing the comments, this section categorizes public comments on
the Gas Industry Petition in terms of legal authority, technical
matters, implementation, and other related issues.
A. Legal Authority
As DOE explained in section II.B of this document, for the purpose
of EPCA, DOE has in prior instances considered product/equipment
``features'' in the context of the consumer's interaction with the
appliance in question. With the submission of the Gas Industry
Petition, DOE is re-evaluating its prior
[[Page 33015]]
interpretations in the context of the petition and providing
stakeholders and the interested public an opportunity to submit
comments and information to further inform DOE's consideration,
particularly in regards to its technical implications, as well as the
needs of consumers (including those with low incomes).
DOE is issuing the interpretation as an interpretative rule within
the meaning of the Administrative Procedure Act (APA). 5 U.S.C. 551(4),
553(b). DOE is publishing a proposed interpretation to solicit comment
and to provide the public with a clear and transparent explanation of
DOE's view of a specific legal question: Whether non-condensing
technology and associated venting constitutes a performance-related
``feature'' under 42 U.S.C. 6295(o)(4),\9\ as would support a separate
product/equipment class under 42 U.S.C. 6295(q)(1),\10\ including the
authority that Congress conferred on DOE through those provisions.
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\9\ 42 U.S.C. 6316(a) for non-ASHRAE equipment; 42 U.S.C.
6313(a)(6)(B)(iii)(II)(aa) for ASHRAE equipment where DOE is setting
more-stringent standards.
\10\ 42 U.S.C. 6316(a) for non-ASHRAE equipment.
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1. Legal Authority To Set Separate Product/Equipment Classes Based Upon
Condensing and Non-Condensing Technologies
The Gas Industry petition raises the issue of whether non-
condensing technology, including the associated venting, constitutes a
``performance characteristic'' or ``feature'' under 42 U.S.C.
6295(o)(4), and if it is so, whether it justifies a separate product/
equipment class under 42 U.S.C. 6295(q)(1). Commenters had divergent
views regarding DOE's legal authority to determine non-condensing
technology used in furnaces and water heaters, including the associated
venting, is a ``performance characteristic'' or ``feature'' within the
meaning of the statute, and whether as a ``performance characteristic''
or ``feature'' it would justify a separate product/equipment class and
standard. Such views are summarized in the immediately following
paragraphs.
Comments from the gas industry, certain manufacturers, housing
associations, and a number of individuals generally supported the
interpretation of ``performance characteristic'' and ``feature'' put
forth in the Gas Industry Petition (i.e., non-condensing technology and
the associated venting is a ``performance characteristic'' for the
purpose of EPCA), arguing that DOE is statutorily prohibited from
adopting standards that would effectively eliminate this performance
characteristic. (Gas Industry Petitioners Joint Comment, No. 44 at pp.
1 and 3; Mortex, No. 58 at p. 1; Weil-McLain, No. 29 at p. 1; PHCC, No.
53 at p. 1; Southern Company, No. 33 at p. 1; Suburban Propane, No. 13
at p. 1; Nortek, No. 35 at pp. 1 and 2; NMHC/NAA/NLHA Joint Comment,
No. 41 at p. 1; Baker, No. 4 at p. 1; Matchneer, No. 21 at p. 1) These
commenters emphasized the point presented in the Gas Industry Petition
that the ability to use category I venting \11\ and to operate without
formation of condensate are performance characteristics and/or features
that DOE cannot eliminate under EPCA.
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\11\ Category I venting has a non-positive vent pressure and is
suitable for non-condensing appliances.
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Southern Company asserted that non-condensing furnaces and water
heaters provide ``unique utility'' in terms of their ability to
commonly vent with other gas appliances, vent into masonry chimneys,
operate in unconditioned space without freeze protection, easily
install in retrofit applications, and operate without the need to
dispose of condensate. (Southern Company, No. 33 at p. 2) Nortek stated
that an energy conservation standard that requires the use of
condensing technology would eliminate the ability to combine the
venting of other non-condensing appliances with the furnace or
commercial water heater. (Nortek, No. 35 at p. 2) NMHC, NAAA, and NLHA
stated that in the context of existing multifamily properties,
installation of a condensing unit may require construction of an
entirely new ventilation system within the apartment to meet the
horizontal venting requirements of the condensing furnace unit, and in
many properties, there is not sufficient clearance on the exterior wall
of the property to locate a ventilation pipe due to existing windows
and doors. (NMHC/NAA/NLHA Joint Comment, No. 41 at p. 2) Regarding
commercial hot water heaters, Rheem stated that according to the Energy
Information Agency (EIA) 2012 Commercial Buildings Energy Consumption
Survey (CBECS) data, more than half of all commercial buildings were
constructed before condensing commercial water heaters were introduced
to the market and that in older buildings having greater than 3-stories
with the water heater(s) located in the interior of the building
structure, it is generally difficult, if not impossible, to replace
non-condensing water heaters with condensing water heaters due
primarily to the need to replace or reline existing vents/chimneys.
(Rheem, No. 34 at p. 2) Southern Company further commented that non-
condensing units can be installed in unconditioned space without the
use of potentially dangerous heat tapes or other devices that prevent
condensate from freezing. (Southern Company, No. 33 at p. 4)
Several of the commenters in support of the Gas Industry Petition
asserted that there is precedent for establishing separate product
classes for non-condensing furnaces and water heaters. (Gas Industry
Petitioners Joint Comment, No. 44 at pp. 5-6; Mortex, No. 58 at p. 2;
Southern Company, No. 33 at pp. 2-4; Nortek, No. 35 at p. 2; MHI, No.
54 at p. 2) The Gas Industry Petitioners stated that the issues facing
the replacement of a non-condensing unit with a condensing unit are
similar, but greater in magnitude, to installation issues for products
that DOE has established separate ``space-constrained'' product
classes. (Gas Industry Petitioners Joint Comment, No. 44 at pp. 4-5)
Southern Company specifically referenced as applicable precedent the
separate product classes established for gas-fired natural draft
commercial packaged boilers, the standard-size equipment class for
package terminal air conditioners and heat pumps, space-constrained
central air conditioners and heat pumps, tabletop water heaters, and
compact products such as clothes dryers. (Southern Company, No. 33 at
pp. 3-4) Mortex and Southern Company pointed to the establishment of
separate classes of furnace fans based on use in a condensing versus
non-condensing furnace as support for establishing separate classes as
requested in the Gas Industry Petition. (Mortex, No. 58 at p. 2;
Southern Company, No. 33 at p. 3)
Various other commenters opposed the Gas Industry Petition and
asserted that the method of venting, type of type of vent, and
condensate disposal system associated with a furnace or water heater
does not qualify as a performance-related characteristic or feature
under EPCA. (CA IOUs Joint Comment, No. 45 at pp. 1-2; EarthJustice/
NRDC Joint Comment, No. 55 at p. 1; Mitsubishi, No. 10 at p. 1; Multi-
State AGs Joint Comment, No. 49 at pp. 1-2, 6; NEMA, No. 46 at p. 4;
NEEA, No. 59 at pp. 1-2; CEC, No. 56 at pp. 1-2 ; NCLC/CFA Joint
Comment, No. 50 at pp. 1-2; ASAP et al. Joint Comment, No. 61 at p. 4)
Referencing DOE's prior, tentative analysis of the issue under EPCA,
commenters stated that condensing and non-condensing furnaces and water
heaters provide
[[Page 33016]]
identical performance characteristics in the form of warm air or hot
water, respectively; that installation cost is not a performance
characteristic for the purpose of 42 U.S.C. 6295(o)(4); and that non-
condensing technology does not justify a separate product class. (CA
IOUs Joint Comment, No. 45 at pp. 2-3; EarthJustice/NRDC Joint Comment,
No. 55 at pp. 5 and 13; Multi-State AGs Joint Comment, No. 49 at p. 7;
NEEA, No. 59 at p. 5; CEC, No. 56 at p. 2; CEL, No. 3 at p. 1; NCLC/CFA
Joint Comment, No. 50 at p. 5; ASAP et al. Joint Comment, No. 61 at p.
4) NEMA stated that increased cost of installation is not a performance
characteristic or feature under paragraphs 42 U.S.C. 6295(o)(4) and
(q)(1). (NEMA, No. 46 at pp. 4, 11) NEMA further stated that while the
type of venting may be a ``characteristic'' or ``feature,'' it is not
one that has utility to the consumer; the consumer suffers no loss of
utility by no longer being able to use a ``type B'' metal vent with a
condensing furnace. (NEMA, No, 46 at pp. 15-16) While NEMA agreed with
the result of DOE's tentative determination, NEMA cautioned that DOE
should not exclusively conflate an appliance's ``basic function'' with
a useful feature, capacity, characteristic, size, or volume. (NEMA, No.
46 at p. 17)
EarthJustice and NRDC argued that Congress intended the provision
at 42 U.S.C. 6295(o)(4) only to address the possibility that efficiency
standards could completely destroy the market for a covered product.
(EarthJustice/NRDC Joint Comment, No. 55 at p. 3) Additionally,
EarthJustice and NRDC asserted that the difference in language between
42 U.S.C. 6295(o)(4) and 42 U.S.C. 6313(a)(6)(iii)(II)(aa) indicates
that ``performance characteristic'' means something different for
residential products and commercial equipment. Specifically, this
comment imparts significant meaning to Congress's placement of a single
parentheses within these two statutory provisions; on the residential
side, 42 U.S.C. 6295(o)(4) describes ``performance characteristics'' as
``(including reliability)'' and then following with ``features, sizes,
capacities, and volumes,'' but on the commercial side, 42 U.S.C.
6313(a)(6)(B)(iii)(II)(aa) describes ``performance characteristics'' as
``(including reliability, features, sizes, capacities, and volumes).''
(EarthJustice/NRDC Joint Comment, No. 55 at p. 4) EarthJustice and NRDC
continued that the method of venting and condensate disposal are not
performance features under either provision, but ``installation
features.'' (EarthJustice/NRDC Joint Comment, No. 55 at p. 4)
A number of commenters stated that not every technology design
option should be captured as a separate ``performance characteristic''
or ``feature,'' because such approach would preclude DOE from ever
setting incrementally more stringent energy conservation standards. (CA
IOUs Joint Comment, No. 45 at p. 3; NRDC, No. 60 at p. 4, 6-7; Multi-
State AGs Joint Comment, No. 49 at p. 7; A.O. Smith, No. 51 at p. 3;
CEC, No. 56 at p. 1) Commenters asserted that the appropriate precedent
is DOE's prior determination in the residential water heater rulemaking
in which DOE determined that heat pump heaters provide hot water to a
residence just as a traditional electric storage water heater does,
and, therefore, a standard level that effectively bans electric
resistance heating does not violate 42 U.S.C. 6295(o)(4). (CA IOUs
Joint Comment, No. 45 at p. 3; NEMA, No. 46 pp. 7-8)
In opposition to the petition, commenters further stated that to
the extent that there are installation cost differences between the
venting technologies, those costs should be addressed in DOE's economic
analysis and are not relevant to the determination of product/equipment
classes. (CA IOUs Joint Comment, No. 45 at pp. 3-4; EarthJustice/NRDC
Joint Comment, No. 55 at p. 7; NRDC, No. 60 at p. 8; ASAP et al. Joint
Comment, No. 61 at pp. 3-4) EarthJustice and NRDC did state that DOE
appropriately established separate product classes for through-the-wall
central air conditioners and heat pumps to avoid requiring changes in
the physical size of the through-the-wall systems and modifications to
the buildings in which they are installed. (EarthJustice/NRDC Joint
Comment, No. 55 at p. 10-11)
A number of commenters stated that with rare exceptions, condensing
furnaces and water heaters are no more difficult to install than non-
condensing units, and they added that in the small number of situations
where there are difficulties, there are work-arounds. (Mitsubishi, No.
10 at pp. 1-2, 6; Multi-State AGs Joint Comment, No. 49 at p. 8; NEEP,
No. 48 at p. 1; NEEA, No. 59 at pp. 1-2; CEC, No. 56 at p. 3; A.O.
Smith, No. 51 at p. 4; Triple-T, No. 63 at p. 1) NEEA and the State
Attorneys General provided the summary of a survey of residential
furnace installers, based on which they stated that the percentage of
homes with the conditions necessary to present significant issues is
likely to be less than 5 percent of the retrofit installations. (NEEA,
No. 59 at p. 2; Multi-State AGs Joint Comment, No. 49 at p. 8) The
State Attorneys General added that those interviewed for the survey
stated that even in ``difficult'' cases, technical solutions are
possible. (Multi-State AGs Joint Comment, No. 49 at p. 8) Mitsubishi
stated that cases where installation of condensing equipment is more
difficult than replacing with non-condensing equipment are rare, and it
estimated that such conditions exist in less than 1 percent of the
total housing stock. (Mitsubishi, No. 10 at p. 4) The CEC identified a
commercially-available product (i.e., FasNSeal 80/90 by DuraVent) that
allows for combined venting of an atmospheric appliance and a
condensing appliance, thereby mitigating the issue of ``orphaned''
water heaters. (CEC, No. 56 at p. 3)
In response, DOE recognizes the importance of its interpretation of
``performance characteristic'' and ``feature'' in the context of
condensing vs. non-condensing furnaces, water heaters, and similarly
situated products/equipment. The submission of comments and other
information pursuant to the Gas Industry Petition has heightened DOE's
awareness of the real world impacts facing consumers of such products/
equipment. In the past, DOE viewed venting of condensing vs. non-
condensing as a technological and economic issue incidental to the
appliance's purpose of providing heat or hot water to a dwelling or
business. DOE has now come to see that it may have been too narrow in
its focus. Commenters have made persuasive arguments that a consumer's
interaction with and perception of a furnace or water heater may go
beyond its primary function.
For example, adoption of an energy conservation standard requiring
the use of condensing technology could potentially impact a home's
aesthetics, if a new installation or retrofit were to entail additional
venting in the conditioned space. Consumers would likely notice the new
venting, and it might deprive them of some enjoyment related to the
appearance of their home. In other cases, the condensing furnace may be
of a different size or shape, and it may require modifications to
existing utility closets or similarly constrained spaces, again
potentially impacting the aesthetics of a room's layout. To that
extent, non-condensing appliances may be similar to the space-
constrained appliances which EarthJustice and NRDC point to in their
comments as an appropriate use of EPCA's features provision. (DOE
requests comments regarding any size-related impacts of the use of
condensing technology, such as
[[Page 33017]]
that related to the need for more heat exchanger surface area.)
Although DOE continues to believe that the distinction between
condensing and non-condensing appliances is largely a matter of
economics for most consumers, for some subset of the population, it is
something much more than that. As commenters representing the
manufactured housing industry and individual owners of such units made
clear, energy conservation standards at condensing levels could price
some low-income consumers out of the housing market entirely. Below
that level, other low-income consumers could face a financial hardship
once they are forced to purchase a condensing furnace, which on average
for mobile home gas furnaces costs between $152 and $331 (total
installed cost; 2015$) more than a non-condensing furnace.\12\
(Consistently, DOE's data support the finding in the fuel switching
analysis of the September 23, 2016 supplemental notice of proposed
rulemaking (September 2016 SNOPR) that accounted for instances where
installation of a condensing furnace was either too difficult or
costly, with the result being substitution of another type of heating
product. 81 FR 65720, 65791-65793 (Sept. 23, 2016) (see also Chapter 8J
of the SNOPR technical support document (TSD)). For such consumers,
there could be difficult choices to be made between heat and other
necessities such as food or medical care. The potential for overall
energy savings after a long payback period does little to ameliorate
such short-term impacts. In light of these reasons, DOE has tentatively
concluded that the totality of such concerns may raise non-condensing
appliances (and their associated venting) sufficiently in the
consciousness of the consumer as to be deemed a ``feature'' under EPCA.
DOE does not believe that its proposed interpretation would have a
cascading effect that would prevent it from ever setting a standard
that would eliminate a less-efficient technology; instead, DOE would
continue to determine ``features'' based upon consumer utility on a
case-by-case basis.
---------------------------------------------------------------------------
\12\ See chapter 8 of the September 2016 SNOPR TSD for
Residential Furnaces (Available at: https://www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0217).
---------------------------------------------------------------------------
2. Legal Authority To Set a ``Small'' Furnaces Product Class for Mobile
Home Furnaces
Manufactured housing associations, certain manufacturers to the
manufactured housing industry, and a number of individuals faulted
DOE's 2016 furnaces SNOPR (81 FR 65720 (Sept. 23, 2016)) for its
failure to consider a ``small'' mobile home furnaces product class. Due
to the cost impacts to manufactured housing consumers and these
consumers' sensitivity to price increases, these commenters argued that
DOE should have considered a ``small'' product class for mobile home
furnaces. According to these commenters, manufactured housing is
disproportionately impacted due to the comparatively high number of
manufactured homes that rely on non-condensing gas furnaces as compared
to site-built homes, as well as the disproportionate number of homes in
the south where the payback of a high-efficiency furnace is less. (MHI,
No. 54 at pp. 1, 3-4; MMHAM, No. 43 at p. 2; MMHA, No. 42 at p. 2;
IMHA-RVIC, No. 32 at p. 2; NMMHA, No. 28 at pp. 1-2; WHA, No. 24 at pp.
1-2; MHIA, No. 23 at p. 2; Oliver Technologies, No. 16 at p. 1; Mortex,
No. 58 at p. 2; Individuals, Nos. 17-22, 25-27, 30-31, 36-40, 47, 57 at
pp. 1-2)
In the September 2016 furnaces SNOPR, DOE explained its rationale
for proposing that energy conservation standards for mobile home gas
furnaces should be set at 92 percent annual fuel utilization efficiency
(AFUE). 81 FR 65720, 65743-65744 (Sept. 23, 2016). First, DOE stated
that under the proposed standard, 63 percent of mobile home gas
furnaces (MHGFs) would see a net benefit from such standards, whereas
only 8 percent would experience a net cost. DOE anticipated minimal
fuel switching, because for new mobile homes, the type of heating
equipment tends to be determined by the intended location of the home,
the expected heating load, and the availability of a gas supply. For
replacement applications, DOE found that switching away from gas is not
likely because the cost increase for installing a condensing furnace
relative to a non-condensing furnace is not a significant factor due to
a much simpler venting system compared to installation of a non-
weatherized gas furnace (NWGF). Id. at 81 FR 65743. As to the costs,
DOE's analyses determined that the expected average cost of a
condensing furnace in a new mobile home is comparable to a non-
condensing furnace, because the increase in the price of the product is
offset by a lower installation cost for a condensing furnace for most
installations.\13\ The SNOPR noted that new furnaces installed in
mobile homes must be approved by the U.S. Department of Housing and
Urban Development, which requires special sealed combustion (direct
vent) for all non-condensing and condensing installations of
manufactured home furnaces. (24 CFR 3280.709(d)(1)) For condensing
installations, the polyvinyl chloride (PVC) piping is usually less
expensive than the metal vent system used for non-condensing furnaces.
Thus, DOE reasoned that there is not likely to be any effect on the
affordability of single-section mobile homes due to the SNOPR's
proposed MHGF standard. Id. at 81 FR 65744.
---------------------------------------------------------------------------
\13\ In the SNOPR, DOE stated that the standard for MHGF furnace
fans requires technology (improved PSC motor) that entails a slight
price increase ($11) in 2013$ compared to the baseline PSC motor
(see furnace fan energy conservation standards final rule; available
at: https://www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-
0011-0117). This cost is applicable to less than 50 percent of
installations because the rest of the market is already comprised of
MHGFs with improved PSC motors or motors with higher efficiencies.
---------------------------------------------------------------------------
Nevertheless, to the extent DOE moves to consider non-condensing
furnaces and water heaters (and associated ductwork) to be a
``feature'' under EPCA, these commenters' concerns should be resolved,
because mobile home purchasers would retain the choice of purchasing a
furnace using non-condensing or condensing technology.
B. Fuel Switching
A number of commenters expressed concern that a national condensing
furnaces standard would drive fuel switching and/or extend the use of
less efficient appliances, because consumers who cannot afford more-
expensive condensing technology will choose to switch to a non-gas
heating option, repair their existing gas furnace, or use other less-
efficient means of heating such as space heaters. (Gas Industry
Petitioners Joint Comment, No. 44 at p. 3; MHI, No. 54 at p. 5; PHCC,
No. 53 at p. 2; NMHC/NAA/NLHA Joint Comment, No. 41 at p. 2)
In contrast, the CEC argued that fuel switching is a cost impact,
not a utility impact, as it does not disrupt service to the consumer of
warm air or hot water. (CEC, No. 56 at p. 3) The CEC also stated that
the costs related to fuel switching were included in DOE's life-cycle
cost analysis in the September 2016 SNOPR for residential furnaces.
(CEC, No. 56 at p. 3)
EarthJustice and NRDC stated that fuel switching is not an obstacle
to amended standards under EPCA. These commenters noted that for small
gas furnaces, EPCA required that DOE prescribe energy conservation
standards at a level ``which the Secretary determines is not likely to
result in a
[[Page 33018]]
significant shift from gas heating to electric resistance heating with
respect to either residential construction or furnace replacement,''
and asserted that Congress could have easily extended this requirement
to other gas products but did not. EarthJustice and NRDC stated that,
therefore, Congress did not intend to prevent the adoption of standards
that may lead consumers to change their space or water heating energy
sources. These commenters further argued that Congress's instruction to
avoid fuel-switching in the initial small furnaces rulemaking would be
superfluous if other parts of the statute were already intended to
prohibit fuel switching. (EarthJustice/NRDC Joint Comment, No. 55 at
pp. 8-9)
As the commenters noted, DOE addressed the potential for fuel
switching in the September 2016 SNOPR. 81 FR 65720, 65723, and Chapter
8 of the September 2016 SNOPR Technical Support Document (TSD).\14\ DOE
agrees with the CEC, EarthJustice, and NRDC that concerns about fuel
switching alone or in isolation would probably not justify a
determination that non-condensing appliances (and associated venting)
constitute a ``feature'' deserving a separate product/equipment class
under EPCA. However, for the reasons previously stated, DOE has
tentatively concluded that the choice of purchasing a non-condensing
appliance is something that matters to some significant portion of
consumers (especially persons with low-incomes), with concerns ranging
from impacts on the aesthetics of the home to overall choice of housing
options. To the extent DOE determines non-condensing technology (and
associated venting) to be a feature, any fuel switching among such
appliances going forward will be voluntary on the part of the consumer
and not driven by government regulation.
---------------------------------------------------------------------------
\14\ The September 2016 SNOPR TSD is available at https://www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0217.
---------------------------------------------------------------------------
C. Analytical Issues
Some commenters raised concerns with the analytical methodology
underlying DOE's rulemakings for residential furnaces and commercial
water heaters. (Gas Industry Petitioners Joint Comment, No. 44 at pp.
12-13; Rheem, No. 34 at pp. 2-3; NMHC/NAA/NLHA Joint Comment, No. 41 at
p. 2; Weil McLain, No. 29 at p. 1) Among the issues raised by these
commenters were that the national average approach to economic
justification fails to consider the excessive localized costs that are
certain to be incurred if non-condensing performance characteristics
are eliminated. (Weil McLain, No. 29 at pp. 1-2)
DOE has attempted in prior residential furnaces and commercial
water heaters rulemakings to capture localized effects (e.g., regional
climate, local utility rates, building type, local contractor labor
rates, high-cost installations) in the life-cycle cost (LCC) analyses.
DOE presented the average LCC results in summary form in the September
23, 2016 SNOPR. 81 FR 65720, 65814-65816. In chapter 8 of the September
23, 2016 furnaces SNOPR TSD, DOE presented the results in charts
showing the mean and median LCC savings, along with the 5th, 25th,
75th, and 95th percentiles, to demonstrate the impacts of more extreme
cases (both positive and negative). The same type of analysis was
conducted for commercial water heaters in the May 31, 2016 NOPR. 81 FR
34440, 34482-34488.
Commenters also asserted that there is a fundamental flaw in DOE's
modeling approach in that the base-case distribution of efficiencies is
assigned randomly, rather than accounting for some consumers making
economically rational decisions. (Gas Industry Petitioners Joint
Comment, No. 44 at pp. 11-12) In response, DOE would point out that the
base-case efficiency distributions for residential furnaces and
commercial water heaters are not entirely random. For furnaces,
assignment of efficiency in the base-case was based on both the region
and specific building in which it is installed, with the market shares
of furnace efficiencies first assigned by region based on historical
shipments data and then allocated to specific buildings within each
region based on the existing furnace being replaced. For commercial
water heaters, the no-new-standards case and the selections in the LCC
model were also not completely random, and rather were based on
distributions of models in DOE's database, which included all
commercially-available equipment on the market at the time and which
(due to the absence of shipments data) represented the best data
available to DOE at the time.
Furthermore, Rheem suggested that the EIA 2003 CBECS data used in
DOE's commercial water heaters proposal is outdated, and DOE should
recalculate results using more up-to-date data and re-evaluate its
proposed standards accordingly. (Rheem, No. 34 at p. 2) In response,
DOE notes that CBECS 2003 was the most recent version available at the
time the analysis was conducted for the notice of proposed rulemaking
for commercial water heating equipment. In any potential future
rulemaking documents for commercial water heating equipment, DOE would
update its analysis to utilize the most recent version of CBECS
(currently the 2012 version).
The National Multifamily Housing Council (NMHC), the National
Apartment Association (NAA), and the National Leased Housing
Association (NLHA) commented that DOE did not include an adequate
analysis of the venting and condensate disposal system installation
costs for multi-story, multi-family properties in its proposals. (NMHC/
NAA/NLHA Joint Comment, No. 41 at p. 2) In response, DOE notes that
requirements specific to multi-story, multi-family properties were
considered in the LCC analyses for residential furnaces and commercial
water heating equipment. DOE acknowledged that multi-family buildings
may require additional measures to replace non-condensing furnaces with
condensing furnaces, noted that it did not find data that would allow a
reliable estimation of the associated costs, and, therefore, requested
comment on the issue. 81 FR 65720, 65778. DOE estimated in the
September 23, 2016 SNOPR that more than 60 percent of replacement
multi-family NWGF installations would not be impacted by the proposed
standard. 81 FR 65720, 65780. For commercial water heaters, in the May
2016 NOPR, DOE included RECS data for multi-family buildings in the
building sample used for its analysis, in order to account for the
unique venting requirements of multi-family buildings, such as the vent
length. 81 FR 34440, 34482 (May 31, 2016).\15\
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\15\ See chapter 8 and Appendix 8-D of the Commercial Water
Heating Equipment NOPR TSD for further discussion. Available at:
https://www.regulations.gov/document?D=EERE-2014-BT-STD-0042-0016.
---------------------------------------------------------------------------
Rheem stated that efficiency standards for commercial water heaters
that require condensing technology could lead to fuel switching or
multiple residential water heaters as alternatives, and suggested that
DOE should consider such costs as part of the life-cycle cost analysis
for commercial water heaters. (Rheem, No. 34 at p. 3) As discussed in
the May 2016 NOPR, DOE considered whether to model fuel switching in
the analysis for commercial water heating equipment and tentatively
determined that fuel switching would be unlikely to occur. 81 FR 34440,
34494 (May 31, 2016).
[[Page 33019]]
Finally, Southern Company argued that DOE's analysis for
residential furnaces grossly overestimates the capabilities of DuraVent
FNS 80/90 as a technological solution, because it does not allow a
condensing appliance to operate with the same utility as a non-
condensing model due to restrictions on the circumstances in which it
can be used. (Southern Company, No. 33 at pp. 6-8)
DOE clarifies that it considered use of the DuraVent FasNSeal (FNS)
80/90 only as a sensitivity analysis; DOE's main analysis does not
assume that the DuraVent FNS 80/90 would be used in any installations.
Because of the uncertainty regarding applicability of FNS 80/90 and
other new venting technologies, and lack of available field data on
such venting installations, DOE has consistently maintained its
approach of only using this option in a sensitivity analysis rather
than its main analysis. In this sensitivity analysis, DOE only applied
the FNS80/90 option to installations that could meet the FNS 80/90
installation requirements. While the previously noted comment from the
CEC identified the FNS 80/90 (CEC, No. 56 at p. 3) as a means to
address orphaned water heaters, the technology is only commercially
available for applications with metal vents, and as pointed out by
Southern, can only be used in certain situations where the vent can be
installed at the appropriate angle to drain condensate. To address
stakeholders' concerns regarding overestimating the number of
installations that could use new venting technologies, DOE plans to
include an additional sensitivity analysis in any potential future
rulemaking documents for furnaces, where the FNS 80/90 option is
applied to installations that can currently meet the FNS 80/90
installation requirements.
Finally, DOE notes that in its February 2019 NOPR regarding
proposed changes to its Process Rule, the Department has announced its
plans to conduct a peer review of its suite of rulemaking analyses as a
second phase to the revisions of its Process Rule. 84 FR 3910, 3936-
3938 (Feb. 13, 2019). Thus, DOE anticipates an ongoing discussion about
potential refinements to its analytical methodologies and modeling,
including those issues raised by commenters on the Gas Industry
Petition.
D. Consumer Impacts
A number of efficiency and consumer advocacy organizations and the
State Attorneys General argued that granting the requests in the Gas
Industry Petition would negatively impact consumers due to lost energy
and cost savings. (NEEP, No. 48 at p. 1; NEEA, No. 59 at p. 3; NCLC/
CFA, No. 50 at pp. 2-3; Multi-State AGs Joint Comment, No. 49 at pp. 9-
10; ASAP et al. Joint Comment, No. 61 at pp. 1-3) The State Attorneys
General also asserted that such action would disrupt State and local
energy and climate goals. (Multi-State AGs Joint Comment, No. 49 at pp.
9-10) The Center for Efficient Living argued that the Gas Industry
Petitioners do not represent the parties most directly impacted by the
regulations at issue, as compared to consumers and manufacturers, but
instead, DOE must recognize the significant advances in heating,
ventilation, and air-conditioning technology in the past 10 years and
not take actions which counteract the associated public health, indoor
air quality (IAQ), and environmental benefits. (CEL, No. 3 at p. 1)
In contrast, individual commenters who support manufactured housing
stated that Federal regulation should encourage manufactured housing as
an affordable ownership option, but DOE's proposal inhibits that by
increasing new home or retrofit costs, thereby potentially pricing
consumers out of the manufactured housing market. These commenters
stated that the median household income of manufactured homeowners is
$30,000, which makes them very sensitive to any change in first cost of
a new home or retrofit costs (e.g., reworking existing utility closets
due to larger units). It was also noted that there is no exemption or
other accommodation for ``small'' furnaces, which are often used in
manufactured homes. (Matchneer et al. (Form Comments), Nos. 17-22, 25-
27, 30-31, 36-40, 47, 57 at p. 1)
As discussed, in establishing and amending energy conservation
standards, EPCA prescribes a number of factors that DOE must consider.
These factors include the savings in operating costs throughout the
estimated average life of the covered product compared to any increase
in the price of, or in the initial charges for, or maintenance expenses
of, the covered products which are likely to result from a standard.
(42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE historically has accounted for and
considered the potential energy savings to consumers through the LCC
and PBP analyses in all of its rulemakings. In contrast, however,
EPCA's ``features'' provision demonstrates that Congress intended
certain aspects of products with consumer utility to be preserved
despite the energy savings or other benefits that might result from
their elimination. (42 U.S.C. 6295(o)(4); 42 U.S.C.
6313(a)(6)(B)(iii)(II)(aa); 42 U.S.C. 6316(a)) DOE recognizes the
important policy concerns raised by these commenters, but the
Department is constrained to act within its statutory authority. Thus,
to the extent DOE interprets EPCA's ``features'' provision as
supporting separate products/equipment classes for condensing and non-
condensing appliances, the concerns of commenters regarding the
affordability of manufactured housing are largely resolved. For other
consumers, DOE will account for them as part of the standard-setting
process and develop energy conservation standards that meet the seven
criteria for economic justification, are technologically feasible, and
produce significant energy savings, as required by EPCA. DOE would note
that for consumers who rent (including low-income consumers), energy
savings from mandatory energy conservation standards set at condensing
levels are likely to be offset, at least in part, by higher rents to
cover the landlord/owner's first cost of the more expensive appliance.
E. Other Issues
Comments from the State Attorneys General and certain efficiency
advocacy organizations commented that other nations such as Canada and
the United Kingdom have successfully adopted and implemented
regulations requiring condensing technology. (CEC, No. 56 at p. 3;
Multi-State AGs Joint Comment, No. 49 at p. 8; ASAP et al. Joint
Comment, No. 61 at p. 4) In response, DOE acknowledges both the energy
savings potential of condensing appliances and the adoption of related
regulatory requirements by other nations such as Canada and the U.K.
However, DOE must act in accordance with domestic law (i.e., EPCA) in
formulating energy conservation standards, complying with all relevant
requirements, including the features provision.
Additionally, the State Attorneys General argued that granting the
Gas Industry Petition would impermissibly further delay DOE's
publication of final rule for the products/equipment in question, rules
which EPCA requires DOE to publish within two years after a proposal.
The commenters pointed out that DOE's statutory deadlines for
promulgating final furnace and water heater standards expired in March
2017 and May 2018, respectively. (Multi-State AGs Joint Comment, No. 49
at pp. 4-6) In response, DOE remains cognizant of its legal deadlines
and plans to act expeditiously to comply with its mandates pursuant to
EPCA. At the
[[Page 33020]]
same time, the Gas Industry Petitioners have the right to petition for
rulemaking under the Administrative Procedure Act, which provides that
``[e]ach agency shall give an interested person the right to petition
for the issuance, amendment, or repeal of a rule.'' 5 U.S.C. 553(e).
DOE is not at liberty to pick and choose among its legal obligations,
but instead it must comply with all applicable legal requirements. In
this case, DOE must evaluate and respond to the Gas Industry Petition
and then implement any revised interpretation in the context of its
ongoing rulemaking obligations.
IV. DOE's Proposed Revised Interpretation
In consideration of public comments and other information received
on the Gas Industry Petition, DOE proposes to revise its interpretation
of EPCA's ``features'' provision in the context of condensing and non-
condensing technology used in furnaces, water heating equipment, and
similarly-situated appliances (where permitted by EPCA). Based on those
comments, DOE prospectively interprets the statute to provide that
adoption of energy conservation standards that would limit the market
to natural gas and/or propane gas furnaces, water heaters, or similarly
situated products/equipment (where permitted by EPCA) that use
condensing combustion technology would result in the unavailability of
a performance related feature within the meaning of 42 U.S.C.
6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa) and 42 U.S.C.
6316(a).
The statute accords the Secretary of Energy considerable discretion
in terms of determining whether a performance characteristic of a
covered product/equipment amounts to a performance-related feature
which cannot be eliminated through adoption of an energy conservation
standard. DOE has taken the opportunity presented by the Gas Industry
Petition to reconsider its historical interpretation of EPCA's
``features'' provision in the context of condensing and non-condensing
technologies used by certain gas appliances. Contrary to the
petitioners' assessment, DOE found this to be a close case, with
persuasive arguments on both sides of the issue. However, a number of
factors have convinced DOE to revise its interpretation.
First, DOE acknowledges that it has, in the past, taken space
constraints and similar limitations into account when setting product
classes (e.g., PTACs, ventless clothes dryers). For example, DOE was
sensitive to the costs associated with requiring expensive building
modifications when it decided to set separate equipment classes for
standard size PTACs and non-standard size PTACs. 73 FR 58772 (Oct. 7,
2008). DOE expects that similar expenses would occur here, if DOE were
to hold to its historical interpretation, at least for some subset of
installations. Although limited data were provided to address the
actual costs that consumers and commercial customers would face to
modify their existing category I venting, there is little doubt that
some number of such installations would be quite costly. These more
complicated/costly installations are documented as part of DOE's
analysis of the venting costs for residential furnaces, which
considered potential venting modifications that could be required when
replacing an existing category I furnace with a condensing (category
IV) furnace (see appendix 8D of the 2016 SNOPR TSD for further
details).
Second, DOE has in the past focused on the consumer's interaction
with the product/equipment in deciding whether a performance feature is
at issue. In the context of residential furnaces and commercial water
heaters, DOE has focused on the primary function of the appliance
(e.g., providing heat to a home or potable hot water) in establishing
the nexus to the consumer. In the past, DOE opined that consumers were
only interested in obtaining heat or hot water from the appliance, so
they would not care about the mechanism for generating that end
product. However, commenters have made clear that in at least some
cases, the physical changes associated with a condensing appliance may
change a home's aesthetics (e.g., by adding new venting into the living
space or decreasing closet or other storage space), thereby impacting
consumer utility even under DOE's prior approach.
Third, DOE notes that it has been its policy to remain neutral
regarding competing energy sources in the marketplace. As certain
commenters have pointed out and as DOE's own analyses have shown, some
enhanced level of fuel switching is likely to accompany standard
setting using DOE's prior interpretation. Many consumers who are
currently gas customers may show a proclivity for that fuel type and
would be negatively impacted by a standard that requires the purchase
of a condensing unit to the extent they feel compelled to change to a
different fuel type. DOE seeks neither to determine winners and losers
in the marketplace nor to limit consumer choice.
Finally, DOE is very concerned about ensuring energy affordability,
particularly for persons with low incomes. Although energy efficiency
improvements may pay for themselves over time, there is a significant
increase in first-cost associated with furnaces and water heaters using
condensing technology. For consumers with difficult installation
situations (e.g., inner-city row houses), there would be the added cost
of potentially extensive venting modifications. In certain cases,
commenters have argued that accommodating condensing products may not
even be possible. Although DOE continues to believe that costs are
properly addressed in the economic analysis portion of its rulemakings,
it remains cognizant of such issues. DOE has tentatively concluded that
the other reasons discussed immediately above are sufficient in and of
themselves to justify the Department's proposed change in
interpretation, but it acknowledges these cost impacts in order to be
fully transparent in terms of the agency's thinking.
Creating separate product classes for condensing and non-condensing
furnaces, water heaters, and similarly situated products/equipment
(where permitted by EPCA) would prevent many of these potential
problems. Although DOE's proposed revised approach may have some impact
on overall energy saving potential as a result of establishing separate
product/equipment classes, that is not the touchstone of EPCA's
``features'' provision; through that provision, Congress expressed its
will that certain product utilities will take priority over additional
energy savings measures. (For example, DOE did not eliminate the oven
window which consumers found useful, despite the potential for further
energy savings.) With that said, DOE believes that any potentially
negative programmatic impacts of its revised interpretation are likely
to be limited. This interpretation is likely to impact only a limited
set of appliances, and DOE notes that market trends have favored the
growing reach of condensing furnaces, even as non-condensing
alternatives have remained available. DOE has every reason to believe
that such trends will continue.
DOE would clarify the limitations of its proposed revised
interpretation, based upon the existing statutory provisions. As
discussed previously, DOE can effect this change for all relevant
consumer products, all non-ASHRAE commercial and industrial equipment,
and ASHRAE equipment in those instances where DOE has clear and
convincing evidence to adopt levels higher than the levels in ASHRAE
Standard 90.1.
[[Page 33021]]
As noted, additional, subsequent DOE action is required before the
interpretation in this proposed interpretive rule can be implemented.
This proposed interpretive rule, therefore, does not alter the
Department's current regulations. This interpretation does not and will
not be used to abrogate DOE's responsibilities under existing laws or
regulations, nor does it change DOE's existing statutory authorities or
those of its regulators at the Federal, State, or local level. DOE
anticipates continued engagement and productive involvement of members
of the public and the regulated community in subsequent activities that
may follow this interpretation.
V. Conclusion
As discussed immediately above, DOE is granting the Gas Industry
Petition to the extent that it prospectively interprets the statute to
provide that adoption of energy conservation standards that would limit
the market of natural gas and/or propane gas furnaces, water heaters,
or similarly situated products/equipment (where permitted by EPCA) that
use condensing combustion technology would result in the unavailability
of a performance related feature within the meaning of 42 U.S.C.
6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa) and 42 U.S.C.
6316(a). Such interpretation would apply to all applicable residential
products, non-ASHRAE commercial equipment, and ASHRAE equipment where
DOE adopts a level more stringent than the ASHRAE level.
DOE is denying the Gas Industry Petition as it pertains to those
rulemakings where ASHRAE sets standard levels that trigger DOE to
consider and adopt those level (unless DOE finds clear and convincing
evidence to adopt more-stringent levels), due to lack of authority. DOE
is also denying the Gas Industry Petition's request for DOE to withdraw
the proposed rules for residential furnaces and commercial water
heaters as unnecessary. If this interpretive rule is finalized, DOE
anticipates developing supplemental notices of proposed rulemaking
(SNOPRs) that would implement the new legal interpretation for those
two rulemakings.
Through this interpretive rule, DOE states its understanding of the
best interpretation of the statutory text in light of the language and
purposes of EPCA, so as to be consistent with Congress's direction. In
light of further consideration and the information presented with and
in response to the Gas Industry Petition, DOE's position has evolved,
and it has tentatively concluded that this revised interpretation is
the best reading of EPCA's ``features'' provision. This interpretation
does not, by itself, change existing applicable DOE regulations or
policies regarding individual appliance standards rulemakings.
Implementation of this interpretation in the context of energy
conservation standards for particular products or equipment, and any
changes to existing policies that may be appropriate in light of this
interpretation will be the subject of subsequent actions.
DOE wishes to make clear that an interpretative rule is a type of
rule or regulation within the meaning of those terms in the
Administrative Procedure Act (APA), 5 U.S.C. 551(4). It is well
established under the APA that agencies have the authority to issue
interpretative rules, and that these rules are a valuable tool for an
agency to use to advise the public prospectively and in a clear and
transparent manner of the agency's construction of a statute it
administers. As such, an interpretative rule does not have force and
effect on its own. It is not until the agency takes an action in which
the interpretation is applied that the interpretation can have an
effect and, even then, only through that subsequent action.
When DOE considers this statutory interpretation in the context of
taking any action in the future with regard to energy conservation
standards rulemakings, it will evaluate its policies to determine if
any require revision to accommodate this interpretation, and if so, DOE
will follow applicable procedures to make any necessary changes.
However, DOE's legal interpretations do not themselves constitute
agency action.
DOE's interpretation does not have legal effect on its own. As
appropriate, the public will be notified and have an opportunity to
comment on any such proposals implementing the interpretation.
Furthermore, the many substantive comments received, including comments
that led to revisions of DOE's interpretation of the ``features''
provision,'' as reflected in this proposed interpretive rule, indicate
that the public had a meaningful opportunity to comment on DOE's
general interpretation. As DOE has indicated, there will be additional
processes after the interpretation has been issued but before any
rulemaking decisions are implemented.
VI. Public Participation
Submission of Comments
DOE invites all interested parties to submit in writing by the date
listed in the DATES section of this document, comments and information
regarding this proposed interpretive rule.
Submitting comments via http://www.regulations.gov. The http://www.regulations.gov web page will require you to provide your name and
contact information prior to submitting comments. Your contact
information will be viewable to DOE Building Technologies 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 via email, hand delivery, or postal mail will
also be posted to http://www.regulations.gov. If you do not want
[[Page 33022]]
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 in your cover letter 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 telefacsimiles (faxes) will be accepted.
Comments, data, and other information submitted 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 include any 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.
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
its process for considering regulatory actions. DOE actively encourages
the participation and interaction of the public during the comment
period. Interactions with and between members of the public provide a
balanced discussion of the issues and assist DOE in determining how to
proceed with a regulatory action. Anyone who wishes to be added to DOE
mailing list to receive future document and information about this
matter should contact Appliance and Equipment Standards Program staff
at (202) 287-1445 or via email at
[email protected].
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this document
granting in part and denying in part the relevant petition for
rulemaking and issuing a proposed interpretive rule.
Signed in Washington, DC, on June 28, 2019.
Daniel R. Simmons,
Assistant Secretary, Energy Efficiency and Renewable Energy.
[FR Doc. 2019-14553 Filed 7-10-19; 8:45 am]
BILLING CODE 6450-01-P