[Federal Register Volume 85, Number 186 (Thursday, September 24, 2020)]
[Proposed Rules]
[Pages 60090-60096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20773]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 85, No. 186 / Thursday, September 24, 2020 / 
Proposed Rules  

[[Page 60090]]



DEPARTMENT OF ENERGY

10 CFR Parts 430 and 431


Energy Conservation Program for Appliance Standards: Energy 
Conservation Standards for Residential Furnaces and Commercial Water 
Heaters

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

ACTION: Notice of supplemental proposed interpretive rule; request for 
comment.

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SUMMARY: In response to a petition for rulemaking submitted on October 
18, 2018 (Gas Industry Petition), the Department of Energy (DOE) 
published that petition in the Federal Register on November 1, 2018, 
for public review and input, and DOE subsequently published a proposed 
interpretive rule in the Federal Register on July 11, 2019, which 
tentatively determined that in the context of residential furnaces, 
commercial water heaters and similarly-situated products/equipment, use 
of non-condensing technology (and associated venting) may constitute a 
performance-related ``feature'' under the Energy Policy and 
Conservation Act (EPCA) that cannot be eliminated through adoption of 
an energy conservation standard. After carefully considering the public 
comments on its proposed interpretive rule, DOE has tentatively 
determined to consider a more involved class structure which turns on 
maintenance of compatibility with existing venting categories, and the 
Department seeks further information on the potential feasibility, 
burdens, and other implications of implementing such a venting-
compatibility approach. DOE requests comments limited in scope to this 
issue, after which DOE will respond to not only this matter, but also 
to all of the other topics raised in comments on the July 2019 notice 
of proposed interpretive rule.

DATES: Written comments and information are requested on or before 
October 26, 2020.

ADDRESSES: Interested persons are encouraged to submit comments, 
identified by ``Energy Conservation Standards for Residential Furnaces 
and Commercial Water Heaters,'' by any of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    Email: [email protected]. Include 
Docket No. EERE-2018-BT-STD-0018 in the subject line of the message. 
Submit electronic comments in WordPerfect, Microsoft Word, PDF, or 
ASCII file format, and avoid the use of special characters or any form 
of encryption.
    Postal Mail: Appliance and Equipment Standards Program, U.S. 
Department of Energy, Building Technologies Office, Mailstop EE-5B, 
1000 Independence Avenue SW, Washington, DC 20585-0121. If possible, 
please submit all items on a compact disc (CD), in which case it is not 
necessary to include printed copies.
    Hand Delivery/Courier: Appliance and Equipment Standards Program, 
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant 
Plaza SW, Suite 600, Washington, DC 20024. Telephone: (202) 287-1445. 
If possible, please submit all items on a CD, in which case it is not 
necessary to include printed copies.
    No telefacsimiles (faxes) will be accepted. For detailed 
instructions on submitting comments and additional information, see 
section IV of this document (Public Participation).
    Docket: For access to the docket to read background documents, or 
comments received, go to the Federal eRulemaking Portal at: http://www.regulations.gov/docket?D=EERE-2018-BT-STD-0018.

FOR FURTHER INFORMATION CONTACT: 
    Ms. Lysia Bowling, Senior Advisor, U.S. Department of Energy, 
Office of Energy Efficiency and Renewable Energy, 1000 Independence 
Avenue SW, Washington, DC 20585. Telephone: (202) 430-1257. Email: 
[email protected].
    Mr. Eris Stas, U.S. Department of Energy, Office of the General 
Counsel, 1000 Independence Avenue SW, Washington, DC 20585. Telephone: 
(202) 586-5827. Email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background
II. Summary Description
    A. Relevant Statutory Provisions
    B. DOE's Historical Interpretation
    C. The Gas Industry Petition
    D. DOE's Proposed Interpretive Rule
III. Discussion of Issues Regarding Structuring of Potential 
Product/Equipment Classes
IV. Public Participation
V. Approval of the Office of the Secretary

I. Background

    On October 18, 2018, the Department received a petition for 
rulemaking submitted by the American Public Gas Association (APGA), 
Spire, Inc., the Natural Gas Supply Association (NGSA), the American 
Gas Association (AGA), and the National Propane Gas Association (NPGA), 
collectively referred to as the ``Gas Industry Petitioners,'' asking 
DOE to: (1) Issue an interpretive rule stating that DOE's proposed 
energy conservation standards for residential furnaces and commercial 
water heaters would result in the unavailability of ``performance 
characteristics'' within the meaning of the Energy Policy and 
Conservation Act of 1975 \1\ (EPCA; 42 U.S.C. 6291 et seq.), as amended 
(i.e., by setting standards which can only be met by products/equipment 
using condensing combustion technology and thereby precluding the 
distribution in commerce of products/equipment using non-condensing 
combustion technology) and (2) withdraw the proposed energy 
conservation standards for residential furnaces \2\ and commercial 
water heaters \3\ based upon such findings. DOE published the petition 
in the Federal Register on November 1, 2018 (83 FR 54883) and requested 
public comment,

[[Page 60091]]

with a comment period scheduled to close on January 30, 2019. DOE 
received two requests from interested parties seeking an extension of 
the comment period in order to develop additional data relevant to the 
petition. DOE granted those requests through publication in the Federal 
Register of a notice extending the comment period on the notice of 
petition for rulemaking until March 1, 2019. 84 FR 449 (Jan. 29, 2019).
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    \1\ All references to EPCA in this document refer to the statute 
as amended through America's Water Infrastructure Act of 2018, 
Public Law 115-270 (Oct. 23, 2018).
    \2\ Standards for non-weatherized residential furnaces were 
published in a notice of proposed rulemaking at 80 FR 13120 (March 
12, 2015) (Docket No. EERE-2014-BT-STD-0031-0032) and in a 
supplemental notice of proposed rulemaking at 81 FR 65720 (Sept. 23, 
2016) (Docket No. EERE-2014-BT-STD-0031-0230).
    \3\ Standards for commercial water heating equipment were 
published in a notice of proposed rulemaking at 81 FR 34440 (May 31, 
2016) (Docket No. EERE-2014-BT-STD-0042).
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    The 90-day public comment period, including the 30-day extension to 
submit comments, invited public input in order to better understand 
stakeholder perspectives and increase transparency around a complex 
issue involving DOE's legal authority. DOE received comments from a 
variety of stakeholders, including representatives from gas industry 
associations, the manufactured housing industry, efficiency advocates, 
consumer advocates, State organizations and Attorneys General, and 
individuals (mostly form letter comments). In general, the gas industry 
associations and the manufactured housing industry supported the 
petition, and the advocates and State officials opposed it.
    After carefully considering the comments on the petition, DOE 
published a notice of proposed interpretive rule in the Federal 
Register on July 11, 2019 to provide the public additional information 
about DOE's tentative interpretation of EPCA's ``features'' provision 
\4\ in the context of condensing vs. non-condensing furnaces and water 
heaters, as informed by public comments. 84 FR 33011. Once again, DOE 
received comments from a variety of stakeholders, including 
representatives from gas industry associations, the housing industry, 
appliance manufacturers, utilities, environmental and efficiency 
advocates, consumer advocates, State organizations and Attorneys 
General, and individuals. DOE plans to respond to these comments, and 
the issues raised therein, fully in a subsequent document, after 
receiving comment on the topic presented in this supplemental notice of 
proposed interpretive rule.
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    \4\ See 42 U.S.C. 6295(o)(4); 42 U.S.C. 
6313(a)(6)(B)(iii)(II)(aa); and as applicable in certain cases 
through 42 U.S.C. 6316(a)).
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II. Summary Description

A. Relevant Statutory Provisions

    In this notice, DOE explains its historical interpretation 
regarding the evaluation of what constitutes a product ``feature'' 
which cannot be eliminated under EPCA, specifically in the context of 
residential furnaces and commercial water heaters. For covered consumer 
products, the key statutory provision at issue can be found at 42 
U.S.C. 6295(o)(4), which provides that the Secretary may not prescribe 
an amended or new standard under this section if the Secretary finds 
(and publishes such finding) that interested persons have established 
by a preponderance of the evidence that the standard is likely to 
result in the unavailability in the United States in any covered 
product type (or class) of performance characteristics (including 
reliability), features, sizes, capacities, and volumes that are 
substantially the same as those generally available in the United 
States at the time of the Secretary's finding.
    Where the Secretary finds such ``performance characteristics 
(including reliability), features, sizes, capacities, and volumes'' 
(collectively referred to hereafter as ``features'') to exist, the 
statute provides a remedy at 42 U.S.C. 6295(q)(1), which states that a 
rule prescribing an energy conservation standard for a type (or class) 
of covered products shall specify a level of energy use or efficiency 
higher or lower than that which applies (or would apply) for such type 
(or class) for any group of covered products which have the same 
function or intended use, if the Secretary determines that covered 
products within such group--(A) consume a different kind of energy from 
that consumed by other covered products within such group (or class); 
or (B) have a capacity or other performance-related feature which other 
products within such type (or class) do not have and such feature 
justifies a higher or lower standard from that which applies (or will 
apply) to other products within such type (or class). In making a 
determination under 42 U.S.C. 6295(q)(1) concerning whether a 
performance-related feature justifies the establishment of a higher or 
lower standard, the Secretary shall consider such factors as the 
utility to the consumer of such a feature, and such other factors as 
the Secretary deems appropriate.
    These provisions also apply to covered non-ASHRAE \5\ commercial 
and industrial equipment through the crosswalk provision at 42 U.S.C. 
6316(a). (Under the statute, ``ASHRAE equipment'' refers to small 
commercial package air conditioning and heating equipment, large 
commercial package air conditioning and heating equipment, very large 
commercial package air conditioning and heating equipment, packaged 
terminal air conditioners (PTACs), packaged terminal heat pumps 
(PTHPs), warm-air furnaces, packaged boilers, storage water heaters, 
instantaneous water heaters, or unfired hot water storage tanks, which 
are addressed by ASHRAE in ASHRAE Standard 90.1, Energy Standard for 
Buildings Except Low-Rise Residential Buildings.)
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    \5\ ``ASHRAE'' refers to the American Society of Heating, 
Refrigerating and Air-Conditioning Engineers.
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    ASHRAE equipment has its own separate statutory scheme under EPCA, 
with the default situation being that DOE must adopt the level set 
forth in ASHRAE Standard 90.1, unless the Department has clear and 
convincing evidence to adopt a more-stringent standard (see 42 U.S.C. 
6313(a)(6)). Under 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa), there is a 
similar ``features'' provision which states, ``The Secretary may not 
prescribe an amended standard under this subparagraph if the Secretary 
finds (and publishes the finding) that interested persons have 
established by a preponderance of the evidence that a standard is 
likely to result in the unavailability in the United States in any 
product type (or class) of performance characteristics (including 
reliability, features, sizes, capacities, and volumes) that are 
substantially the same as those generally available in the United 
States at the time of the finding of the Secretary.'' However, it is 
noted that this provision contains the specific limitation that it 
applies to an amended standard prescribed under this subparagraph 
(i.e., when DOE is acting under its authority to set a more-stringent 
standard). There is no companion ``features'' provision under 42 U.S.C. 
6313(a)(6)(A), which is the provision that would apply when DOE is 
adopting the levels set by ASHRAE. Congress was clearly aware of the 
features issue, and it chose to act in the context of DOE standard 
setting, but not ASHRAE standard setting. There is likewise no 
companion provision to 42 U.S.C. 6295(q)(1) for ASHRAE equipment.

B. DOE's Historical Interpretation

    With this statutory background in mind, in the March 12, 2015, 
notice of proposed rulemaking (NOPR) for energy conservation standards 
for residential furnaces, DOE set forth in detail its rationale for why 
it did not considering the venting of non-condensing furnaces to 
constitute a product ``feature'' under 42 U.S.C. 6295(o)(4). 80 FR 
13120, 13137-13138.
    As discussed previously, when evaluating and establishing energy 
conservation standards, the statute requires DOE to divide covered 
products into product classes by the

[[Page 60092]]

type of energy used, by capacity, or by other performance-related 
features that justify a different standard. In making a determination 
whether a performance-related feature justifies a different standard, 
DOE must consider factors such as the utility to the consumer of the 
feature and other factors DOE determines are appropriate. (42 U.S.C. 
6295(q)) Historically, DOE has viewed utility as an aspect of the 
product that is accessible to the layperson and is based on user 
operation, rather than performing a theoretical function. This 
interpretation has been implemented consistently in DOE's previous 
rulemakings by determining utility through the value the item brings to 
the consumer, rather than through analyzing more complicated design 
features, or costs that anyone, including the consumer, manufacturer, 
installer, or utility companies may bear. DOE reasoned that this 
approach is consistent with EPCA's requirement for a separate and 
extensive analysis of economic justification for the adoption of any 
new or amended energy conservation standard (see 42 U.S.C. 
6295(o)(2)(A)-(B) and (3)).
    Under EPCA, DOE has typically addressed consumer utility by 
establishing separate product classes or otherwise taken action when a 
consumer may value a product feature based on the consumer's everyday 
needs. For instance, DOE has determined that it would be impermissible 
under 42 U.S.C. 6295(o)(4) to include elimination of oven door windows 
as a technology option to improve the energy efficiency of cooking 
products.\6\ DOE reached this conclusion based upon how consumers 
typically use the product: Peering through the oven window to judge if 
an item is finished cooking, as opposed to checking the timer and/or 
indicator light or simply opening the oven door (which could waste more 
energy) to see if the item is finished cooking. DOE has also determined 
that consumers may value other qualities such as ability to self-
clean,\7\ size,\8\ and configuration.\9\ This determination, however, 
can change depending on technological developments and shifts in 
consumer behavior/preferences, and it is conceivable that certain 
products may disappear from the market entirely due to shifting 
consumer demand. DOE stated that it has determined such value on a 
case-by-case basis through its own research, as well as public comments 
received.
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    \6\ 63 FR 48038, 48041 (Sept. 8, 1998).
    \7\ 73 FR 62034, 62048 (Oct. 17, 2008) (separating standard 
ovens and self-cleaning ovens into different product classes).
    \8\ 77 FR 32307, 32319 (May 31, 2012) (creating a separate 
product class for compact front-loading residential clothes 
washers).
    \9\ 75 FR 59469, 59487 (Sept. 27, 2010) (creating a separate 
product class for refrigerators with bottom-mounted freezers).
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    DOE offered a cautionary note that disparate products may have very 
different consumer utilities, thereby making direct comparisons 
difficult and potentially misleading. For instance, in a 2011 
rulemaking, DOE created separate product classes for vented and 
ventless residential clothes dryers based on DOE's recognition of the 
``unique utility'' that ventless clothes dryers offer to consumers. 76 
FR 22454, 22485 (April 21, 2011). This utility could be characterized 
as the ability to have a clothes dryer in a living area where vents are 
impossible to install (e.g., an apartment in a high-rise building). As 
explained in that April 2011 direct final rule technical support 
document, ventless dryers can be installed in locations where venting 
dryers would be precluded due to venting restrictions.
    But in another rulemaking, DOE found that water heaters that 
utilize heat pump technology did not need to be put in a separate 
product class from conventional types of hot water heaters that utilize 
electric resistance technology, even though water heaters utilizing 
heat pumps require the additional installation of a condensate drain 
that a hot water heater utilizing electric resistance technology does 
not require. 74 FR 65852, 65871 (Dec. 11, 2009). DOE found that 
regardless of these installation factors, the heat pump water heater 
and the conventional water heater still had the same utility to the 
consumer: Providing hot water. Id. In both cases, DOE made its finding 
based on consumer type and utility type, rather than product design 
criteria that impact product efficiency.
    DOE expressed concern that tying the concept of ``feature'' to a 
specific technology would effectively lock-in the currently existing 
technology as the ceiling for product efficiency and eliminate DOE's 
ability to address technological advances that could yield significant 
consumer benefits in the form of lower energy costs while providing the 
same functionality for the consumer. DOE stated that it was very 
concerned that determining features solely on product technology could 
undermine the Department's Appliance Standards Program. DOE reasoned 
that if it is required to maintain separate product classes to preserve 
less-efficient technologies, future advancements in the energy 
efficiency of covered products would become largely voluntary, an 
outcome which seems inimical to Congress's purposes and goals in 
enacting EPCA.
    Turning to the product at issue in that rulemaking, DOE noted that 
residential furnaces are currently divided into several product 
classes. For example, furnaces are separated into product classes based 
on their fuel source (gas, oil, or electricity), which is required by 
statute. In the most recent rulemaking for that covered product, DOE 
analyzed only two product classes for residential furnaces: (1) Non-
weatherized gas-fired furnaces (NWGFs) and (2) mobile home gas-fired 
furnaces (MHGFs). DOE did not additionally separate NWGFs and MHGFs 
into condensing and noncondensing product classes.
    In that rulemaking, DOE tentatively concluded that the methods by 
which a furnace is vented did not provide any separate performance-
related impacts, and, therefore, that DOE had no statutory basis for 
defining a separate class based on venting and drainage 
characteristics. DOE reasoned that NWGF and MHGF venting methods did 
not provide unique utility to consumers beyond the basic function of 
providing heat, which all furnaces perform. Using this logic, the 
possibility that installing a non-condensing furnace may be less costly 
than a condensing furnace due to the difference in venting methods did 
not justify separating the two types of NWGFs into different product 
classes. Unlike the consumers of ventless dryers, which DOE had 
determined to be a performance-related feature based on the 
impossibility of venting in certain circumstances (e.g., high-rise 
apartments), DOE reasoned that consumers of condensing NWGFs are 
homeowners that may either use their existing venting or have a 
feasible alternative to obtain heat. In other words, homeowners would 
still be able to obtain heat regardless of the venting. In contrast, 
DOE reasoned that a resident of a high-rise apartment or condominium 
building that is not architecturally designed to accommodate vented 
clothes dryers would have no option in terms of installing and enjoying 
the utility of a dryer in their home unless he or she used a ventless 
dryer.
    As explained previously, DOE's conclusion in the March 12, 2015, 
NOPR was that the utility of a furnace involves providing heat to a 
consumer. DOE reasoned that such utility is provided by any type of 
furnace, but to the extent that a consumer has a preference for a 
particular fuel type (e.g., gas), improvements in venting technology 
may eventually allow a consumer to obtain the efficiency of a 
condensing furnace using the existing

[[Page 60093]]

venting in a residence by sharing venting space with water heaters. DOE 
postulated that this update in technology would significantly reduce 
the cost burden associated with installing condensing furnaces and 
reduce potential instances of ``orphaned'' water heaters, where the 
furnace and water heater can no longer share the same venting (due to 
one unit being condensing and the other noncondensing). In other words, 
when mature, this technology could allow consumers to switch from a 
non-condensing furnace to a condensing furnace in a greater variety of 
applications, such as urban row houses. For more information, 
interested parties were asked to consult appendix 8L of the NOPR TSD.

C. The Gas Industry Petition

    As noted previously, on October 18, 2018, DOE received a petition 
from the Gas Industry Petitioners asking DOE to: (1) Issue an 
interpretive rule stating that DOE's proposed energy conservation 
standards for residential furnaces and commercial water heaters would 
result in the unavailability of ``performance characteristics'' within 
the meaning of the Energy Policy and Conservation Act of 1975, as 
amended (i.e., by setting standards which can only be met by products/
equipment using condensing combustion technology) and (2) withdraw the 
proposed energy conservation standards for residential furnaces and 
commercial water heaters based upon such findings. In their petition, 
the Gas Industry Petitioners argue that DOE misinterpreted its mandate 
under section 325(o)(4) of EPCA by failing to consider as a ``feature'' 
of the subject residential furnaces and commercial water heating 
equipment the compatibility of a product/equipment with conventional 
atmospheric venting systems and the ability to operate without 
generating liquid condensate requiring disposal via a plumbing 
connection. Consequently, the Gas Industry Petitioners assert that 
DOE's proposals would make unavailable non-condensing products/
equipment with such features, which currently exist in the marketplace, 
in contravention of the statute. The petition makes a number of 
technical, legal, and economic arguments in favor of its suggested 
interpretation, and it points to DOE's past precedent related to space 
constraints and differences in available electrical power supply (and 
associated installation costs) as supporting its call to find that non-
condensing technology amounts to a performance-related ``feature.'' 
Based upon these arguments, the Gas Industry Petitioners concluded that 
DOE should issue an interpretive rule treating non-condensing 
technology as a ``feature'' under EPCA, withdraw its rulemaking 
proposals for both residential furnaces and commercial water heaters, 
and proceed on the basis of this revised interpretation.

D. DOE's Proposed Interpretive Rule

    As discussed in section I of this document, DOE published a notice 
of proposed interpretive rule in the Federal Register on July 11, 2019. 
84 FR 33011. In consideration of public comments and other information 
received on the Gas Industry Petition, DOE proposed to revise its 
interpretation of EPCA's ``features'' provision in the context of 
condensing and non-condensing technology used in furnaces, water 
heating equipment, and similarly-situated appliances (where permitted 
by EPCA). Based on those comments and for the reasons set forth fully 
in that document, DOE proposed to interpret prospectively the statute 
to provide that adoption of energy conservation standards that would 
limit the market to natural gas and/or propane gas furnaces, water 
heaters, or similarly-situated products/equipment (where permitted by 
EPCA) that use condensing combustion technology would result in the 
unavailability of a performance related feature within the meaning of 
42 U.S.C. 6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa) (and as 
applicable in certain cases through 42 U.S.C. 6316(a)).
    As explained in the proposed interpretive rule, the statute accords 
the Secretary of Energy considerable discretion in terms of determining 
whether a performance characteristic of a covered product/equipment 
amounts to a performance-related feature which cannot be eliminated 
through adoption of an energy conservation standard. DOE stated that it 
has taken the opportunity presented by the Gas Industry Petition to 
reconsider its historical interpretation of EPCA's ``features'' 
provision in the context of condensing and non-condensing technologies 
used by certain gas appliances. Contrary to the petitioners' 
assessment, DOE found this to be a close case, with persuasive 
arguments on both sides of the issue. However, a number of factors 
convinced DOE to propose a revision to its interpretation.
    First, DOE acknowledged that it has, in the past, taken space 
constraints and similar limitations into account when setting product 
classes (e.g., PTACs, ventless clothes dryers). For example, DOE was 
sensitive to the costs associated with requiring expensive building 
modifications when it decided to set separate equipment classes for 
standard size PTACs and non-standard size PTACs. 73 FR 58772 (Oct. 7, 
2008). DOE stated that it expects that similar expenses would occur 
here, if DOE were to hold to its historical interpretation, at least 
for some subset of installations. Although limited data were provided 
to address the actual costs that consumers and commercial customers 
would face to modify their existing category I venting, there is little 
doubt that some number of such installations would be quite costly. 
These more complicated/costly installations are documented as part of 
DOE's analysis of the venting costs for residential furnaces, which 
considered potential venting modifications that could be required when 
replacing an existing category I furnace with a condensing (category 
IV) furnace (see appendix 8D of the 2016 SNOPR TSD for further 
details).
    Second, DOE stated that it has in the past focused on the 
consumer's interaction with the product/equipment in deciding whether a 
performance feature is at issue. In the context of residential furnaces 
and commercial water heaters, DOE has focused on the primary function 
of the appliance (e.g., providing heat to a home or potable hot water) 
in establishing the nexus to the consumer. In the past, DOE opined that 
consumers were only interested in obtaining heat or hot water from the 
appliance, so they would not care about the mechanism for generating 
that end product. However, commenters have made clear that in at least 
some cases, the physical changes associated with a condensing appliance 
may change a home's aesthetics (e.g., by adding new venting into the 
living space or decreasing closet or other storage space), thereby 
impacting consumer utility even under DOE's prior approach.
    Third, DOE noted that it has been its policy to remain neutral 
regarding competing energy sources in the marketplace. As certain 
commenters have pointed out and as DOE's own analyses have shown, some 
enhanced level of fuel switching is likely to accompany standard 
setting using DOE's prior interpretation. Many consumers who are 
currently gas customers may show a proclivity for that fuel type and 
would be negatively impacted by a standard that requires the purchase 
of a condensing unit to the extent they feel compelled to change to a 
different fuel type. DOE explained that it seeks neither to determine 
winners and losers in the marketplace nor to limit consumer choice.
    Finally, DOE stated that it is very concerned about ensuring energy

[[Page 60094]]

affordability, particularly for persons with low incomes. Although 
energy efficiency improvements may pay for themselves over time, there 
is typically a significant increase in first-cost associated with 
furnaces and water heaters using condensing technology. For consumers 
with difficult installation situations (e.g., inner-city row houses), 
there would be the added cost of potentially extensive venting 
modifications. In certain cases, commenters have argued that 
accommodating condensing products may not even be possible. Although 
DOE continues to believe that costs are properly addressed in the 
economic analysis portion of its rulemakings, it stated that it remains 
cognizant of such issues. DOE stated that it has tentatively concluded 
that the other reasons discussed immediately above are sufficient in 
and of themselves to justify the Department's proposed change in 
interpretation, but it acknowledged these cost impacts in order to be 
fully transparent in terms of the agency's thinking.
    The agency reasoned that creating separate product classes for 
condensing and non-condensing furnaces, water heaters, and similarly-
situated products/equipment (where permitted by EPCA) would prevent 
many of these potential problems. Although DOE's proposed revised 
approach may have some impact on overall energy saving potential as a 
result of establishing separate product/equipment classes, the 
Department noted that that is not the touchstone of EPCA's ``features'' 
provision; through that provision, Congress expressed its will that 
certain product utilities will take priority over additional energy-
saving measures. (For example, DOE did not eliminate the oven window 
which consumers found useful, despite the potential for further energy 
savings.) With that said, DOE expressed it belief that any potentially 
negative programmatic impacts of its revised interpretation are likely 
to be limited. DOE reasoned that the proposed interpretation would be 
likely to impact only a limited set of appliances, and DOE noted that 
market trends have favored the growing reach of condensing furnaces, 
even as non-condensing alternatives have remained available. DOE stated 
that it has every reason to believe that such trends will continue.
    DOE sought to clarify the limitations of its proposed revised 
interpretation, based upon the existing statutory provisions. As 
discussed previously, DOE can effect this change for all relevant 
consumer products, all non-ASHRAE commercial and industrial equipment, 
and ASHRAE equipment in those instances where DOE has clear and 
convincing evidence to adopt levels higher than the levels in ASHRAE 
Standard 90.1.
    As noted, additional, subsequent DOE action would be required 
before the interpretation in the proposed interpretive rule could be 
implemented. The proposed interpretive rule, even once finalized, would 
not alter the Department's current regulations. This interpretation 
does not and will not be used to abrogate DOE's responsibilities under 
existing laws or regulations, nor does it change DOE's existing 
statutory authorities or those of regulators at the Federal, State, or 
local level. DOE anticipates continued engagement and productive 
involvement of members of the public and the regulated community in 
subsequent activities that may follow this interpretation.
    As discussed in the proposed interpretive rule, DOE decided to 
grant the Gas Industry Petition to the extent that it proposed to 
prospectively interpret the statute to provide that adoption of energy 
conservation standards that would limit the market of natural gas and/
or propane gas furnaces, water heaters, or similarly-situated products/
equipment (where permitted by EPCA) to appliances that use condensing 
combustion technology would result in the unavailability of a 
performance related feature within the meaning of 42 U.S.C. 6295(o)(4) 
and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa) (and as applicable in certain 
cases through 42 U.S.C. 6316(a)). The proposal clarified that such 
interpretation would apply to all applicable residential products, non-
ASHRAE commercial equipment, and ASHRAE equipment where DOE adopts a 
level more stringent than the ASHRAE level.
    DOE stated that it is denying the Gas Industry Petition as it 
pertains to those rulemakings where ASHRAE sets standard levels that 
trigger DOE to consider and adopt those level (unless DOE finds clear 
and convincing evidence to adopt more-stringent levels), due to lack of 
authority. DOE also denied the Gas Industry Petition's request for DOE 
to withdraw the proposed rules for residential furnaces and commercial 
water heaters as unnecessary. DOE stated that if the interpretive rule 
were to be finalized, it would anticipate developing supplemental 
notices of proposed rulemaking (SNOPRs) that would implement the new 
legal interpretation for those two rulemakings that were the subject of 
the petition for rulemaking.

III. Discussion of Issues Regarding Structuring of Potential Product/
Equipment Classes

    DOE received a number of comments with diverse views on the 
Department's proposed interpretive rule related to the Gas Industry 
Petition, with some supporting the proposal and others in opposition. 
Once again, all of those comments will be addressed by DOE in a 
subsequent document. Consequently, there is no need to repeat those 
arguments, and interested parties are instead asked to limit the scope 
of their comments to the specific issue raised in this supplemental 
notice of proposed interpretive rule.
    As noted previously, in its proposed interpretive rule, DOE 
explored the issue of whether non-condensing technology (and associated 
venting) constitutes a performance-related ``feature'' under 42 U.S.C. 
6295(o)(4),\10\ as would support a separate product/equipment class 
under 42 U.S.C. 6295(q)(1).\11\ 84 FR 33011, 33015 (July 11, 2019). DOE 
initially assumed that if it were to adopt an interpretation consistent 
with the Gas Industry Petition, it would suffice to set product/
equipment classes largely based upon the key distinction of whether an 
appliance utilizes condensing or non-condensing combustion technology. 
However, a number of comments on the proposed interpretive rule 
suggested that such approach may not adequately resolve the issue at 
hand, as presented in the petition.
---------------------------------------------------------------------------

    \10\ 42 U.S.C. 6316(a) for non-ASHRAE equipment; 42 U.S.C. 
6313(a)(6)(B)(iii)(II)(aa) for ASHRAE equipment where DOE is setting 
more-stringent standards.
    \11\ 42 U.S.C. 6316(a) for non-ASHRAE equipment.
---------------------------------------------------------------------------

    More specifically, while U.S. Boiler (USB) generally agreed with 
DOE's revised interpretation, the commenter argued that DOE has erred 
in focusing on ``non-condensing'' technology as the performance-related 
feature, suggesting that the agency should instead focus on Category I 
venting. According to USB, Category II, III, and IV (as well as non-
categorized direct vent furnaces and boilers) are currently available 
using non-condensing technology, but many of the same problems 
identified in the Gas Industry Petition still may arise. USB stated 
that non-condensing Category II, III, and IV appliances generally share 
the same venting consumer utility issues as condensing appliances and 
equipment, and that they can theoretically operate at higher 
efficiencies than Category I. However, the commenter argued that 
elimination of models using Category I venting (under a standard level 
that could only

[[Page 60095]]

be met by products/equipment using Category II, III, or IV venting) 
would create the same problems which DOE has sought to address through 
its proposed revised interpretation. USB commented that vent 
categorization has been recognized for over 20 years by manufacturers, 
utilities, and code enforcement officials as the best way to determine 
how to safely vent appliances. (USB, No. 78 at pp. 1-2) Burnham 
Holdings, International (BHI) made essentially identical arguments to 
those raised by USB, and Crown Boiler offered a similar comment that 
DOE should focus product classes based upon type of venting used, 
rather than the use of condensing or non-condensing technology. (BHI, 
No. 83 at pp. 1-2; Crown Boiler, No. 79 at pp. 1-2)
    In response to the comments from USB, BHI, and Crown Boiler 
suggesting that DOE focus on the type of venting as the performance 
related feature rather than non-condensing operation, DOE notes that, 
while separate from the product/equipment, the venting system is 
inextricably linked to the design of the product. Because the venting 
system is a separate component from the product, DOE initially sought 
to focus on non-condensing operation as the performance-related 
characteristic of the product itself. However, after further 
considering these commenters' concerns, DOE understands that 
interpreting non-condensing operation to be a feature could still 
result in a reduction of utility for certain consumers, because some 
non-condensing appliances require connection to venting systems other 
than Category I and would likely result in many of the installation 
issues that DOE seeks to address through this interpretive rulemaking.
    As a result, DOE further considered what constitutes a ``feature'' 
or ``performance-related characteristic'' under EPCA, and in 
particular, whether such feature might be based on venting system 
compatibility of the product. Because the most significant concerns 
regarding venting system compatibility involve use of gas appliances 
that are not compatible with Category I venting in place of gas 
appliances that are compatible with Category I venting, DOE considered 
whether compatibility with Category I venting should be a protected 
feature under EPCA. Moreover, DOE also considered whether any impact to 
venting system compatibility resulting from increasing product or 
equipment efficiency standards would cause the aforementioned issues. 
For example, it is conceivable that if a more-stringent standard 
results in an appliance compatible with Category III venting systems 
being replaced with an appliance that is only compatible with Category 
IV venting systems, many of the same issues might arise as have been 
identified for the replacement of appliances compatible with Category I 
venting systems. Thus, compatibility with venting systems of any type 
could conceivably be a feature that consumers desire and which DOE must 
consider when evaluating more-stringent standards. Under such an 
interpretation, compatibility with each existing venting technology 
would be a feature under EPCA that could require separate classes based 
on compatibility with venting systems for each venting category, and 
uncategorized venting systems could also require separate classes.
    The first approach (i.e., considering only Category I venting 
compatibility as a performance-related feature) has the benefit of 
potentially simplifying the regulatory scheme in comparison to the 
latter approach, which could require classification of products in each 
venting category separately. The first approach would result in more 
streamlined regulations and product/equipment classes for gas 
appliances, as compared to the latter approach, while resolving the 
most significant issues involved with venting system compatibility. The 
latter approach potentially would address more comprehensively possible 
issues related to the compatibility of an appliance with venting 
systems, but it would make the regulatory scheme more complex and could 
create extra compliance burdens, as the number of product/equipment 
classes for vented appliances could increase greatly (e.g., each 
current class of gas appliance could require further segmentation by 
each of the four categories of venting and also could need to account 
for gas appliances that are compatible with uncategorized venting 
systems). Both approaches would have the benefit of not limiting DOE to 
consideration of the combustion technology that provides the function 
of the appliance (e.g., condensing, non-condensing), about which some 
commenters have expressed concerns. Instead, DOE's focus would be to 
ensure compatibility with existing venting, thereby allowing DOE to be 
responsive to potential future technological advances in venting system 
compatibility.
    Based on these considerations, DOE is considering a proposed 
alternative interpretation, in addition to the interpretation proposed 
in the July 2019 notice of proposed interpretive rule. As discussed 
previously, the July 2019 notice of proposed interpretive rule proposed 
that adoption of energy conservation standards that would limit the 
market to natural gas and/or propane gas furnaces, water heaters, or 
similarly-situated products/equipment (where permitted by EPCA) that 
use condensing combustion technology would result in the unavailability 
of a performance-related feature within the meaning of 42 U.S.C. 
6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa) (and as applicable 
in certain cases through 42 U.S.C. 6316(a)). In this document, DOE is 
also proposing an interpretation that an appliance's compatibility with 
a venting system is a performance-related characteristic of that 
appliance under EPCA. Specifically, DOE is also considering an 
interpretation that, based on current appliance/venting system 
compatibility limitations, the adoption of energy conservation 
standards that would limit the market to natural gas and/or propane gas 
furnaces, water heaters, or similarly-situated products/equipment 
(where permitted by EPCA) that are incompatible with any existing 
venting systems available on the market would result in the 
unavailability of a performance related feature within the meaning of 
42 U.S.C. 6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa) (and as 
applicable in certain cases through 42 U.S.C. 6316(a)). DOE considered 
limiting its proposal to include only that compatibility with Category 
I venting systems is a feature, as suggested by the commenters, and 
seeks comment on doing so. In addition, DOE is considering a broader 
approach taking into consideration all venting categories since 
concerns similar to those that gave rise to the petition could 
conceivably occur for appliances that are compatible with venting 
systems other than Category I. The Department welcomes input on both 
potential approaches, and it will consider adopting either or the 
original proposed approach in its final interpretation, in light of the 
information received both previously and in response to today's 
request.
    DOE will consider all comments received on the issue of the 
potential utility associated with ensuring venting system 
compatibility, as well as comments on the potential for added 
regulatory complexity from the alternative approaches, before making a 
final decision.

IV. Public Participation

Submission of Comments

    DOE invites all interested parties to submit in writing by the date 
listed in the DATES section of this document, comments and information 
regarding

[[Page 60096]]

this supplemental proposed interpretive rule.
    Submitting comments via http://www.regulations.gov. The http://www.regulations.gov web page will require you to provide your name and 
contact information prior to submitting comments. Your contact 
information will be viewable to DOE Building Technologies staff only. 
Your contact information will not be publicly viewable except for your 
first and last names, organization name (if any), and submitter 
representative name (if any). If your comment is not processed properly 
because of technical difficulties, DOE will use this information to 
contact you. If DOE cannot read your comment due to technical 
difficulties and cannot contact you for clarification, DOE may not be 
able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment or in any documents attached to your comment. 
Any information that you do not want to be publicly viewable should not 
be included in your comment, nor in any document attached to your 
comment. Persons viewing comments will see only first and last names, 
organization names, correspondence containing comments, and any 
documents submitted with the comments.
    Do not submit to http://www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (CBI)). Comments submitted through 
http://www.regulations.gov cannot be claimed as CBI. Comments received 
through the website will waive any CBI claims for the information 
submitted. For information on submitting CBI, see the Confidential 
Business Information section.
    DOE processes submissions made through http://www.regulations.gov 
before posting. Normally, comments will be posted within a few days of 
being submitted. However, if large volumes of comments are being 
processed simultaneously, your comment may not be viewable for up to 
several weeks. Please keep the comment tracking number that http://www.regulations.gov provides after you have successfully uploaded your 
comment.
    Submitting comments via email, hand delivery, or postal mail. 
Comments and documents via email, hand delivery, or postal mail will 
also be posted to http://www.regulations.gov. If you do not want your 
personal contact information to be publicly viewable, do not include it 
in your comment or any accompanying documents. Instead, provide your 
contact information on a cover letter. Include your first and last 
names, email address, telephone number, and optional mailing address. 
The cover letter will not be publicly viewable as long as it does not 
include any comments.
    Include contact information in your cover letter each time you 
submit comments, data, documents, and other information to DOE. If you 
submit via postal mail or hand delivery, please provide all items on a 
CD, if feasible, in which case it is not necessary to submit printed 
copies. No telefacsimiles (faxes) will be accepted.
    Comments, data, and other information submitted electronically 
should be provided in PDF (preferred), Microsoft Word or Excel, 
WordPerfect, or text (ASCII) file format. Provide documents that are 
not secured, written in English, and free of any defects or viruses. 
Documents should not include any special characters or any form of 
encryption, and, if possible, they should carry the electronic 
signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email, postal mail, or hand delivery two well-marked copies: One copy 
of the document marked ``Confidential'' including all the information 
believed to be confidential, and one copy of the document marked ``Non-
confidential'' with the information believed to be confidential 
deleted. Submit these documents via email or on a CD, if feasible. DOE 
will make its own determination about the confidential status of the 
information and treat it according to its determination.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).
    DOE considers public participation to be a very important part of 
its process for considering regulatory actions. DOE actively encourages 
the participation and interaction of the public during the comment 
period. Interactions with and between members of the public provide a 
balanced discussion of the issues and assist DOE in determining how to 
proceed with a regulatory action. Anyone who wishes to be added to DOE 
mailing list to receive future notices and information about this 
matter should contact Appliance and Equipment Standards Program staff 
at (202) 287-1445 or via email at 
[email protected].

V. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this 
supplemental notice of proposed interpretive rule.

Signing Authority

    This document of the Department of Energy was signed on September 
16, 2020, by Daniel R Simmons, Assistant Secretary for Energy 
Efficiency and Renewable Energy, pursuant to delegated authority from 
the Secretary of Energy. That document with the original signature and 
date is maintained by DOE. For administrative purposes only, and in 
compliance with requirements of the Office of the Federal Register, the 
undersigned DOE Federal Register Liaison Officer has been authorized to 
sign and submit the document in electronic format for publication, as 
an official document of the Department of Energy. This administrative 
process in no way alters the legal effect of this document upon 
publication in the Federal Register.

    Signed in Washington, DC, on September 16, 2020.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2020-20773 Filed 9-23-20; 8:45 am]
BILLING CODE 6450-01-P