DOE intends to include the following industry standards, previously incorporated by reference into 10 CFR part 430:

(1) International Electrotechnical Commission (IEC) Standard 62301, Household electrical appliances—Measurement of standby power,” Publication 62301 (First Edition 2005-06).

(2) IEC 62301 Household electrical appliances—Measurement of standby power, (Edition 2.0 2011-01).

Copies of IEC 62301 (First Edition) and IEC 62301 (Second Edition) can be obtained from the American National Standards Institute, 25 W 43rd Street, 4th Floor, New York, NY 10036, (212) 642-4900, or go to http://webstore.ansi.org.

See Section IV.M. for a further discussion of these standards.

Kitchen ranges and ovens are included in the list of “covered products” for which DOE is authorized to establish and amend energy conservation standards and test procedures. (42 U.S.C. 6292(a)(10)) DOE's regulations at 10 CFR 430.2 include definitions for “cooking products,” which cover cooking appliances that use gas, electricity, or microwave energy as the source of heat; as well as specific types of cooking products, including conventional cooking tops, conventional ovens, microwave ovens, and other cooking products. DOE's energy conservation standards and test procedures for cooking products are currently prescribed at 10 CFR 430.32(j) and 10 CFR 430.23(i), respectively. (Note that DOE does not currently have an energy conservation standard for cooktops.) The following sections discuss DOE's authority to establish test procedures for cooking products and relevant background information regarding DOE's consideration to withdraw the test procedures for conventional cooking tops.

Title III, Part B  1 of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles, 2 a program covering most major household appliances, which includes cooking products, and specifically conventional cooking tops, 3 the subject of this NOPR. (42 U.S.C. 6292(a)(10))

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).

The Federal testing requirements consist of test procedures that manufacturers of covered products must use as the basis for: (1) Certifying to DOE that their products comply with the applicable energy conservation standards adopted pursuant to EPCA (42 U.S.C. 6295(s)), and (2) making representations about the efficiency of those consumer products (42 U.S.C. 6293(c)). Similarly, DOE must use these test procedures to determine whether the products comply with relevant standards promulgated under EPCA. (42 U.S.C. 6295(s))

Under 42 U.S.C. 6293, EPCA sets forth the criteria and procedures DOE must follow when prescribing or amending test procedures for covered products. EPCA requires that any test procedures prescribed or amended under this section be reasonably designed to produce test results which measure energy efficiency, energy use or estimated annual operating cost of a covered product during a representative average use cycle or period of use and not be unduly burdensome to conduct. (42 U.S.C. 6293(b)(3)) DOE's test procedures for conventional cooking tops are codified at appendix I to subpart B of title 10 of the CFR part 430 (“appendix I”).

DOE originally established test procedures for cooking products in a final rule published in the Federal Register on May 10, 1978. 43 FR 20108, 20120-20128. DOE revised its test procedures for cooking products to more accurately measure their efficiency and energy use, and published the revisions as a final rule in 1997. 62 FR 51976 (Oct. 3, 1997). These test procedure amendments included: (1) A reduction in the annual useful cooking energy; (2) a reduction in the number of self-clean oven cycles per year; and (3) incorporation of portions of International Electrotechnical Commission (“IEC”) Standard 705-1988, “Methods for measuring the performance of microwave ovens for household and similar purposes,” and Amendment 2-1993 for the testing of microwave ovens. 4 The test procedures for consumer cooking products establish provisions for determining estimated annual operating cost, cooking efficiency (defined as the ratio of cooking energy output to cooking energy input), and energy factor (defined as the ratio of annual useful cooking energy output to total annual energy input). 10 CFR 430.23(i); appendix I. Aside from the provisions for measuring standby power of microwave ovens, all other provisions for consumer cooking products are not currently used for compliance with any energy conservation standards because the present standards are design requirements.

DOE subsequently conducted a rulemaking to address standby and off mode energy consumption, as well as certain active mode ( i.e., fan-only mode) testing provisions, for consumer cooking products. DOE published a final rule on October 31, 2012 (77 FR 65942, the “October 2012 TP Final Rule”), adopting standby and off mode provisions that satisfy the EPCA requirement that DOE include measures of standby mode and off mode power in its test procedures for residential products, if technically feasible. (42 U.S.C. 6295(gg)(2)(A))

On January 30, 2013, DOE published a NOPR (78 FR 6232, the “January 2013 TP NOPR”) proposing amendments to appendix I that would allow for testing the active mode energy consumption of induction cooking products; i.e., conventional cooking tops equipped with induction heating technology for one or more surface units on the cooking top. DOE proposed to incorporate induction cooking tops by amending the definition of “conventional cooking top” to include induction heating technology. Furthermore, DOE proposed to require for all cooking tops the use of test equipment compatible with induction technology. Specifically, DOE proposed to replace the solid aluminum test blocks specified at that time in the test procedure for cooking tops with hybrid test blocks comprising two separate pieces: An aluminum body and a stainless steel base. 78 FR 6232, 6234 (Jan. 30, 2013).

On December 3, 2014, DOE published an SNOPR (the “December 2014 TP SNOPR”), in which DOE modified its proposal from the January 2013 TP NOPR in response to comments from interested parties to specify different test equipment that would allow for measuring the energy efficiency of induction cooking tops, and would include an additional test block size for electric surface units with large diameters (both induction and electric resistance). 79 FR 71894. In addition, DOE proposed methods to test non-circular electric surface units, electric surface units with flexible concentric cooking zones, and full-surface induction cooking tops. Id. In the December 2014 TP SNOPR, DOE also proposed amendments to add a larger test block size to test gas cooking top burners with higher input rates. Id.

In the December 2014 TP SNOPR, DOE also proposed methods for measuring conventional oven volume, clarification that the existing oven test block must be used to test all ovens regardless of input rate, and a method to measure the energy consumption and efficiency of conventional ovens equipped with an oven separator. 79 FR 71894 (Dec. 3, 2014). DOE published the July 2015 TP Final Rule adopting the test procedure amendments discussed above for conventional ovens only. 80 FR 37954.

On June 10, 2015, DOE published a NOPR (the “June 2015 NOPR”) proposing new and amended energy conservation standards for consumer conventional ovens. 80 FR 33030. As discussed in the June 2015 NOPR, DOE received a significant number of comments raising issues with the repeatability and reproducibility of the proposed hybrid test block test method for cooking tops in response to the December 2014 TP SNOPR and in separate interviews conducted with consumer cooking product manufacturers in February and March of 2015. 80 FR 33030, 33039-33040 (June 10, 2015). A number of manufacturers that produce and sell products in Europe supported the use of a water-heating test method and harmonization with IEC Standard 60350-2 Edition 2, “Household electric appliances—Part 2: Hobs—Method for measuring performance” (“IEC Standard 60350-2”) for measuring the energy consumption of electric cooking tops. These manufacturers stated that the test methods in IEC Standard 60350-2 are compatible with all electric cooking top types, specify additional cookware diameters to account for the variety of surface unit sizes on the market, and use test loads that represent real-world cooking top loads. Efficiency advocates also recommended that DOE require water-heating test methods to produce a measure of cooking efficiency for conventional cooking tops that is more representative of actual cooking performance than the hybrid test block method. 80 FR 33030, 33039-33040 (June 10, 2015). For these reasons, DOE decided to defer its decision regarding adoption of energy conservation standards for conventional cooking tops until a representative, repeatable and reproducible test method for cooking tops was finalized. 80 FR 33030, 33040 (June 10, 2015).

DOE published an additional test procedure SNOPR on August 22, 2016 (81 FR 57374) (the “August 2016 TP SNOPR”) that proposed amendments to the test procedures for conventional cooking tops. Given the feedback from interested parties discussed above and based on the additional testing and analysis conducted for the test procedure rulemaking, in the August 2016 TP SNOPR, DOE withdrew its proposal for testing conventional cooking tops with a hybrid test block. Instead, DOE proposed to amend its test procedure to incorporate by reference the relevant sections of IEC Standard 60350-2, which provide a water-heating test method to measure the energy consumption of electric cooking tops. The test method specifies the quantity of water to be heated in a standardized test vessel whose size is selected based on the diameter of the surface unit under test. 81 FR 57374, 57381-57384.

DOE also proposed to extend the test methods provided in European standard EN 60350-2:2013 “Household electric cooking appliances Part 2: Hobs—Methods for measuring performance” EN 60530-2:2013 to measure the energy consumption of gas cooking tops by correlating test equipment diameter to burner input rate, including input rates that exceed 14,000 Btu/h. 81 FR 57374, 57385-57386. In addition, DOE also proposed in the August 2016 TP SNOPR to include methods for both electric and gas cooking tops to calculate the annual energy consumption and the integrated annual energy consumption to account for the proposed water-heating test method. 81 FR 57374, 57387-57388.

In the August 2016 TP SNOPR, DOE proposed to repeal the conventional oven test procedure. DOE determined that the conventional oven test procedure may not accurately represent consumer use, as it favors conventional ovens with low thermal mass and does not capture cooking performance-related benefits due to increased thermal mass of the oven cavity. 81 FR 57374, 57378-57379.

On December 16, 2016, DOE published a final rule (the “December 2016 TP Final Rule”) repealing the test procedures for conventional ovens for the reasons discussed, and adopting the test procedure amendments for conventional cooking tops proposed in the August 2016 TP SNOPR that, among other things: (1) Incorporated by reference the relevant sections of European Standard EN 60350-2:2013, which uses a water-heating test method to measure the energy consumption of electric cooking tops; (2) extended the water-heating test method specified in EN 60350-2:2013 to gas cooking tops; and (3) clarified that the 20-minute simmering period starts when the water temperature first reaches 90 °C and does not drop below 90 °C for more than 20 seconds after initially reaching 90 °C. 81 FR 91418.

The Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., provides among other things, 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 received a petition from AHAM requesting that DOE reconsider its December 2016 TP Final Rule. In its petition, AHAM requested that DOE undertake a rulemaking to withdraw the test procedure for conventional cooking tops, while maintaining the repeal of the oven test procedure that was part of the Final Rule. In the interim, AHAM sought an immediate stay of the effectiveness of the Final Rule, including the requirement that manufacturers use the final test procedure to make energy-related claims. In its petition, AHAM claimed that its analyses showed that the test procedure is not representative for gas cooking tops and, for gas and electric cooking tops, has such a high level of variation it will not produce accurate results for certification and enforcement purposes and will not assist consumers in making purchasing decisions based on energy efficiency. DOE published AHAM's petition on April 25, 2018, and requested comments and information on whether DOE should undertake a rulemaking to consider the proposal contained in the petition. 80 FR 17944.

In this NOPR, DOE proposes to withdraw the test procedure for conventional cooking tops after evaluating new information and data produced by AHAM and other interested parties that suggest the test procedure yields inconsistent results and is unnecessarily burdensome to conduct. The following discussion addresses substantive comments  5 received by DOE on AHAM's petition to withdraw the cooking top test procedure.

The current test procedure in Appendix I for cooking products measures the integrated annual energy consumption of both gas and electric cooking tops. The integrated annual energy consumption comprises active mode energy consumption of each surface unit on the cooking top, as well as the combined low-power mode energy consumption of the cooking top. In general, to measure the active mode energy consumption of each surface unit, a specified amount of water is heated in a vessel at maximum power (“heat-up” period) until a threshold temperature is reached, and then the power is turned down such that the water is left to simmer at just above 90 degrees Centigrade (°C) for 20 minutes (“simmering” period). The active mode energy consumption is the measured energy used during the entire heat-up and simmering periods.

AHAM asserted in its petition that the current test procedure for cooking products is (1) not repeatable or reproducible for both gas and electric cooking tops, (2) is unduly burdensome to conduct, and (3) is not representative for gas cooking tops. In support of its assertions, AHAM submitted results from round-robin testing it conducted and data provided in its petition request. (AHAM, No. 2 at pp. 9, 16, 28, 39)  6

AHAM asserted in the petition and reiterated in comments that the test procedure is not repeatable nor reproducible for gas cooking tops. AHAM's round robin testing of four laboratories showed a level of lab-to-lab variation in the cooking top gas energy consumption among four different cooking top models (3.02%, 3.63%, 9.67%, and 7.99%) that AHAM stated is higher than the acceptable level of variation, which it assumed to be 2 percent. (AHAM, No. 25 at p. 4) AHAM's data showed that a large contributor to this variation was the simmer portion of the test, and AHAM's investigations found that a possible cause is that the gas flow is highly sensitive to the gas burner knob position. (AHAM, No. 25 at p. 5) BSH Home Appliances Corporation (BSH), Whirlpool Corporation (Whirlpool), and GE Appliances (GEA) also commented that determining the simmer setting is difficult. BSH found that four or five trials per burner were necessary to find the correct simmer setting that would keep the water temperature above 90 °C. (BSH, No. 22 at p. 2; Whirlpool, No. 20 at p. 2; GEA, No. 26 at p. 3) GEA found that two to six trials per burner were necessary to find the correct simmer setting. (GEA, No. 26 at p. 3) Whirlpool also commented that it experienced problems with accuracy in determining the turndown temperature, particularly in instances where a technician was performing multiple tasks in the laboratory and not paying strict attention to water temperatures. (Whirlpool, No. 20 at p. 2) AHAM and Whirlpool also commented that DOE did not address pan warpage as a possible factor in repeatability. (AHAM, No. 2 at p. 38; Whirlpool, No. 20 at p. 4)

AHAM asserted in its petition that DOE did not properly conduct a round robin test to ensure the test procedure is reproducible. AHAM commented that DOE only changed testers but used the same laboratory equipment, which AHAM asserted is insufficient for demonstrating reproducibility. (AHAM, No. 2 at p. 17) Whirlpool, BSH, GEA, and Electrolux Home Products (Electrolux) agreed with AHAM's comment regarding DOE's round robin test. (Whirlpool, No. 20 at p. 2; BSH, No. 22 at p. 2; GEA, No. 26 at p. 4; Electrolux, No. 21 at p. 2)

AHAM also asserted in the petition that the current test procedure is not repeatable or reproducible for electric cooking tops. AHAM stated that DOE did not properly evaluate element cycling in electric cooking tops, which could affect the repeatability of the test procedure. (AHAM, No. 2 at p. 34) GEA, Whirlpool, BSH, and Electrolux agreed with this in their comments. (GEA, No. 26 at pp. 3-4; Whirlpool, No. 20 at p. 2; BSH, No. 22 at p. 3; Electrolux, No. 21 at p. 2) Additionally, AHAM noted that new voluntary Underwriters Laboratories (UL) safety standards (UL 858) could require redesigning the element cycling, which could further cause repeatability issues with the test procedure. (AHAM, No. 2 at pp. 36-37) BSH and Electrolux indicated it was unknown at that time how new electric cooking tops would respond due to the new safety standards. (BSH, No. 22 at p. 5; Electrolux, No. 21 at p. 2) Whirlpool indicated design changes to coil elements were required to meet UL 858, which resulted in increased cycling frequency over shorter durations. (Whirlpool, No. 20 at p. 3)

AHAM also asserted in its petition that the test procedure is overly burdensome, and that DOE underestimated the amount of burden imposed by the test procedure. Specifically, AHAM stated that the required test vessels would cost $9,500 per set for each laboratory, and that the laboratory infrastructure would have to be significantly upgraded to maintain the air temperature tolerance of ±2 degrees Fahrenheit (°F), 7 as some current laboratories can only maintain ±5 °F. (AHAM, No. 2 at pp. 20, 42) Felix Storch, Inc. submitted a comment in support of the AHAM petition, and stated that the fixed costs of the test procedure would have a greater impact for small business that produce lower volumes. (Felix Storch, No. 10 at p. 1) BSH and GEA both commented that the test procedure would require substantial improvements to their laboratories to meet these requirements. (BSH, No. 22 at p. 5; GEA, No. 26 at p. 7) Additionally, AHAM reported that testing time for a gas cooking top ranged from 23-26 hours per unit. (AHAM, No. 25 at p. 2) GEA found that the test procedure required 18 hours, on average, to test a four-burner cooking top. (GEA, No. 26 at p. 7)

AHAM also asserted in its petition that the test procedure is not representative for gas cooking tops. It commented that Europe uses a different test standard for gas cooking tops, which differs from the test standard for electric cooking tops, because the simmering and heat-up characteristics vary for different electric cooking top technologies ( e.g., coil, smooth-radiant, smooth-induction), whereas there are not different types of gas heating technologies. (AHAM, No. 2 at p. 10) Therefore, according to AHAM, gas cooking top testing does not require a simmer portion in the test. (AHAM, No. 2 at p. 15) Additionally, AHAM asserted that the stainless steel cooking vessels used for electric testing are not appropriate for gas cooking top testing, because stainless steel has a lower level of conduction than aluminum. (AHAM, No. 2 at p. 14) BSH similarly asserted that the cookware used for electric cooking tops would not be representative for gas cooking tops. (BSH, No. 22 at p. 4) AHAM also stated that some burners are optimized for specific cooking purposes, and a water boiling test is not representative of how these burners are actually used. AHAM commented that small burners take 35-37 minutes to reach 90 °C, which is unacceptable for consumers. (AHAM, No. 25 at p. 3) BSH and Electrolux commented that water boiling is not representative of all gas cooking top use. (BSH, No. 22 at p. 4; Electrolux, No. 21 at p. 3)

DOE also received a joint submission from Pacific Gas and Electric Company, San Diego Gas and Electric, and Southern California Edison (California Investor Owned Utilities (CAIOUs)) and a joint submission from Appliance Standards Awareness Project, Consumers Union, National Consumer Law Center, Natural Resources Defense Council, and Northwest Energy Efficiency Alliance (Joint Advocates). The CAIOUs and Joint Advocates stated they are not aware of any information to suggest that consumers actually use gas cooking tops differently from electric cooking tops, and further stated that the test procedure should be aligned between those two products. (CAIOU, No. 15 at p. 2; Joint Advocates, No. 24 at p. 1) The CAIOUs and Joint Advocates support the process DOE went through in developing the test procedure, which they stated was rigorous and which included multiple rounds of comments from stakeholders and appropriate modifications to the test procedure in response to these comments. (CAIOU, No. 15 at p. 1; Joint Advocates, No. 24 at p. 1) The CAIOUs and Joint Advocates also support DOE's original testing and conclusions about repeatability, with the CAIOUs stating that they agree with DOE's data indicating that the coefficient of variation in test results is less than 2.0 percent if the test procedure is followed correctly. (CAIOU, No. 15 at pp. 2, 3; Joint Advocates No. 24 at p. 3) The CAIOUs and Joint Advocates stated that AHAM's round robin testing is different from the actual test procedure, so no conclusion can be drawn from AHAM's data. The CAIOUs and Joint Advocates pointed to round robin testing conducted by the European Committee of Domestic Equipment Manufacturers that DOE evaluated in its rulemaking, with the Joint Advocates suggesting that DOE could conduct its own round robin testing to confirm that the test procedure is repeatable and reproducible. (CAIOU, No. 15 at p. 2; Joint Advocates, No. 24 at pp. 2, 3)

DOE is conducting additional testing, including for gas cooktops, in response to these stakeholder comments. These additional tests will evaluate both test-to-test repeatability and lab-to-lab reproducibility.

To date, DOE has completed testing of ten electric cooking tops to investigate issues raised in AHAM's petition. For a subset of these tests, DOE specifically evaluated repeatability of test results. Table III.1 summarizes the results of testing DOE conducted subsequent to receipt of the AHAM petition in which DOE performed multiple test replications on a single burner ( i.e. “surface unit”). Table III.1 indicates that the coefficient of variation for each surface unit's energy consumption was no greater than 2 percent for all the units in the test sample.

Additionally, DOE examined the specific behavior of electric cooking tops within its test sample that exhibit cycling behavior. For these test units, the control algorithm turns the heating element on and off intermittently during the heat-up period, typically in order to prevent excessive cooking top surface temperatures. Table III.2 summarizes these results for a representative electric cooking top that exhibited varying degrees of cycling behavior during testing.

The results in Table III.2 indicate that the manner in which an electric cooking top surface unit cycled during the heat-up period could vary between tests ( i.e., the pattern and frequency of heating element on-off cycles varied).

DOE estimated the time required for performing the test procedure in appendix I. Based on its testing, DOE estimates that a single cooking top surface unit requires around six 90-minute test periods to conduct the complete test procedure, which includes about an hour of cool-down per test period. In total, a cooking top with four surface units requires around 36 work-hours to complete, of which 12 hours require active monitoring by the testing technician.

DOE recognizes that the results of its testing and the results achieved by AHAM show differences have causes yet to be identified. Certainly both sets of tests were conducted by skilled technicians who understand both the product and the test requirements. DOE tentatively determines that existence of these differences suggests that additional investigation of repeatability and reproducibility of the test procedure is warranted. Further, DOE believes that differences in test results are indicative of the test not being representative of energy use or efficiency during an average use cycle. As such, it would be unduly burdensome to subject those manufacturers seeking to make representations as to the efficiency of their products to the requirement to conduct such tests while DOE investigates the issues presented.

Therefore, DOE proposes to withdraw the cooking top test procedure in appendix I to subpart B of part 430. Upon consideration of the comments received, DOE will determine whether to proceed with a final rule to withdraw the test procedure. Because a DOE test method is necessary to develop a performance-based energy conservation standard, if DOE were to ultimately withdraw the test procedure, DOE would need to conduct additional testing and gather additional data to determine any appropriate test procedure for use in developing a subsequent energy conservation standard.

Both the CAIOUs and Joint Advocates asserted that since there is not a performance-based efficiency standard for cooking tops, there is no need to stay the effectiveness of the test procedure. (CAIOU, No. 15 at p. 3; Joint Advocates, No. 24 at pp. 1,4) DOE notes that EPCA requires that a manufacturer making representations of efficiency must use the DOE test procedure, even if there is no standard. Thus, there may be a cost to leaving in place a test procedure that yields inconsistent results and is unnecessarily burdensome to conduct. (42 U.S.C. 6293(c)) Both the CAIOUs and Joint Advocates also stated that the cooking top test procedure is necessary for consumers to make informed purchasing choices relative to energy use and efficiency. (CAIOU, No. 15 at p. 3; Joint Advocates, No. 24 at pp. 1, 4) However, this statement is true only if the test procedure yields accurate results. Multiple commenters have submitted data and information indicating that repeated attempts to follow the test procedure lead to inaccurate results. This suggests that the cooking products test procedure, as conducted by testing laboratories that may not be familiar with its provisions, does not provide information that is potentially beneficial to consumers.

The Office of Management and Budget (OMB) has determined that this NOPR constitutes a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993). Accordingly, this action was subject to review under the Executive Order by the Office of Information and Regulatory Affairs (OIRA) in the OMB.

On January 30, 2017, the President issued Executive Order (E.O.) 13771, “Reducing Regulation and Controlling Regulatory Costs.” The E.O. 13771 stated the policy of the executive branch is to be prudent and financially responsible in the expenditure of funds, from both public and private sources. E.O. 13771 stated that it is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations.

Additionally, on February 24, 2017, the President issued E.O. 13777, “Enforcing the Regulatory Reform Agenda.” E.O. 13777 required the head of each agency designate an agency official as its Regulatory Reform Officer (RRO). Each RRO oversees the implementation of regulatory reform initiatives and policies to ensure that agencies effectively carry out regulatory reforms, consistent with applicable law. Further, E.O. 13777 requires the establishment of a regulatory task force at each agency. The regulatory task force is required to make recommendations to the agency head regarding the repeal, replacement, or modification of existing regulations, consistent with applicable law. At a minimum, each regulatory reform task force must attempt to identify regulations that:

(i) Eliminate jobs, or inhibit job creation;

(ii) Are outdated, unnecessary, or ineffective;

(iii) Impose costs that exceed benefits;

(iv) Create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies;

(v) Are inconsistent with the requirements of Information Quality Act, or the guidance issued pursuant to that Act, in particular those regulations that rely in whole or in part on data, information, or methods that are not publicly available or that are insufficiently transparent to meet the standard for reproducibility; or

(vi) Derive from or implement Executive Orders or other Presidential directives that have been subsequently rescinded or substantially modified.

DOE initially concludes that this rulemaking, which would repeal the test procedure for cooktops on the basis that it does not meet the EPCA requirement that a test procedure be designed to measure energy use or efficiency during a representative average use cycle or period of use and not be unduly burdensome to conduct, is consistent with the directives set forth in these executive orders. This action is expected to be a deregulatory action consistent with E.O. 13771 because manufacturers wanting to make voluntary representations of energy efficiency would be required to use the test procedure, which DOE has found does not comport with the statutory requirements. Repeal of the test procedure would allow manufacturers making voluntary representations to determine the best way to make such representations, until such time as DOE promulgates, through rulemaking, a new test procedure.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires preparation of an initial regulatory flexibility analysis (IRFA) for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the General Counsel's website ( http://energy.gov/gc/office-general-counsel ).

DOE reviewed the proposed withdrawal of the cooking tops test procedure under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003.

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 North American Industry Classification System (NAICS). The SBA considers a business entity to be a small business, if, together with its affiliates, it employs less than a threshold number of workers specified in 13 CFR part 121. The 2017 NAICS code for cooking tops is 335210, small electrical appliance manufacturing. The threshold number for NAICS code 335210 is 1,500 employees. This employee threshold includes all employees in a business's parent company and any other subsidiaries.

DOE conducted a focused inquiry into small business manufacturers of products covered by this rulemaking. DOE primarily used the Compliance Certification Database in DOE's Compliance Certification Management System for cooking products to create a list of companies that sell cooking tops. DOE identified a total of 24 distinct companies that sell cooking tops in the United States.

DOE reviewed these companies to determine whether the entities met the SBA's definition of “small business” and screened out any companies that do not offer products covered by this rulemaking, do not meet the definition of a “small business,” or are foreign-owned and operated. Based on this review, DOE has identified 12 domestic manufacturers of cooking tops that are potential small businesses. Through this analysis, DOE has determined the expected effects of this rulemaking on these covered small businesses and whether an IRFA was needed ( i.e., whether DOE could certify that this rulemaking would not have a significant impact).

DOE is proposing to withdraw the cooking tops test procedure for manufacturers. This would not increase manufacturer's testing burden or add any costs to any manufacturers, small or large. Therefore, DOE concludes that the impacts of this proposal would not have a “significant economic impact on a substantial number of small entities,” and that the preparation of an IRFA is not warranted. DOE will transmit the certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b).

Manufacturers of cooking tops must certify to DOE that their products comply with any applicable energy conservation standards. In certifying compliance, manufacturers must test their products according to the DOE test procedures for cooking products, including any amendments adopted for those test procedures. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment. See generally 10 CFR part 429. The collection-of-information requirement for the certification and recordkeeping is subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This requirement has been approved by OMB under OMB control number 1910-1400. Public reporting burden for the certification is estimated to average 30 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number.

In this proposed rule, DOE proposes test procedure amendments that it expects will be used to develop and implement future energy conservation standards for cooking products. DOE has determined that this rule falls into a class of actions that are categorically excluded from review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) and DOE's implementing regulations at 10 CFR part 1021. Specifically, this proposed rule would revoke the existing test procedures. The existing test procedures are not used for determining compliance with an energy conservation standard and as such, their revocation would not affect the amount, quality or distribution of energy usage, and, therefore, would not result in any environmental impacts. Thus, this rulemaking is covered by Categorical Exclusion A5 under 10 CFR part 1021, subpart D, which applies to any rulemaking that interprets or amends an existing rule without changing the environmental effect of that rule. Accordingly, neither an environmental assessment nor an environmental impact statement is required.

Executive Order 13132, “Federalism,” 64 FR 43255 (August 10, 1999), imposes certain requirements on federal agencies formulating and implementing policies or regulations that preempt state law or that have Federalism implications. The Executive Order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the states and to carefully assess the necessity for such actions. The Executive Order also requires agencies to have an accountable process to ensure meaningful and timely input by state and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE has examined this proposed rule and has determined that it would not have a substantial direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. EPCA governs and prescribes federal preemption of state regulations as to energy conservation for the products that are the subject of this proposed rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) Therefore, no further action is required by Executive Order 13132.

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” imposes on federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this proposed rule meets the relevant standards of Executive Order 12988.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each federal agency to assess the effects of federal regulatory actions on state, local, and tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a proposed regulatory action likely to result in a rule that may cause the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a federal agency to develop an effective process to permit timely input by elected officers of state, local, and tribal governments on a proposed “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect them. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy statement is also available at http://energy.gov/gc/office-general-counsel. DOE examined this proposed rule according to UMRA and its statement of policy and determined that the rule contains neither an intergovernmental mandate, nor a mandate that may result in the expenditure of $100 million or more in any year, so these requirements do not apply.

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

Pursuant to Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights,” 53 FR 8859 (March 15, 1988), DOE has determined that this proposed rule would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.

Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for federal agencies to review most disseminations of information to the public under information quality guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this NOPR under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires federal agencies to prepare and submit to OMB, a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgates or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.

This regulatory action to propose the withdrawal of the cooking products test procedure is not a significant regulatory action under Executive Order 12866. Moreover, it would not have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as a significant energy action by the Administrator of OIRA. Therefore, it is not a significant energy action, and, accordingly, DOE has not prepared a Statement of Energy Effects.

In this NOPR, DOE proposes to incorporate by reference the following test standards: (1) IEC 62301, Household electrical appliances—Measurement of standby power,” Publication 62301 (First Edition 2005-06), section 5; and (2) IEC 62301 Household electrical appliances—Measurement of standby power, (Edition 2.0 2011-01), sections 4 and 5. These standards include test conditions and testing procedures for measuring the average standby mode and average off mode power consumption of microwaves and were previously incorporated in appendix I.

Copies of IEC 62301 (First Edition) and IEC 62301 (Second Edition) can be obtained from the American National Standards Institute, 25 W 43rd Street, 4th Floor, New York, NY 10036, (212) 642-4900, or go to http://webstore.ansi.org.

DOE will accept comments, data, and information regarding this proposed rule before or after the public meeting, but no later than the date provided in the DATES section at the beginning of this proposed rule. Interested parties may submit comments, data, and other information using any of the methods described in the ADDRESSES section at the beginning of this NOPR.

Submitting comments via http://www.regulations.gov. The http://www.regulations.gov web page will require you to provide your name and contact information. 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 itself 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. Otherwise, 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 or 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 below.

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/courier, or mail. Comments and documents submitted via email, hand delivery/courier, or 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 in 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 mail or hand delivery/courier, 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 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, that are written in English, and that are 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/courier 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 to: CookProducts2018TP0004@ee.doe.gov 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 that 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 welcomes comments on any aspect of this proposal, without restriction.

The Secretary of Energy has approved publication of this notice of proposed rulemaking.

For the reasons set forth in the preamble, DOE proposes to amend part 430 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, as set forth below:

Table of Contents I. Introduction A. Authority and Background B. Rulemaking Process II. Request for Information and Comments A. Equipment Covered by This Process B. Market and Technology Assessment 1. Equipment Classes 2. Technology Assessment C. Screening Analysis D. Engineering Analysis 1. General Approach 2. Representative Equipment 3. Baseline Efficiency Level 4. Maximum Available and Maximum Technologically Feasible Efficiency Levels 5. Manufacturer Production Costs and Manufacturer Selling Price 6. Additional Engineering Issues E. Mark-Ups 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 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”), 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 certain industrial equipment. Title III, Part C  2 of EPCA, added by Public Law 95-619, Title IV, § 441(a), established the Energy Conservation Program for Certain Industrial Equipment, which sets forth a variety of provisions designed to improve energy efficiency. This equipment includes UFHWSTs, the subject of this RFI. (42 U.S.C. 6311(1)(K)) EPCA prescribed initial standards for this equipment. (42 U.S.C. 6313(a)(5)(F)-(G))

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 EPCA specifically include definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C. 6313), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C. 6315), and the authority to require information and reports from manufacturers (42 U.S.C. 6316).

Federal energy efficiency requirements for covered equipment established under EPCA generally supersede State laws and regulations concerning energy conservation testing, labeling, and standards. (See 42 U.S.C. 6316(a) and (b); 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 set forth under 42 U.S.C. 6316(b)(2)(D).

EPCA contains mandatory standards for commercial heating, air-conditioning, and water-heating equipment. (42 U.S.C. 6313(a)) Specifically, the statute sets standards for small, large, and very large commercial package air-conditioning and heating equipment, packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs), warm-air furnaces, packaged boilers, storage water heaters, instantaneous water heaters, and unfired hot water storage tanks (collectively referred to as “covered ASHRAE equipment”). Id. In doing so, EPCA established standards that generally correspond to the efficiency levels in the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 90.1, “Energy Standard for Buildings Except Low-Rise Residential Buildings,” as in effect on October 24, 1992 ( i.e., ASHRAE Standard 90.1-1989), for each type of covered equipment listed in 42 U.S.C. 6313(a).

In acknowledgement of technological changes that yield energy efficiency benefits, Congress further directed DOE through EPCA to consider amending the existing Federal standard for each type of equipment listed, each time ASHRAE Standard 90.1 is amended with respect to such equipment. (42 U.S.C. 6313(a)(6)(A)) If ASHRAE Standard 90.1 is amended with respect to the standard levels or design requirements applicable under that standard to any covered ASHRAE equipment, not later than 180 days after the amendment of the standard, DOE must publish in the Federal Register for public comment an analysis of the energy savings potential of amended energy efficiency standards. (42 U.S.C. 6313(a)(6)(A)(i)) For each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE must adopt amended energy conservation standards at the new efficiency level in ASHRAE Standard 90.1, unless clear and convincing evidence supports a determination that adoption of a more-stringent efficiency level as a national standard would produce significant additional energy savings and be technologically feasible and economically justified. 3 (42 U.S.C. 6313(a)(6)(A)(ii)) If DOE decides to adopt as a national standard the efficiency levels specified in the amended ASHRAE Standard 90.1, DOE must establish such standard not later than 18 months after publication of the amended industry standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) If DOE determines that a more-stringent standard is appropriate under the statutory criteria, DOE must establish such more-stringent standard not later than 30 months after publication of the revised ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(ii)(II) and (B))

Although EPCA does not explicitly define the term “amended” in the context of what type of revision to ASHRAE Standard 90.1 would trigger DOE's obligation, DOE's longstanding interpretation has been that the statutory trigger is an amendment to the standard applicable to that equipment under ASHRAE Standard 90.1 that increases the energy efficiency level for that equipment. See 72 FR 10038, 10042 (March 7, 2007). In other words, if the revised ASHRAE Standard 90.1 leaves the energy efficiency level unchanged (or lowers the energy efficiency level), as compared to the energy efficiency level specified by the uniform national standard adopted pursuant to EPCA, regardless of the other amendments made to the ASHRAE Standard 90.1 requirement ( e.g., the inclusion of an additional metric), DOE has stated that it does not have the authority to conduct a rulemaking to consider a higher standard for that equipment pursuant to 42 U.S.C. 6313(a)(6)(A). See 74 FR 36312, 36313 (July 22, 2009) and 77 FR 28928, 28937 (May 16, 2012). However, DOE notes that Congress adopted amendments to these provisions related to ASHRAE Standard 90.1 equipment under the American Energy Manufacturing Technical Corrections Act (Pub. L. 112-210 (Dec. 18, 2012); “AEMTCA”). In relevant part, DOE is prompted to act whenever ASHRAE Standard 90.1 is amended with respect to “the standard levels or design requirements applicable under that standard” to any of the enumerated types of commercial air conditioning, heating, or water heating equipment. (42 U.S.C. 6313(a)(6)(A)(i))

EPCA does not detail the exact type of amendment that serves as a triggering event. However, DOE has considered whether its obligation is triggered in the context of whether the specific ASHRAE Standard 90.1 requirement on which the most current Federal requirement is based is amended ( i.e., the regulatory metric). For example, if an amendment to ASHRAE Standard 90.1 changed the metric for the standard on which the Federal requirement was based, DOE would perform a crosswalk analysis to determine whether the amended metric under ASHRAE Standard 90.1 resulted in an energy efficiency level that was more stringent than the current DOE standard. Conversely, if an amendment to ASHRAE Standard 90.1 were to add an additional metric by which a class of equipment is to be evaluated, but did not amend the requirement that is in terms of the metric on which the Federal requirement was based, DOE would not consider its obligation triggered. 4

In addition, DOE has explained that its authority to adopt an ASHRAE amendment is limited based on the definition of “energy conservation standard.” 74 FR 36312, 36322 (July 22, 2009). In general, an “energy conservation standard” is limited, per the statutory definition, to either a performance standard or a design requirement. (42 U.S.C. 6311(18)) Informed by the “energy conservation standard” definition, DOE has stated that adoption of an amendment to ASHRAE Standard 90.1 “that establishes both a performance standard and a design requirement is beyond the scope of DOE's legal authority, as would be a standard that included more than one design requirement.” 74 FR 36312, 36322 (July 22, 2009).

As noted, the ASHRAE Standard 90.1 provision in EPCA acknowledges technological changes that yield energy efficiency benefits, as well as continuing development of industry standards and test methods. Amendments to a uniform national standard provide Federal requirements that continue to reflect energy efficiency improvements identified by industry. Amendments to a uniform national standard that reflect the relevant amended versions of ASHRAE Standard 90.1 would also help reduce compliance and test burdens on manufacturers by harmonizing the Federal requirements, when appropriate, with industry best practices. This harmonization would be further facilitated by establishing not only consistent energy efficiency levels and design requirements between ASHRAE Standard 90.1 and the Federal requirements, but comparable metrics as well.

As stated previously, DOE has limited its review under the ASHRAE Standard 90.1 provisions in EPCA to the equipment class that was subject to the ASHRAE Standard 90.1 amendment. DOE has stated that if ASHRAE has not amended a standard for an equipment class subject to 42 U.S.C. 6313, there is no change that would require action by DOE to consider amending the uniform national standard to maintain consistency with ASHRAE Standard 90.1. See, 72 FR 10038, 10042 (March 7, 2007); 77 FR 36312, 36320-36321 (July 22, 2009); 80 FR 42614, 42617 (July 17, 2015).

In those situations where ASHRAE has not acted to amend the levels in Standard 90.1 for the equipment types enumerated in the statute, EPCA also provides for a 6-year-lookback to consider the potential for amending the uniform national standards. (42 U.S.C. 6313(a)(6)(C)) Specifically, pursuant to the amendments to EPCA under AEMTCA, DOE is required to conduct an evaluation of each class of covered equipment in ASHRAE Standard 90.1 “every 6 years” to determine whether the applicable energy conservation standards need to be amended. (42 U.S.C. 6313(a)(6)(C)(i)) DOE must publish either a notice of proposed rulemaking (NOPR) to propose amended standards or a notice of determination that existing standards do not need to be amended. (42 U.S.C. 6313(a)(6)(C)) In proposing new standards under the 6-year review, DOE must undertake the same considerations as if it were adopting a standard that is more stringent than an amendment to ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(C)(i)(II)) This is a separate statutory review obligation, as differentiated from the obligation triggered by an ASHRAE Standard 90.1 amendment. While the statute continues to defer to ASHRAE's lead on covered equipment subject to Standard 90.1, it does allow for a comprehensive review of all such equipment and the potential for adopting more-stringent standards, where supported by the requisite clear and convincing evidence. That is, DOE interprets ASHRAE's not amending Standard 90.1 with respect to a product or equipment type as ASHRAE's determination that the standard applicable to that product or equipment type is already at an appropriate level of stringency, and DOE will not amend that standard unless there is clear and convincing evidence that a more-stringent level is justified.

As discussed in the paragraphs immediately below, the standard for unfired hot water storage tanks in ASHRAE Standard 90.1 was last updated in October 1999. However, as noted previously, EPCA requires DOE to evaluate the applicable energy conservation standard for unfired hot water storage tanks every 6 years to determine whether it needs to be amended. (42 U.S.C. 6313(a)(6)(C)(i)) Thus, DOE is publishing this RFI to collect data and information to inform its decision consistent with its obligations under EPCA.

As noted previously, the initial Federal standards for UFHWSTs, established by EPCA, corresponded to the efficiency levels contained in the ASHRAE Standard 90.1-1989. On January 12, 2001, DOE amended the standards for UFHWSTs to be equivalent to the efficiency level in ASHRAE Standard 90.1 as revised in October 1999. 66 FR 3336 (“January 2001 final rule”). The January 2001 final rule established an insulation design requirement of a minimum R-value  5 of R-12.5. 66 FR 3336, 3356. This remains the current Federal standard (and the standard level specified in the most recent version of ASHRAE Standard 90.1). The current standard is located in title 10 of the Code of Federal Regulations (“CFR”) part 431, section 110 (10 CFR 431.110). DOE does not prescribe a test procedure for UFHWSTs; however, DOE's regulations define “R-value,” in part, as being determined using either ASTM International (“ASTM”) C177-13, “Standard Test Method for Steady-State Heat Flux Measurements and Thermal Transmission Properties by Means of the Guarded-Hot-Plate Apparatus,” or ASTM C518-15, “Standard Test Method for Steady-State Thermal Transmission Properties by Means of the Heat Flow Meter Apparatus.” 10 CFR 431.102

DOE must follow specific statutory criteria for prescribing amended standards for certain covered equipment. EPCA requires that any amended uniform national standard result in significant additional conservation of energy and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(C)(i)(II) and (B)) To determine whether a standard is economically justified, EPCA requires that DOE determine whether the benefits of the standard exceed its burdens by considering, to the maximum extent practicable, the following seven factors:

(1) The economic impact of the standard on manufacturers and consumers of the affected equipment subject to the standard;

(2) The savings in operating costs throughout the estimated average life of the covered equipment in the type (or class) compared to any increase in the prices, initial charges, or maintenance expenses for the covered equipment likely to result from the standard;

(3) The total projected amount of energy savings likely to result directly from the standard;

(4) Any lessening of the utility or the performance of the covered equipment 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 conservation; and

(7) Other factors the Secretary of Energy (Secretary) considers relevant.

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.

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 UFHWSTs.

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 an amended uniform national standard for UFHWSTs 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 UFHWSTs while remaining consistent with the requirements of EPCA.

This RFI covers equipment that meets the definition for “unfired hot water storage tank,” as codified at 10 CFR 431.102. 6 The definition for “unfired hot water storage tank” was most recently amended in a 2004 test procedure final rule for commercial water heating (CWH) equipment. 69 FR 61974 (Oct. 21, 2004). Specifically, DOE's regulations define “unfired hot water storage tank” as a tank used to store water that is heated externally, and that is industrial equipment. 10 CFR 431.102. UFHWSTs do not use energy ( i.e., UFHWSTs do not directly consume electricity or fossil fuel). (42 U.S.C. 6311(4)) Instead, the hot water stored by a UFHWST is supplied by a water heater or boiler that is paired with the UFHWST. Heat loss that occurs in a UFHWST does impact the energy consumption of the paired water heater or boiler.

Neither EPCA nor DOE's regulations include any storage volume criteria for UFHWSTs. Accordingly, UFHWSTs, regardless of storage volume, are subject to the current standard.

Issue A.1  DOE seeks comment on whether, in the context of its consideration of more-stringent standards, there have been sufficient technological or market changes for UFHWSTs since the most recent standards update that may justify a new rulemaking to consider more-stringent standards. Specifically, DOE seeks data and information that could enable the agency to determine whether DOE should propose a “no new standard” determination because a more-stringent standard: (1) Would not result in significant additional savings of energy; (2) is not technologically feasible; (3) is not economically justified; or (4) any combination of the foregoing.

Issue A.2  DOE requests comment on whether the definition for UFHWSTs requires any revisions—and if so, how the definition should be revised. DOE also requests feedback on whether any sub-category definitions should be added, and if so, DOE seeks specific input on what terms would be needed and 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.

The market and technology assessment that DOE routinely conducts when analyzing the impacts of a potential new or amended standard provides information about the UFHWST industry that will be used in DOE's analysis throughout the rulemaking process. DOE uses qualitative and quantitative information to assess the past and present industry structure and market characteristics. 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 UFHWSTs. To this end, DOE reviews product literature, industry publications, and company websites. Additionally, DOE considers conducting interviews with manufacturers to improve its assessment of the market and available technologies for UFHWSTs.

When evaluating and establishing energy conservation standards, DOE may divide covered equipment into equipment classes by the type of energy used, or by capacity or other performance-related features that justify a different standard. In making a determination whether capacity or other 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.

For UFHWSTs, the current standard at 10 CFR 431.110 is applicable to a single equipment class covering all UFHWSTs.

Issue B.1  DOE requests feedback on whether any division of UFHWSTs into separate equipment classes is warranted, and whether it would impact equipment utility by eliminating any performance-related features or reduce any compliance burdens.

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 standards under consideration. In consultation with interested parties, DOE intends to develop a list of technologies to consider in its analysis. DOE's current standard for UFHWSTs is a prescriptive requirement for minimum tank insulation R-value. Therefore, only technology options that improve tank insulation R-value would be applicable for analyzing more-stringent tank insulation R-value requirements. However, DOE also seeks input on other technologies that can reduce heat loss of UFHWSTs, including those that do not improve R-value.

As described in section II.C of this RFI, some technologies may be removed from consideration during a subsequent screening analysis. The resulting list of technologies that are considered by DOE would be used to establish the maximum technologically feasible design. DOE conducted preliminary market research by examining manufacturer equipment literature and public technical literature ( e.g., reports, journal articles, or presentations) which identified the specific technology options listed subsequently. DOE will consider these technologies along with any others identified during the analysis following the RFI, and the rulemaking process should it determine that a rulemaking is necessary.

Issue B.2  DOE seeks information related to these or other technologies that reduce heat loss. Specifically, DOE is interested in comments regarding the applicability of such technologies to the current market, the associated costs, concerns with incorporating them into UFHWSTs ( e.g., impacts on utility, potential safety concerns, manufacturing/production/implementation issues), and how these technologies would reduce the heat loss of UFHWSTs.

The purpose of the screening analysis is to evaluate the technologies that improve equipment efficiency (or in the present case, reduce heat loss) 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.

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 that efficiency level ( i.e., if there are other non-proprietary technologies capable of achieving the same efficiency level).

Issue C.1  DOE requests feedback on what impact, if any, the four screening criteria described in this section would have on each of the technology options identified in section II.B.2 of this RFI. 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 UFHWSTs.

The engineering analysis estimates the cost-efficiency relationship of equipment at different levels of reduced heat loss (“efficiency levels”). 7 This relationship serves as the basis for the cost-benefit calculations for commercial consumers, manufacturers, and the Nation. In determining the cost-efficiency relationship, DOE estimates the increase in manufacturing production cost (“MPC”) associated with reducing the heat loss of equipment above the baseline, up to the maximum technologically feasible (“max-tech”) efficiency level for each equipment 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 materials, labor, shipping/packaging, and investment for models that operate at particular efficiency levels.

In order to develop the cost-efficiency relationship for UFHWSTs, DOE anticipates that it will structure its engineering analysis using both a reverse-engineering (or cost-assessment) and a catalog teardown approach. The catalog-teardown approach relies on a teardown analysis of representative units at the baseline efficiency level and higher efficiency levels up to the maximum technologically feasible designs. A teardown analysis (or physical teardown) determines the production cost of a product by disassembling the product “piece-by-piece” and estimating the material and labor cost of each component. A catalog teardown approach uses published manufacturer catalogs and supplementary component data to estimate the major physical differences between equipment that has been physically disassembled and similar equipment. These two methods would be used together to help DOE estimate the manufacturer production cost of equipment at various efficiency levels.

Issue D.1  DOE requests feedback on the planned approach for the engineering analysis.

As previously stated, DOE intends to perform a teardown analysis on a set of models with “representative” characteristics to estimate the cost-efficiency relationship for UFHWSTs. DOE plans to conduct teardowns at specific storage volumes (referred to as representative storage volumes) that are the most common on the market, and extrapolate those results for the entire market. Based on a survey of models currently on the market, DOE has preliminarily determined the most common characteristics of UFHWSTs in order to identify a representative unit(s). In particular, DOE examined the number of UFHWST models available at distinct rated storage volumes and identified the most common storage volumes on the market as 80 and 119 gallons. DOE is also aware that UFHWSTs can be either vertical or horizontal tanks and recognizes that the tank orientation may affect heat losses from the tank and placement of ports. Based on its market assessment, DOE has found that vertical tanks are more common than horizontal tanks and that horizontal tanks do not have sufficiently different characteristics from vertical tanks to necessitate separate analysis of representative horizontal units. Finally, DOE is aware that the number and location of ports can affect standby heat losses; therefore, DOE may consider a representative configuration of ports.

Issue D.2  DOE requests feedback on the appropriate representative storage volume to use for analysis of UFHWSTs, whether more than one representative storage volume is warranted, and on whether 80 and/or 119 gallons would be appropriate.

Issue D.3  DOE requests comment on whether a vertical tank orientation should be considered representative for the UFHWST market. Such comments may include, but need not be limited to, data as to the fraction of UFHWST shipments that are horizontal tanks, and on whether this fraction depends on storage volume. DOE seeks feedback on whether horizontal tanks have any differences or limitations regarding insulation thickness relative to vertical tanks. DOE also requests comment on whether there is a difference in the utility provided by a vertical tank, as compared to a horizontal tank, that should be considered when identifying representative equipment.

Issue D.4  DOE requests comment on whether there is a configuration of ports ( i.e., number and location), or a limited set of port configurations, that is most common for UFHWSTs and that would, therefore, be appropriate to analyze as part of the representative unit(s) in the engineering analysis. DOE further seeks feedback on whether this representative configuration would depend on storage volume.

DOE selects a baseline model as a reference point against which any changes resulting from potential new or amended standards can be measured. The baseline model represents the characteristics of common or typical equipment. Typically, a baseline model is one that meets the current minimum standard 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 commercial 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.

Consistent with this analytical approach, DOE tentatively plans to consider the current minimum standard (which went into effect October 29, 2003) to establish the baseline efficiency level. The current standard is a prescriptive minimum insulation requirement (R-value of 12.5). 10 CFR 431.110.

Issue D.5  DOE requests feedback on whether using the current established standard for UFHWSTs is an appropriate baseline efficiency level for DOE to apply in evaluating whether to amend the current standard for this equipment. DOE requests data and suggestions to evaluate the baseline efficiency level in order to better evaluate amending the standard for this equipment.

Issue D.6  DOE requests comment on the insulation types and thicknesses typically used in UFHWSTs with R-12.5 tank insulation ( i.e., at the current baseline level). DOE also seeks feedback on whether any models with R-12.5 insulation use only fiberglass insulation, and if so, what the maximum feasible R-value is for insulation of UFHWSTs with fiberglass.

As part of DOE's analysis, the maximum available efficiency level is the highest-efficiency model currently available on the market. To identify efficiency levels (including the maximum available efficiency level) and technology options used above the R-12.5 baseline for UFHWSTs, DOE conducted a survey of the UFHWST market, including manufacturer catalogs and other publicly-available literature. Many models are advertised as having a tank insulation R-value that “meets or exceeds” R-12.5, without specifying the exact R-value. DOE only identified two model lines for which the manufacturer advertises specific insulation R-values above the R-12.5 baseline, which were advertised as having R-12.9 and R-16 insulation. The product literature for models with these higher insulation R-values identifies the insulation as polyurethane foam insulation but does not provide the insulation thickness.

DOE defines a max-tech efficiency level to represent the theoretical maximum possible efficiency if all available technology options are incorporated in a model. In many cases, the max-tech efficiency level is not commercially available because it is not economically feasible. However, DOE seeks to determine the max-tech level for purposes of its analyses.

Issue D.7  DOE seeks comment on what the range of tank insulation R-values is for the UFHWST market. Such comments may include, but need not be limited to, whether there are models on the market with tank insulation R-values other than R-12.5, R-12.9, and R-16. Further, DOE seeks feedback on the insulation types and thicknesses that typically correspond with any R-values higher than R-12.5.

Issue D.8  DOE requests comment on performance of UFHWSTs currently on the market, including, but not limited to, what the highest tank insulation R-value on the market is ( i.e., the maximum available level), and on what insulation type(s) and thickness(es) typically correspond with this level. DOE also seeks input on whether the maximum available efficiency level is appropriate and technologically feasible for potential consideration as a possible standard for UFHWSTs—and if not, why not. Additionally, DOE seeks feedback on whether there are practical limitations ( e.g., shipping or installation concerns) on the thickness of tank insulation that can be applied to UFHWSTs.

Issue D.9  DOE seeks feedback on what design options would be incorporated at a max-tech efficiency level, and the heat losses associated with those levels. More specifically, DOE seeks comment on the theoretical maximum possible tank insulation R-value, and on what insulation type(s) and thickness(es) would correspond with this level. As part of this request, DOE also seeks information as to whether there are limitations on the use of certain combinations of design options.

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 associated with higher-efficiency equipment.

Issue D.10  DOE requests feedback on how manufacturers would incorporate the technology options listed in section II.B.2 to increase the tank-insulation R-values in UFHWSTs beyond the baseline. This includes information on the order in which manufacturers would incorporate the different technologies to incrementally improve the R-value (or otherwise reduce the heat loss) of equipment. DOE requests feedback on whether increasing tank insulation R-value would lead to other design changes that would not occur otherwise. DOE is also interested in information regarding any potential impact of increased tank insulation R-value on a manufacturer's ability to incorporate additional functions or attributes in response to consumer demand.

Issue D.11  DOE seeks comment on the increase in MPC associated with incorporating each particular technology option. DOE also requests information on the investments necessary to incorporate specific technology options, including, but not limited to, costs related to new or modified tooling (if any), materials, engineering and development efforts to implement each technology option, and manufacturing/production impacts.

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 a notice of proposed rulemaking for energy conservation standards (“ECS”) for certain classes of commercial water heating equipment published on May 31, 2016, DOE estimated a manufacturer mark-up of 1.41 for commercial electric storage water heaters. 81 FR 34440, 34497 (“May 2016 CWH ECS NOPR”). DOE's market assessment indicates that many manufacturers produce both UFHWSTs and electric storage water heaters and that these equipment categories share many design features. Additionally, some tanks designed for electric storage water heaters are used in UFHWST models (see discussion in section II.D.6 of this RFI). Therefore, DOE has tentatively concluded that the manufacturer mark-up for commercial electric storage water heaters is appropriate to apply for analysis of UFHWSTs.

Issue D.12  DOE requests feedback on whether a manufacturer mark-up of 1.41 is appropriate for UFHWSTs.

Due to the need for ports and other openings for service/maintenance or repair, the entire surface of an UFHWST cannot be insulated with foam insulation, and, therefore, portions of the UFHWSTs currently on the market are insulated with fiberglass or uninsulated. Additionally, DOE research suggests that manufacturers may use a single tank design for multiple models and plug ports or other openings that are not designed to be used for a given model but that may be used for a similar model. In such cases where a single tank design is used for multiple models, plugged openings sometimes are not covered with tank foam insulation if the foam insulation is applied before any openings are plugged. Further, manufacturers may use a tank designed for electric storage water heaters as the tank for an UFHWST model by plugging the openings for electric resistance heating elements. Electric storage water heaters typically include gaps in tank foam insulation where each heating element and thermostat are located, and these gaps are often insulated with foam or fiberglass insulation inserts. DOE has also observed during testing and examination of water heaters and UFHWSTs that there sometimes are voids in the foam insulation that is applied to some UFHWSTs that form either during or after the foaming process.

Issue D.13  DOE requests comment on the current practices and limitations of foam insulation, including, but not limited to, the approximate fraction of the tank surface area that can typically be insulated with foam. Further, DOE seeks feedback on whether there is significant variation on the market of the fraction of the tank insulated with foam.

Issue D.14  DOE requests comment on the presence of plugged ports, such as how commonly UFHWSTs include plugged ports, and if included, how the plugged ports are insulated ( e.g., covered with foam insulation, fiberglass wrap, a fiberglass insert, or not insulated). Further, DOE requests comment on the extent to which electric storage water heater tanks are used for UFHWST models, and when used, how/whether the areas of the tank containing ports for resistance heating elements and thermostats are insulated.

Issue D.15  DOE requests comment on the extent to which voids form in foam insulation on UFHWSTs. Further, DOE seeks comment on the extent to which voids affect the standby losses of UFHWSTs.

In response to the May 9, 2016 CWH TP NOPR (81 FR 28588), several stakeholders stated that many UFHWSTs are customized for specific applications or installations. (Bradford White, Docket No. EERE-2014-BT-TP-0008-0021 at p. 5; AHRI, Docket No. EERE-2014-BT-TP-0008-0026  8 at p. 12; A.O. Smith, Docket No. EERE-2014-BT-TP-0008-0027 at p. 4; Rheem, Docket No. EERE-2014-BT-TP-0008-0034 at p. 8). However, it is unclear what share of the market consists of custom models, and to what extent UFHWSTs are customized.

Issue D.16  DOE seeks comment on the customization of UFHWSTs, including but not limited to, information as to the fraction of UFHWST shipments that are custom models, and whether this fraction varies by storage volume; and which aspects are customized in UFHWSTs and whether aspects other than number and locations of ports are customized. DOE also seeks feedback on the extent to which the number and location of ports affect standby heat losses of UFHWSTs. Further, DOE seeks feedback on whether UFHWSTs included in publicly-available product literature can be customized or if customizable models are not publicly advertised.

The mark-ups analysis develops appropriate mark-ups ( e.g., for wholesalers, mechanical contractors, general contractors) in the distribution chain 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.

In generating end-user price inputs for the LCC analysis and the NIA, DOE must identify distribution channels ( i.e., how the equipment passes through the chain of commerce from the manufacturer to the customer), and estimate relative sales volumes through each channel. Two different markets exist for UFHWST systems: (1) Replacements and new owners, 9 and (2) new construction. DOE intends to use similar distribution channels as found in the May 2016 CWH ECS NOPR TSD. 10

For replacement and new owner applications, manufacturers sell mainly to plumbing distributors. The main distribution path that DOE intends to consider is a plumbing distributor ( i.e., a wholesaler) who sells an UFHWST to a contractor, who then sells it to a consumer and installs it. The manufacturer may also utilize a manufacturer's representative to sell the equipment to a plumbing contractor, who then sells it to the commercial consumer. The manufacturer may sell the equipment to a retailer, who in turn may sell it to a plumbing contractor, who in turn sells it to a commercial consumer.

In addition, DOE plans to consider distribution channels where the manufacturer sells the UFHWST a wholesaler or retailer that then sells the equipment to the commercial or industrial consumer. DOE also plans to consider the distribution channel where the manufacturer sells a UFHWST directly to a commercial or industrial consumer through a national account. These three channels reflect those cases where the installation can be accomplished by site personnel.

In summary, DOE plans to characterize the replacement and new owner market distribution channels for UFHWST systems as follows:

The new construction distribution channel for UFHWST equipment includes an additional link in the chain—the general contractor. In most new construction applications, the UFHWST is part of the overall plumbing package installed by a plumbing contractor or, in the case of large building companies, by its own master plumber and crew. A plumbing contractor usually purchases the water heater from a plumbing distributor, and in this case, it is appropriate to include a contractor mark-up. In addition, similar to the replacement and new owner distribution channel, DOE plans to consider distribution channels where the manufacturer sells the UFHWST to a wholesaler or retailer that then sells the equipment to the commercial or industrial consumer, and the distribution channel where the manufacturer sells a UFHWST directly to a commercial or industrial consumer through a national account.

In the case of new construction, DOE plans to characterize the distribution channels as follows:

Issue E.1  DOE seeks input from stakeholders on whether the distribution channels described above are appropriate for UFHWSTs and are sufficient to characterize this market.

Issue E.2  DOE seeks input on the equipment being distributed through the identified channels, including but not limited to, the percentage of equipment being distributed through the different distribution channels, and whether the share of equipment through each channel varies based on equipment capacity (storage volume).

To develop mark-ups for the parties involved in the distribution of the equipment, DOE plans to primarily utilize: (1) Form 10-K  11 from the main consumer water heater wholesalers  12 and retailers (for wholesalers and retailers); (2) the Heating, Air Conditioning & Refrigeration Distributors International (“HARDI”) 2013 Profit Report  13 (for wholesalers); (3) the latest U.S. Census Annual Retail Trade Survey data  14 (for retailers), and (4) U.S. Census Bureau 2012 Economic Census data  15 on the residential and commercial building construction industry (for retailers, 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  16 to disaggregate the mechanical contractor mark-ups into replacement and new construction markets. DOE does not currently have enough information to estimate separate mark-ups for manufacturer's representatives, so DOE plans to assume that the manufacturer's representative mark-up is the same as the wholesaler mark-up.

Issue E.3  DOE seeks recent data and recommendations regarding data sources to establish the mark-ups for the parties involved with the distribution of the UFHWST equipment.

As part of the rulemaking process, DOE conducts an energy use analysis to identify how equipment is used by commercial consumers, and thereby determine the energy savings potential of energy efficiency improvements. As discussed, UFHWSTs store hot water and do not directly consume fuel or electricity for the purpose of heating water, so any potential amendments to the standard target reducing standby loss associated with heat loss from the stored water. The energy use analysis would determine the annual energy consumption of water heaters and boilers due to standby loss of the paired UFHWSTs and to assess the energy savings potential of an amended UFHWST standard, as well as of other technologies that may be applied.

DOE intends to base the energy use analysis on key characteristics from the most current version of the Energy Information Administration's (“EIA”) Commercial Building Energy Consumption Survey (“CBECS”)  17 for the subset of commercial building types that use UFHWSTs. DOE also plans to include the industrial sector  18 using EIA's most current Manufacturing Energy Consumption Survey (“MECS”)  19 for the subset of sectors that use UFHWSTs. DOE also plans to look at the use of UFHWSTs in residential applications, for which it plans to include characteristics from EIA's most current Residential Energy Consumption Survey (“RECS”)  20 for a subset of building types (primarily multi-family buildings) that use UFHWSTs.

CBECS and RECS data include information on the physical characteristics of buildings, water heaters and boilers used, fuels used, energy consumption and expenditures, and other relevant characteristics. Neither CBECS nor RECS provide data on whether the building has an UFHWST. Also, MECS does not provide individual sample characteristics. Therefore, DOE intends to develop a methodology for adjusting its building sample to reflect buildings or industrial sectors that are more likely to include UFHWSTs based on the type of water heating and space heating equipment used in the building (for example if the building has a boiler or a commercial water heater). Based on the most current CBECS, MECS, and RECS data, DOE will develop a representative population of buildings for UFHWST equipment. In addition, DOE intends to review other data sets ( e.g., data from the 2016 Residential Building Stock Assessment for the Northwest, 21 2014 Commercial Building Stock Assessment for the Northwest, 22 2014 Industrial Facilities Site Assessment for the Northwest, 23 2015 Residential Statewide Baseline Study of New York State, 24 2006 California Commercial End-Use Survey, 25 and 2009 Residential Appliance Saturation Study  26 ) to compare these to the CBECS, MECS, and RECS data for the corresponding region.

Issue F.1  DOE seeks input on the water heating equipment and associated fuels that are used to heat the water stored in UFHWSTs, including, but not limited to, information on the fractions of various space heating and water heating equipment that are associated with UFHWSTs, as follows: Gas-fired hot water boilers, electric hot water boilers, oil-fired hot water boilers, gas-fired steam boilers, electric steam boilers, oil-fired steam boilers, gas-fired storage water heaters, electric storage water heaters, oil-fired storage water heaters, gas-fired tankless water heaters, electric tankless water heaters, heat pump water heaters, solar water heater systems, and heat from other sources (such as industrial processes).

Issue F.2  DOE requests information on the installation applications of UFHWSTs, including, but not limited to the fraction of UFHWSTs that are installed in residential (primarily multi-family buildings), commercial, and industrial applications.

The relevant energy consumption is the site energy use associated with offsetting the standby losses incurred by the UFHWST(s) installed in the building. To determine the field standby loss of the UFHWSTs for the purposes of the energy use analysis, DOE intends to use a methodology based on the “R-value” defined by DOE's regulations of UFHWSTs. 27 DOE's methodology will convert the R-value to field standby losses based on tank sizes, tank set point temperature, and surrounding air temperature. The energy use will then be calculated in terms of the fuel type and efficiency of the water heating equipment used to offset the standby losses. DOE intends to also consider any degradation in the R-value over the lifetime of UFHWSTs.

Issue F.3  DOE requests relevant information, such as field or test energy use data, that could assist in the development of an energy use equation to determine field standby loss.

Issue F.4  DOE requests comment on the methodology for determining the standby loss for UFHWSTs based on the R-value and the impact of ambient conditions, tank set-point temperature, and draw patterns.

Issue F.5  DOE seeks data and input on typical tank water temperatures for UFHWSTs used in various residential (primarily multi-family buildings), commercial, and industrial applications to establish the fraction of UFHWSTs storing water at different temperatures.

Issue F.6  DOE seeks input on what are typical storage volumes of UFHWSTs used in various residential (primarily multi-family buildings), commercial, and industrial applications, including, but not limited to the fraction of UFHWSTs at different storage volumes ( i.e., equal to or less than 120 gallons, greater than 120 gallons and equal to or less than 500 gallons, greater than 500 gallons).

Issue F.7  DOE requests comment on the installation location of UFHWSTs in the context of the ambient air temperature conditions, including, but not limited to, the fraction of UFHWSTs that are installed outdoors, in an indoor conditioned space, or an indoor unconditioned space.

Issue F.8  DOE requests comment and any data concerning the potential degradation in the R-value over the lifetime of UFHWSTs.

Issue F.9  To better understand the distribution of energy consumption load profiles, DOE seeks comment on the fraction of UFHWSTs that are installed in utility grid-enabled storage applications.

DOE plans to conduct LCC and PBP analyses to evaluate the economic impacts on residential (primarily multi-family buildings), commercial, and industrial consumers of potential standards for UFHWSTs. The effect of new or amended standards on residential (primarily multi-family buildings), commercial, and industrial 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 (primarily multi-family buildings), commercial, and industrial consumers. DOE plans to utilize the sample of buildings developed for the energy use analysis and the corresponding simulation results. 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 displayed 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.

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 installed cost. DOE intends to develop installation costs using the most recent RS Means data available. 28 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 household or building.

In conducting its analyses, DOE intends to utilize a basic installation plan that would apply to all UFHWSTs. For UFHWSTs in new installations, DOE plans to include costs such as adding water piping, putting the UFHWST 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 UFHWST, as well as removal/disposal and permit fees, if applicable. In addition, DOE intends to assess whether installation costs vary with insulation levels and storage volume.

Issue G.1  DOE seeks input on any available installation cost data for UFHWSTs. DOE also seeks input on the approach it intends to use to develop UFHWST installation costs.

Issue G.2  DOE seeks input on any additional costs associated with installing UFHWSTs. For example, DOE seeks feedback on any installation costs associated with potential space-constraint issues when the original UFHWST location is too small to accommodate the replacement UFHWST (particularly when installing a UFHWST with a lower heat loss that may have larger physical dimensions).

The primary inputs for calculating the operating costs of UFHWSTs 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 relevant energy consumption is the site energy use associated with offsetting the standby losses incurred by the UFHWST(s) installed in the building. DOE intends to utilize the standby loss calculation methodology described in section II.F of this document to determine energy use to offset the UFHWST's standby losses.

Maintenance costs are expenses associated with ensuring continued operation of the covered equipment over time. DOE intends to develop maintenance costs using the most recent RS Means data available  29 and manufacturer literature. DOE intends to assess whether maintenance costs vary with equipment heat loss and storage volume. In addition, DOE plans to consider the cases in which the equipment is covered by service and/or maintenance agreements. More specifically, DOE intends to account for the maintenance cost associated with UFHWSTs being drained and flushed annually to minimize deposition of sediment, maintain operating efficiency, and prolong equipment life.

Issue G.3  DOE seeks comment as to whether UFHWST maintenance costs vary as a function of insulation level and storage volume, for the technology options listed in section II.B.2. DOE also requests any data or information on maintenance costs and seeks comment on the extent to which maintenance costs are covered by service and/or maintenance agreements.

Repair costs are expenses associated with repairing or replacing components of the covered equipment that have failed. DOE intends to develop maintenance costs using the most recent RS Means data available  30 and manufacturer literature. DOE intends to assess whether repair costs vary with insulation level and storage volume.

Issue G.4  DOE seeks comment as to whether UFHWST repair costs and frequency of repair vary as a function of insulation level and storage volume, for the technology options listed in section II.B.2. DOE also requests any data or information on repair costs and seeks comment on the extent to which repair costs are covered by service and/or maintenance agreements. DOE is also interested in whether consumers simply replace the equipment when they fail as opposed to repairing them.

Equipment lifetime is the age at which a unit is retired from service. DOE intends to conduct a literature review of UFHWST lifetime data together with any stakeholder lifetime data to develop a Weibull probability distribution to characterize UFHWST lifetime. 31

Issue G.5  DOE requests equipment lifetime data and information on whether equipment lifetime varies based on UFHWST storage volume, application, or insulation level.

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 equipment shipments by insulation level) for the UFHWSTs, for the anticipated year in which compliance with any potential amended standards would be required. DOE is not aware of any data to estimate the market shares of different UFHWST insulation 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 water heater models at different insulation levels, as reported in DOE's compliance certification database  32 and from manufacturer literature.

Issue G.6  DOE requests information on the UFHWSTs market, including but not limited to, the current UFHWSTs market share data by different by insulation levels; similar historic data; and information on expected future trends in the efficiency of UFHWSTs.

DOE develops shipments forecasts of equipment to calculate the national impacts of potential amended 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 equipment class, capacity, and efficiency. Current sales estimates allow for a more accurate model that captures recent trends in the market. However, DOE is not aware of any shipment data for UFHWSTs.

Issue H.1  DOE seeks historical shipments data for UFHWSTs, which may include shipments by storage volume capacity bins.

The shipments model will consider the UFHWSTs in the commercial, industrial, and residential (primarily multi-family buildings) market segments.

Issue H.2  DOE seeks comment, which may include historical data, on the fraction of UFHWST shipments by commercial, industrial, and residential (primarily multi-family buildings) market segments.

The shipments model will consider three market segments: (1) New buildings acquiring UFHWSTs; (2) existing buildings replacing old UFHWSTs; and (3) existing buildings acquiring new UFHWSTs for the first time.

Issue H.3  DOE seeks comment, which may include historical data, on the fraction of UFHWSTs shipments by new buildings, replacements, and new owner market segments.

A table of the types of data requested for historical shipments in Issues H.1, H.2, and H.3 can be found in Table II.1, Table II.2, and Table II.3.

Comments Invited

The FAA invites interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

The FAA will consider all comments we receive by the closing date for comments. The FAA may change these special conditions based on the comments received.

On April 24, 2018, Boeing applied for an amendment to Type Certificate No. T00001SE to include the new Model 777-9 series airplane. The Boeing Model 777-9 series airplane, which is a derivative of the 777-300ER currently approved under Type Certificate No. T00001SE, is a twin-engine, transport category airplane with seating for up to 495 passengers depending upon airplane configuration, and a maximum takeoff weight of approximately 775,000 lbs.

Under the provisions of title 14, Code of Federal Regulations (14 CFR) 21.101, Boeing must show that the Model 777-9 series airplane, continues to meet the applicable provisions of part 25, as amended by amendments 139 through 141, and the regulations listed in Type Certificate No. T00001SE, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.

If the Administrator finds that the applicable airworthiness regulations ( i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Boeing Model 777-9 series airplane because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, the Boeing Model 777-9 series airplane must comply with the continued airworthiness and safety improvement requirements for transport category airplanes of 14 CFR part 26, the fuel vent and exhaust emission requirements of 14 CFR part 34, and the noise certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.

The Boeing Model 777-9 series airplane will incorporate the following novel or unusual design features:

This airplane will include a passenger cabin with six HWS arranged in two rows of three suites each in a 1-1-1 configuration. Each HWS has a door and walls that extend from the floor to the ceiling or close to the ceiling. The characteristics of the HWS design are unique such that the suites are not fully open to the cabin (such as for conventional mini-suites with partial height surrounds). They are not remote from the main cabin, as are overhead crew rest areas, for example.

This Boeing Model 777-9 series airplane HWS design is unique to part 25 since its design was not specifically considered during the development of § 25.795(c)(3), which requires that the interior design of the airplane deter the easy concealment of weapons, explosives, or other objects, and lessen the likelihood of overlooking such items during a search. Transport category airplanes contain many areas that are not readily visible, but are readily accessible. For example, areas above stowage bins may not be easily visible when conducting a search due to light fixtures that could inhibit both the visual and physical inspection, but these areas could be accessible places to hide an explosive device. The wall-to-blended ceiling interfaces presented in the HWS designs are similar to overhead bin designs with respect to such challenges associated with conducting searches. However, as opposed to areas above overhead bins, which could exist in continuous sections in the passenger cabin, the search challenges associated with HWS designs may be limited when there are a relatively small number of installed suites.

In consideration of the proposed HWS design, an installation incorporating six suites or less limits the search challenges due to the limited overhead area involved, which is similar to the search area presented by installation of a monument complex, for example. Installations incorporating six suites present a large overhead area that closely resembles the large overhead bin areas currently addressed by the rule and associated guidance material. Since the development of HWS designs were not specifically considered during development of the rule, a unique set of special conditions are needed for interior configurations incorporating HWS.

These proposed special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards. Existing airworthiness regulations do not contain adequate standards to address this feature.

As discussed above, these special conditions are applicable to the Boeing Model 777-9 series airplanes with HWS installed. Should Boeing apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.

This action affects only certain novel or unusual design features on one model series airplane. It is not a rule of general applicability.

The authority citation for these special conditions is as follows:

Accordingly, the Federal Aviation Administration (FAA) proposes the following special conditions as part of the type certification basis for the Boeing Model 777-9 series airplanes with HWS installed. These conditions are in addition to existing FAA Special Condition No. 25-703-SC published in the Federal Register on October 26, 2017 (82 FR 49492).

1. The area above each HWS must be designed such that there should be no hazards to a person performing a physical search above the HWS ( e.g., no hot surfaces, no sharp edges, and no corners).

2. Where there are more than six (6) HWS installed on the aircraft, design features must be incorporated that will deter concealment or promote discovery of weapons, explosives, or objects from a simple inspection. Areas above the HWS must be designed to prevent objects from being hidden from view in a simple search from the aisle.

3. Guidance. The associated guidance material presented in Advisory Circular 25.795-8, Interior Design to Facilitate Searches, dated October 24, 2008, for airplane interiors can also be applied to HWS designs.

Comments Invited

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.

On December 6, 2013, Boeing applied for Type Certificate No. T00001SE for Model 777-9 series airplanes. On September 19, 2018, Boeing applied for a change to Type Certificate No. T00001SE for seats with inertia locking devices in Model 777 series airplanes. The Model 777 series airplane is a twin-engine, transport-category airplane with a maximum takeoff weight of 775,000 pounds and seating for 495 passengers.

Under the provisions of title 14, Code of Federal Regulations (14 CFR) 21.101, Boeing must show that the Model 777 series airplanes, as changed, continue to meet the applicable provisions of the regulations listed in Type Certificate No. T00001SE, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.

If the Administrator finds that the applicable airworthiness regulations ( i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for Boeing Model 777 series airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, Boeing Model 777 series airplanes must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.

Boeing Model 777 series airplanes will incorporate the following novel or unusual design features:

Seats with inertia locking devices.

Boeing has proposed to install, in Model 777 series airplanes, Thompson Aero Seating Ltd. passenger seats that can be translated in the fore and aft direction by an electrically powered motor (actuator) that is attached to the seat primary structure. Under typical service-loading conditions, the motor internal brake is able to translate the seat and hold the seat in the translated position. However, under the inertial loads of emergency-landing loading conditions specified in 14 CFR 25.562, the motor internal brake may not be able to maintain the seat in the required position. The ILD is an “active” device intended to control seat movement ( i.e., a system that mechanically deploys during an impact event) to lock the gears of the motor assembly in place. The ILD mechanism is activated by the higher inertial load factors that could occur during an emergency landing event. Each seat place incorporates two ILDs; one on either side of the seat pan. Only one ILD is required to hold an occupied seat in position during worst-case dynamic loading specified in § 25.562.

The ILD will self-activate only in the event of a predetermined airplane loading condition such as that occurring during crash or emergency landing, and will prevent excessive seat forward translation. A minimum level of protection must be provided if the seat-locking device does not deploy.

The normal means of satisfying the structural and occupant protection requirements of § 25.562 result in a non-quantified, but nominally predictable, progressive structural deformation or reduction of injury severity for impact conditions less than the maximum specified by the rule. A seat using ILD technology, however, may involve a step change in protection for impacts below and above that at which the ILD activates and deploys to retain the seat pan in place. This could result in structural deformation or occupant injury output being higher at an intermediate impact condition than that resulting from the maximum impact condition. It is acceptable for such step-change characteristics to exist, provided the resulting output does not exceed the maximum allowable criteria at any condition at which the ILD does or does not deploy, up to the maximum severity pulse specified by the requirements.

The ideal triangular maximum severity pulse is defined in Advisory Circular (AC) 25.562-1B. For the evaluation and testing of less-severe pulses for purposes of assessing the effectiveness of the ILD deployment setting, a similar triangular pulse should be used with acceleration, rise time, and velocity change scaled accordingly. The magnitude of the required pulse should not deviate below the ideal pulse by more than 0.5g until 1.33 t 1 is reached, where t 1 represents the time interval between 0 and t 1 on the referenced pulse shape as shown in AC 25.562-1B. This is an acceptable method of compliance to the test requirements of the special conditions.

Proposed conditions 1 through 5 address ensuring that the ILD activates when intended in order to provide the necessary protection of occupants. This includes protection of a range of occupants under various accident conditions. Proposed conditions 6 through 10 address maintenance and reliability of the ILD, including any outside influences on the mechanism, to ensure it functions as intended.

The proposed special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

As discussed above, these special conditions are applicable to Boeing Model 777 series airplanes. Should Boeing apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.

This action affects only one novel or unusual design feature on one model series of airplanes. It is not a rule of general applicability.

The authority citation for these special conditions is as follows:

Accordingly, the Federal Aviation Administration (FAA) proposes the following special conditions as part of the type certification basis for Boeing Model 777 series airplanes.

In addition to the requirements of § 25.562, passenger seats incorporating an inertia locking device (ILD) must meet the following:

1. Level of Protection Provided by ILD—It must be demonstrated by test that the seats and attachments, when subject to the emergency-landing dynamic conditions specified in § 25.562, and with one ILD not deployed, do not experience structural failure that could result in:

a. Separation of the seat from the airplane floor.

b. Separation of any part of the seat that could form a hazard to the seat occupant or any other airplane occupant.

c. Failure of the occupant restraint or any other condition that could result in the occupant separating from the seat.

2. Protection Provided Below and Above the ILD Actuation Condition—If step-change effects on occupant protection exist for impacts below and above that at which the ILD deploys, tests must be performed to demonstrate that the occupant is shown to be protected at any condition at which the ILD does or does not deploy, up to the maximum severity pulse specified by § 25.562. Test conditions must take into account any necessary tolerances for deployment.

3. Protection Over a Range of Crash Pulse Vectors—The ILD must be shown to function as intended for all test vectors specified in § 25.562.

4. Protection During Secondary Impacts—The ILD activation setting must be demonstrated to maximize the probability of the protection being available when needed, considering a secondary impact that is above the severity at which the device is intended to deploy up to the impact loading required by § 25.562.

5. Protection of Occupants other than 50th Percentile—Protection of occupants for a range of stature from a two-year-old child to a ninety-five percentile male must be shown.

6. Inadvertent Operation—It must be shown that any inadvertent operation of the ILD does not affect the performance of the device during a subsequent emergency landing.

7. Installation Protection—It must be shown that the ILD installation is protected from contamination and interference from foreign objects.

8. Reliability—The performance of the ILD must not be altered by the effects of wear, manufacturing tolerances, aging/drying of lubricants, and corrosion.

9. Maintenance and Functional Checks—The design, installation, and operation of the ILD must be such that it is possible to functionally check the device in place. Additionally, a functional check method and a maintenance check interval must be included in the seat installer's instructions for continued airworthiness (ICA) document.

10. Release Function—If a means exists to release an inadvertently activated ILD, the release means must not introduce additional hidden failures that would prevent the ILD from functioning properly.

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.

On January 27, 2012, Boeing applied for Type Certificate No. A16WE for Model 737-8 airplanes. On September 19, 2018, Boeing applied for a change to Type Certificate No. A16WE for seats with inertia locking devices in Model 737 series airplanes. The Model 737 series airplane is a twin-engine, transport-category airplane with a maximum takeoff weight of 194,700 pounds and seating for 220 passengers.

Under the provisions of title 14, Code of Federal Regulations (14 CFR) 21.101, Boeing must show that the Model 737 series airplanes, as changed, continue to meet the applicable provisions of the regulations listed in Type Certificate No. A16WE, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.

If the Administrator finds that the applicable airworthiness regulations ( i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for Boeing Model 737 series airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, Boeing Model 737 series airplanes must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.

Boeing Model 737 series airplanes will incorporate the following novel or unusual design features:

Seats with inertia locking devices.

Boeing has proposed to install, in Model 737 series airplanes, Thompson Aero Seating Ltd. passenger seats that can be translated in the fore and aft direction by an electrically powered motor (actuator) that is attached to the seat primary structure. Under typical service-loading conditions, the motor internal brake is able to translate the seat and hold the seat in the translated position. However, under the inertial loads of emergency-landing loading conditions specified in 14 CFR 25.562, the motor internal brake may not be able to maintain the seat in the required position. The ILD is an “active” device intended to control seat movement ( i.e., a system that mechanically deploys during an impact event) to lock the gears of the motor assembly in place. The ILD mechanism is activated by the higher inertial load factors that could occur during an emergency landing event. Each seat place incorporates two ILDs; one on either side of the seat pan. Only one ILD is required to hold an occupied seat in position during worst-case dynamic loading specified in § 25.562.

The ILD will self-activate only in the event of a predetermined airplane loading condition such as that occurring during crash or emergency landing, and will prevent excessive seat forward translation. A minimum level of protection must be provided if the seat-locking device does not deploy.

The normal means of satisfying the structural and occupant protection requirements of § 25.562 result in a non-quantified, but nominally predictable, progressive structural deformation or reduction of injury severity for impact conditions less than the maximum specified by the rule. A seat using ILD technology, however, may involve a step change in protection for impacts below and above that at which the ILD activates and deploys to retain the seat pan in place. This could result in structural deformation or occupant injury output being higher at an intermediate impact condition than that resulting from the maximum impact condition. It is acceptable for such step-change characteristics to exist, provided the resulting output does not exceed the maximum allowable criteria at any condition at which the ILD does or does not deploy, up to the maximum severity pulse specified by the requirements.

The ideal triangular maximum severity pulse is defined in Advisory Circular (AC) 25.562-1B. For the evaluation and testing of less-severe pulses for purposes of assessing the effectiveness of the ILD deployment setting, a similar triangular pulse should be used with acceleration, rise time, and velocity change scaled accordingly. The magnitude of the required pulse should not deviate below the ideal pulse by more than 0.5g until 1.33 t 1 is reached, where t 1 represents the time interval between 0 and t 1 on the referenced pulse shape as shown in AC 25.562-1B. This is an acceptable method of compliance to the test requirements of the special conditions.

Proposed conditions 1 through 5 address ensuring that the ILD activates when intended in order to provide the necessary protection of occupants. This includes protection of a range of occupants under various accident conditions. Proposed conditions 6 through 10 address maintenance and reliability of the ILD, including any outside influences on the mechanism, to ensure it functions as intended.

The proposed special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

As discussed above, these special conditions are applicable to Boeing Model 737 series airplanes. Should Boeing apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.

This action affects only one novel or unusual design feature on one model series of airplanes. It is not a rule of general applicability.

The authority citation for these special conditions is as follows:

Accordingly, the Federal Aviation Administration (FAA) proposes the following special conditions as part of the type certification basis for Boeing Model 737 series airplanes.

In addition to the requirements of § 25.562, passenger seats incorporating an inertia locking device (ILD) must meet the following:

1. Level of Protection Provided by ILD—It must be demonstrated by test that the seats and attachments, when subject to the emergency-landing dynamic conditions specified in § 25.562, and with one ILD not deployed, do not experience structural failure that could result in:

a. Separation of the seat from the airplane floor.

b. Separation of any part of the seat that could form a hazard to the seat occupant or any other airplane occupant.

c. Failure of the occupant restraint or any other condition that could result in the occupant separating from the seat.

2. Protection Provided Below and Above the ILD Actuation Condition—If step-change effects on occupant protection exist for impacts below and above that at which the ILD deploys, tests must be performed to demonstrate that the occupant is shown to be protected at any condition at which the ILD does or does not deploy, up to the maximum severity pulse specified by § 25.562. Test conditions must take into account any necessary tolerances for deployment.

3. Protection Over a Range of Crash Pulse Vectors—The ILD must be shown to function as intended for all test vectors specified in § 25.562.

4. Protection During Secondary Impacts—The ILD activation setting must be demonstrated to maximize the probability of the protection being available when needed, considering a secondary impact that is above the severity at which the device is intended to deploy up to the impact loading required by § 25.562.

5. Protection of Occupants other than 50th Percentile—Protection of occupants for a range of stature from a two-year-old child to a ninety-five percentile male must be shown.

6. Inadvertent Operation—It must be shown that any inadvertent operation of the ILD does not affect the performance of the device during a subsequent emergency landing.

7. Installation Protection—It must be shown that the ILD installation is protected from contamination and interference from foreign objects.

8. Reliability—The performance of the ILD must not be altered by the effects of wear, manufacturing tolerances, aging/drying of lubricants, and corrosion.

9. Maintenance and Functional Checks—The design, installation and operation of the ILD must be such that it is possible to functionally check the device in place. Additionally, a functional check method and a maintenance check interval must be included in the seat installer's instructions for continued airworthiness (ICA) document.

10. Release Function—If a means exists to release an inadvertently activated ILD, the release means must not introduce additional hidden failures that would prevent the ILD from functioning properly.

Comments Invited

The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2019-0583; Product Identifier 2019-NM-063-AD” at the beginning of your comments. The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of this NPRM. The FAA will consider all comments received by the closing date and may amend this NPRM because of those comments.

The FAA will post all comments received, without change, to http://www.regulations.gov, including any personal information you provide. The FAA will also post a report summarizing each substantive verbal contact received about this proposed AD.

The FAA received a report of an escapement from the wing spar terminal fitting supplier indicating that the engineering requirements provided by Boeing for controlling machine mismatch were incorrect for part faying surfaces, which can result in a reduced fatigue capability at the interface of the SOB rib. The engineering-defined machined mismatch requirement of 0.001 inch was incorrectly documented as 0.010 inch. Inspection of parts internal to Boeing production found machine mismatch on faying surfaces exceeding the 0.001-inch requirement. This condition, if not addressed, could result in undetected fatigue cracks. Undetected fatigue cracks can grow to weaken primary wing structure where it cannot sustain limit load, which could adversely affect the structural integrity of the airplane.

The FAA reviewed Boeing Alert Requirements Bulletin B787-81205-SB570036-00 RB, Issue 001, dated December 14, 2018. The service information describes procedures for repetitive high frequency eddy current or ultrasonic inspections for fatigue cracking and applicable on-condition actions for the SOB rib webs where fastener locations attach the terminal fittings. On-condition actions include repair.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA is proposing this AD because the agency evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This proposed AD would require accomplishment of the actions identified in Boeing Alert Requirements Bulletin B787-81205-SB570036-00 RB, Issue 001, dated December 14, 2018, described previously, except for any differences identified as exceptions in the regulatory text of this proposed AD.

For information on the procedures and compliance times, see this service information at http://www.regulations.gov by searching for and locating Docket No. FAA-2019-0583.

The FAA estimates that this proposed AD affects 1 airplane of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:

The FAA has received no definitive data that would enable the agency to provide cost estimates for the on-condition actions specified in this proposed AD.

According to the manufacturer, some or all of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected individuals. The FAA does not control warranty coverage for affected individuals. As a result, the FAA has included all known costs in our cost estimate.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.

The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify this proposed regulation:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2019-0602; Product Identifier 2019-NM-016-AD” at the beginning of your comments. The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of this NPRM. The FAA will consider all comments received by the closing date and may amend this NPRM because of those comments.

The FAA will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. The FAA will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

The FAA issued AD 2010-26-01, Amendment 39-16540 (75 FR 78594, December 16, 2010) (“AD 2010-26-01”), for certain Model 777-200 series airplanes. AD 2010-26-01 requires installing a new insulation blanket on the latch beam firewall of each T/R half. AD 2010-26-01 resulted from an in-flight shutdown due to an engine fire indication; an under-cowl engine fire was extinguished after landing. We issued AD 2010-26-01 to prevent a fire from entering the cowl or strut area, which could weaken T/R parts and result in reduced structural integrity of the T/R, possible separation of T/R parts during flight, and consequent damage to the airplane and injury to people or damage to property on the ground.

Since AD 2010-26-01 was issued, the agency received a report that the T/R affected by AD 2010-26-01 has the potential to be installed on airplanes outside of the applicability of that AD. Therefore, the applicability in this proposed AD has been revised to specify The Boeing Company Model 777-200 series airplanes, equipped with General Electric Company (GE) GE90-76B, -85B, -90B, or -94B engines.

The FAA reviewed Boeing Service Bulletin 777-78A0066, Revision 3, dated April 28, 2011. This service information describes procedures for installing a new insulation blanket on the latch beam firewall of each T/R half. The installation includes, for certain airplanes, inspecting to determine if fitting part number 315W1436-4 is installed on the aft latch beam of the right side T/R and, for affected fittings, cutting the clevis from the affected fitting.

This proposed AD would also require Boeing Alert Service Bulletin 777-78A0066, Revision 2, dated April 8, 2010, which the Director of the Federal Register approved for incorporation by reference as of January 20, 2011 (75 FR 78594, December 16, 2010).

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA is proposing this AD because the agency evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This proposed AD would retain all requirements of AD 2010-26-01. This proposed AD would also add airplanes to the applicability. For those airplanes, this proposed AD would require an inspection to determine if the installed T/R has an affected part number and, if an affected part number is found, installation of a new insulation blanket.

The FAA estimates that this proposed AD affects 25 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:

Entities potentially affected directly by this action include sources in all industry categories. Entities potentially affected by this action also include state, local and tribal air pollution control agencies (air agencies) responsible for permitting sources pursuant to the NSR program.

When submitting comments, remember to:

• Identify the rulemaking docket by docket number and other identifying information (subject heading, Federal Register date and page number).

• Follow directions. The proposed rule may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

• Explain why you agree or disagree, suggest alternatives and substitute language for your requested changes.

• Describe any assumptions and provide any technical information and/or data that you used to support your comment.

• If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

• Provide specific examples to illustrate your concerns wherever possible and suggest alternatives.

• Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

• Make sure to submit your comments by the comment period deadline identified.

In addition to being available in the docket, an electronic copy of this Federal Register document will be posted at https://www.epa.gov/nsr .

The information presented in this document is organized as follows:

The major NSR provisions of the Clean Air Act (CAA) are a combination of air quality planning and air pollution control technology provisions that require stationary sources of air pollution to obtain a preconstruction permit prior to beginning the construction of a new major stationary source or a major modification of an existing major stationary source. Part C of title I of the CAA contains the requirements for the preconstruction review and permitting of new and modified major stationary sources of air pollution (specifically, regulated NSR pollutants) locating in areas meeting the National Ambient Air Quality Standards (NAAQS) (“attainment” areas) and, areas for which there is insufficient information to classify an area as either attainment or nonattainment (“unclassifiable” areas). 1 This program is known as the Prevention of Significant Deterioration (PSD) program. Part D of title I of the CAA contains the requirements for the preconstruction review and permitting of new and modified major stationary sources of air pollution locating in areas not meeting the NAAQS (“nonattainment” areas). This program is known as the Nonattainment New Source Review (NNSR) program. 2

The permit program for non-major sources and minor modifications to major sources is known as the minor NSR program. CAA section 110(a)(2)(C) requires states to develop a program, which includes a permitting program to regulate the construction and modification of any stationary source “as necessary to assure that [NAAQS] are achieved.”

To comply with the requirements of the CAA and the major NSR implementing regulations at 40 CFR 51.166 and 51.165 respectively, most states have EPA-approved State Implementation Plans (SIPs) in place to implement the PSD and NNSR preconstruction permit programs. For states and tribes that lack an EPA-approved SIP or Tribal Implementation Plan (TIP) to implement the PSD permit program, the federal PSD program at 40 CFR 52.21 applies. For states that do not have an approved NNSR SIP for a particular nonattainment pollutant, Appendix S to 40 CFR part 51 contains an interim NNSR program. This interim program enables implementation of NNSR permitting in such areas during the time between the date of the relevant nonattainment designation and the date on which the EPA approves into the SIP a NNSR program or additional components of an NNSR program for a particular pollutant. The EPA also has a federal NNSR program at 40 CFR 49.165 that only applies to tribal areas that do not have an EPA-approved TIP in place to implement the NNSR program. 3 For stationary sources whose emissions are lower than the PSD and NNSR applicability thresholds, minor NSR permitting requirements might apply. Sources should consult with the applicable state or local permitting agency, or for most tribal areas the applicable EPA Regional office, 4 to determine if any minor NSR requirements may apply to your stationary source.

The applicability of the PSD, NNSR, or minor NSR programs to a stationary source must be determined in advance of construction and is a pollutant-specific determination. Thus, a stationary source may be subject to the PSD program for certain pollutants, NNSR for some pollutants and minor NSR for others.

Our NSR regulations define a major modification  5 as any physical change in or change in the method of operation of an existing major stationary source that would result in a significant emissions increase of a regulated NSR pollutant (known as Step 1) and a significant net emissions increase of that pollutant (known as Step 2) from the major stationary source. This two-step test, which has been an element of the NSR program since the 1980's, was codified by the 2002 NSR Reform Rule  6 to explicitly include the prior EPA practice of looking first at whether any emissions increase that may result from the project  7 by itself would be significant before evaluating whether there would be a significant “net emission increase”  8 from the major stationary source as a whole. In other words, Step 1 considers the effect of the project alone and Step 2 considers the effect of the project and any other emissions changes at the major stationary source that are contemporaneous to the project ( i.e., generally within a 5-year period) and creditable. We currently refer to Step 1 applicability procedures as “project emissions accounting” (previously known as “project netting”) and Step 2 as “contemporaneous netting.”  9

An emissions increase of a regulated NSR pollutant is considered significant at Step 1 or 2 if the emissions increase would be equal to or greater than any of the pollutant-specific significant emissions rates listed under the definition of “significant” in the applicable PSD or NNSR regulations. 10 For those regulated NSR pollutants not specifically listed, any increase in emissions is significant. In addition, the procedure for calculating whether a proposed project would result in a significant emissions increase depends upon the type of emissions unit(s)  11 that would be included in the proposed project. The emissions units involved in a project can be new, existing, or a combination of new and existing units. 12 For new units, 13 the NSR regulations require the difference in pre-and post-project emissions to be calculated based on the difference between baseline actual emissions (as applicable to new emissions units)  14 and potential to emit (PTE)  15 after the project. For existing units, 16 the NSR regulations allow the difference in pre-and post-project emissions to be calculated based on the difference between baseline actual emissions (as applicable to existing emissions units)  17 and projected actual emissions. 18 Baseline actual emissions are generally based on the rate of actual emissions a unit has emitted in the past. Projected actual emissions are based on the maximum rate of actual emissions a unit is projected to emit in the future. Potential to emit represents a unit's maximum capacity to emit a pollutant under its physical and operational design.

Step 2, or contemporaneous netting, is described in 40 CFR 52.21(a)(2)(iv)(a). Once a source owner or operator determines that a significant emissions increase would occur at Step 1, then the source owner or operator may perform the Step 2 or contemporaneous netting analysis to determine if there would be a significant net emissions increase. A “net emissions increase” is specifically defined at 40 CFR 52.21 (b)(3)  19 and “means, with respect to any regulated NSR pollutant emitted at a major stationary source, the amount of which the sum of the following exceeds zero: (a) The increase in emissions from a particular physical change or change in the method of operation at a stationary source as calculated pursuant to [40 CFR 52.21] (a)(2)(iv), and (b) any other increases and decreases in actual emissions at the major stationary source that are contemporaneous with the particular change and are otherwise creditable.” Thus, the Step 2 contemporaneous netting analysis is conducted by adding the resulting emissions changes from the project at Step 1 to all other emissions increases and decreases in actual emissions at the major stationary source that are contemporaneous with the Step 1 project and otherwise creditable. If there is a significant net emissions increase after the Step 2 contemporaneous netting analysis, then the project is a major modification.

Emissions increases and decreases are contemporaneous if they occur between “the date five years before construction of a particular project commences and the date that the increase from a particular change occurs.”  20 An emissions increase or decrease in actual emissions under Step 2 is creditable only if the EPA Administrator or other reviewing authority has not relied on it in issuing a PSD or NNSR permit for the source and the permit is still in effect at the time of the major modification. 21 Furthermore, emissions increases under Step 2 are only creditable if the new level of actual emissions exceeds the old level of actual emissions. 22 Emissions decreases under Step 2, on the other hand, are creditable only to the extent that the old level of actual emissions or the old level of allowable emissions, whichever is lower, exceeds the new level of actual emissions and the decrease in actual emissions is enforceable as a practical matter at and after the time that actual construction of the particular change begins. 23

Thus, for a project that results in a significant emissions increase under Step 1 of the major modification applicability test and a significant net emissions increase as determined under Step 2, the modification is a major modification.

In 2002, as part of the NSR Reform Rule, the EPA revised the applicability procedures in its NSR regulations, including procedures for determining whether a project at an existing major stationary source constitutes a major modification. This 2002 rule codified the EPA's prior interpretation that one must first determine whether “there will be a significant emissions increase from the modification itself,”  24 and only then move on to assess whether there will be a significant net emissions increase (based on the contemporaneous netting analysis).

In 2006, the EPA issued a proposed rule titled, “Prevention of Significant Deterioration and Nonattainment New Source Review: Debottlenecking, Aggregation and Project Netting” (2006 Project Netting Proposal)  25 to address, among other topics, the accounting of emissions under Step 1 of the major modification applicability test. Prior to the 2006 Project Netting Proposal, the agency had come to perceive that there was some uncertainty both within the regulated community and among reviewing authorities with respect to how to account for emissions at Step 1 of the NSR applicability regulations, insofar as some sources and reviewing authorities were counting both emissions decreases and emissions increases from a project at Step 1 of the major modification applicability test, while others were only considering emissions increases from a project at Step 1. 26 In addition, the EPA made applicability determinations before and after this proposal in which it suggested that the NSR applicability regulations could be read as precluding the consideration of emissions decreases at Step 1 of the major modification applicability test. 27 The agency indicated in the 2006 Project Netting Proposal that the current regulatory text for projects that involve multiple types of emissions units, 28 which uses the term “sum of the emissions increases for each emissions unit,” “would not allow a source to include reductions from units that are part of the project until Step 2 of the calculation,” while the current regulatory text that applies to projects that involve only new or existing units, which uses the term “sum of the difference,” would allow for the consideration of both emissions increases and decreases at Step 1 because that “difference may either be a positive number (representing a projected increase) or a negative number (representing a projected decrease).”  29

In the 2006 Project Netting Proposal, we solicited public comment on revising the relevant regulatory text to expressly provide that both emissions increases and decreases that occur within the scope of a project be counted in Step 1 of the major modification applicability test for all project categories. The EPA explained that this was appropriate in order to “represent the true environmental impact of a project on all involved emissions units.”  30 In January 2009, however, the EPA announced in a Federal Register notice  31 that it was taking no action on the “project netting” portion of the 2006 proposal since the agency was still considering whether and how to proceed with that proposal.

In early 2017, the new Administration issued a Presidential Memorandum and several Executive Orders initiating a review of regulatory requirements. One of those actions was the Presidential Memorandum on Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing. 32 The Presidential Memorandum directed the Secretary of Commerce to conduct outreach to stakeholders concerning the impact of federal regulations on domestic manufacturing and solicit comments from the public concerning federal actions to streamline permitting and reduce regulatory burdens for domestic manufacturers. 33 A number of the comments the Department of Commerce subsequently received were related to “project netting.”  34 In those comments, the commenters asked the EPA to allow for “project netting” in Step 1 of the NSR applicability test because, in general, most of these stakeholders believed that “project netting” streamlines permitting. In addition, some of these commenters asked the agency to finalize the 2006 Project Netting Proposal. During the public comment period for another action, Executive Order 13777 on Enforcing the Regulatory Reform Agenda, 35 the agency received over 20 comments specifically on “project netting.”  36 As with the commenters on the Presidential Memorandum on Streamlining Permitting, all of these commenters argued that the agency should allow for “project netting.” For example, one commenter stated that they had “recently supported a client in obtaining a PSD permit in which Step 1 of the PSD applicability analysis exceeded the PSD [Significant Emission Rate] (SER) for several pollutants due to the fact that emissions reductions at certain emissions units could not be counted in Step 1.”  37 This commenter represented that “if “project netting” had been allowed in Step 1, then PSD review would not have been triggered” and the client would had saved “four additional months and an additional $80,000 in obtaining a PSD permit.”

After consideration of the “project netting” regulatory history, past interpretations, and the recent public comments on this topic, in March 2018, the EPA Administrator issued a memorandum titled “Project Emissions Accounting Under the New Source Review Preconstruction Permitting Program” (the “March 2018 Memorandum”). 38 The March 2018 Memorandum communicated the EPA's current interpretation regarding the consideration of emissions decreases as part of Step 1 of the major modification applicability test. In the memorandum, the agency explained that it interprets the current NSR regulations as providing that emissions decreases as well as increases are to be considered at Step 1 of the NSR applicability process, where those decreases and increases are part of a single project. 39 Unlike in 2006, EPA determined in the March 2018 Memorandum that decreases could be considered at Step 1 for all project categories ( i.e., new, existing or projects that involve multiple types of emissions units) . Although the existing language in the NSR regulations supports this interpretation, this rulemaking proposal is intended to eliminate uncertainty regarding this issue. As discussed in more detail below, we propose to revise the NSR applicability procedures for projects that involve multiple types of emissions units to make clear that project emissions accounting should be conducted under Step 1 of the major modification applicability procedures for all project categories, consistent with the interpretation set forth in the March 2018 Memorandum. The EPA is not proposing any changes to the procedures or requirements for Step 2 of the major modification applicability regulations.

In this action, we are proposing revisions to the applicability provisions in the NSR regulations to fully clarify that the regulatory language of 40 CFR 52.21(a)(2)(iv)( f ) allows the approach set forth in the March 2018 Memorandum. More specifically, we are proposing to revise the regulatory language for projects that involve multiple types of emissions units  40 to more directly state that both emissions increases and decreases are to be considered as part of Step 1 of the major modification applicability test in the same manner as they are for projects that involve only existing emissions units and projects that involve only new emissions units. Furthermore, the EPA is seeking comment on other aspects of the implementation of the concept of project emissions accounting, including how sources should keep records of their emissions increases and decreases. In addition, the EPA is seeking comment on whether states would need to modify their SIPs to accommodate this rule's clarifications if the rule revisions become final. Lastly, this proposal supersedes the agency's 2006 Project Netting Proposal and, as such, this action withdraws the 2006 Project Netting Proposal.

As stated previously, the emissions units involved in a project can be new, existing or a combination of new and existing units. 41 For projects that involve only existing emissions units, the applicability procedures at 40 CFR 52.21(a)(2)(iv)(c) state that “a significant emissions increase of a regulated NSR pollutant is projected to occur if the sum of the difference between the projected actual emissions and the baseline actual emissions for each existing emission unit, equals or exceeds the significant amount for that pollutant.” For projects that only involve new emissions units, the applicability procedures at 40 CFR52.21(a)(2)(iv)(d) state that “a significant emissions increase of a regulated NSR pollutant is projected to occur if the sum of the difference between the potential to emit from each new emissions unit following completion of the project and the baseline actual emissions of these units before the project equals or exceeds the significant amount for that pollutant.” Finally, for projects that involve multiple types of emissions units ( i.e., a combination of new and existing units), the applicability procedures at 40 CFR 52.21(a)(2)(iv)(f) state that “a significant emissions increase of a regulated NSR pollutant is projected to occur if the sum of the emissions increases for each emissions unit, using the method specified in [40 CFR 52.21] (a)(2)(iv)(c) through (d) as applicable with respect to each emissions unit, for each type of emissions unit equals or exceeds the significant amount for that pollutant.”

In the 2006 Project Netting Proposal, the agency said, consistent with its prior understanding, that the omission of the phrase “sum of the difference” and the use of the term “sum of the emissions increases” in the regulations for the test for projects involving multiple types of emissions units ( i.e., hybrid test) suggested that the current NSR regulations “would not allow a source to include reductions from units that are part of the project until Step 2 of the calculation.”  42 However, as reflected in the Administrator's March 2018 Memorandum, the agency has reexamined the existing regulations and their context and has concluded after a more thorough review that, for projects that involve multiple types of emissions units, “emissions decreases are also to be accounted for.”  43 The applicability procedures for projects involving multiple types of emissions units state that for each type of unit involved in the modification, the “method specified in [40 CFR 52.21] (a)(2)(iv)(c) through (d) of this section as applicable with respect to each emission unit” shall be used and then the sum of the emissions increases for each type of emissions unit is calculated to determine if there is a significant emissions increase for that pollutant. Therefore, since “the method specified in [40 CFR 52.21] (a)(2)(iv)(c) through (d) with respect to each emission unit” applies, the EPA has concluded that “the “current NSR regulations provide that emissions decreases as well as increases are to be considered at Step 1 of the NSR applicability process . . .”  44

The EPA is proposing to revise a portion of the regulations to end any confusion and clarify that project emissions accounting is allowed for all project categories, including projects that involve multiple types of emissions units. Specifically, the EPA is proposing to revise the text “sum of the emissions increase” in 40 CFR 52.21(a)(2)(iv)(f) to “sum of the difference” as in subparagraphs 40 CFR 52.21(a)(2)(iv)(c) and (d) to make clear that accounting of emissions increases and decreases under Step 1 of the major modification applicability test is allowed for projects that involve multiple types of emissions units. Furthermore, the EPA is proposing to add a subparagraph (g) to 40 CFR 52.21(a)(2)(iv) to further clarify that the term “sum of the difference,” as used in 40 CFR 52.21(a)(2)(iv)(c) and (d) and proposed for 40 CFR 52.21(a)(2)(iv)(f), shall include both increases and decreases in emissions calculated in accordance with the procedures specified in those paragraphs. These proposed changes will make clear that projects that involve multiple types of emissions units should treat the calculation of the change in emissions from the project in the same way that projects that only involve new units or only involve existing units. As explained in the March 2018 Memorandum, the history of this provision in the regulations indicates that the EPA originally intended that project emissions accounting be allowed at Step 1 for projects involving different types of units. 45

The EPA is seeking comment on these clarifying revisions to the regulatory text and whether other clarifications might be more appropriate to convey that consideration of emissions decreases and increases is allowed as part of Step 1 of the major modification applicability test for projects that involve both new and existing emissions units.

The EPA said in its March 2018 Memorandum that we believe that our current NSR applicability regulations, promulgated in 2002 can be reasonably interpreted to allow for project emissions accounting at Step 1. 46 However, the agency made statements in 2006 and earlier that suggested that, at least insofar as the so-called “hybrid” applicability test for proposed projects involving both new and existing units is concerned, emissions decreases may not be taken into account at Step 1. Thus, in light of this history, the EPA is proposing to make regulatory revisions that fully clarify that both increases and decreases in emissions from all categories of projects are to be considered at Step 1 of the major NSR applicability regulations.

Fundamentally, the major NSR applicability regulations discussed previously are an interpretation of the statutory phrase “increases the amount of any air pollutant emitted” contained in the definition of “modification.”  47 This definition is cross referenced in both Part C (PSD) and Part D (NNSR) of the CAA. 48 The United States Court of Appeals for the District of Columbia Circuit has recognized that the CAA “is silent on how to calculate such `increases' in emissions.”  49 Thus, the question of how to determine whether a physical change or change in method of operation “increases” emissions is ambiguous. 50 Accordingly, because the statutory text does not itself dictate how to determine whether a physical change or change in the method of operation “increases” emissions, under the principles of Chevron , 51 the “EPA has the authority to choose an interpretation” of the term “increases” in “administering the NSR program and filling in the gaps left by Congress.”  52

The EPA believes that allowing for consideration of both increases and decreases from a project is consistent with congressional intent for these preconstruction programs to cover existing sources only when they undertook projects which resulted in a non- de minimis increase in emissions. 53 If the full scope of emissions changes from a project were not considered at Step 1, the regulations could subject a project to preconstruction review when the actual effect of that project would be to reduce emissions, which would be contrary to congressional intent for this program. 54 The EPA sees little policy support for such an outcome, while allowing the consideration of both increases and decreases at Step 1 would allow sources to undertake projects that are overall environmentally beneficial that they might forgo if decreases could not be considered at Step 1. Therefore, the EPA believes a two-step process—first determining all of the emissions changes, both increases and decreases, from the project under consideration and second, considering any other contemporaneous increases or decreases that are otherwise creditable—is a reasonable and allowable interpretation of the phrase “increases the amount of any air pollutant emitted” within the definition of “modification.”

Furthermore, this approach represents sound policy to the extent it encourages emissions decreases that might not otherwise occur or would be delayed. In discussions with stakeholders, the EPA has come to understand that, given the complexities that Step 2 contemporaneous netting can entail, and given past EPA statements that emissions decreases could not be accounted for at Step 1, there are occasions where sources have experienced significant delays or declined altogether to undertake projects that could have resulted in overall emissions decreases. 55 The agency requests additional information on adverse project impacts that may have occurred and specifically any examples of environmentally beneficial projects that were proposed or under consideration but did not move forward as a result of the apparent unavailability of project emissions accounting.

In the March 2018 Memorandum, the agency explained that, for purposes of ascertaining whether a proposed project would constitute a major modification at a major stationary source, defining the scope of a project that a source owner or operator is proposing to undertake is a determination that rests within the reasonable discretion of the source owner or operator. 56 Further, while the EPA acknowledged the longstanding principle that, in defining the scope of the project, an owner or operator cannot seek to circumvent NSR permitting by separating multiple activities into smaller projects, the EPA did not “interpret its NSR regulations as directing the agency to preclude a source from reasonably defining its proposed project broadly, to reflect multiple activities.”  57 The agency concluded by indicating that it would speak more about this concept of grouping multiple activities in a then-planned future action regarding “project aggregation.”  58

Subsequently, the EPA took a final action in November 2018 addressing the subject of “project aggregation” in the action titled “Prevention of Significant Deterioration and Nonattainment New Source Review: Aggregation; Reconsideration.”  59 In that final action, the agency concluded the reconsideration of an earlier action that the EPA had published on January 15, 2009, titled “Prevention of Significant Deterioration and Nonattainment New Source Review: Aggregation and Project Netting.” That 2009 action had provided clarification with respect to when the EPA considered it appropriate to treat nominally separate activities as a single project for the purpose of determining NSR applicability at a stationary source. In the final “project aggregation” action, the EPA decided, among other things, not to revoke the 2009 NSR Aggregation Action but to retain both the interpretation and the policy set forth therein.

For purposes of determining the circumstances under which nominally separate activities should reasonably be considered to be a single project, “the 2009 NSR Aggregation Action called for sources and reviewing authorities to aggregate emissions from nominally-separate activities when they are “substantially related.”  60 For a project to be substantially related, the “interrelationship and interdependence of the activities [is expected], such that substantially related activities are likely to be jointly planned ( i.e., part of the same capital improvement project or engineering study), and occur close in time and at components that are functionally interconnected.”  61 In addition, the November final 2018 project aggregation action adds that in general “[to] be `substantially related,' there should be an apparent interconnection—either technically or economically—between the physical and/or operational changes, or a complementary relationship whereby a change at a plant may exist and operate independently, however its benefit is significantly reduced without the other activity.”  62

Thus, the main purpose of the November 2018 final project aggregation action was to address situations where a source owner or operator might attempt to circumvent NSR “through some artificial separation of activities where it would be unreasonable to consider them separate projects.”  63 This project emissions accounting proposed action, however, addresses the opposite scenario— i.e., “where a source itself is choosing to group together, as a single project, activities to which a projected emissions decrease is attributable.”  64

With respect to this latter scenario, the EPA observed in the March 2018 Memorandum that its “current view is that the concerns regarding the real possibility that NSR might be circumvented through some artificial separation of activities where it would be unreasonable to consider them separate projects,” were “not so obviously presented by the situation where a source itself is choosing to group together, as a single project, activities to which a projected emissions decrease is attributable.”  65 To the contrary, the EPA observed, the agency “views this latter situation as one where sources could potentially be incentivized to seek out emission reductions that might otherwise be foregone entirely— e.g., because of perceived complexity with contemporaneous netting under Step 2 of the NSR applicability analysis.”  66 Nevertheless, we said that in a planned future rulemaking on project emissions accounting, the EPA would take comment on our current view of this issue. 67

The EPA continues to believe that taking account of emissions decreases at Step 1 does not present any reasonable concerns regarding NSR circumvention. Therefore, having analyzed the applicability regulations and having considered the project aggregation final action, we are not proposing to impose additional requirements or find that scrutiny equivalent to that which the EPA's approach to project aggregation requires is warranted with respect to projects where source owners or operators choose to group together activities into a single project. We do not believe it is necessary to adopt the same criteria that apply for separation of activities ( i.e., under aggregation) to the grouping of activities, by considering such grouping to potentially constitute “over aggregation” that, in turn, may constitute NSR circumvention. The circumvention policy speaks to the situation where a source carves up what is plainly a single project into multiple projects, where each of those separate projects may result in emissions increases below the significance threshold but which, if considered collectively as one project, would result in an emissions increase above the threshold. Separate activities that, when considered together, either decrease emissions or result in an increase that is not significant are not in view in the EPA's circumvention policy. We ask for comment on our position in this regard. In addition, we seek comment on whether, if, in order for an emissions decrease to be accounted for at Step 1, it would be reasonable to require that a source owner or operator determine whether the activity (or activities) to which the emissions decrease is projected to occur is “substantially related” to another activity (or activities) to which an emissions increase is projected to occur. We are particularly interested in the impacts that this alternative approach might have on sources' decisions to undertake activities projected to result in emissions decreases ( e.g., whether such decisions might be delayed or otherwise foregone). The agency requests public input that would identify examples helpful to inform the agency's judgment on the emissions and cost impacts of this and other potential alternative approaches.

The EPA is currently unable to estimate any cost savings or emissions decreases associated with project emissions accounting because most NSR permits are issued by state and local agencies and the EPA does not have estimates of those permitting statistics. Furthermore, neither the EPA nor state and local permitting agencies have access to any decision-making records made by company owners that would indicate whether a project was or was not undertaken due to the availability of project emissions accounting. NSR permitting is a case-by-case determination and source owners make permitting decisions based on many factors. We do not have access nor require reporting of any decision-making information for permitting projects that were or were not pursued. Thus, any examples on the emissions and cost impacts of project emissions accounting, including the particular cases described above, could be beneficial for the agency to potentially provide some level of qualitative analysis when finalizing this action.

In the 2006 Project Netting Proposal, the agency proposed a series of steps for implementing project emissions accounting under Step 1 of the major NSR applicability test, including that emissions “decreases must be enforceable as a practical matter, or there must be another procedure that will ensure the decrease actually occurs and is maintained, and are subject to all the requirements of 40 CFR 52.21(b)(3).”  68 The 2006 proposal, however, did not provide an explanation as to why the EPA considered this step necessary or warranted. As explained in the March 2018 Memorandum, “the agency now recognizes that other provisions in existing regulations serve to alleviate concerns that projected emissions decreases would escape the same tracking, documentation and reporting requirement applicable to projected emissions increases.”  69 The March 2018 Memorandum recognized that the provisions at 40 CFR 52.21(r)(6) are adequate for recording, tracking, documenting, and reporting emissions decreases as well as increases for project emissions accounting. The provisions at 40 CFR 52.21(r)(6) were specifically designed for source owners or operators to document and maintain records when a project that is not a part of a major modification subject to major NSR permitting nonetheless presents a reasonable possibility that it may result in a significant emissions increase of such pollutant after completion. The regulations provide for, among other things: The identification of the emissions units affected by the project; the identification of the applicability test used to determine that the project was not a major modification; and monitoring, recordkeeping, and reporting of emissions from the units involved in the project based on certain criteria.

The agency “expressly declined to adopt a requirement under which a source's post-project projected actual emissions would have become an enforceable emission limitation”  70 as part of the 2002 NSR Reform Rule, 71 and the EPA currently believes that “the same reasoning that underpinned the 2002 NSR Reform Rule's treatment of projected actual increases applies equally to projected emissions decreases at Step 1.”  72 The EPA continues to believe that “. . . the combination of the recordkeeping requirements of this rule, along with a requirement to report to the reviewing authority any annual emissions that exceed your baseline actual emissions by a significant amount for the regulated NSR pollutant and differ from your preconstruction projection, is an equally effective way to ensure that a reviewing authority can receive the information necessary to enforce the major NSR requirements.”  73 In addition, the NSR regulations make enforceability of emissions decreases a requirement of Step 2 and not Step 1. 74 As part of this proposal, we are seeking comment on whether the 40 CFR 52.21(r)(6) provisions provide appropriate monitoring, recordkeeping and reporting requirements for both emissions decreases and increases, as relevant, in the context of Step 1 of the major modification applicability test.

The requirements of 40 CFR 52.21 are implemented by the EPA or reviewing authorities that have been delegated federal authority from the EPA to issue PSD permits on behalf of the EPA (via a delegation agreement with an EPA Regional office). Thus, if this regulation is finalized, any revisions to this federal PSD regulation will automatically apply to the EPA and permitting authorities that implement a PSD program pursuant to a delegation agreement.

For state and local agencies that implement the NSR program through EPA-approved SIPs, the EPA's regulations for SIP-approved programs in 40 CFR 51.165 and 51.166 include applicability procedures that are analogous to the applicability procedures at 40 CFR 52.21(a)(2)(iv) that have been cited in this preamble. As noted previously, the EPA is also proposing to revise those regulations consistent with the proposed revisions to 40 CFR 52.21(a)(2)(iv). 75

In light of the agency's interpretation that the existing NSR regulations allow project emissions accounting, and as discussed in the March 2018 Memorandum, the EPA believes that state and local reviewing authorities with approved NSR programs do not need to wait until finalization of this proposal to allow for project emissions accounting if their local rules and SIPs contain the same language as the EPA's regulations. In addition, if the EPA were to finalize the clarifications being proposed in this rulemaking, reviewing authorities may not need to revise their state regulations and submit SIP revisions to adopt those revisions if the current applicability procedures in those regulations can be interpreted to allow for project emissions accounting or these state and local programs incorporate the federal NSR regulations by reference without a date restriction.

Nevertheless, the EPA is currently aware of a few states and locals where the applicable SIP-approved regulations expressly preclude project emissions accounting. With respect to this situation, we request comment on whether the EPA should determine that the revisions to 40 CFR 51.165(2)(ii)(F) and (G); to 40 CFR 51.166(a)(7)(iv)(f) and (g); to (IV)(I)(1)(v) and (vi) to Appendix S to part 51; and to 40 CFR 52.21(a)(2)(iv)(f) and (g) that we are proposing here constitute minimum program elements that must be included in order for state and local agency programs implementing part C or part D to be approvable under the SIP. 76

As mentioned in Section III.A of this notice, this proposal supersedes the 2006 Project Netting Proposal and, as such, this action withdraws the 2006 Project Netting Proposal. As the agency explained in the March 2018 Memorandum, the EPA recently performed a thorough reconsideration of the regulations pertaining to project emissions accounting and found that the statement included in the EPA's 2006 Project Netting Proposal that project emissions accounting was not allowed for projects with multiple types of emissions units  77 was unwarranted as “other language in clause (f) indicates that emissions decreases are also to be accounted for.”  78 Therefore, in light of this proposal, we believe the 2006 Project Netting Proposal is no longer necessary and is withdrawn.

We do not believe that the proposed clarifying revisions to the NSR applicability regulations would have any effect on environmental justice communities. As indicated in the March 2018 Memorandum, the EPA's NSR regulations in place after the 2002 NSR Reform Rule was finalized allow project emissions accounting and, as such, no increased burden is expected for source owners or operators, permitting authorities or environmental justice communities after finalization of the clarifications included in this rule.

This action is a significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review since it raises policy issues arising from the President's priorities. Any changes made in response to OMB recommendations have been documented in the docket.

This proposed rule is not subject to the requirements of E.O. 13771 (82 FR 9339, February 3, 2017) because this proposed rule would not result in additional costs.

This action does not impose any new information collection burden under the PRA. OMB has previously approved the information collection activities contained in the existing regulations and has assigned OMB control numbers 2060-0003 for the PSD and NNSR permit programs. The burden associated with obtaining an NSR permit for a major stationary source undergoing a major modification is already accounted for under the approved information collection requests.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. In general, major stationary sources undergoing major modifications are not small entities. In addition, the EPA interprets its current NSR regulations to allow for project emissions accounting and, as such, no increased burden is expected for source owners or operators or permit reviewing authorities after finalization of the clarifications included in this rule.

This action does not contain any unfunded federal mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local or tribal governments or the private sector.

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This action does not have tribal implications as specified in Executive Order 13175. The EPA's NSR applicability regulations in place after the 2002 NSR Reform Rule allow for the consideration of emissions increases and decreases as part of Step 1 of the major NSR applicability test for modifications and, as such, the clarifying revisions being proposed in this rule will not have exclusive tribal implications. Furthermore, the EPA is currently the reviewing authority for PSD and NNSR permits issued in tribal lands and, as such, the clarifying revisions being proposed will not impose direct burdens on tribal permit reviewing authorities. Thus, Executive Order 13175 does not apply to this action.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk.

This action is not a “significant energy action” because it is not likely to have a significant adverse effect on the supply, distribution or use of energy. The EPA interprets its current NSR regulations to allow for project emissions accounting and, as such, no increased burden is expected for source owners or permit reviewing authorities after the finalization of the clarifications included in this rule.

This rulemaking does not involve technical standards.

The EPA believes that this action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). The EPA interprets its current NSR regulations to allow for project emissions accounting and this action only proposes clarifying revisions to the NSR applicability regulations. Accordingly, no disproportionately high and adverse human health or environmental effects on minority populations, low-income populations and/or indigenous peoples are expected.

The statutory authority for this action is provided by 42 U.S.C. 7401, et seq.

For the reasons stated in the preamble, title 40, chapter I of the Code of Federal Regulations is proposed to be amended as follows:

This rule proposes to amend the DFARS to implement section 837 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L. 115-91). Section 837 requires an amendment to the DFARS to provide for the appropriate use of the should-cost review process of a major weapon system in a manner that is transparent, objective, and provides for the efficiency of the systems acquisition process in the Department of Defense. A weapon system is considered to be a “major weapon system,” as defined by DFARS 234.7001, when it is “a weapon system acquired pursuant to a major defense acquisition program.” At a minimum, DoD is required to address the following:

• A description of the features of the should-cost review process.

• Establishment of a process for communicating with the prime contractor on the program the elements of a proposed should-cost review.

• A method for ensuring that identified should-cost savings opportunities are based on accurate, complete, and current information and can be quantified and tracked.

• A description of the training, skills, and experience that Department of Defense and contractor officials carrying out a should-cost review should possess.

• A method for ensuring appropriate collaboration with the contractor throughout the review process.

• Establishment of review process requirements that provide for sufficient analysis and minimize any impact on program schedule.

Federal Acquisition Regulation (FAR) 15.407-4(b) establishes when a program should-cost review should be considered in the case of a major system acquisition. DoD is proposing to add a new paragraph (b) to DFARS 215.407-4 to address the six elements of a program should-cost review, as required by section 837. In addition, DoD is proposing to add a new contract clause at DFARS 252.215-701X, Program Should-Cost Review, for use in solicitations and contracts for the development or production of a major weapon system, as defined in DFARS 234.7001, to ensure objectivity and efficiency in the should-cost review process, if a program should-cost review is performed.

This rule does not propose to create any new provisions or clauses or impact any existing provisions or clauses for contracts at or below the simplified acquisition threshold or for contracts for the acquisition of commercial items, including commercially available off-the-shelf items. Contracts for the development and or production of a major weapon system do not include contracts valued at or below the simplified acquisition threshold and are unlikely to include contracts for commercial items.

Executive Order (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This is not a major rule under 5 U.S.C. 804.

This rule is not expected to be subject to E.O. 13771, because this rule is not a significant regulatory action under E.O. 12866.

DoD does not expect this rulemaking to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule only applies to major weapon system acquisition programs. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement to implement section 837 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L. 115-91). Section 837 requires an amendment to the DFARS to provide for the appropriate use of the should-cost review process of a major weapon system in a manner that is transparent, objective and provides for the efficiency of the systems acquisition process in the Department of Defense.

The objective of this rulemaking is to incorporate in the DFARS the six elements of a program should-cost review required to be addressed by section 837, and to provide a new contract clause for use in solicitations and contracts for the development or production of a major weapon system, in order to ensure objectivity and efficiency in the should-cost review process. The legal basis for these changes is section 837 of the NDAA for FY 2018.

DoD estimates that there are 150 major systems, which include major weapon systems. DoD further estimates that the prime contractors for major weapon systems are other than small business and only one program should-cost review occurs per year for major weapon systems, so this rule will have minimal impact on small businesses.

This proposed rule does not include any new reporting or recordkeeping requirements for small entities.

The rule does not duplicate, overlap, or conflict with any other Federal rules.

There are no known significant alternative approaches to the proposed rule that would meet the requirements of the applicable statute.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2018-D015), in correspondence.

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

Therefore, 48 CFR parts 215 and 252 are proposed to be amended as follows:

I. Background

This rule proposes to revise the DFARS to implement section 1811 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328) and the Small Business Administration (SBA) proposed rule published in the Federal Register on December 4, 2018, at 83 FR 62516. Section 1811 provides limits on the scope of review by SBA's procurement center representatives for certain solicitations awarded by or for DoD.

Specifically, section 1811 limits the scope of review by procurement center representatives, unless DoD requests a review, if the solicitation is awarded by or for DoD and—

• Is conducted pursuant to section 22 of the Arms Export Control Act (22 U.S.C. 2762);

• Is a humanitarian operation as defined in 10 U.S.C. 401(e);

• Is a contingency operation as defined in 10 U.S.C. 101(a)(13);

• Is to be awarded pursuant to an agreement with the government of a foreign country in which U.S. Armed Forces are deployed; or

• Both the place of award and place of performance outside the United States and its territories.

SBA's proposed rule states that, unless the contracting agency requests a review, procurement center representatives will not review such procurements. Additionally, section 1811 excludes these procurements from DoD's small business goals.

This rule proposes to amend DFARS part 219 to implement section 1811 of the NDAA for FY 2017 and SBA's proposed rule. Specifically, the rule proposes to add text at DFARS 219.402 to inform contracting officers that procurement center representatives will not review acquisitions conducted by or for DoD, unless the contracting activity requests a review, if the acquisition is—

• For foreign military sales (see DFARS 225.7300);

• In support of humanitarian and civic assistance;

• In support of a contingency operation;

• Awarded pursuant to a Status of Forces Agreement or other agreement with the government of a foreign country in which U.S. Armed Forces are deployed; or

• Both awarded and performed outside the United States and its outlying areas.

The proposed text includes a definition of “humanitarian and civic assistance” that applies only to the implementation of section 1811. Both section 1811 and SBA's proposed rule refer to “a humanitarian operation as defined in section 401(e) of title 10, United States Code.” Although the term “humanitarian operation” is used, the type of activities it covers are quite different from the “humanitarian or peacekeeping operation” defined in Federal Acquisition Regulation 2.101 and currently used in the DFARS. In 10 U.S.C. 401(e), the term “humanitarian and civic assistance” is used to refer to specific activities carried out in conjunction with authorized military operations in a foreign country. Examples of such assistance include construction of rudimentary surface transportation systems, well drilling, and construction of basic sanitation facilities. Therefore, this proposed rule includes a definition to avoid confusion among the contracting workforce.

This rule also proposes to add a reference in DFARS subpart 219.5, Set-Asides for Small Business, to the exclusions in DFARS 219.402.

This rule does not propose to create any new provisions or clauses or impact any existing provisions or clauses.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

This rule is not expected to be subject to E.O. 13771, because this rule is not a significant regulatory action under E.O. 12866.

DoD does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because it is expected to impact primarily Government operations. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

This rule proposes to revise the DFARS to implement section 1811 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328) and the SBA proposed rule published in the Federal Register on December 4, 2018, at 83 FR 62516. Specifically, the rule informs contracting officers that procurement center representatives will not review acquisitions conducted by or for DoD, unless the contracting activity requests a review, if the acquisition is—

• For foreign military sales (see DFARS 225.7300);

• In support of humanitarian and civic assistance;

• In support of a contingency operation;

• Awarded pursuant to a Status of Forces Agreement or other agreement with the government of a foreign country in which U.S. Armed Forces are deployed; or

• Both awarded and performed outside the United States and its outlying areas.

Additionally, section 1811 of the NDAA for FY 2017 excludes these procurements from DoD's small business goals.

The objective of this rule is to implement, in the DFARS, the limits on the scope of review by procurement center representatives. The legal basis for the rule is section 1811 of the NDAA for FY 2017.

This rule may impact small entities that are interested in performing the types of DoD contracts listed in section 1811 of the NDAA for FY 2017. According to the Federal Procurement Data System (FPDS), DoD awarded an average of 12,658 contracts and orders for performance outside the United States to approximately 1,292 unique small entities per year in FY 2016, 2017, and 2018. Approximately 4 percent of those small entities received awards for foreign military sales. About 8 percent received awards in support of a contingency operation. Approximately 81 percent received awards made pursuant to an agreement such as a Status of Forces Agreement.

FPDS does not currently collect data on the type of humanitarian operation identified in section 1811, which is very different from the “humanitarian or peacekeeping” operation defined in Federal Acquisition Regulation (FAR) 2.101 and used in the DFARS. FPDS does collect data on humanitarian or peacekeeping operations, as defined in FAR 2.101, showing that about 1% of the small entities, performing contracts or orders outside the United States, received awards for humanitarian or peacekeeping operations. The data collected may provide some indication of the number of small entities that could perform contracts or orders for the type of humanitarian operation identified in section 1811.

This rule does not impose any new reporting, recordkeeping or other compliance requirements for small entities.

This rule does not duplicate, overlap, or conflict with any other Federal rules.

There are no known alternatives which would accomplish the stated objectives of the applicable statute.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C 610 (DFARS Case 2019-D008), in correspondence.

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

Therefore, 48 CFR part 219 is proposed to be amended as follows: