[Federal Register Volume 86, Number 110 (Thursday, June 10, 2021)]
[Proposed Rules]
[Pages 30796-30819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-11957]


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DEPARTMENT OF ENERGY

10 CFR Part 431

[EERE-2017-BT-STD-0021]
RIN 1904-AD90


Energy Conservation Program: Energy Conservation Standards for 
Unfired Hot Water Storage Tanks

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

ACTION: Notification of proposed determination and request for comment.

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SUMMARY: The Energy Policy and Conservation Act, as amended (EPCA), 
prescribes energy conservation standards for various consumer products 
and certain commercial and industrial equipment, including unfired hot 
water storage tanks (UFHWSTs). EPCA also requires the U.S. Department 
of Energy (DOE or the Department) to periodically determine whether 
more-stringent, amended standards would result in significant 
additional conservation of energy, be technologically feasible, and be 
economically justified. After carefully considering the available 
market and technical information for this equipment, DOE has 
tentatively concluded in this document that it lacks clear and 
convincing evidence that more-stringent standards for UFHWSTs would 
save a significant additional amount of energy and would be 
economically justified. As such, DOE has initially determined that 
energy conservation standards for UFHWSTs do not need to be amended. 
DOE requests comment on this notification of proposed determination 
(NOPD), as well as the associated analyses and results.

DATES: Meeting: DOE will hold a webinar on Tuesday, July 13, 2021, from 
12:00 p.m. to 4:00 p.m. See section VII, ``Public Participation,'' for 
webinar registration information, participant instructions, and 
information about the capabilities available to webinar participants.
    Comments: Written comments and information are requested and will 
be accepted on or before August 9, 2021.

ADDRESSES: Interested persons are encouraged to submit comments using 
the Federal eRulemaking Portal at https://www.regulations.gov. Follow 
the instructions for submitting comments. Alternatively, interested 
persons may submit comments by email to the following address: 
[email protected]. Include docket number EERE-
2017-BT-STD-0021 and/or RIN number 1904-AD90 in the subject line of the 
message. Submit electric comments in WordPerfect, Microsoft Word, PDF, 
or ASCII file format, and avoid the use of special characters or any 
form of encryption. No telefacsimiles (faxes) will be accepted. For 
detailed instructions on submitting comments and additional information 
on this process, see section VII (Public Participation) of this 
document.
    Although DOE has routinely accepted public comment submissions 
through a variety of mechanisms, including postal mail and hand 
delivery/courier, the Department has found it necessary to make 
temporary modifications to the comment submission process in light of 
the ongoing Covid-19 pandemic. DOE is currently accepting only 
electronic submissions at this time. If a commenter finds this change 
poses an undue hardship, please contact Appliance Standards Program 
staff at (202) 586-1445 to discuss the need for alternative 
arrangements. Once the Covid-19 pandemic health emergency is resolved, 
DOE anticipates resuming all of its regular options for public comment 
submissions, including postal mail and hand delivery/courier.
    Docket: The docket for this activity, which includes Federal 
Register notices, public meeting attendee lists and transcripts, 
comments, and other supporting documents/materials, is available for 
review at https://www.regulations.gov. All documents in the docket are 
listed in the https://www.regulations.gov index. However, some 
documents listed in the index, such as information that is exempt from 
public disclosure, may not be publicly available.
    The docket web page can be found at: https://www.regulations.gov/docket?D=EERE-2017-BT-STD-0021. The docket web page contains 
instructions on how to access all documents, including public comments, 
in the docket. See section VII, ``Public Participation,'' for further 
information on how to submit comments through https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Ms. Catherine Rivest, U.S. Department 
of Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC 
20585- 0121. Telephone: (202) 586-7335. Email: 
[email protected].
    Mr. Eric Stas, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. 
Telephone: (202) 586-5827. Email: [email protected].
    For further information on how to submit a comment or review other 
public comments and the docket, contact the Appliance and Equipment 
Standards Program staff at (202) 287-1445 or by email: 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Proposed Determination

[[Page 30797]]

II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemakings for UFHWSTs
III. General Discussion
    A. Product Classes and Scope of Coverage
    B. Test Procedure
    C. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    D. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    E. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Savings in Operating Costs Compared to Increase in Price (LCC 
and PBP)
    c. Energy Savings
    d. Lessening of Utility or Performance of Equipment
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Scope of Coverage and Equipment Classes
    2. Technology Options
    3. Screening Analysis
    a. Screened-Out Technologies
    b. Remaining Technologies
    B. Engineering Analysis
    1. Efficiency Levels for Analysis
    2. Representative Equipment for Analysis
    3. Cost Analysis
    C. Energy Use Analysis
    1. Tank Thermal Loss Model
    a. Tank Surface Area (Ai, j)
    b. Tank Internal Water Temperature (Ti)
    c. Tank Ambient Temperature (Tamb, z)
    d. R-value of Insulation (Ri, j)
    2. Annual Energy Use Due To UFHWST Losses
    3. Additional Sources of Uncertainty
    D. Life-Cycle Cost and Payback Period Analysis
    1. Installation Costs
    2. Annual Energy Consumption
    E. Shipments Analysis
    1. Stock Estimates
    a. Residential Stock
    b. Commercial Stock
    c. Industrial Stock
    2. Shipments for Replacement
    3. Shipments for New Construction
    4. Estimated Shipments
    a. Distribution of Shipments by UFHWST Storage Volume
    5. Additional Sources of Uncertainty
    F. National Impact Analysis
    1. Energy Efficiency Distribution in the No-New-Standards Case
    2. Hot Water Supply Boiler Efficiency Trend
    G. Discussion of Other Comments Received
V. Analytical Results and Conclusions
    A. National Impact Analysis
    1. Significance of Energy Savings
    2. Net Present Value of Consumer Costs and Benefits
    B. Proposed Determination
    1. Technological Feasibility
    2. Significant Conservation of Energy
    3. Economic Justification
    4. Summary
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Order 12866
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
    A. Participation in the Webinar
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Determination

    Title III, Part C \1\ of EPCA,\2\ established the Energy 
Conservation Program for Certain Industrial Equipment. (42 U.S.C. 6311-
6317) This equipment includes UFHWSTs, the subject of this NOPD. (42 
U.S.C. 6311(1)(K))
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    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part C was redesignated Part A-1.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the Energy Act of 2020, Public Law 116-260 (Dec. 
27, 2020).
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    Pursuant to EPCA, DOE is triggered to consider amending the energy 
efficiency standards for certain types of commercial and industrial 
equipment, including the equipment at issue in this document, whenever 
the American Society of Heating, Refrigerating, and Air-Conditioning 
Engineers (ASHRAE) amends the standard levels or design requirements 
prescribed in ASHRAE Standard 90.1, ``Energy Standard for Buildings 
Except Low-Rise Residential Buildings,'' (ASHRAE Standard 90.1). Under 
a separate provision of EPCA, DOE is required to review the existing 
energy conservation standards for those types of covered equipment 
subject to ASHRAE Standard 90.1 every six 6 years to determine whether 
those standards need to be amended. (42 U.S.C. 6313(a)(6)(A)-(C)) DOE 
is conducting this review of the energy conservation standards for 
UFHWSTs under EPCA's six-year-lookback authority. (42 U.S.C. 
6313(a)(6)(C))
    For this proposed determination, DOE analyzed UFHWSTs subject to 
standards as specified in the Code of Federal Regulations (CFR) at 10 
CFR 431.110. DOE first analyzed the technological feasibility of more 
efficient UFHWSTs. For those UFHWSTs for which DOE determined higher 
standards to be technologically feasible, DOE estimated energy savings 
that would result from potential amended energy conservation standards. 
DOE also considered whether potential energy conservation standards 
would be economically justified. As discussed in the following 
sections, DOE has initially determined that it lacks clear and 
convincing evidence that amended energy conservation standards for 
UFHWSTs would result in significant additional conservation of energy 
or be economically justified.
    Based on the results of these analyses, summarized in section V of 
this document, DOE has tentatively determined that current energy 
conservation standards for UFHWSTs do not need to be amended.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this proposed determination, as well as some of the 
historical background relevant to the establishment of energy 
conservation standards for UFHWSTs.

A. Authority

    EPCA, 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 of EPCA, added by Public Law 95-619, Title IV, Sec.  441(a) 
(42 U.S.C. 6311-6317, as codified), 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 document. (42 U.S.C. 6311(1)(K))
    Under EPCA, the energy conservation program consists essentially of 
four parts: (1) Testing; (2) labeling; (3) the establishment of 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 conservation requirements for covered equipment 
established under EPCA generally

[[Page 30798]]

supersede State laws and regulations concerning energy conservation 
testing, labeling, and standards. (42 U.S.C. 6316(a) and (b); 42 U.S.C. 
6297) DOE may, however, grant waivers of Federal preemption in limited 
circumstances for particular State laws or regulations, in accordance 
with the procedures and other provisions set forth under EPCA. (42 
U.S.C. 6297(d); 42 U.S.C. 6316(a); 42 U.S.C. 6316(b)(2)(D))
    Subject to certain criteria and conditions, DOE is required to 
develop test procedures to measure the energy efficiency, energy use, 
or estimated annual operating cost of covered equipment. (42 U.S.C. 
6314) Specifically, EPCA requires that if a test procedure referenced 
in ASHRAE Standard 90.1 is updated, DOE must update its test procedure 
to be consistent with the amended test procedure in ASHRAE Standard 
90.1, unless DOE determines, by rule, published in the Federal Register 
and supported by clear and convincing evidence, that the amended test 
procedure is not reasonably designed to produce test results that 
reflect the energy efficiency, energy use, or estimated operating costs 
of the covered ASHRAE equipment during a representative average use 
cycle. In addition, DOE must determine that the amended test procedure 
is not unduly burdensome to conduct. (42 U.S.C. 6314(a)(2) and (4)) In 
addition, if DOE determines that a test procedure amendment is 
warranted, it must publish proposed test procedures in the Federal 
Register and offer the public an opportunity (of not less than 45 days 
duration) to present oral and written comments on them. (42 U.S.C. 
6314(b)) In contrast, if DOE determines that test procedure revisions 
are not appropriate, DOE must publish in the Federal Register its 
determination not to amend the test procedures. (42 U.S.C. 
6314(a)(1)(A)(ii))
    Manufacturers of covered equipment must use the Federal test 
procedures as the basis for the following: (1) Certifying to DOE that 
their equipment complies with the applicable energy conservation 
standards adopted pursuant to EPCA (42 U.S.C. 6316(b); 42 U.S.C. 6296), 
and (2) when making representations to the public regarding the energy 
use or efficiency of such equipment. (42 U.S.C. 6314(d)) Similarly, DOE 
uses these test procedures to determine whether the equipment complies 
with relevant standards promulgated under EPCA. It is noted that DOE 
does not prescribe a test procedure for UFHWSTs, as the current Federal 
standard is an insulation design requirement of a minimum R-value of R-
12.5. 10 CFR 431.110.
    EPCA contains mandatory energy conservation 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 and packaged terminal 
heat pumps, warm-air furnaces, packaged boilers, storage water heaters, 
instantaneous water heaters, and UFHWSTs. Id. In doing so, EPCA 
established Federal energy conservation standards that generally 
corresponded to the levels in the ASHRAE Standard 90.1 in effect on 
October 24, 1992 (i.e., ASHRAE Standard 90.1-1989).
    If ASHRAE Standard 90.1 is amended with respect to the standard 
levels or design requirements applicable under that standard for 
certain commercial equipment, including UFHWSTs, 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)) 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. (42 U.S.C. 6313(a)(6)(A)(ii))
    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 greatest extent practicable, the 
following seven factors:

    (1) The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    (2) The savings in operating costs throughout the estimated 
average life of the product in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses of 
the products 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 
products likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy conservation; and
    (7) Other factors the Secretary considers relevant.

(42 U.S.C. 6313(a)(6)(B)(ii) and (C)(i); 42 U.S.C. 6316(a); 42 U.S.C. 
6295(o)(2)(B)(i))

    If DOE adopts as a national standard the efficiency levels 
specified in the amended ASHRAE Standard 90.1, DOE must establish such 
a 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 the more-stringent standard not later than 
30 months after publication of the revised ASHRAE Standard 90.1. (42 
U.S.C. 6313(a)(6)(B)(i))
    EPCA also requires that every six years DOE shall evaluate the 
energy conservation standards for each class of certain covered 
commercial equipment, including UFHWSTs, and publish either a notice of 
determination that the standards do not need to be amended, or a notice 
of proposed rulemaking (NOPR) that includes new proposed energy 
conservation standards (proceeding to a final rule, as appropriate). 
(42 U.S.C. 6313(a)(6)(C)(i)) EPCA further provides that, not later than 
three years after the issuance of a final determination not to amend 
standards, DOE must publish either a notice of determination that 
standards for the product do not need to be amended, or a NOPR 
including new proposed energy conservation standards (proceeding to a 
final rule, as appropriate). (42 U.S.C. 6313(a)(6)(C)(iii)(II)) DOE 
must make the analysis on which the determination is based publicly 
available and provide an opportunity for written comment. (42 U.S.C. 
6313(a)(6)(C)(ii)) Further, a determination that more- stringent 
standards would: (1) Result in significant additional conservation of 
energy and (2) be both technologically feasible and economically 
justified must be supported by clear and convincing evidence. (42 
U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)) DOE is publishing 
this NOPD in satisfaction of the 6-year review requirement in EPCA, 
having initially determined that DOE lacks clear and convincing 
evidence that amended standards for UFHWSTs would result in significant 
additional conservation of energy and be economically justified.

B. Background

1. Current Standards
    The initial Federal standards for UFHWSTs, established by EPCA, 
corresponded to the efficiency levels

[[Page 30799]]

contained in 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 of R-12.5 for all 
UFHWSTs. 66 FR 3336, 3356 (Jan. 12, 2001). 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 at 10 
CFR 431.110.
2. History of Standards Rulemakings for UFHWSTs
    As noted previously, the standards for UFHWSTs were most recently 
amended in the January 2001 final rule. EPCA requires DOE to evaluate 
the applicable energy conservation standard for UFHWSTs every 6 years 
to determine whether it needs to be amended. (42 U.S.C. 
6313(a)(6)(C)(i)) Thus, DOE published a request for information (RFI) 
on August 9, 2019, which identified various issues and sought to 
collect data and information to inform its determination, consistent 
with its obligations under EPCA, as to whether the UFHWST standards 
need to be amended (the August 2019 RFI). 84 FR 39220.
    DOE received five comments in response to the August 2019 RFI from 
the interested parties listed in Table II.1. Discussion of the relevant 
comments provided by these organizations and DOE's responses are 
provided in the appropriate sections of this document.

 Table II.1--Interested Parties Providing Written Comments on the August
                                2019 RFI
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              Name                   Abbreviation       Commenter type
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Appliance Standards Awareness     ASAP and NRDC.....  Efficiency
 Project and Natural Resources                         Organizations.
 Defense Council.
Air-Conditioning, Heating, &      AHRI..............  Trade Association.
 Refrigeration Institute.
Pacific Gas and Electric Company  CA IOUs...........  Investor-Owned
 (PG&E), Sand Diego Gas and                            Utilities.
 Electric (SDG&E), Southern
 California Edison (SCE).
A.O. Smith Corporation..........  A.O. Smith........  Manufacturer.
Bradford White Corporation......  BWC...............  Manufacturer.
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    A parenthetical reference at the end of a comment quotation or 
paraphrase provides the location of the item in the public record.\3\
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    \3\ The parenthetical reference provides a reference for 
information located in the docket. (Docket No. EERE-2017-BT-STD-
0021, which is maintained at https://www.regulations.gov/docket?D=EERE-2017-BT- STD-0021). The references are arranged as 
follows: (commenter name, comment docket ID number, page of that 
document).
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III. General Discussion

    DOE developed this proposed determination after a review of the 
UFHWST market, including product literature and product listings in the 
DOE Compliance Certification Management System (CCMS) database. DOE 
also considered written comments, data, and information from interested 
parties that represent a variety of interests. This notice addresses 
issues raised by these commenters.

A. Product Classes and Scope of Coverage

    When evaluating and establishing new or amended energy conservation 
standards, DOE typically divides covered equipment into equipment 
classes by the type of energy used or by capacity or other performance-
related features that justify differing standards. For UFHWSTs, the 
current standard at 10 CFR 431.110 is applicable to a single equipment 
class covering all UFHWSTs, which is consistent with the standard and 
structure in ASHRAE Standard 90.1. 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. The scope 
of coverage is discussed in further detail in section IV.A.1 of this 
NOPD.

B. Test Procedure

    EPCA sets forth generally applicable criteria and procedures for 
DOE's adoption and amendment of test procedures. (42 U.S.C. 6314(a)) As 
a general matter, manufacturers of covered ASHRAE equipment must use 
these test procedures to certify to DOE that their equipment complies 
with energy conservation standards and to quantify the efficiency of 
their equipment. (42 U.S.C. 6316(b); 42 U.S.C. 6296) DOE's current 
energy conservation standards for UFHWSTs are expressed in terms of a 
minimum R- value for tank insulation. (See 10 CFR 431.110.)
    DOE does not prescribe a test procedure for UFHWSTs; however, DOE's 
regulations define ``R-value'' as the thermal resistance of insulating 
material as 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'' and expressed in ([deg]F ft\2\ h/Btu). 10 CFR 431.102.
    In response to the August 2019 RFI, DOE received several comments 
encouraging DOE to consider a performance-based test procedure for 
UFHWSTs. ASAP and NRDC referenced a test procedure notice of proposed 
rulemaking (NOPR) published in the Federal Register on May 9, 2016 (81 
FR 28588) (May 2016 CWH TP NOPR) in which DOE proposed, among other 
things, a standby loss test for UFHWSTs, and a final rule for the test 
procedure for commercial water heating (CWH) equipment published in the 
Federal Register on November 10, 2016 (81 FR 79261), in which DOE 
suggested that it would address comments received in response to the 
May 2016 CWH TP NOPR in a separate rulemaking notice. These commenters 
encouraged DOE to review and finalize the performance-based test 
procedure for UFHWSTs before proceeding with a UFHWST standards 
rulemaking, in order to not forgo potential additional energy savings 
that could come from incorporating standby losses and/or other changes 
to the UFHWST test procedure. (ASAP and NRDC, No. 7 at pp. 1-2) 
Similarly, the CA IOUs stated that they believe the current R-12.5 
insulation requirement limits consumer choice and does not encourage 
design innovation. They likewise encouraged DOE to adopt a performance-
based metric, which they believe would lead to additional energy 
savings. The CA IOUs analyzed standby losses for commercial storage 
water heaters in the AHRI Directory of Certified Product Performance 
and noted a wide range of performance. They stated that this suggests 
the potential for energy savings

[[Page 30800]]

opportunities for UFHWSTs, if storage water heater tanks are 
representative of UFHWSTs. Commenting more specifically, the CA IOUs 
encouraged DOE to consider the thermal losses through uninsulated 
ports. (CA IOUs, No. 3 at pp. 1-3)
    In contrast to these comments, BWC recommended that DOE maintain 
the requirements for UFHWSTs in terms of insulation level, stating that 
performance testing for UFHWSTs would be overly burdensome, especially 
considering the relatively small and customized nature of the 
marketplace. BWC also expressed concerns that a test procedure change, 
and ultimately an energy conservation standards change, could have 
anti-competitive impacts on the UFHWST market. (BWC, No. 5 at pp. 1-3) 
AHRI also recommended maintaining the current prescriptive design 
requirement (a minimum insulation requirement of R-12.5), rather than a 
performance-based metric, stating that the prescriptive approach is 
simpler. (AHRI, No. 6 at p. 2)
    As discussed in section II.A of this document, DOE is publishing 
this NOPD in satisfaction of the 6-year-lookback review requirement in 
EPCA, which requires DOE to evaluate the energy conservation standards 
for certain commercial equipment, including UFHWSTs. Under that 
provision, DOE must publish either a notice of determination that the 
standards do not need to be amended, or a NOPR that includes proposed 
amendments to the energy conservation standards (proceeding to a final 
rule, as appropriate) every six years. (42 U.S.C. 6313(a)(6)(C)(i)) 
Because test procedure amendments to adopt a standby loss requirement 
were not finalized for UFHWSTs, for this analysis of potential amended 
standards, DOE has only considered potential amended standards based on 
updating the prescriptive design requirement for insulation R-value.

C. Technological Feasibility

1. General
    In evaluating potential amendments to energy conservation 
standards, DOE first conducts a market and technology assessment to 
survey all current technology options in products on the market and 
prototype designs that could improve the efficiency of the products or 
equipment that are the subject of the determination. This list of 
technology options for consideration is developed in consultation with 
manufacturers, design engineers, and other interested parties. DOE then 
conducts a screening analysis for the technologies identified, and, as 
a first step, determines which of those means for improving efficiency 
are technologically feasible. DOE considers technologies incorporated 
in commercially available equipment or in working prototypes to be 
technologically feasible. See generally 10 CFR 431.4; 10 CFR part 430, 
subpart C, appendix A, section 6(c)(3)(i) and 7(b)(1).
    After DOE has determined that particular technology options are 
technologically feasible, it further evaluates each technology option 
in light of the following additional screening criteria: (1) 
Practicability to manufacture, install, and service; (2) adverse 
impacts on equipment utility or availability; (3) adverse impacts on 
health or safety; and (4) unique-pathway proprietary technologies. See 
generally 10 CFR 431.4; 10 CFR part 430, subpart C, appendix A, 
sections 6(c)(3)(ii)-(v) and 7(b)(2)-(5). Section IV.A.3 of this 
document discusses the results of the screening analysis for UFHWSTs, 
particularly the designs DOE considered, those it screened out, and 
those that are the basis for the standards considered in this proposed 
determination.
2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt an amended standard for a type or class 
of covered equipment, as part of its analysis, the Department 
determines the maximum improvement in energy efficiency or maximum 
reduction in energy use that is technologically feasible for such 
equipment. Accordingly, in the engineering analysis, DOE determined the 
maximum technologically feasible (max-tech) improvements in energy 
efficiency for UFHWSTs, using the design parameters for the most 
efficient equipment available on the market or in working prototypes. 
The max-tech levels that DOE determined for this analysis are described 
in section IV.B of this proposed determination.

D. Energy Savings

1. Determination of Savings
    For each efficiency level (EL) evaluated, DOE projected energy 
savings from application of the EL to the UFHWSTs purchased in the 30-
year period that begins in the assumed year of compliance with the 
potential amended standards (2025-2054). The savings are measured over 
the entire lifetime of the UFHWSTs purchased in the previous 30-year 
period. DOE quantified the energy savings attributable to each EL as 
the difference in energy consumption between each standards case and 
the no-new-standards case. The no-new-standards case represents a 
projection of energy consumption that reflects how the market for 
equipment would likely evolve in the absence of amended energy 
conservation standards. DOE used a simplified National Impacts Analysis 
(NIA) spreadsheet model to estimate national energy savings (NES) from 
potential amended or new standards for UFHWSTs. The simplified NIA for 
this analysis is to ascertain if potential efficiency improvements for 
UFHWSTs meet the required significance of savings described in section 
III.D.2 of this document; however, it does not estimate the net present 
value (NPV) to the Nation of these savings that is typically performed 
as part of the NIA. The simplified NIA spreadsheet model (described in 
section IV.F of this document) calculates energy savings in terms of 
site energy, which is the energy directly consumed by equipment at the 
locations where it is used.
2. Significance of Savings
    In determining whether amended standards are needed for covered 
equipment addressed by ASHRAE Standard 90.1, DOE must consider whether 
such standards would result in significant additional conservation of 
energy.\4\ (42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 
6313(a)(6)(A)(ii)(II))
---------------------------------------------------------------------------

    \4\ In setting a more-stringent standard for ASHRAE equipment, 
DOE must have ``clear and convincing evidence'' that doing so 
``would result in significant additional conservation of energy,'' 
in addition to being technologically feasible and economically 
justified. 42 U.S.C. 6313(a)(6)(A)(ii)(II). This language indicates 
that Congress had intended for DOE to ensure that, in addition to 
the savings from the ASHRAE standards, DOE's standards would yield 
additional energy savings that are significant. In DOE's view, this 
statutory provision shares the requirement with the statutory 
provision applicable to other covered non- ASHRAE equipment that 
``significant conservation of energy'' must be present (42 U.S.C. 
6295(o)(3)(B); 42 U.S.C. 6316(a)), but it must also be supported 
with ``clear and convincing evidence'' to permit DOE to set a more 
stringent requirement than ASHRAE.
---------------------------------------------------------------------------

    EPCA defines ``energy efficiency'' as the ratio of the useful 
output of services from an article of industrial equipment to the 
energy use of such article, measured according to the Federal test 
procedures. (42 U.S.C. 6311(3)) EPCA defines ``energy use'' as the 
quantity of energy directly consumed by an article of industrial 
equipment at the point of use, as measured by the Federal test 
procedures. (42 U.S.C. 6311(4)) Given this context, DOE relies on site 
energy as the appropriate metric for evaluating the significance of 
energy savings.

[[Page 30801]]

E. Economic Justification

1. Specific Criteria
    As noted previously, EPCA provides seven factors to be considered 
in determining whether a potential energy conservation standard is 
economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII)) The 
following sections provide an overview of each of those seven factors.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of a potential amended standard on 
manufacturers, DOE typically conducts a manufacturer impact analysis 
(MIA). In conducting a MIA, DOE uses an annual cash-flow approach to 
compare the quantitative impacts between the no-new-standards and the 
amended standards cases. The industry-wide impacts typically analyzed 
include: (1) Industry net present value (INPV), which values the 
industry on the basis of expected future cash flows; (2) cash flows by 
year; (3) changes in revenue and income, and (4) other measures of 
impact, as appropriate. However, DOE is not proposing amended standards 
for UFHWSTs, and, therefore, this proposed determination would have no 
cash-flow impacts on manufacturers. Accordingly, as discussed further 
in section IV.G of this document, DOE did not conduct an MIA for this 
NOPD.
    For individual consumers, measures of economic impact include the 
changes in the life-cycle cost (LCC) and payback period (PBP) 
associated with new or amended standards. These measures are discussed 
further in the following section. For consumers in the aggregate, DOE 
also typically calculates the national net present value of the 
consumer costs and benefits expected to result from particular 
standards. DOE also typically evaluates the impacts of potential 
standards on identifiable subgroups of consumers that may be affected 
disproportionately by a standard. However, as discussed in section 
V.A.2 of this document, due to significant uncertainties regarding the 
costs of alterations to doorways and mechanical rooms (which may be 
required in certain replacement installations in order to get an UFHWST 
to its installation destination if additional insulation thickness 
makes the UFHWST too large for existing structures to accommodate) and 
the lack of data indicating the likelihood of such alterations being 
required, any analysis conducted by DOE regarding the LCC or PBP would 
be of limited value because of the lack of data and high degree of 
uncertainty of the inputs to those analyses. Therefore, DOE did not 
estimate the NPV of consumer costs and benefits.
b. Savings in Operating Costs Compared to Increase in Price (LCC and 
PBP)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product in the 
type (or class) compared to any increase in the price of, or in the 
initial charges for, or maintenance expenses of, the covered product 
that are likely to result from a standard. (42 U.S.C. 
6313(a)(6)(B)(ii)(II)) DOE typically conducts this comparison in its 
LCC and PBP analysis.
    The LCC is the sum of the purchase price of equipment (including 
its installation) and the operating expense (including energy, 
maintenance, and repair expenditures) discounted over the lifetime of 
the equipment. The LCC analysis requires a variety of inputs, such as 
equipment prices, energy consumption, energy prices, maintenance and 
repair costs, equipment lifetime, and discount rates appropriate for 
consumers. To account for uncertainty and variability in specific 
inputs, such as equipment lifetime and discount rate, DOE uses a 
distribution of values, with probabilities attached to each value.
    The PBP is the estimated amount of time (in years) it takes 
consumers to recover the increased purchase cost (including 
installation) of more-efficient equipment through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
due to a more-stringent standard by the change in annual operating cost 
for the year that standards are assumed to take effect. This type of 
calculation is known as a ``simple'' payback period because it does not 
take into account changes in operating expenses over time or the time 
value of money (i.e., the calculation is done at an effective discount 
rate of zero percent). Payback periods greater than the life of the 
equipment indicate that the increased total installed cost is not 
recovered by the reduced operating expenses.
    For its LCC and PBP analysis, DOE assumes that consumers will 
purchase the equipment in the first year of compliance with new or 
amended standards. The LCC savings for the considered efficiency levels 
are calculated relative to the case that reflects projected market 
trends in the absence of new or amended standards. As discussed in 
section IV.D of this document, DOE did not conduct an LCC and PBP 
analysis for this NOPD because the lack of data and high degree of 
uncertainty of the inputs to those analyses meant that the outputs 
would be of little value.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for amending an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(III)) As 
discussed in section IV.F of this document, DOE uses the NIA 
spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Equipment
    In establishing equipment classes and in evaluating design options 
and the impact of potential standard levels, DOE evaluates potential 
standards that would not lessen the utility or performance of the 
considered products. (42 U.S.C. 6313(a)(6)(B)(ii)(IV)) Because DOE is 
not proposing standards for UFHWSTs, the Department has tentatively 
concluded that this proposed determination would not reduce the utility 
or performance of UFHWSTs.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from a proposed standard. (42 U.S.C. 
6313(a)(6)(B)(ii)(V)) Because DOE is not proposing standards for 
UFHWSTs, DOE did not transmit a copy of its proposed determination to 
the Attorney General for anti-competitive review.
f. Need for National Energy Conservation
    DOE also considers the need for national energy conservation in 
determining whether a new or amended standard is economically 
justified. (42 U.S.C. 6313(a)(6)(B)(ii)(VI)) Because DOE has 
tentatively concluded that it lacks clear and convincing evidence that 
amended standards for UFHWSTs would result in significant additional 
conservation of energy or be economically justified, DOE did not 
conduct a utility impact analysis or emissions analysis for this NOPD.
g. Other Factors
    In determining whether an energy conservation standard is 
economically justified, DOE may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) To 
the extent DOE

[[Page 30802]]

identifies any relevant information regarding economic justification 
that does not fit into the other categories described previously, DOE 
could consider such information under ``other factors.''

IV. Methodology and Discussion of Related Comments

    This section addresses DOE's consideration of the statutory factors 
and the analyses that DOE has performed for this proposed determination 
with regard to UFHWSTs. Separate subsections address each component of 
the factors for DOE's consideration, as well as corresponding analyses 
to the extent conducted. DOE used a spreadsheet tool to estimate the 
impact of potential energy conservation standards. This spreadsheet 
uses inputs from the energy use analysis and shipments projections and 
calculates a simplified NES expected to result from potential energy 
conservation standards.

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the equipment 
concerned, including the purpose of the equipment, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the equipment. This activity includes both quantitative and 
qualitative assessments, based primarily on publicly-available 
information. DOE also conducted structured, detailed interviews with 
representative manufacturers. During these interviews, DOE discussed 
engineering, manufacturing, procurement, and financial topics to 
validate assumptions used in its analyses, and to identify key issues 
or concerns. These interviews were conducted under non-disclosure 
agreements (NDAs), so DOE does not document these discussions in the 
same way that it does public comments in the comment summaries and 
DOE's responses throughout the rest of this document.
    The subjects addressed in the market and technology assessment for 
this proposed determination include: (1) A determination of the scope 
and equipment classes; (2) manufacturers and industry structure; (3) 
shipments information, (4) market and industry trends, and (5) 
technologies or design options that could improve the energy efficiency 
of UFHWSTs. The key findings of DOE's market assessment are summarized 
in the following subsections.
1. Scope of Coverage and Equipment Classes
    In this analysis, DOE relied on the definition of UFHWSTs in 10 CFR 
431.102, which defines an UFHWST as a tank used to store water that is 
heated externally, and that is industrial equipment. Any equipment 
meeting the definition of an UFHWST is included in DOE's scope of 
coverage. UFHWSTs are not currently divided into equipment classes 
(i.e., there is a single equipment class covering all UFHWSTs).
    In the August 2019 RFI, DOE requested comment on whether the 
current definition of UFHWSTs requires any revisions, and whether any 
sub-category divisions should be added. 84 FR 39220, 39224 (August 9, 
2019). In response, BWC generally supported the definition of UFHWSTs 
as presented in the August 2019 RFI (i.e., the current regulatory 
definition). Similarly, BWC also stated that it does not believe any 
subcategory definitions should be created and that there is not an 
appropriate way to divide UFHWSTs into separate equipment classes. 
(BWC, No. 5 at pp. 1-2) The CA IOUs encouraged DOE to ensure that any 
revised definitions of UFHWSTs maintain the current scope of coverage, 
and suggested that DOE should not consider establishing new equipment 
classes that are not currently available in the market. The CA IOUs 
also recommended that equipment class differentiations should be based 
on performance- related features that are ``accessible to the layperson 
and is based on user operation.'' \5\ (CA IOUs, No. 3 at pp. 1-3)
---------------------------------------------------------------------------

    \5\ The terminology ``accessible to the layperson and is based 
on user operation'' used by CA IOUs is quoted from a discussion of 
product utility written by DOE in the context of differentiating 
product classes in a March 12, 2015 notice of proposed rulemaking 
for energy conservation standards for residential non- weatherized 
gas furnaces and mobile home furnaces. 80 FR 13120, 13137. The full 
document is available at: https://www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0032 (Last accessed: July 22, 
2020).
---------------------------------------------------------------------------

    In this proposed determination, absent any indication that the 
scope of UFHWSTs as currently defined would benefit from amendment, DOE 
is not proposing any changes to the definition of UFHWSTs. Similarly, 
because DOE does not have an indication that capacity or other 
performance characteristic justifies a different standard level, and 
because commenters did not provide any such indication, DOE is not 
proposing to divide UFHWSTs into separate equipment classes in this 
NOPD. Therefore, the analysis for this NOPD was conducted for the 
existing single equipment class covering all UFHWSTs.
2. Technology Options
    In the August 2019 RFI, DOE identified several technology options 
that would be expected to improve the efficiency of UFHWSTs. 84 FR 
39220, 39225 (August 9, 2019). These technology options were based on 
manufacturer equipment literature and publicly- available technical 
literature. Specifically, the technologies identified in the August 
2019 RFI included the following:

 Improved insulation R-value
    [cir] Increased insulation thickness
    [cir] Foam insulation
    [cir] Advanced insulation types
    [ssquf] Aerogel
    [ssquf] Vacuum panels
    [ssquf] Inert gas-filled panels
 Pipe and fitting insulation
 Greater coverage of tank surface area with foam insulation 
(e.g., tank bottom)
3. Screening Analysis
    DOE uses the following five screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    (1) Technological feasibility. Technologies that are not 
incorporated in commercial equipment or in working prototypes will not 
be considered further.
    (2) Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial equipment could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
projected compliance date of the standard, then that technology will 
not be considered further.
    (3) Impacts on equipment utility or equipment availability. If it 
is determined that a technology would have significant adverse impact 
on the utility of the equipment to significant subgroups of consumers 
or would 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 would have significant adverse impacts on health or safety, 
it will not be considered further.
    (5) Unique-Pathway Proprietary Technologies. If a design option 
utilizes

[[Page 30803]]

proprietary technology that represents a unique pathway to achieving a 
given efficiency level, that technology will not be considered further.
    10 CFR part 430, subpart C, appendix A, sections 6(c)(3) and 7(b). 
In summary, if DOE determines that a technology, or a combination of 
technologies, fails to meet one or more of the listed five criteria, it 
will be excluded from further consideration in the engineering 
analysis.
a. Screened-Out Technologies
    In response to the August 2019 RFI, DOE received several comments 
related to the suggested technology options. A.O. Smith stated that the 
technologies used to increase the efficiency of UFHWSTs are limited to 
changes in installation thickness, location, and materials. (A.O. 
Smith, No. 8 at p. 2) BWC stated that many of the technologies listed 
would be very difficult to apply to UFHWSTs due to the wide variety of 
tank sizes, configurations, and fittings. Additionally, BWC stated that 
the majority of the technologies identified would present significant 
manufacturability issues due to the variability of tank configurations 
and fittings, and that increasing insulation thickness and/or changing 
to another insulating solutions could present issues with fittings that 
would not occur otherwise. BWC also asserted that the technology 
options listed could increase the fragility of tanks, which could cause 
difficulties in moving the tanks to their final installation location. 
(BWC, No. 5 at p. 2) As discussed in section IV.A of this document, DOE 
also conducted interviews with manufacturers. During these interviews, 
which were conducted under NDAs, manufacturers made statements similar 
to those comments submitted by BWC in response to the August 2019 RFI.
    In response to these comments, DOE acknowledges that requiring use 
of advanced insulation types (such as vacuum panels or aerogels) could 
necessitate an extremely difficult change to the UFHWST manufacturing 
process due to the rigid nature of these materials and the high degree 
of customization and ports on UFHWSTs. Applying these materials closely 
around ports and configuring them to all tank shapes and setups (e.g., 
number of ports, port locations) may not be possible where tight 
curvatures would be required and/or due to the high level of 
customization of UFHWSTs. Additionally, DOE is not aware of equipment 
on the market that incorporate aerogels, vacuum panels, or inert gas-
filled panels at the time of this analysis. Therefore, in the analysis 
for this NOPD, DOE did not consider any advanced insulation types as a 
technology option to increase the insulation R-value for UFHWSTs.
    To explain what technologies are commonly used, BWC stated that 
most manufacturers use polyurethane foam to achieve the minimum R-12.5 
requirement, although high density fiberglass may be applied in certain 
areas where it is difficult to apply foam. (BWC, No. 5 at p. 2) 
Relatedly, A.O. Smith stated that certain technology options proposed 
by DOE, such as insulation on tank bottoms, would be impractical to 
implement because bottom mounted drain connections must be kept 
accessible. (A.O. Smith, No. 8 at p. 2) AHRI commented that 
technologies such as pipe insulation cannot be pre-configured by the 
manufacturer for installation in the field. (AHRI, No. 6 at p. 2)
    As suggested by BWC, and supported by DOE's review of publicly-
available manufacturer information, polyurethane foam is the most 
commonly used type of insulation for meeting the minimum insulation 
requirement, but fiberglass and/or Styrofoam are often used in specific 
regions (e.g. tank tops or bottoms, or regions around ports) where 
doing so could limit access to ports or be impractical to manufacture. 
For its analyses, DOE has estimated energy losses based on tanks being 
covered primarily with polyurethane foam, but the agency has also 
included several regions with alternative insulation materials. 
Therefore, DOE included a minimum amount of insulation around pipes and 
fittings in its analysis of baseline equipment, but it did not consider 
requiring different insulation materials in these regions. Likewise, 
DOE did not consider additional insulation coverage around pipes and 
fittings as a technology option for the analysis.
b. Remaining Technologies
    Ultimately, after reviewing all of the proposed technologies, DOE 
did not screen out improved insulation R-value due to increased 
polyurethane foam thickness, so the Department included this as a 
design option in the engineering analysis. DOE determined that this 
technology option is technologically feasible because it only involves 
an increase in thickness of the same insulation material that is 
currently commonly used on UFHWSTs, and can be achieved with the same 
processes that are currently being used in commercially-available 
equipment or working prototypes (e.g., fabricating jackets or foaming).

B. Engineering Analysis

    The purpose of the engineering analysis is to establish the 
relationship between the efficiency and cost of UFHWSTs at different 
levels of reduced heat loss (``efficiency levels'').\6\ This 
relationship serves as the basis for the cost-benefit calculations for 
commercial consumers, manufacturers, and the Nation. There are 
typically two elements to consider in the engineering analysis; the 
selection of efficiency levels to analyze (i.e., the ``efficiency 
analysis'') and the determination of equipment cost at each efficiency 
level (i.e., the ``cost analysis''). In determining the performance of 
higher-efficiency equipment, DOE considers technologies and design 
option combinations not eliminated by the screening analysis. DOE then 
typically estimates the manufacturing production cost (MPC) at the 
baseline and the change in MPC associated with reducing the heat loss 
of equipment above the baseline, up to the max-tech efficiency level 
for each equipment class. The typical output of the engineering 
analysis is a set of cost-efficiency ``curves'' that are used in 
downstream analyses (i.e., the LCC and PBP analyses and the NIA). 
However, for the reasons discussed in IV.B.3 of this document, the cost 
analysis was not performed for this NOPD.
---------------------------------------------------------------------------

    \6\ While the UFHWSTs standard addresses heat loss through 
establishing a minimum level of insulation, for the purpose of this 
analysis, the levels of improvement are referred to generally as 
``efficiency levels.''
---------------------------------------------------------------------------

1. Efficiency Levels for Analysis
    DOE typically uses one of two approaches to develop energy 
efficiency levels for the engineering analysis: (1) Relying on observed 
efficiency levels in the market (i.e., the efficiency-level approach), 
or (2) determining the incremental efficiency improvements associated 
with incorporating specific design options to a baseline model (i.e., 
the design-option approach). Using the efficiency-level approach, the 
efficiency levels established for the analysis are determined based on 
the market distribution of existing equipment (in other words, based on 
the range of efficiencies and efficiency level ``clusters'' that 
already exist on the market, without regard to the specific design 
options used to achieve those levels). Using the design-option 
approach, the efficiency levels established for the analysis are 
determined through detailed engineering calculations and/or computer 
simulations of the efficiency improvements resulting from 
implementation of specific design

[[Page 30804]]

options that have been identified in the technology assessment. DOE may 
also rely on a combination of these two approaches. In this rulemaking, 
DOE is adopting a design-option approach because there are very few 
models of UFHWSTs currently on the market that are marketed with higher 
insulation levels than the current baseline requirement of R-12.5.
    Based on its review of publicly-available equipment information and 
feedback from manufacturers, DOE had tentatively determined that 2 
inches of polyurethane foam insulation is needed to meet the current 
insulation requirement, and DOE, therefore, considered this insulation 
thickness as the baseline. As discussed in section IV.A.3 of this 
document, increased polyurethane foam insulation thickness was the only 
technology option that was not screened-out for this analysis, and 
thus, DOE considered more-stringent efficiency levels (i.e., increased 
R-value) based on varying levels of increased polyurethane foam 
thickness.
    In response to the August 2019 RFI, AHRI commented that there is a 
diminishing return from increasing insulation thickness due to the 
increasing heat transfer rate and surface area as the insulation 
thickness increases. (AHRI, No. 6 at pp. 1-2) This comment was 
supported by individual manufacturers during interviews with DOE. 
Manufacturers stated that surface tension decreases as the foam 
thickness increases, which results in the foam becoming less stable. To 
counter this, less blowing agent is used and the foam becomes denser, 
thereby reducing the added insulating benefit per inch of applied 
insulation at thicknesses above 3 inches (if foam is applied by being 
poured into a form, which is the typical application method for 
polyurethane foam on jacketed UFHWSTs). Manufacturers stated that due 
to the changing foam density as the insulation thickness increases, the 
R-value per inch is expected to diminish as insulation thickness is 
increased, especially as thickness increases beyond 3 inches. As a 
result, when more than 3 inches of insulation thickness is applied, it 
is unclear how much additional R-value could be achieved by continuing 
to increase the thickness of the foam of jacketed UFHWSTs. Unjacketed 
tanks, which are intended for outdoor installation and may not have the 
same space constraints as indoor units, do not have an outer metal 
jacket enclosing and protecting the foam. As a result, unjacketed tanks 
can be spray-foamed in layers, which reduces the compression of the 
foam and mitigates the potential for changes in foam density at 
thicknesses above 3 inches. However, all UFHWSTs were considered in a 
single equipment class (as discussed in section IV.A.1 of this 
document), so the max-tech level for jacketed UFHWSTs was applied for 
all UFHWSTs in this analysis. Furthermore, feedback from manufacturers 
and DOE's previous knowledge of the UFHWST market indicated that at 
least 90 percent of UFHWSTs are jacketed and intended for indoor 
installation.
    Therefore, DOE expects uncertainty related to the effective R-value 
of insulation for insulation thicknesses above 3 inches. Because 
thicknesses above 3 inches are not typically used on jacketed UFHWSTs, 
the improvement in R-value as insulation thickness increases beyond 3 
inches for jacketed tanks is unclear at this time. Therefore, due to 
the high level of uncertainty regarding the R-value of foam insulation 
with thickness greater than 3 inches, DOE has limited its analysis to 
considering only up to 1 additional inch of insulation thickness above 
the baseline insulation level of 2 inches, so 3 inches of foam 
insulation was considered the max-tech efficiency level for UFHWSTs in 
this analysis.
    DOE requests data and information related to achievable R-values of 
polyurethane foam insulation on jacketed UFHWSTs at thicknesses above 3 
inches. DOE also seeks comment on its understanding of the difficulties 
associated with applying more than 3 inches of foam to jacketed 
UFHWSTs.
    DOE also included one intermediate level of added insulation in its 
analysis, with 0.5 inch of added insulation above the 2-inch baseline 
that results in R-12.5. DOE has assumed for its analysis that 
polyurethane foam has an R-value per inch of 6.25 (up to a maximum 
thickness of 3 inches). The selected ELs used in the analyses for this 
NOPD are shown in Table IV.1.

    Table IV.1--Efficiency Levels for Representative UFHWSTs Based on
                          Increased Insulation
------------------------------------------------------------------------
                                 Insulation thickness      R-value of
       Efficiency levels          (polyurethane foam)      insulation
------------------------------------------------------------------------
Baseline--EL0..................  2 inches............  R-12.5.
EL1............................  2.5 inches..........  R-15.625.
EL2............................  3 inches............  R-18.75.
------------------------------------------------------------------------

    DOE seeks comment on the considered efficiency levels analyzed for 
UFHWSTs. Additionally, DOE seeks comment on its assumption that 
polyurethane foam has an R-value per inch of 6.25, up to a maximum 
thickness of 3 inches.
2. Representative Equipment for Analysis
    For the engineering analysis, DOE analyzed the publicly-available 
details, including storage volumes and other critical features, of 
UFHWST models available on the market and conducted interviews with 
manufacturers under NDAs to determine appropriate representative 
equipment to analyze. In response to the August 2019 RFI, several 
commenters highlighted the customized and variable nature of the UFHWST 
market. (BWC, No. 5 at pp. 1-2; AHRI, No. 6 at p. 2; A.O. Smith, No. 8 
at p. 1) BWC stated that it does not believe it is possible to have one 
representative volume of UFHWSTs (or more in a reasonable quantity). 
BWC also commented that it would be difficult to have a representative 
application with associated R-value, ambient conditions, tank setpoint, 
and draw patterns for UFHWSTs and suggested that DOE's analysis should 
not be overly simplified if it is acknowledged that tank orientation 
can affect heat losses. (BWC, No. 5 at pp. 2-3) A.O. Smith recommended 
that DOE conduct its analysis using various standard models, but the 
agency should keep in mind the customized nature of the UFHWST market. 
(A.O. Smith, No. 8 at p. 1)
    To account for the wide range of UFHWSTs on the market, DOE chose 
several representative baseline units for analysis. As discussed in 
section IV.C.1.c of this document, DOE also included several ambient 
temperature conditions in its energy use analysis to reflect typical 
installation locations (i.e., indoors in mechanical rooms or outdoors 
in ``Very Hot'' and ``Hot'' regions). Although UFHWSTs can be installed 
horizontally or vertically, DOE used a conservative assumption in its 
energy use analysis that water temperature would remain uniformly at 
140 [deg]F (as discussed in section IV.C.1.b of this document, DOE did 
not consider stratification of water temperatures inside the tank and 
assumed that a tank would always be full of hot water). Therefore, DOE 
determined that installation orientation would not have a significant 
impact on its energy use analysis results, so the Department calculated 
estimated standby losses based on all tanks being vertical, because 
vertical installations are the most common. The characteristics of 
these representative units are listed in Table IV.2.

[[Page 30805]]



                                 Table IV.2--Representative Tank Characteristics
----------------------------------------------------------------------------------------------------------------
                                                                                    Representative  dimensions
                                                                  Representative -------------------------------
                      Volume range  (gal.)                             volume                        Diameter
                                                                      (gal.)       Height  (in.)       (in.)
----------------------------------------------------------------------------------------------------------------
0 to 100........................................................              50              47              22
101 to 250......................................................             175              65              28
251 to 500......................................................             375              72              42
501 to 1000.....................................................             750             141              42
1001 to 2000....................................................            1500             124              60
2001 to 5000....................................................            3500             168              84
>5000...........................................................            5000             180              96
----------------------------------------------------------------------------------------------------------------

    In response to the August 2019 RFI, BWC stated that most 
manufacturers use polyurethane foam to insulate UFHWSTs, although 
fiberglass may be used in certain areas or on certain tanks where it is 
difficult to apply foam. (BWC, No. 5 at p. 2) As discussed in section 
IV.C.1 of this document, in its energy use analysis, DOE divided the 
surface area of each tank, at each EL, into several zones and assigned 
a representative R-value to each zone depending on the expected 
insulation type and thickness. Although most tank surfaces can be 
insulated with 2 inches of polyurethane foam, it is not practical to 
insulate all surfaces with polyurethane foam due to the insulation 
application process or the need to retain access to certain ports. In 
particular, it can be difficult to insulate the areas surrounding 
fittings, manholes or handholes, and the tops or bottoms of tanks with 
polyurethane foam, so DOE accounted for the use of other insulating 
materials in those areas. Similarly, certain fittings and ports will 
remain uninsulated due to the need to be accessible, situations for 
which DOE also accounted in its analysis.
    In publicly-available equipment literature, DOE observed that the 
typical number of ports on UFHWSTs ranged from 5 to 11. These ports can 
include an inlet port, an outlet port, a temperature sensor, a 
temperature and pressure relief valve, a drain, a recirculation valve, 
one or more ports for anode rods, and other custom fittings. In its 
energy use analysis, DOE selected 7 ports as a representative number of 
ports. DOE further assumed that a 2-inch-wide ring of fiberglass would 
be placed around each port. DOE also included a small area (1.5 inches 
in diameter) of uninsulated tank at each port to reflect losses through 
adjoining pipes or fittings. Wherever fiberglass was modeled as the 
insulation for tanks, the thickness of fiberglass was the same as the 
thickness of polyurethane foam on the same tank (which for the analysis 
in this NOPD, depends on the EL) because the thickness of insultation 
would be uniformly constrained by the outer metal jacketing on most 
UFHWSTs. The R-values for each insulation type and at each EL are shown 
in Table IV.3.

                                         Table IV.3--Insulation R-Values
----------------------------------------------------------------------------------------------------------------
                                                                                 Effective R-value
                    Material                        R-value per  -----------------------------------------------
                                                       inch             EL0             EL1             EL2
----------------------------------------------------------------------------------------------------------------
Polyurethane Foam...............................            6.25            12.5          15.625           18.75
Fiberglass......................................             3.5               7            8.75            10.5
Bare Tank (free convective heat transfer to air)             N/A            0.33            0.33            0.33
----------------------------------------------------------------------------------------------------------------

    Based on feedback from manufacturers and its own review of 
publicly-available materials, DOE also assumed that the tank tops would 
be covered with fiberglass instead of polyurethane foam, and that an 
extra maintenance access port (a 6 inch by 4 inch hand hole for tanks 
with storage volumes up to 500 gallons, or a 12 inch by 16 inch manhole 
for tanks with storage volumes greater than 500 gallons) would be 
partially covered with fiberglass and partially bare.
    DOE requests comment on the inputs and assumptions used in its 
engineering analysis. In particular, DOE requests input on its choice 
of representative volumes, its assumptions about the typical coverage 
of various insulation materials, and its estimated R-values for each 
insulation material at each EL considered.
3. Cost Analysis
    The cost analysis portion of the Engineering Analysis is typically 
conducted using one or a combination of cost approaches. The selection 
of cost approach depends on a suite of factors, including the 
availability and reliability of public information, characteristics of 
the regulated equipment, and the availability and timeliness of 
purchasing the equipment on the market. The cost approaches are 
summarized as follows:
     Physical teardowns: Under this approach, DOE physically 
dismantles commercially-available equipment, component-by-component, to 
develop a detailed bill of materials for the equipment.
     Catalog teardowns: In lieu of physically deconstructing 
equipment, DOE identifies each component using parts diagrams 
(available from sources such as manufacturer websites or appliance 
repair websites) to develop the bill of materials for the equipment.
     Price surveys: If a physical or catalog teardown is 
infeasible (e.g., for tightly integrated equipment such as fluorescent 
lamps, which are infeasible to disassemble and for which parts diagrams 
are unavailable), cost-prohibitive, or otherwise impractical (e.g. 
large commercial boilers), DOE conducts price surveys using publicly-
available pricing data published on major online retailer websites and/
or by soliciting prices through distributors or other commercial 
channels.
    As discussed in section IV.D of this document, DOE did not conduct 
a cost

[[Page 30806]]

analysis because DOE did not have the requisite inputs to develop its 
LCC model with a degree of certainty that would meet the statute's 
``clear and convincing'' evidentiary threshold. DOE likewise did not 
expend resources to generate the cost-efficiency curve, as it is 
unnecessary without an LCC model to feed into.

C. Energy Use Analysis

    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 would reduce standby loss of heat from the 
stored water. Further, DOE currently only prescribes a minimum 
insulation requirement (as opposed to a minimum efficiency requirement) 
for UFHWSTs. Accordingly, the energy use analysis determines the annual 
energy consumption of paired water heaters and boilers due to standby 
loss of the UFHWSTs and assesses the energy savings potential of 
increasing the stringency of the required insulation for UFHWSTs.
1. Tank Thermal Loss Model
    For this determination, DOE adapted the thermal loss model 
described in the technical support document (TSD) for the commercial 
water heating energy conservation standards (ECS) NOPR published in the 
Federal Register on May 31, 2016 (81 FR 34440; May 2016 CWH ECS NOPR), 
with some modifications to how the tank surface areas are defined.\7\ 
These modifications were introduced to capture equipment performance 
that results from differences in surface insulation thickness over 
different areas of tank (i.e., insulation around fittings and access 
ports). These differences are described in section IV.C.1.a of this 
document.
---------------------------------------------------------------------------

    \7\ Available at: https://www.regulations.gov/document?D=EERE-2014-BT-STD-0042-0016, section 5.5.3 (Last accessed: April 8, 2020).
[GRAPHIC] [TIFF OMITTED] TP10JN21.013

---------------------------------------------------------------------------
Where:

Qhr, j = The hourly heat loss for the UFHWST for each efficiency 
level (EL) j (Btu/hr).
i = The surface area of the cylindrical tank is divided into 
different zones each indexed i.
Ai, j = The area of each zone i at each EL j(ft\2\).
Ti = The constant internal water temperature for each tank zone i 
([deg]F).
Tamb,z = The ambient air temperature for each climate zone z 
([deg]F).
Ri, j = The net R-value of the insulation for each zone i at each EL 
j ([deg]Fl[middot]ft\2\[middot]hr/Btu).
a. Tank Surface Area (Ai, j)
    As discussed in section IV.B.2 of this document, DOE used a 
conservative assumption in its energy use analysis that water 
temperature would remain uniformly at 140 [deg]F and did not consider 
stratification of water temperatures inside the tank. Therefore, 
although tanks can be installed horizontally or vertically, there is no 
difference in thermal losses between these configurations, and DOE only 
used vertical tanks in its analysis. The UFHWST's total external 
surface area was divided into separate zones, where i is the index for 
each zone. Zones represent the different areas of an UFHWST that would 
have unique insulative values. These zones are described in more detail 
in in section IV.B of this document.

ATankTop = When the UFHWST is oriented vertically, this represents 
the tank's top surface.
AFittings = Is the sum of all uninsulated areas of the tank's 
surface devoted to fittings.
AFittingInsulation = Is the sum of all insulated areas of the tank's 
surfacesurrounding the (uninsulated) fittings.
AAccessPort = Is the sum of all insulated areas of the tank's 
surface devoted to the tank's cleanout hand hole port or manhole.
ATankWall = When the UFHWST is oriented vertically, this represents 
the tank's walls.
ATankBottom = When the UFHWST is oriented vertically, this 
represents the tank's bottom surface.
b. Tank Internal Water Temperature (Ti)
    For this analysis, DOE assumed that the water inside the UFHWSTs is 
at a constant uniform temperature of 140 [deg]F, which is the average 
water temperature required by the current Federal test procedures for 
storage-type CWH equipment during standby loss testing. See generally 
10 CFR 431.106; 10 CFR part 431, subpart G, appendix A, section 6; 10 
CFR part 431, subpart G, Appendix B, section 5. Because UFHWSTs serve 
the same function as storage-type CWH equipment in standby mode, DOE 
expects that similar conditions would be appropriate for UFHWSTs as for 
storage-type CWH equipment in standby mode. DOE used a conservative 
assumption that internal water temperatures would remain indefinitely 
at 140 [deg]F. In reality, the rate of heat loss from a UFHWST would 
decrease slowly as the temperature difference between the internal 
stored water and the ambient air decreased. However, because this 
effect would be minimal, DOE did not consider stratification of water 
temperatures inside the tank and assumed that a tank would always be 
full of hot water. Therefore, DOE held the temperature T constant 
across all tank zones i.
    DOE requests comment on the appropriateness of its assumption 
regarding the use of a constant internal water temperature of 140 
[deg]F.
c. Tank Ambient Temperature (Tamb, z)
    Based on feedback from manufacturers during interviews conducted 
under NDA, DOE assumed that 90 percent of UFHWSTs would be installed 
indoors and that the remaining 10 percent would be installed outdoors. 
DOE assumed that all tanks that are installed indoors would have a 
constant ambient temperature of 75 [deg]F, which is the average air 
temperature required by the current Federal test procedure for storage-
type CWH equipment during standby loss testing. See generally 10 CFR 
431.106; 10 CFR part 431, subpart G, appendix A, section 6; 10 CFR part 
431, subpart G, Appendix B, section 5.
    For the fraction of UFHWSTs that are installed in outdoor, or non-
conditioned, spaces, DOE defined each climate zone (z) and calculated 
the monthly average temperatures from Typical Meteorological Year 3 
(TMY3) \8\ data for the Building America climate regions 1A, 2A, and 
2B.9 10 The temperatures for each region are represented by 
the cities in Table IV.4. The monthly regional averages were then 
weighted using the regional city populations based on data from 2018 
Census.\11\
---------------------------------------------------------------------------

    \8\ The TMY data sets hold hourly values of solar radiation and 
meteorological elements for a 1-year period. Their intended use is 
for computer simulations of solar energy conversion systems and 
building systems to facilitate performance comparisons of different 
system types, configurations, and locations in the United States and 
its territories. Because they represent typical rather than extreme 
conditions, they are not suited for designing systems to meet the 
worst-case conditions occurring at a location.
    \9\ Wilcox, S. and W. Marion, 2008 User's Manual for TMY3 Data 
Sets, NREL/TP-581-43156 (April 2008) (Available at: https://www.nrel.gov/docs/fy08osti/43156.pdf).
    \10\ Building America Best Practices Series, Volume 7.3, Guide 
to determining climate regions by county 2015 (Available at: https://www.energy.gov/sites/prod/files/2015/10/f27/ba_climate_region_guide_7.3.pdf).
    \11\ U.S. Census Population Estimates by County, as of 2018 
(Available at: https://www.census.gov/data/tables/time-series/demo/popest/2010s-counties-total.html#par_textimage).

[[Page 30807]]



                               Table IV.4--Climate Zones and Representative Cities
----------------------------------------------------------------------------------------------------------------
                                                                                                   TMY  location
               Climate zone                   Population             Representative city                No.
----------------------------------------------------------------------------------------------------------------
1A........................................       6,208,359  Miami...............................          722020
2A........................................      38,418,718  Houston.............................          722430
2B........................................       6,869,283  Phoenix.............................          722780
3A........................................      43,230,951  Atlanta.............................          722190
3B--CA....................................      29,951,605  Los Angeles.........................          722950
3B--Non CA................................       5,546,151  Las Vegas...........................          723677
3C........................................       8,596,694  San Francisco.......................          724940
4A........................................      69,154,015  Baltimore...........................          724060
4B........................................       2,245,023  Albuquerque.........................          723650
4C........................................       9,696,610  Seattle.............................          727930
5A........................................      70,727,419  Chicago.............................          725300
5B........................................      13,119,013  Boulder.............................          724699
6A........................................      17,705,715  Minneapolis.........................          726580
6B........................................       2,650,907  Helena..............................          727720
7.........................................       2,625,239  Duluth..............................          727450
8.........................................         170,286  Fairbanks...........................          702610
----------------------------------------------------------------------------------------------------------------

    While a UFHWST can be installed outdoors anywhere in the Nation, 
for this analysis, DOE is using the assumption that these installations 
will only occur in the ``Very Hot'' and ``Hot'' regions (Building 
America climate zones 1A, 2A, and 2B) where the chance of overnight 
freezing is very low.
    Table IV.5 shows the fraction of UFHWSTs installed indoors versus 
outdoors, and the monthly average ambient temperature values for each 
Tamb, z.

                                                    Table IV.5--Average Monthly Ambient Temperatures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Average temperature for month  ([deg]F)
               Climate zone/location  (z)                  Location  -----------------------------------------------------------------------------------
                                                            weight      1      2      3      4      5      6      7      8      9      10     11     12
--------------------------------------------------------------------------------------------------------------------------------------------------------
1A.....................................................        0.012     67     70     71     75     80     82     83     82     81     79     74     69
2B.....................................................        0.075     55     60     63     75     81     93     96     93     87     77     64     53
2A.....................................................        0.013     51     55     61     69     75     81     83     83     80     69     63     55
Indoor.................................................        0.900     75     75     75     75     75     75     75     75     75     75     75     75
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE requests comment on its assumption regarding the typical 
ambient temperatures for UFHWSTs installed indoors and outdoors.
    DOE requests comment on its assumption that 10 percent of all 
UFHWST would be installed outdoors. DOE requests information on the 
typical capacities and R-values of outdoor equipment.
    DOE requests comment on its assumption that outdoor installations 
would be limited to climate zones 1A, 2A, and 2B. DOE requests 
information or data on the fraction of installations that occur within 
these, or other, climate zones.
d. R-value of Insulation (Ri, j)
    The R-value of each zone i of the UFHWST is defined for each EL j 
in the engineering analysis in Table IV.1 and Table IV.3 of section 
IV.B of this document.
    DOE requests comment on its Tank Thermal Loss Model.
2. Annual Energy Use Due to UFHWST Losses
    To calculate the energy used by the boiler attributable to the heat 
losses of the UFHWSTs, DOE used the following equation for each EL 
listed in Table IV.1 of this document:
[GRAPHIC] [TIFF OMITTED] TP10JN21.014

Where:

EBoilj = The energy by the boiler required to maintain the water 
temperature in the UFHWST at the temperature Ti at each EL j, (Btu/
yr),
Qhr, j = hourly heat loss for the UFHWST at each EL j (see section 
IV.C.1, (Btu/hr) of this document), and
Boilern = average boiler efficiency (%) in year yr (defined in 
section IV.F.2 of this document).
    Table IV.6 presents the energy used by the boiler attributable to 
the heat losses of the UFHWST at the baseline (EL 0) and each EL by 
tank capacity. Table IV.7 presents the resulting energy savings at each 
EL above baseline. The representative storage volumes used in this 
analysis are discussed in section IV.B.2 of this document.

[[Page 30808]]



                 Table IV.6--Boiler Energy Use Due to UFHWST Heat Losses in 2025 (MMBtu/yr) \12\
----------------------------------------------------------------------------------------------------------------
                                                                  Capacity (US gal)
                 EL                 ----------------------------------------------------------------------------
                                         50        175        375        750        1500       3500       5000
----------------------------------------------------------------------------------------------------------------
0..................................       1.76       2.78       4.71       8.59      11.44      21.09      25.27
1..................................       1.55       2.39       3.97       7.32       9.63      17.45      20.80
2..................................       1.41       2.13       3.48       6.48       8.42      15.02      17.83
----------------------------------------------------------------------------------------------------------------


          Table IV.7--Savings in Boiler Energy Use Due to Reduced UFHWST Heat Losses in 2025 (MMBtu/yr)
----------------------------------------------------------------------------------------------------------------
                                                                  Capacity (US gal)
                 EL                 ----------------------------------------------------------------------------
                                         50        175        375        750        1500       3500       5000
----------------------------------------------------------------------------------------------------------------
1..................................       0.21       0.39       0.74       1.26       1.81       3.64       4.47
2..................................       0.35       0.64       1.23       2.10       3.02       6.07       7.44
----------------------------------------------------------------------------------------------------------------

3. Additional Sources of Uncertainty
---------------------------------------------------------------------------

    \12\ The projected value for Boiler Efficiency (Boilern) is 
0.922 in 2027, see section IV.F.2 of this document for more details.
---------------------------------------------------------------------------

    As discussed in section IV.B.2 of this document, the inputs to 
DOE's tank thermal loss model were primarily based on publicly-
available information, DOE's previous knowledge of UFHWSTs, and 
feedback from manufacturers received during interviews conducted under 
NDAs. To validate the model, DOE compared the results produced by the 
model to results of testing previously conducted to evaluate the 
performance-based test procedure proposed for UFHWSTs in the May 2016 
CWH TP NOPR, which was largely based on the standby loss test procedure 
for commercial storage water heaters. The proposed test procedure 
included a standby loss test that would be conducted as the mean tank 
water temperatures decay from 142 [deg]F to 138 [deg]F at a nominal 
ambient temperature of 75 [deg]F. 81 FR 28588, 28603 (May 9, 2016). 
Standby loss tests were conducted on 17 UFHWSTs with an advertised 
insulation level of R-12.5 and storage volumes of 40, 80, or 120 
gallons in order to gather data on whether measured standby losses were 
consistent with what would be expected from tanks insulated to their 
rated and/or advertised insulation levels, to assess the repeatability 
and sensitivity of the proposed test procedure, and to gather data on 
the potential burden in conducting the testing.
    DOE used the same analytical model described in this section to 
calculate the expected losses from each of these tanks, using their 
measured dimensions and actual number of ports. As discussed, the 
internal water temperature (140 [deg]F) and ambient air temperature (75 
[deg]F) used for the analytical model were the same as the average 
temperatures seen during the physical testing. The same assumptions 
about insulation details (e.g., R-values for different materials and 
the use of fiberglass around ports) were used as were used for the 
baseline (R-12.5) units in DOE's thermal loss model. The average 
predicted rate of standby losses for these tanks were 73 percent of the 
measured standby losses and ranged from as low as 58 percent of the 
measured losses up to 90 percent of the measured losses. Because the 
estimated standby losses are significantly lower than the measured 
losses, this suggests that DOE's thermal loss model undercounts the 
actual standby losses that would occur in the field. Furthermore, the 
wide range in calculated standby losses as compared to measured standby 
losses indicates that the accuracy of the thermal loss calculations in 
predicting the standby losses of a particular model will be somewhat 
unpredictable, thereby adding additional uncertainty.
    Furthermore, when DOE conducted standby loss tests of UFHWSTs, it 
found that tanks with identical storage volumes, dimensions, number of 
ports, and nominal insulation levels differed by up to 8.5 percent, 
whereas DOE's model would predict the same level of standby losses for 
these tanks. This finding suggests that there may be variations in the 
extent of R-12.5 coverage between units, even between units from the 
same manufacturer. As discussed in section IV.B.2 of this document, it 
may not be practical to insulate all surfaces of UFHWSTs with 
polyurethane foam due to the nature of the insulation application 
process or the need to retain access to certain ports. Differences in 
manufacturers' tank designs, manufacturing processes, or their 
interpretations of the R-12.5 insulation requirement could lead to 
variations in the amount of tank surface area that is actually 
insulated with R-12.5. Therefore, tanks that appear to have the same 
attributes and insulation may have different levels of standby losses 
in the field. This source of potential variation in standby losses 
further supports DOE's conclusion that there may be additional sources 
of thermal losses that vary between tanks and that are not adequately 
captured in its current thermal loss model. This variation also makes 
it very difficult for DOE to characterize the representative 
performance of a ``baseline'' UFHWST, or the expected performance at 
any potential amended standard level, with a high degree of confidence 
since there is significant variation in thermal energy losses at a 
given efficiency level (R-value) that cannot be readily predicted or 
otherwise accounted for in the analysis. Due to these potential 
variations in insulation coverage and because DOE has not been able to 
verify its thermal loss model against its physical test results, there 
is significant uncertainty as to the validity of its energy use 
analysis.

D. Life-Cycle Cost and Payback Period Analysis

    To determine whether a standard is economically justified, EPCA 
requires DOE to consider the economic impact of the standard on 
manufacturers and consumers, as well as the savings in operating costs 
throughout the estimated average life of the equipment compared to any 
increase in price, initial charges, or maintenance expenses of the 
equipment likely to result from the standard. (42 U.S.C. 
6313(a)(6)(B)(ii)(I)-(II)) The effect of new or amended energy 
conservation standards on individual consumers usually involves a 
reduction in operating cost and an increase in purchase cost. To 
evaluate the economic impacts of potential energy conservation

[[Page 30809]]

standards on individual consumers, in order to determine whether 
amended standards would be economically justified, DOE typically uses 
the following two metrics:
     The LCC is the total consumer expense of equipment over 
the life of that equipment, consisting of total installed cost 
(manufacturer selling price, distribution chain mark-ups, sales tax, 
and installation costs) plus operating costs (expenses for energy use, 
maintenance, and repair). To compute the operating costs, DOE discounts 
future operating costs to the time of purchase and sums them over the 
lifetime of the equipment.
     The PBP is the estimated amount of time (in years) it 
takes consumers to recover the increased purchase cost (including 
installation) of more-efficient equipment through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
at higher efficiency levels by the change in annual operating cost for 
the year that amended or new standards are assumed to take effect.
    For any given efficiency level, DOE typically measures the change 
in LCC relative to the LCC in the no-new-standards case, which reflects 
the estimated efficiency distribution of equipment in the absence of 
new or amended energy conservation standards. In contrast, the PBP for 
a given efficiency level is measured relative to the baseline 
equipment.
1. Installation Costs
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the equipment. In response to the 
August 2019 RFI, DOE received several comments related to installation 
issues associated with UFHWSTs with increased insulation thickness. BWC 
and AHRI stated that increasing the size of UFHWSTs by increasing the 
thickness of required insulation will lead to difficulties getting 
tanks through doorways and to their final locations in existing 
mechanical rooms. (BWC, No. 5 at p. 2 and AHRI, No. 6 at p. 2)
    AHRI commented that reducing the storage volume of the tank itself 
is not a practical option because the most critical design feature of 
UFHWSTs is their storage volume. (AHRI, No. 6 at pp. 1-2) AHRI asserted 
that the predominant market for UFHWSTs are replacement installations, 
and again increased insulation would lead to difficulties with 
replacement because of space constraints in existing mechanical rooms. 
Additionally, BWC suggested that this could potentially necessitate the 
following changes: replacement of one UFHWST with two UFHWSTs, addition 
of mechanical rooms, or changes to system configurations. (BWC, No. 5 
at p. 2)
    Feedback from manufacturer interviews conducted under NDAs also 
suggests that manufacturers are very concerned that increases in 
overall UFHWST dimensions due to increased insulation thickness could 
require modifications to existing doorways or mechanical rooms, in 
order to be able to replace existing tanks with a single tank of 
similar volume, which would significantly increase installation costs.
    In response to these comments from BWC and AHRI, DOE examined some 
of the potential installation costs (i.e., widening doorways that lead 
to the mechanical room and expanding the mechanical room itself). To 
estimate the costs of expanding doorways in order to allow UFHWSTs to 
pass through, DOE was able to examine the cost of door removal and 
reinstallation using data for exterior and interior door installations 
available in the RSMeans 2020 Estimating Handbook Online.\13\ DOE 
examined the cost breakdown of installing new fire-rated doorways, both 
at 3 to 4-foot, and 6 to 7-foot width ranges, as well as interior 
passage doors at these same widths. For these doorway types, DOE did 
not use the entire installation values cited in the literature; rather, 
DOE only used the portions of the cost associated with the installation 
of existing frames and doors. DOE expects that comparable costs would 
be required to remove existing doors in a manner where they could be 
reinstalled without the need for new equipment, so for this estimate, 
the doorway installation cost were doubled to reflect both removal and 
reinstallation. Under this scenario, DOE found that door removal and 
reinstallation costs could potentially increase the cost of UFHWST 
installation by between $280 and $1720 for every doorway requiring 
modification. DOE currently has no method of determining the average 
number of doorways that a UFHWST would need to pass through during the 
course of installation which increases the potential range of 
installation costs.
---------------------------------------------------------------------------

    \13\ RSMeans Data from Gordian (2020) (Available at: https://www.rsmeansonline.com/) (Last Accessed: July 20, 2020). For details, 
please see the following records: B20301251800: Door, single, 
exterior fire door, ``A'' label, B20301252500: Door, double, 
exterior fire door, ``A'' label, C10201101600: Door, interior fire 
door, B20301251900: Door, double, aluminum, entrance, B20301251200: 
Door, single, aluminum, entrance.
---------------------------------------------------------------------------

    For this NOPD, DOE was unable to find detailed data characterizing 
the costs of restructuring the mechanical room. However, DOE was able 
to examine other water- heating rulemakings with equipment with water 
storage characteristics where replacement installations could prove 
difficult. Specifically, DOE compared the magnitude of difference 
between the average, the 95th percentile, and maximum installation 
costs for the following baseline equipment as a proxy for potential 
customer impacts in extreme cases. DOE also does not currently have 
enough data indicating the percentage of UFHWST installations that 
could necessitate building modifications to get the UFHWST to its 
destination in the mechanical room, if tank dimensions were increased. 
However, the results in Table IV.8, while illustrative, are not 
exhaustive, and they show that the potential range of increased costs 
is significant, particularly for commercial equipment where the range 
of potential installation costs can be greater than 50 percent than the 
average in some extreme cases. It is expected that these costs would 
often be unavoidable because building owners are likely unable to 
substitute these tanks with tanks of alternative dimensions or volumes 
to meet operational needs and fit in existing spaces.

                        Table IV.8--Magnitude of Potential Increase in Installation Costs
----------------------------------------------------------------------------------------------------------------
                                               Installation cost ($)                  Increase over mean (%)
                                 -------------------------------------------------------------------------------
            Equipment                                  95th-                           95th-
                                       Mean         Percentile        Maximum       Percentile        Maximum
----------------------------------------------------------------------------------------------------------------
Commercial-Duty Gas Storage                  812           1,225           2,432              51             199
 Water Heater \14\..............
Residential-Duty Commercial Gas              678           1,001           2,088              48             208
 Storage Water Heater \15\......
Commercial Electric Storage                1,054           1,325           1,773              26              68
 Water Heater \16\..............

[[Page 30810]]

 
Consumer Gas-fired Storage Water             630           1,375           2,370             118             276
 \17\...........................
Consumer Electric Storage Water              288             402             498              40              73
 Heaters \18\...................
Consumer Oil-fired Storage Water           1,974           2,283           2,910              16              47
 Heaters \19\...................
----------------------------------------------------------------------------------------------------------------

    DOE recognizes that increasing installation costs can reduce, or 
even eliminate, the future economic consumer benefits from a potential 
new standard. Because of this, DOE tentatively agrees with the 
commenters that installation costs for certain UFHWST customers could 
include the removal and reinstallation of exterior and interior 
doorways, and in some extreme cases, it could require the restructuring 
of existing mechanical rooms to fit the new replacement equipment if 
the dimensions of UFHWSTs are increased. Furthermore, DOE tentatively 
agrees with the commenters that a small increase in tank dimensions in 
a potential new standards case could potentially disproportionately 
increase the installation costs for a fraction of consumers of 
replacement equipment. While the fraction of impacted consumers is 
uncertain, DOE is certain that there will be some consumers who will 
experience these higher installation costs. These higher installation 
costs for replacement equipment create uncertainty regarding the 
positive economic benefits for a potentially significant fraction of 
consumers from an amended standard for UFHWSTs.
---------------------------------------------------------------------------

    \14\ U.S. Department of Energy, Energy Efficiency and Renewable 
Energy Office, Energy Conservation Standards for Commercial Water 
Heating Equipment, NOPR Analytical Spreadsheet: Commercial Water 
Heater (CWH) Life Cycle Cost (LCC) and Payback Period Analysis 
(April 20, 2016) (Available at: https://regulations.gov/document/EERE-2014-BT-STD-0042-0013). See worksheet labelled: Forecast Cells.
    \15\ Ibid.
    \16\ Ibid.
    \17\ U.S. Department of Energy, Energy Efficiency and Renewable 
Energy Office, Energy Efficiency Standards for Pool Heaters, Direct 
Heating Equipment and Water Heaters, 2010-04-06 Final Rule 
Analytical Tools (July 1, 2011) (Available at: https://www.regulations.gov/document?D=EERE-2006-STD-0129-0148). See: 2010-
03-26 Life Cycle Cost Electric Storage Water Heaters.xlsx.
    \18\ U.S. Department of Energy, Energy Efficiency and Renewable 
Energy Office, Energy Efficiency Standards for Pool Heaters, Direct 
Heating Equipment and Water Heaters, 2010-04-06 Final Rule 
Analytical Tools (July 1, 2011) (Available at: https://www.regulations.gov/document?D=EERE-2006-STD-0129-0148). See: 2010-
03-26 Life Cycle Cost Gas-fired Storage Water Heaters.xlsx.
    \19\ U.S. Department of Energy, Energy Efficiency and Renewable 
Energy Office, Energy Efficiency Standards for Pool Heaters, Direct 
Heating Equipment and Water Heaters, 2010-04-06 Final Rule 
Analytical Tools (July 1, 2011) (Available at: https://www.regulations.gov/document?D=EERE-2006-STD-0129-0148). See: 2010-
03-24 Life Cycle Cost Oil-fired Storage Water Heaters.xlsx.
---------------------------------------------------------------------------

    DOE requests data and information which can be used to estimate 
installation costs of UFHWSTs with modified dimensions.
    DOE requests information and data characterizing the types of 
buildings where installation difficulties are likely to occur and to 
lead to increased installation cost, as well as the frequency with 
which such installation problems may arise.
    DOE requests information and data characterizing the average 
installation costs for UFHWSTs at all different storage volumes.
    DOE requests information and data characterizing the circumstances 
that would drive the decision to potentially restructure an existing 
building spaces, including doorways and mechanical rooms, when 
installing a replacement UFHWST. For example, is the decision driven by 
a minimum building code requirement for door openings?
2. Annual Energy Consumption
    DOE typically determines the annual energy consumption for 
equipment at different efficiency levels. DOE's approach to determining 
the annual energy consumption of UFHWSTs is described in section IV.C 
of this document. In response to the August 2019 RFI, A.O. Smith 
suggested that any potential energy savings resulting from changes to 
insulation thickness would be small and significantly outweighed by the 
costs that would be borne by commercial customers and manufacturers. 
(A.O. Smith, No. 8 at p. 2)
    As discussed in section V.A.1 of this document, DOE estimates that 
amended standards at the max-tech level would result in site energy 
savings (i.e., realized at the source of hot water by either a water 
heater or hot water supply boiler) of 0.017 quads over 30 years. 
However, as discussed in section IV.C.1 of this document, even small 
adjustments to several critical inputs to the model could have a large 
impact on these results and could significantly alter the findings. For 
example, as explained previously, the inputs to the tank thermal loss 
model are primarily based on publicly-available data and information 
gathered during manufacturer interviews, but as discussed earlier, the 
results from this model underestimate losses as compared to those 
observed during testing of UFHWSTs that was previously done to evaluate 
the test procedure proposed for UFHWSTs in the May 2016 CWH TP NOPR. 
These uncertainties would propagate through the cost-benefit analyses 
and could potentially significantly reduce the energy savings from 
amended standards. Therefore, DOE did not conduct an LCC and PBP 
analysis for this NOPD.

E. Shipments Analysis

    DOE uses projections of annual equipment shipments to calculate the 
national impacts of potential amended or new energy conservation 
standards. The shipments model takes an accounting approach in tracking 
market shares of each equipment class and the vintage of units in the 
stock. Stock accounting uses equipment shipments as inputs to estimate 
the age distribution of in-service equipment stocks for all years.
    In response to the August 2019 RFI, AHRI stated that it would 
provide DOE with 2018 shipments data for UFHWST. (AHRI, No. 6 at p.1) 
However, no data were received, so DOE developed its own shipments 
estimates based on available data.
    To project shipments and equipment stocks for 2025 through the end 
of the 30-year analysis period (2054), DOE used a stock accounting 
model. Future shipments are calculated based on projections in Annual 
Energy Outlook 2021 (AEO 2021) (see section IV.E.3 of this document for 
further details). The stock accounting model keeps track of shipments 
and calculates replacement shipments based on the expected service 
lifetime of UFHWSTs and a Weibull distribution that identifies a 
percentage of units still in existence from a prior year that will fail 
and need to be replaced in the current year.

[[Page 30811]]

    AHRI and A.O. Smith both stated that the UFHWST market is very 
small and often customized, and that the predominant market for UFHWSTs 
is for replacement equipment. (AHRI, No. 6 at p. 2; A.O. Smith, No. 8 
at pp.1) While this may be the case, DOE expects that manufacturers of 
this equipment will continue to seek out new markets and that some 
equipment will be sold into new construction. Therefore, the Department 
developed projections for this market as described in section IV.E.3 of 
this document.
    DOE's approach begins with an estimate of the current stock of 
UFHWSTs. DOE uses an estimate of average UFHWST lifetime to derive the 
fraction of the stock that is replaced in each year. DOE then adds an 
estimate of new UFHWSTs installed in each year.
1. Stock Estimates
    DOE investigated each sector that is presumed to operate UFHWSTs: 
Residential, commercial, and industrial. However, DOE was unable to 
find clear indicators of how many UFHWST are used by any of these 
sectors, so it developed sectoral stock estimates from publicly-
available data, as discussed in the paragraphs that follow.
a. Residential Stock
    To estimate the stock of UFHWSTs in the residential sector, DOE 
examined the Residential Energy Consumption Survey (RECS) \20\ 
database. Although RECS does not contain specific fields that indicate 
the presence of a UFHWST, nor does RECS catalog specific water heating 
technologies, DOE was able to examine the available sample for 
buildings that would be likely to contain a UFHWST. DOE assumed that 
such a building would be characterized as follows:
---------------------------------------------------------------------------

    \20\ Presently the 2015 edition of RECs is the most recent 
version. Energy Information Administration (EIA), 2015 Residential 
Energy Consumption Survey (RECS) (Available at: https://www.eia.gov/consumption/residential/) (Last accessed April 4, 2019).
---------------------------------------------------------------------------

     A building with multiple residences (TYPEHUQ = 4 and 5),
     where the hot water heater and storage tank are not in the 
apartment itself (H20HEATAPT = 2), and
     where the hot water heater is of a type that is tankless, 
or on-demand. (WHEATSZ = 4)
    The results of a search of the RECS database using these 
assumptions yielded a sample of zero buildings. Based upon these 
results, DOE tentatively agrees with AHRI's statement that UFHWST are 
primarily installed in industrial/commercial applications (AHRI, No. 6 
at p. 2). Accordingly, DOE has tentatively concluded that the quantity 
of UFHWST installed in the residential sector is minimal and should not 
be considered for the purpose of this determination.
b. Commercial Stock
    To estimate the stock of UFHWSTs in the commercial sector, DOE 
examined the Commercial Building Energy Consumption Survey (CBECS).\21\ 
Although CBECS does not contain specific fields that indicate the 
presence of a UFHWST, DOE was able to examine the available sample for 
buildings that would be likely to contain a UFHWST. DOE assumed that 
such a building would be characterized as follows:
---------------------------------------------------------------------------

    \21\ Presently, the 2012 edition of CBECs is the most recent 
version. Energy Information Administration (EIA), 2012 Commercial 
Building Energy Consumption Survey (CBECS) (Available at: https://www.eia.gov/consumption/commercial/) (Last accessed April 4, 2019).
---------------------------------------------------------------------------

     A building with water heating equipment (WTHTEQ = 1), and
     Where the main heating equipment is boilers inside (or 
adjacent to) the building that produce steam or hot water (MAINHT = 3).
    The results of a search of the CBECS database using these 
assumptions yielded a commercial sample of 325,089 buildings in 2012. 
DOE could not find any data specifying the quantity of UFHWSTs per 
commercial building, so for this analysis, DOE assumed one UFWHST per 
building of all sizes. From this sample DOE also found that 99.2 
percent of these buildings use natural gas as their primary energy 
source for water heating, with the remaining 0.8 percent of buildings 
using district water heating,\22\ electricity, heating oil, or other 
fuels. For purpose of this analysis, DOE considered 100 percent of 
commercial buildings to use natural gas to heat water.
---------------------------------------------------------------------------

    \22\ ``District heating'' is an underground infrastructure asset 
where thermal energy is provided to multiple buildings from a 
central energy plant or plants. In this context, it would be 
operated by local governments.
---------------------------------------------------------------------------

c. Industrial Stock
    DOE examined the industrial data source listed in the August 2019 
ECS RFI and was not able to determine an appropriate stock sample from 
the highly aggregated data available.23 24 DOE understands 
that UFHWSTs are used to store potable hot water for human consumption 
and washing, not for industrial process water. Therefore, DOE assumed 
that the need for hot water storage would be the similar across both 
commercial and manufacturing sectors on a per-person basis.
---------------------------------------------------------------------------

    \23\ Energy Information Administration (EIA), 2014 Manufacturing 
Energy Consumption Survey (MECS) (Available at: https://www.eia.gov/consumption/manufacturing/data/2014/) (Last accessed April 4, 2019).
    \24\ Northwest Energy Efficiency Alliance, 2014 Industrial 
Facilities Site Assessment: Report & Analytic Results, 2014 
(Available at: https://neea.org/img/documents/2014-industrial-facilities-stock-assessment-final-report.pdf) (Last accessed May 3, 
2021).
---------------------------------------------------------------------------

    To estimate the stock of industrial consumers, DOE used the number 
of manufacturing employees from the 2017 census.\25\ DOE first 
determined the ratio of UFHWSTs per commercial employee. DOE then used 
the ratio of the employee count from the commercial sample described in 
section IV.E.1.b of this document over the total number of commercial 
employees to represent the number of UFHWSTs in the commercial sector 
on a per-employee basis. DOE then applied this ratio to the total 
number of manufacturing employees from the 2017 census to produce a 
National stock estimate for the industrial sector.
---------------------------------------------------------------------------

    \25\ U.S. Census Bureau, All Sectors: Summary Statistics for the 
U.S., States, and Selected Geographies: 2017, Table EC1700BASIC, 
2017 (Available at: https://data.census.gov/cedsci/table?q=31-33%3A%20Manufacturing&hidePreview=false&tid=ECNBASIC2017.EC1700BASIC&vintage=2017) (Last accessed: March 27, 2020).
---------------------------------------------------------------------------

    Table IV.9 presents the estimated stock of UFHWSTs in each sector, 
in 2012.

                Table IV.9--Estimated UFHWST Stock (2012)
------------------------------------------------------------------------
                                                 Number of
                    Sector                         units      Weight (%)
------------------------------------------------------------------------
Residential...................................            0            0
Commercial....................................      315,360           82
Industrial....................................       71,361           18
------------------------------------------------------------------------

    DOE requests comments generally regarding its stock analysis for 
UFHWSTs.
    DOE requests comment regarding its assumption that there would be 
only one UFWHST per building.
    DOE requests comment regarding its disaggregation of UFHWST stock 
by sector.
    DOE requests comment on its assumption that UFHWSTs are not used 
for industrial process hot water storage.
2. Shipments for Replacement
    For this analysis DOE was unable to locate data on average 
lifetimes for UFHWSTs, and the Department likewise could not find 
primary data indicating average or maximum lifetimes for UFHSWTs. DOE 
understands that some of the causes of failure in other hot water 
storage tanks include corrosion, sediment build-up, and mechanical

[[Page 30812]]

failures. UFHWSTs are relatively simple equipment when compared to 
storage-type water heaters that include heating elements or a fossil-
fuel burner with a storage tank. The simplicity of UFHWSTs would limit 
the likelihood of mechanical failure as compared to a storage-type 
water heater, but they can still fail due to corrosive or sediment 
build-up. Electric storage water heaters that use electric resistance 
elements for heating are likewise relatively simple equipment, whereas 
gas-fired storage water heaters can be more complex, because they 
typically require an ignition system, burner, combustion fans (in some 
cases), associated combustion controls, and flue gas venting system. 
The mechanical simplicity of electric storage water heaters lends 
itself to a failure mode related to the storage tank component of the 
water heating package, which would be expected to be analogous to the 
typical failure mode for an UFHWST. For this analysis, DOE used the 
average lifetime for commercial electric storage water heaters (i.e., 
12 years) as a proxy for UFHWST lifetime. In the TSD for DOE's May 2016 
CWH ECS NOPR (81 FR 34440), the average lifetime for commercial 
electric hot water storage tanks was estimated to be 12 years. Based on 
this average lifetime, DOE assumed an 8 percent per year replacement 
rate for UFHWSTs.
    DOE requests comment on its assumption of a 12-year lifetime for 
UFHWSTs similar to commercial electric hot water storage tanks.
3. Shipments for New Construction
    To project shipments of UFHWSTs for new construction, DOE relied on 
the trends available from the AEO 2021. DOE used the Commercial 
Floorspace and Macro Indicators Employment Manufacturing trends to 
project new construction for the commercial and industrial sectors, 
respectively.26 27 DOE estimated a saturation rate for each 
equipment type using building and equipment stock values. The 
saturation rate was applied in each year, yielding shipments to new 
buildings.
---------------------------------------------------------------------------

    \26\ U.S. Energy Information Administration, Annual Energy 
Outlook (2021), Table 22, Commercial Sector Energy Consumption, 
Floorspace, Equipment Efficiency, and Distributed Generation 
(Available at: https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2021&cases=ref2021&sourcekey=0).
    \27\ U.S. Energy Information Administration, Annual Energy 
Outlook (2021), Table 23, Industrial Sector Macroeconomic Indicators 
(Available at: https://www.eia.gov/outlooks/aeo/data/browser/#/?id=34- AEO2021&cases=ref2021&sourcekey=0).
---------------------------------------------------------------------------

    DOE requests comment on its use of AEO 2021 trends as a scaler to 
project shipments to new construction.
4. Estimated Shipments
    Table IV.10 presents the estimated UFHWST shipments in selected 
years.

           Table IV.10--Shipments Results for UFHWSTs (Units)
------------------------------------------------------------------------
                          Year                               Shipments
------------------------------------------------------------------------
2025....................................................          18,292
2030....................................................          19,240
2040....................................................          21,244
2050....................................................          23,208
2060....................................................               0
------------------------------------------------------------------------

a. Distribution of Shipments by UFHWST Storage Volume
    Table IV.11 presents the estimated distribution of UFHWST shipments 
by the storage volume ranges specified in section IV.B.2 of this 
document. DOE estimated these values through examination of capacity 
counts in existing trade literature and DOE's CCMS database. DOE 
assumes that this distribution is static and does not change over time.

                                          Table IV.11--Distribution of Shipments by UFHWST Storage Volume (gal)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       0 to 100        101 to 250       251 to 500      501 to 1000      1001 to 2000     2001 to 5000
          Capacity Range              (percent)        (percent)        (percent)        (percent)        (percent)        (percent)     >5000 (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Share.....................               3               11               23               26               20               16                1
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE requests comment on its distribution of shipments by storage 
volume, and on its assumption that the distribution of shipments by 
storage volume does not change over time.
5. Additional Sources of Uncertainty
    DOE recognizes that the market for UFHWSTs is a relatively highly 
customized and low-volume shipments market. DOE's review of publicly-
available information indicates that annual shipments through 2030 will 
be below 20,000 units (see the previous section for additional 
details). Additionally, in response to the August 2019 RFI, BWC 
submitted a list of over 200 companies which it identified as UFHWST 
manufacturers, which underscores the low-volume nature of the UFHWST 
industry. (BWC, No. 5 at p.2) DOE reviewed these companies and found 
many to be custom fabrication/welding shops or producers of vessels for 
niche industry processes such as chemical mixing or fuel storage. 
Although most of the manufacturers listed by BWC may theoretically be 
capable of manufacturing UFHWSTs, DOE did not find evidence that these 
businesses advertise or market UFHWSTs. However, DOE was able to 
confirm that some of the companies listed by BWC manufacture UFHWSTs, 
and DOE included these manufacturers in its list of UFHWST 
manufacturers. In total, DOE has identified 48 UFHWST manufacturers, 37 
of which are small domestic manufacturers.
    Due to the niche nature of this marketplace, it is difficult to 
accurately predict how the market would respond to amended standards 
(e.g. whether any manufacturers would face disproportionately high 
conversion costs, what changes may result to the distribution of tank 
sizes sold, if consumers would select different equipment to meet their 
water heating needs, or whether manufacturers might consolidate or exit 
the market). These uncertainties may substantially impact the findings 
if DOE were to complete a full economic impact analysis of amended 
standards for UFHWSTs or estimate the cost-effectiveness of a more-
stringent standard.

F. National Impact Analysis

    DOE conducted an NIA that assesses the NES in terms of total site 
energy savings that would be expected to result from new or amended 
standards at specific efficiency levels. DOE did not assess the net 
present value (NPV) of the total costs and benefits experienced by 
consumers as part of the NIA because of the lack of an LCC analysis as 
previously discussed. DOE calculates the NES for the potential standard 
levels considered based on projections of annual equipment shipments, 
along with the annual energy consumption from the energy use analysis. 
For the present analysis, DOE projected the site energy savings over 
the lifetime of UFHWSTs sold from 2025 through 2054.

[[Page 30813]]

    DOE evaluates the effects of amended standards at the national 
level by comparing a case without such standards (referred to as the 
no-new-standards case) with standards-case projections that 
characterize the market for each UFHWST class if DOE were to adopt 
amended standards at the specified energy efficiency levels for that 
class. As discussed in the subsections that follow, this analysis 
requires an examination of both the efficiency of the UFHWST, as well 
as the efficiency of the appliance supplying heated water to that tank.
1. Energy Efficiency Distribution in the No-New-Standards Case
    DOE received limited information regarding the efficiency range of 
UFHWSTs distributed in commerce in response to its request for comment 
in the August 2019 ECS RFI. BWC stated that it is appropriate to assume 
that for this analysis, all UFHWST have R-12.5 insulation (i.e., that 
they meet the minimum R-value of 12.5 currently required by ASHRAE 
90.1). (BWC, No. 5 at p. 3)
    To estimate the fraction of equipment sold at or above the current 
standard, DOE examined the counts and R-values of the records in its 
Compliance Certification Management System (CCMS) database.\28\ DOE 
found that there were a minimal number of designs that related to the 
R-value efficiency levels determined in the engineering analysis, as 
demonstrated by Table IV.11. However, DOE notes that the data from the 
CCMS database is a count of models at a given efficiency and not a 
direct reflection of the number of units shipped at that efficiency 
level. When weighted as a function of shipments, the data shows that 
the vast majority of shipment are at baseline, as shown in Table IV.13. 
Consequently, DOE tentatively agrees with the statement from BWC and 
for this analysis assumed that almost all UFHWST across all capacities 
are at the baseline efficiency level, R-12.5.
---------------------------------------------------------------------------

    \28\ See: https://www.regulations.doe.gov/ccms.

                               Table IV.12--Fractions of Model Efficiency in CCMS
                                                 [% of records]
----------------------------------------------------------------------------------------------------------------
                                                                       EL 0            EL 1            EL 2
                                                                    (baseline)   -------------------------------
                Representative tank volume (gal.)                ----------------
                                                                      R-12.5          R-15.62         R-18.75
----------------------------------------------------------------------------------------------------------------
50..............................................................              14               2               0
175.............................................................              21               1               0
375.............................................................              20               0               0
750.............................................................              18               0               0
1500............................................................              21               0               0
3500............................................................               2               0               0
5000............................................................               0               0               0
----------------------------------------------------------------------------------------------------------------


                     Table IV.13--Fraction of Model Efficiencies as a Function of Shipments
                                                 [% of records]
----------------------------------------------------------------------------------------------------------------
                                                                       EL 0            EL 1            EL 2
                                                                    (baseline)   -------------------------------
        Representative tank volume (gal.)             Weight     ----------------
                                                                      R-12.5          R-15.62         R-18.75
----------------------------------------------------------------------------------------------------------------
50..............................................            0.03               3               0               0
175.............................................            0.11              10               1               0
375.............................................            0.23              23               0               0
750.............................................            0.26              26               0               0
1500............................................            0.20              20               0               0
3500............................................            0.16              16               0               0
5000............................................            0.01               1               0               0
----------------------------------------------------------------------------------------------------------------

    DOE requests comment regarding its applied efficiency distribution 
that 99 percent of all units sold are currently at baseline (R-12.5).
2. Hot Water Supply Boiler Efficiency Trend
    As stated previously, a potential standard increasing the 
insulation rating of UFWHST equipment would reduce thermal losses, 
which would in turn reduce the energy used by a building's hot water 
supply equipment to provide hot water.\29\ Determining the impact of 
reduced UFHWST losses on the connected boiler(s) requires an estimate 
of the boiler efficiency. To estimate the efficiency of boiler systems, 
DOE used the No-New-Standards Case (EL0) efficiency distribution data 
from the May 2016 CWH ECS NOPR \30\ to calculate a single, market-
weighted, average efficiency, which is 84.4 percent in 2016. For years 
beyond 2016 and future years through 2050, DOE used the AEO 2021 data 
series ``Commercial: Stock Average Efficiency: Water Heating: Natural 
Gas: Reference case'' to project the efficiency trend of hot-water 
supply boilers.\31\ DOE assumed no increase in boiler efficiency after 
2050 (i.e., the end date for the AEO 2021

[[Page 30814]]

analysis). This efficiency trend is shown in Table IV.14.
---------------------------------------------------------------------------

    \29\ While there is a wide range of equipment that building 
owners can use to produce hot water, for this analysis, DOE assumed 
that 100 percent of all hot water is produced by a hot water supply 
boiler. See section IV.E.1.b of this document for details.
    \30\ Available at: https://www.regulations.gov/document?D=EERE-2014-BT-STD-0042-0016 (Last accessed: April 8, 2020).
    \31\ U.S. Energy Information Administration, Annual Energy 
Outlook (2021), Table 22, Commercial Sector Energy Consumption, 
Floorspace, Equipment Efficiency, and Distributed Generation 
(Available at: https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2021&cases=ref2021&sourcekey=0) (Last accessed April 23, 
2021).

Table IV.14--Average Stock Efficiencies of Hot-Water Supply Boilers from
                                2025-2050
------------------------------------------------------------------------
                          Year                            Efficiency (%)
------------------------------------------------------------------------
2025....................................................            91.5
2030....................................................            93.1
2035....................................................            94.2
2040....................................................            94.8
2045....................................................            95.1
2050....................................................            95.3
------------------------------------------------------------------------

G. Discussion of Other Comments Received

    In response to the August 2019 RFI, DOE received several comments 
in support of the current efficiency standard. BWC stated that the 
current efficiency requirement (a minimum insulation value of R-12.5) 
is an appropriate baseline efficiency level. (BWC, No. 5 at p. 2) 
Similarly, AHRI recommended that DOE maintain the current minimum 
insulation requirement of R-12.5. (AHRI, No. 6 at p. 2) BWC and A.O. 
Smith also said that there have not been significant market changes 
since their last energy conservation standard change and that a revised 
standard would not result in significant energy savings. (BWC, No. 5 at 
p. 2; and A.O. Smith, No. 8 at p. 2)
    Additionally, BWC submitted comments related to the proposed 
manufacturer mark-up and the distribution channels used to characterize 
the UFHWST market in the August 2019 RFI. (BWC, No. 5 at p. 2) A.O. 
Smith commented that the majority of UFHWSTs are sold as replacement 
units and stated that major redesigns of existing product lines are 
very uncommon and potentially cost-prohibitive. (A.O. Smith, No. 8 at 
p. 2)
    As discussed previously, certain economic analyses were not 
conducted for this NOPD because it was determined they would be of 
limited use due to the lack of data and high degree of uncertainty 
regarding the inputs to those analyses. Furthermore, an MIA was also 
not conducted because of the lack of ``clear and convincing'' evidence 
that amended standards would be economically justified or result in 
significant conservation of energy. If DOE later determines that 
amended standards are warranted, these comments will be revisited.

V. Analytical Results and Conclusions

    The following section addresses the results from DOE's analyses 
with respect to the considered energy conservation standards for 
UFHWSTs. It addresses the ELs examined by DOE and the projected site 
energy savings of each of these levels. As discussed previously, 
certain economic analyses were not conducted for this NOPD because it 
was determined they would be of limited value due to the lack of data 
and high degree of uncertainty of the inputs to those analyses.

A. National Impact Analysis

    This section presents DOE's estimates of the site NES that would 
result from each of the ELs considered as potential amended standards.
1. Significance of Energy Savings
    To estimate the energy savings attributable to potential amended 
standards for UFHWSTs, DOE compared their energy consumption under the 
no-new-standards case to their anticipated energy consumption under 
each EL. The savings are measured over the entire lifetime of equipment 
purchased in the 30-year period that begins in the year of anticipated 
compliance with amended standards (2025-2054). Table V.1 presents DOE's 
projections of the site NES for each EL considered for UFHWSTs. The 
savings were calculated using the approach described in section IV.C of 
this document.

 Table V.1--Cumulative National Energy Savings for UFHWSTs; 30 Years of
                                Shipments
                               [2025-2054]
------------------------------------------------------------------------
                                                      Efficiency level
                                                   ---------------------
                                                        1          2
------------------------------------------------------------------------
Site Energy (quads)...............................      0.011      0.017
Percent Savings Over Baseline (%).................        15%        26%
------------------------------------------------------------------------

    OMB Circular A-4 \32\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this proposed 
determination, DOE undertook a sensitivity analysis using 9 years, 
rather than 30 years, of equipment shipments. The choice of a 9-year 
period is a proxy for the timeline in EPCA for the review of certain 
energy conservation standards and potential revision of and compliance 
with such revised standards.\33\ The review timeframe established in 
EPCA is generally not synchronized with the equipment lifetime, 
equipment manufacturing cycles, or other factors specific to UFHWSTs. 
Thus, such results are presented for informational purposes only and 
are not indicative of any change in DOE's analytical methodology. The 
NES sensitivity analysis results based on a 9-year analytical period 
are presented in Table V.2. The impacts are counted over the lifetime 
of UFHWSTs purchased in 2025 through 2033.
---------------------------------------------------------------------------

    \32\ U.S. Office of Management and Budget, Circular A-4: 
Regulatory Analysis (Sept. 17, 2003) (Available at: https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/).
    \33\ Under 42 U.S.C. 6313(a)(6)(C)(i) and (iv), EPCA requires 
DOE to review its standards for covered ASHRAE equipment every 6 
years, and it requires a 3-year period after any new standard is 
promulgated before compliance is required, except that in no case 
may any new standards be required within 6 years of the compliance 
date of the previous standards. If DOE makes a determination that 
amended standards are not needed, it must conduct a subsequent 
review within three years following such a determination. (42 U.S.C. 
6313(a)(6)(C)(iii)(II)) Furthermore, if ASHRAE acts to amend ASHRAE 
Standard 90.1 for any of the enumerated equipment covered by EPCA, 
DOE is triggered to consider and adopt the amended ASHRAE levels, 
unless the Department has clear and convincing evidence to support 
more-stringent standard levels, which would result in significant 
additional energy savings and be technologically feasible and 
economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) If DOE adopts 
the amended ASHRAE levels, compliance with amended Federal energy 
conservation standards would be required either two or three years 
after the effective date of the ASHRAE Standard 90.1 amendments 
(depending upon the equipment type in question). However, if DOE 
adopts more-stringent standards pursuant to the ASHRAE trigger, 
compliance with such standards would be required four years after 
publication of a final rule. (42 U.S.C. 6313(a)(6)(D)) As DOE is 
evaluating the need to amend the standards, the sensitivity analysis 
is based on the review timeframe associated with amended standards. 
While adding a 6-year review to the 3-year compliance period adds up 
to 9 years, DOE notes that it may undertake reviews at any time 
within the 6-year period and that the 3-year compliance date may 
yield to the 6-year backstop. A 9-year analysis period may not be 
appropriate given the variability that occurs in the timing of 
standards reviews and the fact that for some equipment, the 
compliance period may be something other than 3 years.

 Table V.2--Cumulative National Energy Site Savings for UFHWSTs; 9 Years
                              of Shipments
                               [2025-2034]
------------------------------------------------------------------------
                                                      Efficiency level
                                                   ---------------------
                                                        1          2
------------------------------------------------------------------------
Site Energy (quads)...............................      0.003      0.005
Percent Savings Over Baseline (%).................        15%        26%
------------------------------------------------------------------------

2. Net Present Value of Consumer Costs and Benefits
    As discussed in section IV.D of this document, increasing the size 
of

[[Page 30815]]

UFHWSTs could necessitate alterations to doorways and mechanical rooms 
in certain replacement installations in order to get an UFHWST to its 
installation destination. Further, due to significant uncertainties 
regarding the costs of these alterations and the lack of data 
indicating the likelihood of such alterations being required, at this 
time, DOE is unable to estimate typical installation costs of UFHWSTs. 
Therefore, any analysis conducted by DOE regarding the LCC or PBP would 
be of limited value because of the lack of data and high degree of 
uncertainty of the inputs to those analyses, and as a result, DOE did 
not estimate the NPV of consumer costs and benefits.

B. Proposed Determination

    After carefully considering the comments on the August 2019 RFI and 
the available data and information, DOE has tentatively determined that 
the energy conservation standards for UFHWSTs do not need to be 
amended, for the reasons explained in the paragraphs immediately 
following. DOE will consider all comments received on this proposed 
determination prior to issuing the next document in this rulemaking 
proceeding.
    EPCA specifies that for any commercial and industrial equipment 
addressed under 42 U.S.C. 6313(a)(6)(A)(i), including UFHWSTs, DOE may 
prescribe an energy conservation standard more stringent than the level 
for such equipment in ASHRAE Standard 90.1 only if ``clear and 
convincing evidence'' shows that a more-stringent standard would result 
in significant additional conservation of energy and is technologically 
feasible and economically justified. (42 U.S.C. 6313(a)(6)(C)(i); 42 
U.S.C. 6313(a)(6)(A)(ii)(II)) The ``clear and convincing'' evidentiary 
threshold applies both when DOE is triggered by ASHRAE action and when 
DOE conducts a six-year- lookback rulemaking, with the latter being the 
basis for the current proceeding.
    Because an analysis of potential cost-effectiveness and energy 
savings first require an evaluation of the relevant technology, DOE 
first discusses the technological feasibility of amended standards. DOE 
then evaluates the energy savings potential and cost-effectiveness of 
potential amended standards.
1. Significant Conservation of Energy
    EPCA also mandates that DOE consider whether amended energy 
conservation standards for UFHWSTs would result in result in 
significant additional conservation of energy. (42 U.S.C. 
6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)(ii)(II))
    In the present case, DOE estimates that amended standards for 
UFHWST would result in energy savings of 0.011 quads at EL 1 and 0.017 
quads at EL 2 (the max-tech level) over a 30-year analysis period 
(2025-2054), as realized by the connected hot-water supply boiler. 
However, as discussed in section IV.C.3 of this document, DOE has been 
unable to validate the results of the thermal loss model used for its 
analysis of energy savings, and consequently, there is considerable 
uncertainty regarding the accuracy and validity of the projected energy 
savings generated by that calculated model. Thus, DOE has tentatively 
determined that it lacks clear and convincing evidence that amended 
energy conservation standards for UFHWSTs would result in significant 
additional conservation of energy. (See results in Table V.1.)
2. Technological Feasibility
    EPCA mandates that DOE consider whether amended energy conservation 
standards for UFHWSTs would be technologically feasible. (42 U.S.C. 
6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)(ii)(II)) DOE has tentatively 
determined that increasing the thickness of insulation by up to 1 inch 
would improve the efficiency of UFHWSTs. As discussed in section IV.B.1 
of this document, this increase in insulation thickness can be achieved 
for jacketed UFHWSTs without resulting in a decrease in the insulative 
properties of the foam. However, the potential for a decrease in 
insulative value of foam as the thickness increases above 3 inches 
thick, which results from changes in foam density, adds uncertainty to 
the R-values achievable by higher levels of increased insulation 
thicknesses. Increasing the thickness of insulation by up to 1 inch is 
achievable with the same insulation processes currently used in 
commercially-available jacketed UFHWSTs, and, therefore, would be 
technologically feasible. (See section IV.A.3 of this document for 
further information.) Hence, DOE has tentatively determined that 
amended energy conservation standards for UFHWSTs would be 
technologically feasible.
3. Economic Justification
    In determining whether a standard is economically justified, the 
Secretary must determine whether the benefits of the standard exceed 
its burdens, considering to the greatest extent practicable the seven 
statutory factors discussed previously (see section II.A of this 
document). (42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(B)(ii)(I)-
(VII))
    One of those seven factors is the savings in operating costs 
throughout the estimated average life of the product in the type (or 
class) compared to any increase in the price, initial charges, or 
maintenance expenses of the products that are likely to result from the 
standard. (42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(B)(ii)(II)) 
This factor is typically assessed using the LCC and PBP analysis, as 
well as the NPV. However, as discussed in sections IV.D and V.A.2 of 
this document, DOE was unable to calculate the LCC, PBP, and NPV of 
amended standards, because significant uncertainties in the inputs to 
these analyses would result in significant uncertainties in the 
results. Consequently, DOE could not develop economic analyses that 
would provide ``clear and convincing'' evidence that amended standards 
are economically justified.
4. Summary
    Based on the reasons stated in the foregoing discussion, DOE is 
proposing to determine that the energy conservation standards for 
unfired hot water storage tanks do not need to be amended, having 
initially determined that it lacks ``clear and convincing'' evidence 
that amended standards would be economically justified or result in 
significant additional conservation of energy. DOE will consider and 
respond to all comments received on this proposed determination in 
issuing any final determination.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
proposed determination does not constitute a ``significant regulatory 
action'' under section 3(f) of Executive Order (E.O.) 12866, 
``Regulatory Planning and Review,'' 58 FR 51735 (Oct. 4, 1993). 
Accordingly, this action was not subject to review under the Executive 
Order by the Office of Information and Regulatory Affairs (OIRA) at 
OMB.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (IRFA) for 
any rule that by law must be proposed for public comment, unless the 
agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a

[[Page 30816]]

substantial number of small entities. As required by E.O. 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).
    The Small Business Administration (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 size standards and codes are established by the 2017 North American 
Industry Classification System (NAICS).
    Unfired hot water storage tank manufacturers are classified under 
NAICS code 333318, ``Other Commercial and Service Industry Machinery 
Manufacturing.'' The SBA sets a threshold of 1,000 employees or fewer 
for an entity to be considered as a small business in this category. 
DOE has conducted a focused inquiry into small business manufacturers 
of the equipment covered by this rulemaking. The Department used 
available public information to identify potential small manufacturers. 
DOE accessed the Compliance Certification Database \34\ to create a 
list of companies that import or otherwise manufacture the unfired hot 
water storage tanks covered by this proposal. Using these sources, DOE 
identified a total of 48 distinct manufacturers of unfired hot water 
storage tanks. Of these manufacturers, DOE identified 37 manufacturers 
that are potential small businesses.
---------------------------------------------------------------------------

    \34\ U.S. Department of Energy Compliance Certification 
Management System, available at: https://www.regulations.doe.gov/ccms.
---------------------------------------------------------------------------

    DOE reviewed this proposed determination under the provisions of 
the Regulatory Flexibility Act and the policies and procedures 
published on February 19, 2003. Because DOE is proposing not to amend 
standards for UFHWSTs, if adopted, the determination would not amend 
any energy conservation standards. On the basis of the foregoing, DOE 
certifies that the proposed determination, if adopted, would not have a 
``significant economic impact on a substantial number of small 
entities.'' Accordingly, DOE has not prepared an IRFA for this proposed 
determination. DOE will transmit this 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).

C. Review Under the Paperwork Reduction Act

    This proposed determination, which proposes to determine that 
amended energy conservation standards for UFHWSTs are unneeded under 
the applicable statutory criteria, would impose no new informational or 
recordkeeping requirements. Accordingly, OMB clearance is not required 
under the Paperwork Reduction Act. (44 U.S.C. 3501 et seq.)

D. Review Under the National Environmental Policy Act of 1969

    DOE is analyzing this proposed action in accordance with the 
National Environmental Policy Act of 1969 (NEPA) and DOE's NEPA 
implementing regulations (10 CFR part 1021). DOE's regulations include 
a categorical exclusion for actions which are interpretations or 
rulings with respect to existing regulations. 10 CFR part 1021, subpart 
D, appendix A4. DOE anticipates that this action qualifies for 
categorical exclusion A4 because it is an interpretation or ruling in 
regard to an existing regulation and otherwise meets the requirements 
for application of a categorical exclusion. See 10 CFR 1021.410. DOE 
will complete its NEPA review before issuing the final action.

E. Review Under Executive Order 13132

    E.O. 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 determination 
and has tentatively 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 equipment that is the subject of this proposed 
determination. States can petition DOE for exemption from such 
preemption to the extent, and based on criteria, set forth in EPCA. 
(See 42 U.S.C. 6316(a) and (b); 42 U.S.C. 6297) As this proposed 
determination would not amend the standards for UFHWSTs, there is no 
impact on the policymaking discretion of the States. Therefore, no 
action is required by E.O. 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of E.O. 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 E.O. 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 determination meets 
the relevant standards of E.O. 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a

[[Page 30817]]

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 
https://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    DOE examined this proposed determination according to UMRA and its 
statement of policy and determined that the proposed determination does 
not contain a Federal intergovernmental mandate, nor is it expected to 
require expenditures of $100 million or more in any one year by State, 
local, and Tribal governments, in the aggregate, or by the private 
sector. As a result, the analytical requirements of UMRA do not apply.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This proposed determination 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.

I. Review Under Executive Order 12630

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

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

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review 
most disseminations of information to the public under 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). Pursuant to OMB Memorandum M-19-15, Improving 
Implementation of the Information Quality Act (April 24, 2019), DOE 
published updated guidelines which are available at: https://www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has 
reviewed this NOPD under the OMB and DOE guidelines and has concluded 
that it is consistent with applicable policies in those guidelines.

K. Review Under Executive Order 13211

    E.O. 13211, ``Actions Concerning Regulations That Significantly 
Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 (May 22, 
2001), requires Federal agencies to prepare and submit to OIRA at OMB, 
a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgates or is expected to lead to promulgation of a 
final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor Executive 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 proposed determination, which does not propose to amend energy 
conservation standards for UFHWSTs, 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 at OIRA. Therefore, it is not a significant energy 
action, and accordingly, DOE has not prepared a Statement of Energy 
Effects.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 
2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
the agency reasonably can determine will have, or does have, a clear 
and substantial impact on important public policies or private sector 
decisions.'' Id. at 70 FR 2667.
    In response to OMB's Bulletin, DOE conducted formal peer reviews of 
the energy conservation standards development process and the analyses 
that are typically used and has prepared Peer Review report pertaining 
to the energy conservation standards rulemaking analyses.\35\ 
Generation of this report involved a rigorous, formal, and documented 
evaluation using objective criteria and qualified and independent 
reviewers to make a judgment as to the technical/scientific/business 
merit, the actual or anticipated results, and the productivity and 
management effectiveness of programs and/or projects. DOE has 
determined that the peer-reviewed analytical process continues to 
reflect current practice, and the Department followed that process for 
considering amended energy conservation standards in the case of the 
present action.
---------------------------------------------------------------------------

    \35\ ``Energy Conservation Standards Rulemaking Peer Review 
Report'' (2007) (Available at: https://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review- 
report-0).
---------------------------------------------------------------------------

VII. Public Participation

A. Participation in the Webinar

    The time and date of the webinar are listed in the DATES section at 
the beginning of this document. Webinar registration information, 
participant instructions, and information about the capabilities 
available to webinar participants will be published on DOE's

[[Page 30818]]

website: https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=36&action=viewlive. Participants are 
responsible for ensuring their systems are compatible with the webinar 
software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has an interest in the topics addressed in this 
proposed rulemaking, or who is representative of a group or class of 
persons that has an interest in these issues, may request an 
opportunity to make an oral presentation at the webinar. Such persons 
may submit requests to speak by email to the Appliance and Equipment 
Standards Program, [email protected]. Persons who 
wish to speak should include with their request a computer file in 
WordPerfect, Microsoft Word, PDF, or text (ASCII) file format that 
briefly describes the nature of their interest in this rulemaking and 
the topics they wish to discuss. Such persons should also provide a 
daytime telephone number where they can be reached.
    Persons requesting to speak should briefly describe the nature of 
their interest in this proposed determination and provide a telephone 
number for contact. DOE requests persons selected to make an oral 
presentation to submit an advance copy of their statements at least two 
weeks before the webinar. At its discretion, DOE may permit persons who 
cannot supply an advance copy of their statement to participate, if 
those persons have made advance alternative arrangements with the 
Building Technologies Office. As necessary, requests to give an oral 
presentation should ask for such alternative arrangements.

C. Conduct of the Webinar

    DOE will designate a DOE official to preside at the webinar and may 
also use a professional facilitator to aid discussion. The meeting will 
not be a judicial or evidentiary-type public hearing, but DOE will 
conduct it in accordance with section 336 of EPCA (42 U.S.C. 6306). A 
court reporter will be present to record the proceedings and prepare a 
transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the webinar. There shall not be discussion of proprietary information, 
costs or prices, market share, or other commercial matters regulated by 
U.S. anti-trust laws. After the webinar and until the end of the 
comment period, interested parties may submit further comments on the 
proceedings and any aspect of the proposed determination.
    The webinar will be conducted in an informal, conference style. DOE 
will present summaries of comments received before the webinar, allow 
time for prepared general statements by participants, and encourage all 
interested parties to share their views on issues affecting this 
proposed determination. Each participant will be allowed to make a 
general statement (within time limits determined by DOE), before the 
discussion of specific topics. DOE will permit, as time permits, other 
participants to comment briefly on any general statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to this proposed determination. The official 
conducting the webinar will accept additional comments or questions 
from those attending, as time permits. The presiding official will 
announce any further procedural rules or modification of the above 
procedures that may be needed for the proper conduct of the webinar.
    A transcript of the webinar will be included in the docket, which 
can be viewed as described in the Docket section at the beginning of 
this NOPD. In addition, any person may buy a copy of the transcript 
from the transcribing reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed determination no later than the date provided in the DATES 
section at the beginning of this proposed determination. Interested 
parties may submit comments, data, and other information using any of 
the methods described in the ADDRESSES section at the beginning of this 
document.
    Submitting comments via https://www.regulations.gov. The https://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 https://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 
https://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 https://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 https://www.regulations.gov provides after you have successfully uploaded your 
comment.
    Submitting comments via email. Comments and documents submitted via 
email also will be posted to https://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. With this instruction followed, 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. No telefacsimiles (faxes) will 
be accepted.
    Comments, data, and other information submitted to DOE

[[Page 30819]]

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 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. 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).

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposed 
determination, DOE is particularly interested in receiving comments and 
views of interested parties concerning the following issues:
    (1) DOE requests data and information related to achievable R-
values of polyurethane foam insulation on jacketed UFHWSTs at 
thicknesses above 3 inches. DOE also seeks comment on its understanding 
of the difficulties associated with applying more than 3 inches of foam 
to jacketed UFHWSTs.
    (2) DOE seeks comment on the considered efficiency levels analyzed 
for UFHWSTs. Additionally, DOE seeks comment on its assumption that 
polyurethane foam has an R-value per inch of 6.25, up to a maximum 
thickness of 3 inches.
    (3) DOE requests comment on the inputs and assumptions used in its 
engineering analysis. In particular, DOE requests input on its choice 
of representative volumes, its assumptions about the typical coverage 
of various insulation materials, and its estimated R-values for each 
insulation material at each EL considered.
    (4) DOE requests comment on the appropriateness of its assumption 
regarding the use of a constant internal water temperature of 140 
[deg]F.
    (5) DOE requests comment on its assumption regarding the typical 
ambient temperatures for UFHWSTs installed indoors and outdoors.
    (6) DOE requests comment on its assumption that 10 percent of all 
UFHWST would be installed outdoors. DOE requests information on the 
typical capacities and R-values of outdoor equipment.
    (7) DOE requests comment on its assumption that outdoor 
installations would be limited to climate zones 1A, 2A, and 2B. DOE 
requests information or data on the fraction of installations that 
occur within these, or other, climate zones.
    (8) DOE requests comment on its Tank Thermal Loss Model.
    (9) DOE requests data and information which can be used to estimate 
installation costs of UFHWSTs with modified dimensions.
    (10) DOE requests information and data characterizing the types of 
buildings where installation difficulties are likely to occur and to 
lead to increased installation cost, as well as the frequency with 
which such installation problems may arise.
    (11) DOE requests information and data characterizing the average 
installation costs for UFHWSTs at all different storage volumes.
    (12) DOE requests information and data characterizing the 
circumstances that would drive the decision to potentially restructure 
existing building spaces, including doorways and mechanical rooms, when 
installing a replacement UFHWST. For example, is the decision driven by 
a minimum building code requirement for door openings?
    (13) DOE requests comments generally regarding its stock analysis 
for UFHWSTs.
    (14) DOE requests comment regarding its assumption that there would 
be only one UFWHST per building.
    (15) DOE requests comment regarding its disaggregation of UFHWST 
stock by sector.
    (16) DOE requests comment on its assumption that UFHWSTs are not 
used for industrial process hot water storage.
    (17) DOE requests comment on its assumption of a 12-year lifetime 
for UFHWSTs similar to commercial electric hot water storage tanks.
    (18) DOE requests comment on its use of AEO 2021 trends as a scaler 
to project shipments to new construction.
    (19) DOE requests comment on its distribution of shipments by 
storage volume, and on its assumption that the distribution of 
shipments by storage volume does not change over time.
    (20) DOE requests comment regarding its applied efficiency 
distribution that 99 percent of all units sold are currently at 
baseline (R-12.5).

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this 
notification of proposed determination.

Signing Authority

    This document of the Department of Energy was signed on June 3, 
2021, by Kelly Speakes-Backman, Principal Deputy Assistant Secretary 
and Acting 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 June 3, 2021.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2021-11957 Filed 6-9-21; 8:45 am]
BILLING CODE 6450-01-P