[Federal Register Volume 87, Number 100 (Tuesday, May 24, 2022)]
[Rules and Regulations]
[Pages 31359-31384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-11128]



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  Federal Register / Vol. 87, No. 100 / Tuesday, May 24, 2022 / Rules 
and Regulations  

[[Page 31359]]



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: Final determination.

-----------------------------------------------------------------------

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 be 
technologically feasible and economically justified, and would result 
in significant additional energy savings. In this final determination, 
DOE determines that the energy conservation standards for UFHWSTs do 
not need to be amended. DOE has determined 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.

DATES: The effective date of this final determination is July 25, 2022.

ADDRESSES: The docket for this rulemaking, which includes Federal 
Register notices, public meeting attendee lists and transcripts, 
comments, and other supporting documents/materials, is available for 
review at www.regulations.gov. All documents in the docket are listed 
in the www.regulations.gov index. However, not all documents listed in 
the index may be publicly available, such as information that is exempt 
from public disclosure.
    The docket web page can be found at 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.
    For further information on how to review the docket, contact the 
Appliance and Equipment Standards Program staff at (202) 287-1445 or by 
email: [email protected].

FOR FURTHER INFORMATION CONTACT: Ms. Julia Hegarty, 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: (240) 597-6737. 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].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Synopsis of the Final Determination
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking 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. Economic Impact on Manufacturers and Consumers
    2. Savings in Operating Costs Compared to Increase in Price (LCC 
and PBP)
    3. Energy Savings
    4. Lessening of Utility or Performance of Equipment
    5. Impact of Any Lessening of Competition
    6. Need for National Energy Conservation
    7. Other Factors
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Scope of Coverage and Equipment Classes
    2. Technology Options
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Efficiency Analysis
    2. Representative Equipment for Analysis
    3. Cost Analysis
    D. 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
    E. Life-Cycle Cost and Payback Period Analysis
    1. Installation Cost
    2. Annual Energy Consumption
    F. 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
    5. Additional Sources of Uncertainty
    G. National Impact Analysis
    1. National Energy Savings
    2. Product Lifetime
    3. Energy Efficiency Distribution in the No-New-Standards Case
    4. Hot Water Supply Boiler Efficiency Trend
V. Analytical Results and Conclusions
    A. National Impact Analysis
    1. Significance of Energy Savings
    2. Net Present Value of Consumer Costs and Benefits
    B. Final Determination
    1. Technological Feasibility
    2. Significant Conservation of Energy
    3. Economic Justification
    4. Summary
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act of 1995
    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
    M. Congressional Notification
VII. Approval of the Office of the Secretary

[[Page 31360]]

I. Synopsis of the Final 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 rulemaking. 
(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), which reflects the last statutory amendments that impact 
Parts A and A-1 of EPCA.
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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 6 years to determine 
whether those standards need to be amended. (42 U.S.C. 6313(a)(6)(A)-
(C)) DOE is publishing this final determination regarding the energy 
conservation standards for UFHWSTs under EPCA's 6-year-lookback 
authority. (42 U.S.C. 6313(a)(6)(C))
    For this final 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 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 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 final determination, as well as some of the relevant 
historical background related 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, section 
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 rulemaking. (42 U.S.C. 
6311(1)(K))
    The energy conservation program under EPCA 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 efficiency requirements for covered equipment 
established under EPCA generally supersede State laws and regulations 
concerning energy conservation testing, labeling, and standards. (42 
U.S.C. 6316(a) and 42 U.S.C. 6316(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: (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) making 
representations about the energy use or efficiency of that 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

[[Page 31361]]

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 products subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered equipment that are likely to result from the standard;
    (3) The total projected amount of energy savings likely to result 
directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
product likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy conservation; and
    (7) Other factors the Secretary of Energy considers relevant.
    (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII) 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 6 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 
3 years after the issuance of a final determination not to amend 
standards, DOE must publish either a notice of determination that 
standards for the product do not need to be amended, or a NOPR 
including new proposed energy conservation standards (proceeding to a 
final rule, as appropriate). (42 U.S.C. 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 final determination in satisfaction of the 6-year-lookback review 
requirement in EPCA, having 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 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 codified at 10 CFR 431.110.
2. History of Standards Rulemaking 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'') in the Federal Register 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 subsequently published a notice of proposed 
determination (``NOPD'') in the Federal Register on June 10, 2021 
(``June 2021 NOPD''), wherein DOE tentatively determined that the 
energy conservation standards for UFHWSTs do not need to be amended.
    DOE received six comments in response to the June 2021 NOPD from 
the interested parties listed in Table II.1.

  Table II.1--Interested Parties Providing Written Comments on the June
                            2021 UFHWSTs NOPD
------------------------------------------------------------------------
          Commenter(s)               Abbreviation       Commenter type
------------------------------------------------------------------------
Aarin King......................  King..............  Individual.
Appliance Standards Awareness     Joint Commenters..  Efficiency
 Project, American Council for                         Organizations.
 an Energy-Efficient Economy,
 Northwest Energy Efficiency
 Alliance.
Bradford White Corporation......  BWC...............  Manufacturer.
Rheem Manufacturing Company.....  Rheem.............  Manufacturer.
A.O. Smith Corporation..........  A.O. Smith........  Manufacturer.
Pacific Gas and Electric Company  CA IOUs...........  Investor-Owned
 (``PG&E''), San Diego Gas and                         Utilities.
 Electric (``SDG&E''), Southern
 California Edison (``SCE'').
------------------------------------------------------------------------


[[Page 31362]]

    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 www.regulations.gov). The references are 
arranged as follows: (Commenter name, comment docket ID number, page 
of that document).
---------------------------------------------------------------------------

III. General Discussion

    DOE developed this final determination after a review of the UFHWST 
market, including product literature and product listings in the DOE 
Compliance Certification Database (``CCD'').\4\ DOE also considered 
oral and written comments, data, and information from interested 
parties that represent a variety of interests. The following discussion 
addresses issues raised by these commenters. BWC, Rheem, and A.O. Smith 
all expressed support for DOE's proposed determination that energy 
conservation standards for UFHWSTs do not need to be amended. (BWC, No. 
14 at p. 1; Rheem, No. 15 at p. 1; A.O. Smith, No. 16 at p. 1) However, 
as discussed in section III.B of this document, the CA IOUs and the 
Joint Commenters encouraged DOE to consider a performance-based test 
procedure for UFHWSTs to address standby loss before proceeding with 
this standards rulemaking. (CA IOUs, No. 17 at p. 2; Joint Commenters, 
No. 13 at p. 1)
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    \4\ The CCD is available at www.regulations.doe.gov/certification-data.
---------------------------------------------------------------------------

A. Product Classes and Scope of Coverage

    When evaluating and establishing 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 final 
determination.

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 degrees-square feet-hours per British 
thermal units (``[deg]F ft\2\ h/Btu''). 10 CFR 431.102.
    In response to the June 2021 NOPD, the CA IOUs and the Joint 
Commenters encouraged DOE to consider a performance-based test 
procedure for UFHWSTs to address standby loss before proceeding with 
this energy conservation standards rulemaking. (CA IOUs, No. 17 at p. 
2; Joint Commenters, No. 13 at p. 1) The CA IOUs stated that 
performance-based standards are preferable to prescriptive standards 
because performance-based standards present a clearer assessment of 
product energy performance, allow purchasers to directly compare 
product efficiencies, and would encourage innovation in terms of new 
methods to reduce heat loss. (CA IOUs, No. 17 at pp. 1-2) Additionally, 
the Joint Commenters stated that the current standard, in terms of 
thermal resistance, does not guarantee that all tank surfaces are 
sufficiently insulated. They suggested that performance-based standards 
would provide a better understanding of actual energy consumption and 
would likely encourage improved methods to reduce heat loss. (Joint 
Commenters, No. 13 at p. 1) In contrast, Rheem recommended that the 
current prescriptive design requirement (i.e., the minimum insulation 
requirement of R-12.5) be retained for UFHWSTs. (Rheem, No. 15 at p. 1)
    As discussed in section II.A of this document, DOE is publishing 
this final determination 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 6 years. (42 U.S.C. 
6313(a)(6)(C)(i)) Because a Federal test procedure for evaluating 
standby loss of UFHWSTs has not been established, DOE has only 
considered potential amended standards based on updating the 
prescriptive design requirement for insulation R-value. DOE will 
consider the merits and feasibility of a performance test in its next 
test procedure rulemaking for UFHWSTs.
    Additionally, in response to the June 2021 NOPD, the CA IOUs 
suggested that DOE clarify the amount of tank surface area that is 
required to be insulated. (CA IOUs, No. 17 at p. 4) Aarin King stated 
that heat travels upward, and, therefore, insulation placement 
requirements should be at the greatest heat loss zones, such as the 
relief valve and fittings on the head of the tank. (King, No. 12 at p. 
1) \5\
---------------------------------------------------------------------------

    \5\ Commenter also provided additional comments regarding heat 
transfer in tanks not applicable to this rulemaking.
---------------------------------------------------------------------------

    As stated, the energy conservation standard for UFHWSTs specifies a 
minimum insulation rating. The energy conservation standard does not 
further specify the manner in which insulation is applied to a UFHWST. 
There are a wide variety of tank configurations (including the number, 
shape, and location of ports and other fittings) in equipment currently 
on the market, and the relative amount of tank surface area that is 
practical to insulate to R-12.5 varies between tanks. Further, DOE is 
not aware of an industry standard that would allow for evaluation of 
insulation uniformity at this time. Therefore, DOE is not imposing an 
insulation placement requirement at this time but will continue to 
consider the issue in the future.
    Additionally, in response to the June 2021 NOPD, Rheem suggested 
that focusing on insulation of field-installed plumbing may provide 
more significant energy savings than added tank insulation. The 
commenter stated that there are diminishing returns from increasing 
insulation thicknesses, and consequently, fittings and piping 
contribute to a significantly greater portion of the overall standby 
losses as tank insulation is increased. (Rheem, No. 15 at p. 2) In 
response to Rheem, DOE notes that it does not have authority to 
regulate field-installed plumbing insulation and did not

[[Page 31363]]

consider such approach for this analysis.

C. Technological Feasibility

1. General
    In evaluating potential amendments to energy conservation 
standards, DOE conducts a screening analysis based on information 
gathered through a market and technology assessment of all current 
technology options and working prototype designs that could improve the 
efficiency of the products or equipment that are the subject of the 
rulemaking. As the first step in such an analysis, DOE develops a list 
of technology options for consideration in consultation with 
manufacturers, design engineers, and other interested parties. DOE then 
determines which of those means for improving efficiency are 
technologically feasible. In general, DOE considers technologies 
incorporated in commercially-available products or in working 
prototypes to be technologically feasible. See generally 10 CFR 431.4; 
10 CFR part 430, subpart C, appendix A, section 6(b)(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(b)(3)(ii)-(v) and 7(b)(2)-(5). Section IV.B 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 
rulemaking.
2. Maximum Technologically Feasible Levels
    As when DOE proposes to adopt an amended standard for a type or 
class of covered equipment, 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 rulemaking are described in section IV.C of this 
final determination.

D. Energy Savings

1. Determination of Savings
    For each efficiency level (``EL'') evaluated, DOE projected energy 
savings from application of the efficiency level to UFHWSTs purchased 
in the 30-year period that begins in the assumed year of compliance 
with potential amended standards (2025-2054). The savings are measured 
over the entire lifetime of UFHWSTs purchased in the 30-year analysis 
period. DOE quantified the energy savings attributable to each 
efficiency level 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 the subject equipment would likely evolve in the absence of 
amended energy conservation standards.
    DOE used a simplified national impact analysis (``NIA'') 
spreadsheet model to estimate national energy savings (``NES'') from 
potential amended standards for UFHWSTs. The simplified NIA for this 
analysis quantifies the potential energy savings from potential 
efficiency improvements for UFHWSTs; 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.G 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. DOE also calculates NES 
in terms of full-fuel-cycle (``FFC'') energy savings. The FFC metric 
includes the energy consumed in extracting, processing, and 
transporting primary fuels (i.e., coal, natural gas, petroleum fuels), 
and, thus, presents a more complete picture of the impacts of energy 
conservation standards.\6\ DOE's approach is based on the calculation 
of an FFC multiplier for each of the energy types used by covered 
products or equipment. For more information on FFC energy savings, see 
section IV.G.1 of this document.
---------------------------------------------------------------------------

    \6\ The FFC metric is discussed in DOE's statement of policy and 
notice of policy amendment. 76 FR 51281 (August 18, 2011), as 
amended at 77 FR 49701 (August 17, 2012).
---------------------------------------------------------------------------

2. Significance of Savings
    In determining whether amended standards are needed for covered 
equipment addressed by ASHRAE Standard 90.1, DOE must determine whether 
such action would 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))
    The significance of energy savings offered by a new or amended 
energy conservation standard cannot be determined without knowledge of 
the specific circumstances surrounding a given rulemaking. For example, 
the United States has now rejoined the Paris Agreement on February 19, 
2021. As part of that agreement, the United States has committed to 
reducing GHG emissions in order to limit the rise in mean global 
temperature.\7\ Additionally, some covered products and equipment have 
most of their energy consumption occur during periods of peak energy 
demand. The impacts of these products on the energy infrastructure can 
be more pronounced than products with relatively constant demand.
---------------------------------------------------------------------------

    \7\ See Executive Order 14008, ``Tackling the Climate Crisis at 
Home and Abroad,'' 86 FR 7619 (Feb. 1, 2021).
---------------------------------------------------------------------------

    Accordingly, DOE evaluates the significance of energy savings on a 
case-by-case basis. DOE has estimated the potential full-fuel cycle 
energy savings from an amended energy conservation standard for UFHWSTs 
at max-tech to be 0.058 quadrillion British thermal units (``quads'') 
over a 30-year analysis period (2025-2054). However, as explained in 
section V.B.2 of this document, DOE has encountered significant 
uncertainties related to its assessment of the energy savings potential 
of more-stringent amended energy conservation standards for UFHWSTs.

E. Economic Justification

    As noted previously, EPCA provides seven factors to be evaluated in 
determining whether a potential energy conservation standard is 
economically justified. (See 42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII)) The 
following sections discuss how DOE has addressed each of those seven 
factors in this rulemaking.
1. Economic Impact on Manufacturers and Consumers
    In determining the impacts of potential amended standards on 
manufacturers, DOE typically conducts a manufacturer impact analysis 
(``MIA''). In conducting an MIA, DOE uses an annual cash-flow approach 
to determine the quantitative impacts between the no-new-standards and 
the potential amended standards cases. The industry-wide impacts 
analyzed typically include: (1) Industry net present value (``INPV''), 
which values the industry on the basis of expected

[[Page 31364]]

future cash flows; (2) cash flows by year; (3) changes in revenue and 
income; and (4) other measures of impact, as appropriate. DOE has 
determined that the energy conservation standard for UFHWSTs does not 
need to be amended, and, therefore, this final determination has no 
cash-flow impacts on manufacturers. Accordingly, DOE did not conduct an 
MIA for this final determination.
    For individual consumers, measures of economic impact include the 
changes in 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 calculates the national net present value of the consumer costs 
and benefits expected to result from particular standards. DOE also 
evaluates the impacts of potential standards on identifiable subgroups 
of consumers that may be affected disproportionately by a standard. 
However, as discussed in more detail in section IV.E 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 and cost of such alterations when required, 
any analysis conducted by DOE regarding the LCC or PBP would have a 
high degree of uncertainty in terms of the inputs to those analyses. 
Comments received regarding the potential installation cost impacts of 
UFHWSTs due to larger tank dimensions in pursuit of increased 
efficiency for replacement equipment are discussed in section IV.E.1 of 
this document, and the rationale for not conducting the LCC or PBP is 
discussed in more detail in section IV.E.2 of this document. The 
consumer economic impacts which are normally calculated as part of the 
LCC are inputs to DOE's National NPV estimates, but since the 
Department did not conduct an LCC analysis in the present case, DOE was 
unable to estimate the NPV for this final determination.
2. 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 cost (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, equipment 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.E of this document, DOE did not conduct an LCC and PBP 
analysis for this final determination 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.
3. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting 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.G of this document, DOE uses the NIA 
spreadsheet models to project national energy savings.
4. 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 equipment. (42 U.S.C. 6313(a)(6)(B)(ii)(IV)) Because DOE is 
not amending standards for UFHWSTs, the Department has concluded that 
this final determination will not reduce the utility or performance of 
UFHWSTs.
5. 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 standard. (42 U.S.C. 6313(a)(6)(B)(ii)(V)) 
Because DOE did not propose amended standards for UFHWSTs, DOE did not 
transmit a copy of its proposed determination to the Attorney General 
for anti-competitive review.
6. 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 concluded 
that it lacks clear and convincing evidence that amended standards for 
UFHWSTs would result in significant additional conservation of energy 
and be technologically feasible and economically justified, DOE did not 
conduct a utility impact analysis or emissions analysis for this final 
determination.
7. 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 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 the analyses DOE has performed for this 
final

[[Page 31365]]

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 had structured, detailed interviews conducted 
with representative manufacturers. During these interviews, 
engineering, manufacturing, procurement, and financial topics were 
discussed to validate assumptions used in DOE's 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 rulemaking include: (1) A determination of the scope of the 
rulemaking 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 June 2021 NOPD, DOE did not propose to amend the definition 
of UFHWSTs or to divide UFHWSTs into separate equipment classes, 
stating that there was no indication the definition would benefit from 
an amendment or that further delineation of equipment classes was 
justified. 86 FR 30796, 30802 (June 10, 2021). In response to the June 
2021 NOPD, the CA IOUs recommend that DOE explore whether separate 
product classes would remove technical and market barriers to the 
setting of more stringent standards and if it would be feasible to set 
different standards. Similarly, the CA IOUs requested that DOE 
investigate different markets and applications for these different 
types of equipment, stating that rated capacity, along with other 
performance-related features, may justify the recognition of subgroups 
of UFHWSTs as separate equipment classes with differing standards. (CA 
IOUs, No. 17 at p. 2)
    In response, DOE notes that for consumer products, EPCA provides 
that DOE shall specify a level of energy use or efficiency higher or 
lower than that which applies (or would apply) for such type (or class) 
for any group of covered products which have the same function or 
intended use, if the Secretary determines that covered products within 
such group consume a different kind of energy or have a capacity or 
other performance-related feature which other products within such type 
(or class) do not have and such feature justifies a higher or lower 
standard from that which applies (or will apply) to other products 
within such type (or class). (42 U.S.C. 6295(q)(1)) However, there is 
no companion provision to 42 U.S.C. 6295(q)(1) for ASHRAE equipment. In 
addition, DOE continues to find that changes to the definition of 
UFHWST are unnecessary.
    Therefore, in this Final Determination, DOE maintains the 
definition of UFWST and is not dividing UFHWSTs into separate equipment 
classes.
2. Technology Options
    In the June 2021 NOPD, DOE identified several technology options 
that would be expected to improve the efficiency of UFHWSTs. 86 FR 
30796, 30802 (June 10, 2021). These technology options were based on 
manufacturer equipment literature and publicly-available technical 
literature. Specifically, the technologies identified in the June 2021 
NOPD 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)

    In response to the June 2021 NOPD, Rheem commented that some foam 
systems can provide higher R-values but noted that there are variations 
with in-place foam properties such as densities within the cavity from 
the top to the bottom of the tank that will impact insulation 
performance. (Rheem, No. 15 at p. 2)
    In the analysis for this final determination, DOE maintained the 
same set of technology options, which include foam insulation as 
suggested by Rheem.

B. 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 products 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 proprietary technology that represents a unique pathway to 
achieving a given efficiency level, that technology will not be 
considered further due to the potential for monopolistic concerns.

[[Page 31366]]

    10 CFR 431.4; 10 CFR part 430, subpart C, appendix A, sections 
6(b)(3) and 7(b). In sum, 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. The reasons for eliminating any technology are 
discussed in the following sections.
1. Screened-Out Technologies
    In the June 2021 NOPD, DOE did not consider any advanced insulation 
types as a technology option to increase the insulation R-value for 
UFHWSTs. Based on feedback from manufacturers, DOE tentatively 
determined that 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. 
Additionally, DOE is not aware of any UFHWST equipment on the market 
that incorporate aerogels, vacuum panels, or inert gas-filled panels. 
DOE found that 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 applying 
polyurethane foam could limit access to ports or be impractical to 
manufacture. As discussed in the June 2021 NOPD, DOE included a minimum 
amount of insulation other than polyurethane foam around pipes and 
fittings in its analysis of baseline equipment, but it did not consider 
requiring different insulation materials in these regions. For similar 
reasons, DOE did not consider additional insulation coverage around 
pipes and fittings as a technology option for the analysis. 86 FR 
30796, 30803 (June 10, 2021).
    DOE did not receive any comments in response to the June 2021 NOPD 
suggesting any changes to the results of its screening analysis.
2. Remaining Technologies
    In the June 2021 NOPD, DOE retained improved insulation R-value due 
to increased polyurethane foam thickness 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 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). 86 FR 30796, 30803 (June 10, 
2021). DOE did not receive any comments opposing the use of this design 
option, and considered it for the engineering analysis for this final 
determination.

C. 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'').\8\ 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 baseline cost, as well as the incremental cost 
for the equipment at efficiency levels 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 section IV.C.3 of this 
document, the cost analysis was not performed for this final 
determination.
---------------------------------------------------------------------------

    \8\ 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 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 from implementing specific 
design options that have been identified in the technology assessment. 
DOE may also rely on a combination of these two approaches.
    In the June 2021 NOPD, DOE adopted a design-option approach. DOE 
identified very few models of UFHWSTs on the market that are marketed 
with higher insulation levels than the current baseline requirement of 
R-12.5. However, as discussed later in this section, in the interim 
since the publication of the June 2021 NOPD, UFHWSTs have been 
certified in DOE's CCD with R-values up to R-30. Therefore, for the 
current analysis, DOE is using the efficiency-level approach to 
determine the ``max-tech'' efficiency level as the maximum efficiency 
level available on the market. However, DOE is retaining the design-
option approach for setting intermediate efficiency levels because of 
the limited range of R-values among UFHWSTs on the market between the 
baseline and max-tech.
    In response to the June 2021 NOPD, BWC commented that it is 
concerned about foam consistency and quality at thicknesses approaching 
or exceeding 3 inches. BWC stated that it is difficult to ensure that 
the foam would evenly flow circumferentially, as well as vertically, on 
the tank given the size and many features on tanks. BWC asserted that 
this could ultimately compromise perceived efficiency improvements from 
increased foam thicknesses. (BWC, No. 14 at p. 1) Similarly, Rheem 
recognized that some foam systems can provide higher R-values, but the 
commenter pointed out that there are variations with in-place foam 
properties, such as densities within the cavity from the top to the 
bottom of the tank, that will impact insulation performance. (Rheem, 
No. 15 at p. 2) Rheem suggested that applying more than 3 inches of 
polyurethane foam insulation to a jacketed tank is challenging and can 
lead to larger variation with in-place density and foam, which it 
stated would impact insulation quality and contributes to a decrease in 
R-values. Rheem also stated that R-values of 6.25 per inch of 
insulation can be achieved with larger cavities but said that this is 
impractical and costly to manufacture, especially with the highly 
customized tanks and relatively small market production quantities for 
UFHWSTs. (Rheem, No. 15 at pp. 1-2)
    Rheem further stated that there are diminishing returns from 
increasing insulation thicknesses due to the increased surface area and 
heat transfer rate. (Rheem, No. 15 at p. 2). Similarly,

[[Page 31367]]

A.O. Smith stated that in its experience, polyurethane foam insulation 
collapses when expanding in a cavity greater than 3 inches (which in 
turn leads to increased heat loss). The commenter stated that it did 
experience greater reliability when exceeding 3 inches of thickness for 
polyurethane foam insulation by sequentially adding several layers of 
insulation but added that this process came at significant cost, 
including increased curing time, longer manufacturing times, as well as 
increased capital and labor. (A.O. Smith, No. 16 at p. 2) A.O. Smith 
also recommended that the Department engage with the U.S. Environmental 
Protection Agency (``EPA'') and industry moving forward regarding the 
efficacy of polyurethane foam properties, given evolving chemical 
regulations. (A.O. Smith, No. 16 at p. 2)
    Rheem and A.O. Smith also stated that they support the insulation 
thickness levels (up to 3 inches) as well as the R-value per inch 
(6.25) used in DOE's analysis. (Rheem, No. 15 at p. 2; A.O. Smith, No. 
16 at p. 2)
    For each equipment class, DOE generally selects a baseline model as 
a reference point for each class, and measures changes resulting from 
potential energy conservation standards against the baseline. The 
baseline model in each equipment class represents the characteristics 
of equipment typical of that class (e.g., capacity, physical size). 
Generally, a baseline model is one that just meets current energy 
conservation standards, or, if no standards are in place, the baseline 
is typically the most common or least efficient unit on the market.
    Based on its review of publicly-available equipment information and 
feedback from manufacturers, DOE found that 2 inches of polyurethane 
foam insulation provides a level of insulation that meets the current 
insulation requirement, and DOE, therefore, considered this insulation 
thickness as the baseline. As discussed in section IV.B.2 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. As discussed in the June 2021 NOPD, based on feedback from 
manufacturers and its own review of the UFHWST market, improvement in 
R-value as insulation thickness increases beyond 3 inches for jacketed 
tanks is unclear due to the lack of models on the market with thicker 
insulation and manufacturers' feedback that increasing thickness beyond 
3 inches is impractical. Therefore, DOE limited its analysis in the 
June 2021 NOPD to considering only up to 1 additional inch of 
insulation thickness above the baseline insulation level of 2 inches 
(i.e., 3 inches of foam insulation was considered the max-tech 
efficiency level for UFHWSTs). 86 FR 30796, 30804 (June 10, 2021).
    As noted, UFHWSTs are currently certified in DOE's CCD with 
insulation R-values up to R-30. From a review of product literature,\9\ 
DOE found that these products are insulated with polyurethane foam and 
have a stated insulation thickness of 5 inches. Based on the presence 
of these UFHWSTs on the market and their represented R-value, DOE 
updated its analysis from the June 2021 NOPR to use R-30 as the max-
tech level, as this level of insulation has now been demonstrated to be 
technologically feasible.
---------------------------------------------------------------------------

    \9\ See: www.hotwater.com/water-heaters/commercial/storage-tanks/jacketed---hpwh-optimized/ (Last accessed Feb. 21, 2022).
---------------------------------------------------------------------------

    In response to manufacturer concerns that insulation levels beyond 
3 inches would be difficult or impossible to achieve, DOE notes that 
such products are now on the market, demonstrating that they are 
feasible to manufacture. Therefore, DOE has concluded that the R-30 
level is appropriate for consideration in this analysis. The conversion 
costs to produce higher levels of insulation would typically be 
accounted for in the MIA. However, as discussed in section III.E.1 of 
this document, DOE did not complete an MIA for this analysis because 
DOE is not amending standards for UFHWSTs. Similarly, in response to 
A.O. Smith's suggestion that DOE engage with the EPA and industry 
moving forward regarding the efficacy of polyurethane foam properties 
given ever evolving chemical regulations, DOE notes that it is not 
amending standards for UFHWSTs in this final determination but will 
consider the impact of chemical regulations of foam efficacy in future 
rulemakings.
    For the evaluated insulation at a thickness less than the R-30 max-
tech level, DOE estimated an R-value per inch of 6.25 because UFHWSTs 
are typically capable of achieving R-12.5 using 2 inches of insulation. 
For the max-tech level, DOE estimated an R-value per inch of 6.00 based 
on the certified R-value and the insulation thickness specified in 
manufacturer literature, which represents the insulation properties 
demonstrated in the current tanks. The reduction in R-value per inch of 
insulation seen in units with increased insulation thickness 
illustrates the uncertainty associated with improvements in R-value as 
jacket thickness increases. This reduction in R-value at higher 
thicknesses of insulation is also consistent with feedback from 
manufacturers that the R-value per inch of polyurethane foam insulation 
would be uncertain at thicknesses greater than 3 inches. (See 
discussion of comments received earlier in this section.)
    DOE included this updated max-tech efficiency level in its analysis 
in addition to the two efficiency levels considered in the June 2021 
NOPD: R-15.625 and R-18.75, which correspond to 2.5 and 3 inches of 
polyurethane foam insulation, respectively. DOE did not receive any 
comments in response to the June 2021 NOPD suggesting that the 
efficiency levels previously analyzed should be adjusted, and did not 
identify any information that would support adjusting the insulation 
thickness or the assumed R-value per inch at those levels. The 
efficiency levels used in the analysis for this final determination are 
shown in Table IV.1.

             Table IV.1--Efficiency Levels for Representative UFHWSTs Based on Increased Insulation
----------------------------------------------------------------------------------------------------------------
                                                                        R-value per
            Efficiency level                 Insulation thickness         inch of        R-value of insulation
                                              (polyurethane foam)       insulation
----------------------------------------------------------------------------------------------------------------
Baseline--EL0...........................  2 inches..................            6.25  R-12.5.
EL1.....................................  2.5 inches................            6.25  R-15.625.
EL2.....................................  3 inches..................            6.25  R-18.75.
EL3.....................................  5 inches..................             6.0  R-30.
----------------------------------------------------------------------------------------------------------------


[[Page 31368]]

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 to determine appropriate 
representative equipment to analyze. DOE also discussed the appropriate 
representative characteristics with UFHWST manufacturers during 
interviews. For the June 2021 NOPD, DOE determined the dimensions in 
Table IV.2 to be representative of the UFHWST market.

                   Table IV.2--Representative Tank Characteristics Used in the June 2021 NOPD
----------------------------------------------------------------------------------------------------------------
                                                                                    Representative  dimensions
                          Volume range                            Representative -------------------------------
                                                                   volume (gal.)   Height (in.)   Diameter (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
1,001 to 2,000..................................................           1,500             124              60
2,001 to 5,000..................................................           3,500             168              84
>5,000..........................................................           5,000             180              96
----------------------------------------------------------------------------------------------------------------

    In response to the June 2021 NOPD, A.O. Smith suggested alternative 
dimensions for several representative tank sizes. Specifically, it 
recommended a height of 34 inches and a diameter of 24 inches for a 50-
gallon tank, a height of 87 inches and a diameter of 36 inches for a 
375-gallon tank, a height of 100 inches and a diameter of 48 inches for 
a 750-gallon tank, a height of 204 inches and a diameter of 72 inches 
for a 3,500-gallon tank, and a height of 283 inches and a diameter of 
72 inches for a 5,000-gallon tank. A.O. Smith also suggested that tanks 
of 3,500 and 5,000 gallons should be installed horizontally. (A.O. 
Smith, No. 16 at p. 3)
    Rheem recommended that an 80-gallon tank be used instead of a 50-
gallon tank to represent tanks in the 0 to 100 gallon volume range, 
because this volume would better represent commercial applications as 
the predominant installation size. Rheem suggested that 50 gallons is 
more representative of light commercial and some residential 
applications. (Rheem, No. 15 at p. 2) After further reviewing UFHWSTs 
on the market between 0 and 100 gallons, DOE agrees with this comment 
and changed the representative size for this volume range to 80 gallons 
in the analysis for this final determination.
    Rheem also suggested that the diameter and height for an 80-gallon 
tank should be 24 inches and 58 inches, respectively, and suggested 
that the dimensions of the 175-gallon tank should be 67 inches in 
height and 32 inches in diameter. (Rheem, No. 15 at p. 2) Based on a 
review of manufacturer specification sheets for 80-gallon models on the 
market, DOE agrees that Rheem's suggested dimensions for the 80-gallon 
tank are appropriate and has updated its representative dimensions for 
this final determination accordingly. However, based on review of the 
manufacturer specification sheets for other sizes of UFHWSTs on the 
market, DOE did not conclude that the representative dimensions used 
for other volumes of tanks should be changed. These dimensions were 
determined based on DOE's review of the entire market, as well as 
feedback from manufacturers during manufacturer interviews.
    In the June 2021 NOPD, DOE acknowledged comments regarding the 
customized and variable nature of the UFHWST market. 86 FR 30796, 30804 
(June 10, 2021). To account for the wide range of UFHWSTs on the 
market, DOE chose several representative baseline units for analysis. 
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). 
DOE also noted that UFHWSTs can be installed in either a vertical or 
horizontal orientation. As discussed in section IV.D.1.b of this 
document, for the energy use analysis, DOE employed a conservative 
assumption that a tank would always be full of hot water and, 
therefore, did not consider stratification of water temperature inside 
the tank. Under this assumption, installation orientation would not 
have a significant impact on its energy use analysis results. As such, 
DOE included only vertically-oriented units (which are the most common) 
in the representative equipment analyzed. In light of these 
considerations, the characteristics of the representative units 
evaluated (including the change to an 80 gallon unit for the 0-100 
gallon range) are listed in Table IV.3.

                 Table IV.3--Representative Tank Characteristics Used in the Final Determination
----------------------------------------------------------------------------------------------------------------
                                                                                     Representative dimensions
                          Volume range                            Representative -------------------------------
                                                                   volume (gal.)   Height (in.)   Diameter (in.)
----------------------------------------------------------------------------------------------------------------
0 to 100........................................................              80              58              20
101 to 250......................................................             175              65              28
251 to 500......................................................             375              72              42
501 to 1,000....................................................             750             141              42
1,001 to 2,000..................................................           1,500             124              60
2,001 to 5,000..................................................           3,500             168              84
>5,000..........................................................           5,000             180              96
----------------------------------------------------------------------------------------------------------------


[[Page 31369]]

3. Cost Analysis
    The cost analysis portion of the engineering analysis is 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, 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 neither a physical nor catalog teardown 
is feasible (e.g., for tightly integrated products 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 from distributors and other commercial 
channels.
    As discussed in section IV.E of this document, DOE did not conduct 
a cost 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. Accordingly, 
DOE did not generate a cost-efficiency curve, as it would not be 
necessary without an LCC model to feed into.

D. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of UFHWSTs at different efficiencies in 
representative U.S. commercial buildings and industrial facilities, and 
to assess the energy savings potential of increased UFHWST efficiency. 
The energy use analysis estimates the range of energy use of UFHWSTs in 
the field (i.e., as they are actually used by consumers). The energy 
use analysis provides the basis for other analyses DOE performed, 
particularly assessment of the energy savings that could result from 
adoption of amended or new standards.
    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
    As discussed in the June 2021 NOPD, for this determination, DOE 
adapted the thermal loss model described in the technical support 
document (``TSD'') for the commercial water heating (``CWH'') 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.\10\ 86 FR 
30796, 30806 (June 10, 2021). These modifications were introduced to 
capture equipment performance that results from differences in surface 
insulation thickness over different areas of the tank (i.e., insulation 
around fittings and access ports). These differences are described in 
section IV.D.1.a of this document.
---------------------------------------------------------------------------

    \10\ Available at: www.regulations.gov/document?D=EERE-2014-BT-STD-0042=0016, section 5.5.3 (Last accessed: April 8, 2020).
---------------------------------------------------------------------------

    DOE received comment from both the CA IOUs and Rheem on its energy 
use analysis. The CA IOUs suggested that DOE should find alternative 
methods to analyze the energy consumption of UFHWSTs or solicit 
assistance from stakeholders because, they stated that the challenges 
of evaluating the impacts and feasibility of energy efficiency 
standards for UFHWSTs should not prompt DOE to forego updating those 
standards. (CA IOUs, No. 17 at p. 4) In contrast, Rheem stated that the 
Tank Thermal Loss Model was appropriate for this analysis. (Rheem, No. 
15 at p. 3) DOE did not receive any further specific input or 
information from stakeholders on its Tank Thermal Loss Model. After 
again considering the available information, DOE did not identify 
alternative models appropriate for the analysis conducted for this 
determination. Accordingly, DOE has elected to maintain its modeling 
approach for this final determination.
[GRAPHIC] [TIFF OMITTED] TR24MY22.007

Where:
Qhr, j = The hourly heat loss for the UFHWST for each efficiency 
level 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 efficiency level 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 
efficiency level j ([deg]F [middot] ft\2\ [middot] hr/Btu).
a. Tank Surface Area (Ai, j)
    DOE maintained the approach it used in the June 2021 NOPD for this 
final determination, where 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. 86 FR 30796, 30806 (June 10, 2021). 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.

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 
surface surrounding the (uninsulated) fittings.
AAccessPort = Is the sum of all insulated areas of the tank's 
surface devoted to the tank's clean-out 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.

    In response to the June 2021 NOPD, A.O. Smith stated that it has 
not conducted any tests to validate DOE's Tank Thermal Loss Model but 
recommended that any tests conducted to validate the Tank Thermal Loss 
Model must include an uninsulated temperature and pressure relief valve 
installed in a fitting in the top 6 inches of the tank. The commenter 
stated that a temperature and pressure relief valve is a mandatory 
safety device that will be installed on each UFHWST and is not

[[Page 31370]]

permitted by most applicable safety codes to be covered. (A.O. Smith, 
No. 16 at p. 4) In response and as discussed in this section, DOE's 
Tank Thermal Loss Model accounts for small areas of uninsulated tank to 
reflect losses through adjoining pipes or fittings at each of several 
ports. DOE maintained the quantity of uninsulated ports that were 
discussed in the June 2021 NOPD, which specifically included reference 
to a temperature and pressure relief valve. 86 FR 30796, 30805 (June 
10, 2021).
b. Tank Internal Water Temperature (Ti)
    For the June 2021 NOPD 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. 
86 FR 30796, 30806 (June 10, 2021). (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 reasoned 
that similar conditions would be appropriate for UFHWSTs as for 
storage-type CWH equipment in standby mode. Id. 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. Id.
    DOE received comments from a number of stakeholders regarding the 
assumed constant internal water temperature of 140 [deg]F. The CA IOUs 
commented that many common commercial hot water applications require 
temperatures higher than 140 [deg]F and stated that the Centers for 
Disease Control and Prevention notes in its Environmental Infection 
Control Guidelines that a temperature of 160 [deg]F is recommended for 
clothes washing in healthcare facilities. (CA IOUs, No. 17 at p. 2)
    Rheem stated that typical storage water temperatures are between 
120 [deg]F and 180 [deg]F for food service, laundry, and commercial 
building applications or between 120 [deg]F and 130 [deg]F for 
commercial buildings not requiring sanitation. Rheem stated that a 
constant internal tank temperature of 140 [deg]F is an appropriate 
estimate for the purposes of DOE's analysis. (Rheem, No. 15 at p. 2) 
A.O. Smith stated that it agrees with DOE's use of 140 [deg]F as a 
constant internal water temperature. (A.O. Smith, No. 16 at p. 3)
    Given the wide range of temperatures provided by stakeholders above 
and below DOE's assumed internal temperature, DOE finds the 140 [deg]F 
to be reasonably representative of UFHWST use in the field. The 140 
[deg]F is within the range of temperatures suggested by commenters. The 
data sources examined by DOE (i.e., recent versions of the Commercial 
Building Energy Consumption Survey (``CBECS'')),11 12 while 
containing information on primary business activity, do not contain 
information from which to infer an average internal tank water 
temperature. Additionally, commenters did not provide data in terms of 
percentage of applications at which the various internal temperatures 
are realized. As such, DOE maintained its use of 140 [deg]F for this 
final determination.
---------------------------------------------------------------------------

    \11\ Presently, the 2018 edition of CBECs is the most recent 
version. Energy Information Administration (EIA), 2018 Commercial 
Building Energy Consumption Survey (CBECS) (Available at: 
www.eia.gov/consumption/commercial/) (Last accessed Feb. 10, 2021).
    \12\ Energy Information Administration (EIA), 2012 Commercial 
Building Energy Consumption Survey (CBECS) (Available at: https://www.eia.gov/consumption/commercial/) (Last accessed April 4, 2019).
---------------------------------------------------------------------------

c. Tank Ambient Temperature (Tamb, z)
    For the June 2021 NOPD, 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 specified by the current 
Federal test procedure for storage-type CWH equipment during standby 
loss testing. 86 FR 30796, 30806 (June 10, 2021). 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.
    Both Rheem and A.O. Smith commented on DOE's assumed use of 75 
[deg]F as the constant average ambient temperature. Rheem supported the 
ambient temperature of 75 [deg]F used as a representative value for 
indoor installations. (Rheem, No. 15 at p. 3) In contrast, A.O. Smith 
suggested that 78 [deg]F would be more accurate for indoor ambient 
temperatures. (A.O. Smith, No. 16 at p. 3)
    In response, DOE understands that indoor ambient temperatures seen 
in the field will be a distribution of values depending on the location 
of the UFHWST within the building and that this location may be 
conditioned to a temperature other than 75 [deg]F, or not conditioned 
at all. As discussed, UFHWSTs serve the same function as storage-type 
CWH equipment in standby mode, and DOE expects that similar conditions 
would be appropriate for UFHWSTs as for storage-type CWH equipment in 
standby mode. For the purpose of this simplified energy savings 
estimate for this final determination, DOE finds that the use of the 75 
[deg]F applicable under the CWH test procedure is appropriately 
representative for UFHWSTs.
    DOE notes that A.O. Smith did not provide a basis for its 
suggestion to test at 78 [deg]F, which would increase the ambient air 
temperature as compared to the current DOE test procedure. Increasing 
the ambient temperature would lower the temperature differential 
between the UFHWST's internal and ambient temperature, thereby reducing 
the projected potential energy savings. Given the unsubstantiated 
nature of A.O. Smith's comment and for the reasons discussed, DOE 
maintained its use of 75 [deg]F as the indoor constant ambient 
temperature for this final determination.
    As stated in the June 2021 NOPD, 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. 86 FR 30796, 30806 (June 10, 
2021).
    Rheem agreed with DOE's assumption that 10 percent of all UFHWSTs 
are installed outdoors. (Rheem, No. 15 at p. 3) A.O. Smith suggested 
that the Department's assumption that 10 percent of all UFHWSTs are 
installed outdoors may be overstated. (A.O. Smith, No. 16 at p. 3) 
However, A.O. Smith did not provide a basis for its assertion and did 
not provide an alternate percentage to consider. Absent additional 
support for a different value, for this final determination, DOE 
maintained its assumption that 10 percent of UFWHSTs are installed 
outdoors.
    A.O. Smith stated that outdoor tanks tend to be taller and have 
larger volumes than indoor tanks, but R-values are generally consistent 
with indoor tanks. (A.O. Smith, No. 16 at p. 3) Rheem stated that 
typical capacities used for outdoor applications include 235, 335, 499, 
534-gallon sizes; smaller tanks not specifically intended for outdoor 
installation may also be placed outside with applied weatherization; 
and outdoor models can have 2.5 to 3 inches of spray foam insulation 
and be

[[Page 31371]]

rated as high as R-16. (Rheem, No. 15 at p. 3)
    Furthermore, Rheem stated that in addition to climate zones 1A, 2A, 
and 2B, UFHWSTs are installed in some areas of climate zones 3 and 4. 
Rheem also stated that given indoor space constraints and rising 
construction costs, installation outdoors in colder climate zones with 
added pipe and fittings insulation and freeze protection is becoming 
more viable. (Rheem, No. 15 at p. 3)
    For this final determination, for the fraction of UFHWSTs modeled 
as installed in outdoor spaces, or in non-conditioned spaces, DOE 
expanded the applicable climate zones (z) and calculated the monthly 
average temperatures from Typical Meteorological Year 3 (``TMY3'') \13\ 
data for the Building America climate regions 1A, 2A, 2B, 3A, 3B, 3C, 
4A, 4B, and 4C.14 15 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 2018 
Census data.\16\ Additionally, DOE revised its capacity weighting 
assumptions for outdoor installed tanks to account for the larger 
capacities described by both A.O. Smith and Rheem; these capacity 
weights are shown in Table IV.5.
---------------------------------------------------------------------------

    \13\ 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.
    \14\ Wilcox, S. and W. Marion, 2008 User's Manual for TMY3 Data 
Sets, NREL/TP-581-43156 (April 2008) (Available at: www.nrel.gov/docs/fy08osti/43156.pdf) (Last accessed November 2021).
    \15\ Building America Best Practices Series, Volume 7.3, Guide 
to determining climate regions by county 2015 (Available at: 
www.energy.gov/sites/prod/files/2015/10/f27/ba_climate_region_guide_7.3.pdf).
    \16\ U.S. Census Population Estimates by County, as of 2018 
(Available at: www.census.gov/data/tables/time-series/demo/popest/2010s-counties-total.html#par_textimage) (Last accessed April 1, 
2022).

                               Table IV.4--Climate Zones and Representative Cities
----------------------------------------------------------------------------------------------------------------
               Climate zone                   Population             Representative city          TMY location #
----------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------


     Table IV.5--Capacity Weighting of Indoor Versus Outdoor UFHWSTs
------------------------------------------------------------------------
                                     Indoor weighting  Outdoor weighting
       Capacity range (gal)               factor             factor
------------------------------------------------------------------------
60 to 100.........................               0.05                  0
101 to 250........................                0.2               0.21
251 to 500........................                0.3               0.32
501 to 1000.......................                0.2               0.21
1001 to 2000......................               0.15               0.16
2001 to 5000......................               0.09               0.09
>5000.............................               0.01               0.01
------------------------------------------------------------------------

    Table IV.6 provides the monthly average ambient temperature values, 
Tamb, z, for each of the Climate Zones considered in this final 
determination.

                                                    Table IV.6--Average Monthly Ambient Temperatures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Average temperature for month ([deg] F)
                      Climate zone                         Location  -----------------------------------------------------------------------------------
                                                            weight      1      2      3      4      5      6      7      8      9      10     11     12
--------------------------------------------------------------------------------------------------------------------------------------------------------
1A.....................................................        0.028   67.0   69.6   70.8   75.4   79.5   81.8   82.6   82.4   81.5   79.4   74.5   68.5
2A.....................................................        0.175   50.9   55.0   61.2   68.9   75.3   80.6   82.9   82.8   79.6   68.6   62.8   54.6
2B.....................................................        0.031   55.4   60.2   63.2   74.6   81.1   93.2   96.0   92.9   86.7   76.7   64.3   53.1
3A.....................................................        0.197   39.1   46.3   56.8   63.0   69.5   76.6   78.9   79.8   72.5   60.8   53.5   45.9
3B--CA.................................................        0.136   56.7   57.6   58.2   60.4   62.6   64.7   67.8   68.1   67.7   64.7   61.2   57.8
3B--Non CA.............................................        0.025   37.6   37.6   40.6   53.4   58.9   65.1   68.6   66.0   63.6   50.5   40.3   34.5

[[Page 31372]]

 
3C.....................................................        0.039   49.3   52.3   54.8   56.6   59.0   59.6   60.7   61.9   62.1   59.2   55.0   51.2
4A.....................................................        0.314   31.1   36.0   46.4   55.7   65.0   73.3   77.6   75.7   68.8   54.8   48.0   35.7
4B.....................................................        0.010   36.7   39.7   47.8   57.0   64.1   73.8   78.1   75.3   68.9   56.7   44.5   35.7
4C.....................................................        0.044   40.1   42.5   47.0   51.5   55.4   60.1   63.8   65.8   59.2   52.6   46.5   41.8
Indoor.................................................         0.90   75.0   75.0   75.0   75.0   75.0   75.0   75.0   75.0   75.0   75.0   75.0   75.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

d. R-Value of Insulation (Ri, j)
    The R-value of each zone i of the UFHWST is defined for each 
efficiency level j in the engineering analysis in Table IV.1 and Table 
IV.3 of section IV.C of this document.
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 maintained the approach from the June 2021 
NOPD and used the following equation for each efficiency level listed 
in Table IV.1:
[GRAPHIC] [TIFF OMITTED] TR24MY22.008

Where:

eBoilj = The energy by the boiler required to maintain the water 
temperature in the UFHWST at the temperature Ti at each efficiency 
level j, (Btu/yr),

Qhr, j = hourly heat loss for the UFHWST at each efficiency level j 
(see section IV.D.1, of this document) (Btu/hr), and

Boiler[eta] = average boiler efficiency (%) in year yr 
(defined in section IV.G.4 of this document).

    Table IV.7 presents the energy used by the boiler attributable to 
the heat losses of the UFHWST at the baseline (EL 0) and each 
efficiency level by tank capacity. Table IV.8 presents the resulting 
energy savings at each efficiency level above baseline. The 
representative storage volumes used in this analysis are discussed in 
section IV.C.2 of this document.
    DOE did not receive any comment regarding annual energy use due to 
UFHWST losses and maintained its approach from the June 2021 NOPD for 
this final determination.

                         Table IV.7--Boiler Energy Use Due to UFHWST Heat Losses in 2025
                                                 [MMBtu/yr] \17\
----------------------------------------------------------------------------------------------------------------
                                                                UFHWST capacity (gal)
                 EL                 ----------------------------------------------------------------------------
                                         80        175        375        750       1,500      3,500      5,000
----------------------------------------------------------------------------------------------------------------
0..................................       2.28       3.42       5.56       9.79      12.82      22.53      27.48
1..................................       2.00       2.94       4.70       8.35      10.80      18.67      22.68
2..................................       1.82       2.63       4.13       7.39       9.46      16.10      19.48
3..................................       1.48       2.03       3.01       5.49       6.81      10.99      13.10
----------------------------------------------------------------------------------------------------------------


               Table IV--8 Savings in Boiler Energy Use Due to Reduced UFHWST Heat Losses in 2025
                                                   [MMBtu/yr]
----------------------------------------------------------------------------------------------------------------
                                                                UFHWST capacity (gal)
                 EL                 ----------------------------------------------------------------------------
                                         80        175        375        750       1,500      3,500      5,000
----------------------------------------------------------------------------------------------------------------
1..................................       0.28       0.47       0.86       1.45       2.01       3.85       4.80
2..................................       0.46       0.79       1.43       2.41       3.35       6.42       8.00
3..................................       0.81       1.39       2.54       4.30       6.01      11.53      14.38
----------------------------------------------------------------------------------------------------------------

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

    \17\ The projected value for Boiler Efficiency (Boilern) is 
0.922 in 2027. See section IV.G.4 of this document for more details.
---------------------------------------------------------------------------

    As discussed in section IV.C.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

[[Page 31373]]

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 Tank Thermal Loss Model. The average 
predicted rate of standby losses for these tanks was 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 Tank 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.C.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 Tank 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 Tank Thermal Loss Model against its physical test results, 
there is significant uncertainty as to the validity of its energy use 
analysis.

E. 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 
standards on consumers, in order to determine whether amended standards 
would be economically justified, DOE used the following two metrics to 
measure consumer impacts:
     The LCC is the total consumer expense of an appliance or 
equipment over the life of that equipment, consisting of total 
installed cost (manufacturer selling price, distribution chain markups, 
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 measures the change in LCC 
relative to the LCC in the no-new-standards case, which reflects the 
estimated efficiency distribution of UFHWSTs 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 Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the equipment. In the June 2021 
NOPD, DOE qualitatively examined certain factors that can impact the 
installation costs of UFHWST. 86 FR 80796, 80809-80810 (June 10, 2021). 
DOE acknowledged that that increasing installation costs can reduce, or 
even eliminate, the future economic consumer benefits from a potential 
new standard. Id. at 86 FR 80810. DOE tentatively agreed with the 
commenters that a small increase in tank dimensions, a change driven by 
the need to comply with a potential new standard case, could 
potentially disproportionately increase the installation costs for a 
fraction of consumers of replacement equipment. Id. DOE stated that 
while the fraction of impacted consumers is uncertain, DOE is certain 
that there will be some consumers who will experience these higher 
installation costs. Id. DOE further stated that 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. Id.
    In response to the June 2021 NOPD, DOE received comments regarding 
information related to costs resulting from building modifications due 
to increased equipment size. A.O. Smith stated that the primary 
consideration of the designing/specifying engineer when replacing a 
UFHWST is the required storage volume and frequency of hot water demand 
for the building/application. From there, an installation 
recommendation is made based upon constraints, including, but not 
limited to, doorways and passageways that can accommodate the 
installation of one or more new UFHWSTs. (A.O. Smith, No. 16 at p. 5) 
Rheem suggested that an increase in the overall dimensions, especially 
the diameter of UFHWST due

[[Page 31374]]

to increased insulation thickness, could require modifications to 
existing doorways or mechanical rooms. Rheem stated that an increase in 
the overall dimensions of UFHWSTs would require additional space for 
installation, along with higher cost for transportation and handling of 
the tank until it reaches its final location. (Rheem, No. 16 at p. 3) 
Both A.O. Smith and Rheem agreed that the costs will vary substantially 
depending on the tank size, building type, and whether it is going to 
new construction or a replacement installation. Rheem commented that 
for new construction, the UFHWST installation can be better planned and 
located during the construction process, but future replacement will 
still present challenges. Rheem further commented that there are 
several requirements to consider in determining if restructuring a 
building is cost-effective or appropriate for a given installation and 
building, including compliance with building, mechanical, plumbing, and 
local codes and manufacturer's instructions. Rheem stated that 
installing floor tie downs, modifying fire-rated doorways and interior 
passage doors, and changing exit routes in a building are some examples 
of codes-related considerations. (Rheem, No. 15 at pp. 3-4; A.O. Smith, 
No. 16 at p. 4) Finally, A.O. Smith suggested that buildings associated 
with municipal, university, school, and hospital (``MUSH'') facilities 
will typically have equipment/mechanical rooms, and access thereto, 
that can accommodate the installation of UFHWSTs of slightly different 
sizes, including ones with modest increases in dimensions. In the 
commenter's experience, the more challenging installations are ones 
associated with ``high-rise buildings'' and historic buildings, in both 
urban and rural areas; according to A.O. Smith, these buildings often 
have equipment/mechanical rooms in basements or on the rooftop, which 
present unique and challenging circumstances for replacing a UFHWST 
generally, let alone with one that may have slightly larger dimensions. 
(A.O. Smith, No 16 at p. 5)
    In response, the comments from A.O. Smith and Rheem reaffirmed 
DOE's understanding that potential amended standards for UFHWSTs could 
potentially disproportionately increase the installation costs for a 
fraction of consumers of replacement equipment. Absent further 
information or data on typical installations costs for UFHWST to 
indicate the contrary, DOE maintains the conclusion arrived at in the 
June 2021 NOPD: There is considerable uncertainty regarding future 
consumer economic benefits from increasing the efficiency of UFHWSTs.
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.D 
of this document.
    As discussed in section V.A.1 of this document, DOE estimates that 
amended standards at the max-tech level would result in FFC energy 
savings of 0.058 quads over 30 years. However, as discussed in sections 
IV.D and IV.E 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. As noted in 
the June 2021 NOPD, 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 
tanks with the same attributes and insulation. This finding suggests 
that there are variations in the extent of R-12.5 coverage between 
units, even between units from the same manufacturer. 86 FR 30796, 
30808 (June 10, 2021). The unpredictable results of DOE testing meant 
that DOE was unable to validate its thermal loss model to test data 
with a high degree of certainty. Without being able to verify expected 
levels of heat loss through testing, DOE is unable to conduct an LCC 
and PBP analysis for this final determination. DOE may continue to 
investigate this issue further in the future.

F. 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.
    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.F.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.
    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
    As explained in detail in the June 2021 NOPD, to estimate the stock 
of UFHWSTs in the residential sector, DOE's search of the RECS database 
using these assumptions yielded a sample of zero buildings that had the 
potential to contain an UFHWST.\18\ 86 FR 30796, 30811 (June 10, 2021). 
At that time, DOE assumed that UFHWST were not used in residential 
buildings. DOE did not receive any comments on residential 
installations of UFHWST. Accordingly, for this final determination, DOE 
concluded that the quantity of UFHWST installed in the residential 
sector is minimal, and consequently, it was not considered for the 
purpose of this final determination.
---------------------------------------------------------------------------

    \18\ U.S. Energy Information Administration, Residential Energy 
Consumption Survey 2015 (RECS), as published in 2018.
---------------------------------------------------------------------------

b. Commercial Stock
    To estimate the stock of UFHWSTs in the commercial sector, DOE 
examined the CBECS databases. At the time of the publication of the 
June 2021 NOPD, the 2012 edition of CBECS (``CBECS 2012'') was the most 
recent edition. Since the

[[Page 31375]]

June 2021 NOPD was published in the Federal Register, the 2018 edition 
of CBECS (``CBECS 2018'') was made available.
    CBECS 2018 introduced new building records that may contain UFHWST 
equipment, as they relate to technologies that are often connected to 
UFHWSTs which were absent from CBECS 2012. However, CBECS 2018 was also 
limited in its characterization of buildings that may contain an UFHWST 
when compared to CBECS 2012 and did not have the same fields from which 
to draw a customer sample. For this final determination, in addition to 
the sample based on CBECS 2012 which was presented in the June 2021 
NOPD, DOE included the buildings from CBECS 2018 with the following 
characteristics in addition to the stock estimates presented in the 
June 2021 NOPD (see 86 FR 30796, 30811 (June 10, 2021)).
     Solar thermal used for water heating (SOWATR = 1), and
     Water loop heat pump for hot water distribution (WTLOOP_HW 
= 1).
    As noted previously, for the June 2021 NOPD, DOE based its 
commercial stock estimates on data from CBECS 2012. Since DOE did not 
receive any comments suggesting alternate stock from the estimates, the 
Department has elected to maintain its use of these estimates for this 
final determination in addition to the new records from CBECS 2018. 
From CBEC 2012, DOE assumed that builds likely to contain an UFHWST 
would be characterized as follows:
     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 databases using these 
assumptions yielded a commercial sample of 325,089 buildings from CBECS 
2012, plus an additional 11,134 buildings from CBECS 2018. 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,\19\ 
electricity, heating oil, or other fuels. For purpose of analysis, DOE 
considered 100 percent of commercial buildings to use natural gas to 
heat water.
---------------------------------------------------------------------------

    \19\ ``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.
---------------------------------------------------------------------------

    DOE notes that for this determination, the surveys from both CBECS 
2012, and CBECS 2018 contain very course data regarding the quantity 
and type of water heating technologies for each record. DOE assumed one 
UFWHST per building--for all building records- regardless of building 
size from the CBECS results. This is likely to be an overestimation of 
UFHWST installed stock, as not all buildings matching the available 
criteria from CBECS will contain UFHWSTs, even if some of these 
building contain multiple units.
c. Industrial Stock
    For this final determination DOE maintained its industrial stock 
approach and estimate of UFWHSTs that it used in the June 2021 NOPD. As 
described in the June 2021 NOPD, 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.20 21 86 FR 30796, 30811 (June 10, 2021). DOE 
maintains that UFHWSTs are used to store potable hot water for human 
consumption and washing, not for industrial process water. This 
assumption is supported by Rheem's comment that stated that their 
UFHWSTs are not intended for non-potable water storage. (Rheem, No.15 
at p. 5)
---------------------------------------------------------------------------

    \20\ 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).
    \21\ 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).
---------------------------------------------------------------------------

    DOE maintained its assumption that the volume of hot water storage 
needed would be similar across both commercial and manufacturing 
sectors on a per-person basis. To estimate the stock of industrial 
consumers, DOE used the number of manufacturing employees from the 2017 
census.\22\ DOE then 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.F.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.
---------------------------------------------------------------------------

    \22\ 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).
---------------------------------------------------------------------------

    DOE received comments from Rheem and A.O. Smith indicating that the 
estimates industrial stock should be a smaller fraction of the UFHWST 
install base when compared to commercial installations. Rheem commented 
that most UFHWSTs are installed in the commercial sector; and A.O. 
Smith stated that the percentage of UFHWSTs used for industrial process 
hot water storage is relatively small, and that those UFHWSTs used for 
industrial processes are typically customized/engineered-to-order 
tanks. (Rheem, No.15 at p. 4; A.O. Smith, No. 16 at p. 6) Additionally, 
Rheem supported DOE's ``80/20'' split between commercial and industrial 
applications. (Rheem, No.15 at p. 4) DOE received no other comment on 
the industrial stock estimates. Given the supportive nature of these 
comments regarding DOE's industrial stock estimation, the Department 
maintained the approach from the June 2021 NOPD for this final 
determination.
    Table IV.9 presents the estimated stock of UFHWSTs in each sector, 
in 2012 and 2018. Table IV.9 shows that even with the updated 
commercial inputs resulting from the additional buildings from CBEC 
2018 that the approximate 80/20 split in the final determination weight 
between commercial and industrial sectors is maintained.

                                    Table IV.9--Estimated UFHWST Stock (2012)
----------------------------------------------------------------------------------------------------------------
                                                                                  Final              Final
                         Sector                            NOPD number of     determination      determination
                                                            units (2012)       units (2012)    weight (%) (2018)
----------------------------------------------------------------------------------------------------------------
Residential............................................                  0                  0                  0
Commercial.............................................            315,360            325,269                 82

[[Page 31376]]

 
Industrial.............................................             71,361             71,361                 18
----------------------------------------------------------------------------------------------------------------

2. Shipments for Replacement
    For the reasons explained in the June 2021 NOPD, DOE based the 
replacement rate for UFHWSTs on an average equipment lifetime of 12 
years, using the equipment lifetime developed for commercial water 
heaters. 86 FR 30796, 30811-30812 (June 10, 2021). In response to the 
June 2021 NOPD, DOE did not receive any comments regarding its derived 
annual rate of UFHWST replacement. Accordingly, for this final 
determination, DOE maintained its assumption of an 8 percent per year 
replacement rate for UFHWSTs.
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.\23\ \24\ 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.
---------------------------------------------------------------------------

    \23\ 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 Feb. 21, 
2022).
    \24\ 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) (Last accessed Feb. 21, 
2022).
---------------------------------------------------------------------------

    On this topic, Rheem stated that it expects to see growth in 
storage tank applications to support growth with commercial heat pump 
water heater systems for new a construction and replacement 
installations. (Rheem, No.15 at p. 5) The CA IOUs stated that they 
likewise expect future shipments of UFHWSTs to increase in response to 
the increased penetration of commercial heat pump water heaters. 
(Rheem, No.15 at p. 5, CA IOUs, No.17 at p. 1)
    A.O. Smith commented that the AEO may be too broad of a ``scaler'' 
to use and recommended considering whether an organization like the 
American Institute of Architects (AIA) or ASHRAE may have a more 
defined data set. (A.O. Smith, No.16 at p. 6)
    In response, DOE notes that there are insufficient publicly-
available data to model the future shipments of UFHWSTs connected to 
heat pump water heaters. However, buildings with heat pump water 
heaters were included in CBECS 2018, and they were also included in 
this stock analysis (see section IV.F.1.b of this document). 
Additionally, DOE did search for data related to future UFHWST 
shipments (or an appropriate proxy) generated by either the AIA or 
ASHRAE, but the Department was unable to locate any such information. 
Therefore, for this final determination, DOE continued to use AEO 2021 
to project future UFHWST sales. The trend from AEO is publicly 
available, and DOE finds that it provides an accepted, credible 
projection of key performance indicators.
    Rheem commented on instances of installation of a second tank that 
can serve to help meet the total hot water load or function as a 
backup. More specifically, Rheem stated that two tanks (under 500 
gallons) are used in a growing number of applications, but the 
commenter did not provide data or information as to the extent of any 
such trend. (Rheem, No.15 at p. 4) A.O. Smith suggested that it is not 
uncommon for installations to have more than one UFHWST per building. 
A.O. Smith further stated that individual installations will have 
different/unique dimensional limitations depending on the doorways or 
elevators that must be used to get the tanks into place, as well as 
overhead clearances. A.O. Smith stated that these constraints may limit 
tank size and require multiple tanks to meet the intended application. 
A.O. Smith further stated that some installations require redundancy 
for critical components such as hot water supply systems and will have 
heaters and storage tanks connected in parallel such that one can be 
isolated for maintenance while the other remains in service. (A.O. 
Smith, No.16 at p. 6)
    DOE understands that the installation of additional equipment could 
be driven by concerns related to limitations associated with individual 
installation circumstances, or the need for added redundancy of 
critical hot water systems, as suggested by commenters. However, DOE 
does not have data as to the extent to which multiple installations 
occur, and commenters did not provide information as to the extent of 
such installations in terms of either units installed or sectors where 
this would be most probable. Nonetheless, DOE notes that its initial 
stock estimate in section IV.F.1 of this document is very broad due to 
the categories available in CBECS 2012 and CBECS 2018, and, therefore, 
it likely estimates at the higher end of the potential range of 
installed UFHWSTs. For these reasons, DOE did not explicitly include a 
factor to increase shipments to account for redundant UFHWSTs.
4. Estimated Shipments
    Table IV.10 presents the estimated UFHWST shipments in selected 
years.

           Table IV.10--Shipments Results for UFHWSTs (units)
------------------------------------------------------------------------
                                                             Shipments
                    Year                      Shipments       (final
                                                (NOPD)    determination)
------------------------------------------------------------------------
2025.......................................       38,119         39,407
2030.......................................       41,324         41,424
2040.......................................       45,474         45,694
2050.......................................       48,363         49,901
------------------------------------------------------------------------

    Table IV.11 presents the estimated distribution of UFHWST shipments 
by the storage volume ranges specified in section IV.C.2 of this 
document. DOE estimated these values through examination of capacity 
counts in existing trade literature and DOE's CCMS database, 
confidential interviews with manufactures under NDA, and stakeholder 
comments. DOE assumes that this distribution is static and does not 
change over time.
    DOE received comments from A.O. Smith and Rheem regarding the 
distribution of shipments over equipment capacities. Both suggested 
that DOE's stock analysis may include too many large tanks and not 
enough smaller tanks. Rheem stated that the distribution of shipment 
estimates for the 0 to 100 and 101 to 250-gallon capacity ranges 
appears to be low, and the 1,001 to 2,000 and 2,001 to 5,000-gallon 
ranges are high. (A.O. Smith, No.16 at p. 5, Rheem, No.15 at p. 5) In

[[Page 31377]]

response, for this final determination, DOE has redistributed the 
fraction of capacities based on the comments received. This 
redistribution is shown in Table IV.11.

  Table IV.11--Distribution of Shipments by UFHWST Storage Volume (gal)
------------------------------------------------------------------------
                                           Market shares   Revied market
             Capacity range                 in NOPD (%)     shares (%)
------------------------------------------------------------------------
0 to 100................................               3              15
101 to 250..............................              11              20
251 to 500..............................              23              23
501 to 1000.............................              26              26
1001 to 2000............................              20              10
2001 to 5000............................              16               5
>5000...................................               1               1
------------------------------------------------------------------------

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). In the June 2021 NOPD, DOE identified 48 UFHWST 
manufacturers, 37 of which are small domestic manufacturers. 86 FR 
30796, 30812 (June 10, 2021). In response to the June 2021 NOPD, BWC 
stated that the number of manufacturers identified that produce UFHWSTs 
reinforces the point that the market is highly customized and contains 
a significant number of small, niche manufacturers. (BWC, No. 14 at p. 
2)
    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.

G. National Impact Analysis

    DOE conducted an NIA that assesses the NES in terms of total FFC 
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 a cost analysis and 
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 energy 
savings over the lifetime of UFHWSTs sold from 2025 through 2054.
1. National Energy Savings
    The national energy savings (``NES'') analysis involves a 
comparison of national energy consumption of UFHWSTs between each 
potential standards case (for this final determination represented by 
efficiency level (``EL'')) and the case with no new or amended energy 
conservation standards. DOE calculated the national energy consumption 
by multiplying the number of units (stock) of equipment (by vintage or 
age) by the unit energy consumption (also by vintage). DOE calculated 
annual NES based on the difference in national energy consumption for 
the no-new-standards case and for each higher-efficiency-standards 
case. 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.
    In 2011, in response to the recommendations in a report titled, 
``Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement 
Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards'' 
issued by a committee appointed by the National Academy of Sciences, 
DOE announced its intention to use FFC measures of energy use and 
greenhouse gas and other emissions in the NIA and emissions analyses 
included in future energy conservation standards rulemakings. 76 FR 
51281 (August 18, 2011). After evaluating the approaches discussed in 
the August 18, 2011 notice, DOE subsequently published a statement of 
amended policy in the Federal Register, in which DOE explained its 
determination that EIA's National Energy Modeling System (``NEMS'') is 
the most appropriate tool for DOE's FFC analysis and its intention to 
use NEMS for that purpose. 77 FR 49701 (August 17, 2012). NEMS is a 
public domain, multi-sectoral, partial equilibrium model of the U.S. 
energy sector \25\ that EIA uses to prepare its AEO. The FFC factors 
incorporate losses in production, and delivery in the case of natural 
gas, (including fugitive emissions) and additional energy used to 
produce and deliver the various fuels used by power plants.
---------------------------------------------------------------------------

    \25\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview 2009, DOE/EIA-0581(2009) (October 2009) 
(Available at: www.eia.gov/analysis/pdfpages/0581(2009)index.php) 
(Last accessed March 25, 2022).
---------------------------------------------------------------------------

2. Product Lifetime
    For this analysis, DOE maintained use of the average lifetime for 
commercial electric storage water heaters (i.e., 12 years) as a proxy 
for UFHWST lifetime, as was done in the June 2021 NOPD. 86 FR 30796, 
30812 (June 10, 2021).
    DOE received several comments related to average UFHWST lifetimes. 
Both Rheem and A.O. Smith agreed with DOE's estimated 12-year tank 
lifetime. (Rheem, No.15 at p. 5 and A.O. Smith, No.16 at p. 6) BWC 
suggested that UFHWST lifetimes vary between 6 and 12 years, but the 
commenter opined that the actual lifetime is extremely dependent on 
product maintenance,

[[Page 31378]]

water quality, and product application. (BWC, No.14 at p. 1)
    In response, DOE notes that in its analysis, a distribution of 
lifetimes is used (with an average lifetime of 12 years) to capture 
different factors that may contribute to lifetimes that are shorter or 
longer than the average. As BWC did not provide specific frequencies of 
UFHWST failures as would support modification of the distribution of 
lifetimes, DOE maintained the same assumptions used in its proposed 
determination for this final determination.
3. Energy Efficiency Distribution in the No-New-Standards Case
    To estimate the share of consumers that would be affected by a 
potential energy conservation standard at a particular efficiency 
level, DOE first considered the projected distribution (market shares) 
of product efficiencies under the no-new-standards case (i.e., the case 
without amended or new energy conservation standards. In the June 2021 
NOPD, DOE based its distribution of efficiencies in the no-new-
standards case on the counts and R-values of the records in its CCD 
database. At that time, DOE found that there were a minimal number of 
designs that related to the R-value efficiency levels determined in the 
engineering analysis. 86 FR 30796, 30813 (June 10, 2021).
    In commenting on the June 2021 NOPD, DOE received input from 
interested parties regarding the distribution of efficiencies in the 
no-new-standards case. Both A.O. Smith and BWC agreed with DOE's 
assumption that 99 percent of all units sold are currently at baseline 
(R-12.5). (A.O. Smith, No.16 at p. 7, BWC, No.14 at p. 2) While Rheem 
agreed most shipments are at or near the baseline of R-12.5, it 
suggested that DOE should review the 99-percent assumption. (Rheem, 
No.15 at p. 5) The CA IOUs commented in the DOE compliance database, 
roughly 1149 out of 2428 models have an R-value above 12.5, and 660 
models have an R-value at or above 15.625 (EL 1), suggesting that there 
is interest in equipment with insulation levels well above the current 
minimum levels. (CA IOUs, No.17 at p. 4)
    Based on the comments received, DOE updated the baseline efficiency 
distribution used in the final determination based on the most recently 
available data from CCD. These data contain a greater number of models 
above baseline than there were at the time the June 2021 NOPD was 
published. Based on these new data, DOE revised its energy efficiency 
distribution in the no-new-standards case to match the data shown in 
Table IV.12 of this document. This update results in a revised 
distribution for this final determination of 68 precent at EL 0 
(baseline), and 31 percent at EL 1, and less than 1 percent combined at 
ELs 2 and 3. The revised distribution of efficiencies weighted as a 
function of shipments by representative tank volume (gal) are shown in 
Table IV.13.

                                Table IV.12--Fraction of Model Efficiency in CCMS
                                                 (% of records)
----------------------------------------------------------------------------------------------------------------
                                                       EL 0            EL 1            EL 2            EL 3
                                                    (baseline)   -----------------------------------------------
        Representative tank volume (gal.)        ----------------
                                                      R-12.5          R-15.62         R-18.75          R-30
----------------------------------------------------------------------------------------------------------------
80..............................................               7               0               0               0
175.............................................              19               4               0               0
375.............................................              18               6               0               0
750.............................................              19               6               0               0
1,500...........................................              10               8               0               0
3,500...........................................               0               2               0               0
5,000...........................................               0               1               0               0
----------------------------------------------------------------------------------------------------------------
Note: DOE notes that while there is some equipment currently distributed in commerce that achieves EL 3, the
  fraction of such equipment is very small when compared to rest of the market and is not reflected here due to
  rounding.


                     Table IV.13--Fraction of Model Efficiencies as a Function of Shipments
                                                (% of shipments)
----------------------------------------------------------------------------------------------------------------
                                                       EL 0            EL 1            EL 2            EL 3
   Representative tank volume        Shipments      (baseline)   -----------------------------------------------
             (gal.)                   weight     ----------------
                                                      R-12.5          R-15.62         R-18.75          R-30
----------------------------------------------------------------------------------------------------------------
80..............................  ..............               4               0               0               0
175.............................  ..............              17               3               0               0
375.............................  ..............              23               7               0               0
750.............................  ..............              15               5               0               0
1,500...........................  ..............               8               7               0               0
3,500...........................  ..............               1               8               0               0
5,000...........................  ..............               0               1               0               0
----------------------------------------------------------------------------------------------------------------
Note: DOE notes that while there is some equipment currently distributed in commerce that achieves EL 3, the
  fraction of such equipment is very small when compared to rest of the market and is not reflected here due to
  rounding.


[[Page 31379]]

4. 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.\26\ 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 (EL 0) efficiency distribution data 
from the May 2016 CWH ECS NOPR \27\ to calculate a single, market-
weighted, average efficiency, which was 84.4 percent in 2016. For years 
beyond 2016 and future years through 2050, DOE used the AEO 2022 data 
series ``Commercial: Stock Average Efficiency: Water Heating: Natural 
Gas: Reference case'' to project the efficiency trend of hot-water 
supply boilers.\28\
---------------------------------------------------------------------------

    \26\ 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.
    \27\ Available at: https://www.regulations.gov/document?D=EERE-2014-BT-STD-0042-0016 (Last accessed: April 8, 2020).
    \28\ U.S. Energy Information Administration, Annual Energy 
Outlook (2022), Table 22, Commercial Sector Energy Consumption, 
Floorspace, Equipment Efficiency, and Distributed Generation 
(Available at: https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2020&region=0-0&cases=ref2020&start=2018&end=2050&f=A&linechart=ref2020-d112119a.45-32-AEO2020↦=&ctype=linechart&sourcekey=0) (Last 
accessed May 10, 2022).
---------------------------------------------------------------------------

    The CA IOUs suggested that the boiler efficiencies used in DOE's 
analysis of UFHWSTs might be too high and recommended that DOE revise 
its installed stock efficiency assumptions by using the NIA shipments 
estimates from the 2016 commercial packaged boilers (``CPB'') standards 
rulemaking. (CA IOUs, No.17 at pp. 3-4)
    In response, DOE notes that the analysis preformed in support of 
the May 2016 CPB standards rulemaking has a number of outdated 
assumptions, and even the January 2020 CPB standards final rule,\29\ 
while still relevant, does not include recent State and other 
initiatives promoting water heater efficiency that are captured in the 
AEO 2022 data series ``Commercial: Stock Average Efficiency: Water 
Heating: Natural Gas: Reference case'' to project the efficiency trend 
of hot-water supply boilers.\30\ For this final determination, DOE 
examined the efficiency distributions in the no-new-standards case for 
small and large commercial gas water heating boilers from the 2020 CPB 
standards final rule and found that that the resulting FFC savings were 
0.061 quads, or 0.003 quads greater that DOE's estimation using the 
efficiency trend from AEO 2022. 31 32 As DOE stated 
previously, the AEO 2022 data on boiler efficiency is the most current 
data available, and despite showing slightly less cumulative energy 
savings than the trend from the 2020 CPB standards final rule, DOE has 
maintained its approach to use the most recently available information. 
Additionally, as in the June 2021 NOPD, DOE assumed no additional 
increase in boiler efficiency after 2050 (i.e., the end date for the 
AEO 2022 analysis). This efficiency trend for select years is shown in 
Table IV.13.
---------------------------------------------------------------------------

    \29\ Available at: https://www.regulations.gov/document?D=EERE-2013-BT-STD-0030-0099 (Last accessed: April 8, 2020).
    \30\ U.S. Energy Information Administration, Annual Energy 
Outlook (2021), Table 22, Commercial Sector Energy Consumption, 
Floorspace, Equipment Efficiency, and Distributed Generation 
(Available at: www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2021&cases=ref2021&sourcekey=0) (Last accessed April 23, 2021).
    \31\ Commercial Packaged Boilers Final Rule National Impact 
Spreadsheet (Jan. 10, 2020) (Available at: https://www.regulations.gov/document/EERE-2013-BT-STD-0030-0087) See: 
Efficiency Distribution tables on worksheets: SGHW, and LGHW (Last 
accessed: April 22, 2022).
    \32\ The impacts of applying the no-new standards case 
efficiency trend from CPB can be examined as a sensitivity scenario 
in the accompanying energy savings estimation tool. (Available at: 
https://www.regulations.gov/docket/EERE-2017-BT-STD-0021/document.)

Table IV.14--Average Stock Efficiencies of Hot-Water Supply Boilers From
                                2025-2050
------------------------------------------------------------------------
                          Year                            Efficiency (%)
------------------------------------------------------------------------
2025....................................................            89.5
2030....................................................            90.8
2035....................................................            92.3
2040....................................................            93.3
2045....................................................            93.9
2050....................................................            94.3
------------------------------------------------------------------------

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 efficiency levels examined by DOE and the 
projected FFC energy savings of each of these levels. As discussed 
previously, certain economic analyses were not conducted for this final 
determination 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 FFC NES that would 
result from each of the efficiency levels 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 efficiency level. The savings are measured over the entire 
lifetime of equipment purchased in the 30-year period that would begin 
in the year of anticipated compliance with amended standards (2025-
2054). Table V.1 presents DOE's projections of the FFC National energy 
savings for each efficiency level considered for UFHWSTs. The savings 
were calculated using the approach described in section IV.D of this 
document.

        Table V.1--Cumulative FFC National Energy Savings for UFHWSTs; 30 Years of Shipments (2025-2054)
----------------------------------------------------------------------------------------------------------------
                                                                                Efficiency level
                                                              --------------------------------------------------
                                                                      1                2                3
----------------------------------------------------------------------------------------------------------------
Full-Fuel-Cycle Energy (quads)...............................           0.015            0.029            0.058
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \33\ 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

[[Page 31380]]

to consider the variability of key elements underlying the estimates of 
benefits and costs. For this final 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.\34\ 
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 of this 
document. The impacts are counted over the lifetime of UFHWSTs 
purchased in 2025-2034.
---------------------------------------------------------------------------

    \33\ U.S. Office of Management and Budget, Circular A-4: 
Regulatory Analysis (Sept. 17, 2003) (Available at: 
www.whitehouse.gov/omb/circulars_a004_a-4/).
    \34\ 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 FFC National Energy Savings for UFHWSTs; 9 Years of Shipments (2025-2034)
----------------------------------------------------------------------------------------------------------------
                                                                                Efficiency level
                                                              --------------------------------------------------
                                                                      1                2                3
----------------------------------------------------------------------------------------------------------------
Full-Fuel-Cycle Energy (quads)...............................           0.005            0.009            0.018
----------------------------------------------------------------------------------------------------------------

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

    After carefully considering the comments on the June 2021 NOPD and 
the available data and information, DOE has determined that the energy 
conservation standards for UFHWSTs do not need to be amended, for the 
reasons explained in the paragraphs immediately following.
    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 6-year-lookback rulemaking, with the latter being the 
basis for the current proceeding.
    Because an analysis of potential economic justification and energy 
savings first requires an evaluation of the relevant technology, DOE 
first discusses the technological feasibility of amended standards. DOE 
then evaluates the energy savings potential and economic justification 
of potential amended standards.
1. 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 determined 
that increasing the R-value of insulation up to R-30 would improve the 
efficiency of UFHWSTs. As discussed in section IV.C.1 of this document, 
this increased R-value has been demonstrated in commercially-available 
jacketed UFHWSTs. These tanks have an advertised polyurethane foam 
thickness of 5 inches. For insulation thicknesses up to 3 inches, DOE 
has determined that an R-value per inch of 6.25 is appropriate. 
However, the R-value per inch of insulation appears to decrease to 6 
beyond this foam thickness, so DOE used this slightly lower R-value-per 
inch in its Tank Thermal Loss Model for the max-tech level. Therefore, 
increasing the thickness of insulation up to a level of 5 inches has 
been demonstrated to be achievable in commercially-available jacketed 
UFHWSTs, and, thus, would be technologically feasible. (See section 
IV.C.1 of this document for further information.) Hence, DOE has 
determined that amended energy conservation standards for UFHWSTs would 
be technologically feasible.
2. 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 FFC 
energy savings of 0.015 quads at EL 1, 0.029 quads at EL 2, and 0.058 
quads at

[[Page 31381]]

EL 3 (the max-tech level) over a 30-year analysis period (2025-2054), 
as realized by the connected hot-water supply boiler. However, as 
discussed throughout this document, there are significant uncertainties 
related to these results.
    First, as discussed in section IV.C.1 of this document, there 
appears to be a reduction in R-value per inch of insulation in units 
with insulation thickness greater than 3 inches, generating uncertainty 
with regard to the performance of models above EL 2.
    Second, as discussed in section IV.D.3 of this document, when 
comparing the results of the Tank Thermal Loss model to measured 
standby losses, the predicted rate of standby losses ranged from as low 
as 58 percent of the measured losses up to 90 percent of the measured 
losses. Furthermore, DOE's model would predict the same level of 
standby losses for tanks with identical storage volumes, dimensions, 
number of ports, and nominal insulation levels, whereas measured 
standby losses for such comparable tanks differed by up to 8.5 percent. 
These findings suggest 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.C.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 variation 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.
    Third, as discussed in section IV.F.5 of this document, 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). This 
uncertainty in standards-case shipments projections propagates 
uncertainty into the estimates of national energy savings.
    Due to the uncertainties in characterizing the efficiency 
performance of models above EL 2, the uncertainties in characterizing 
the representative field energy use of both baseline models and models 
at all ELs, and the uncertainty in projecting standards-case shipments, 
DOE has determined that it lacks clear and convincing evidence that 
amended energy conservation standards for UFHWSTs would result in 
significant additional conservation of energy.
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.
    As discussed in section IV.E.1 and V.A.2 of this document, there 
are significant uncertainties with regard to installation costs of 
models with increased insulation thickness. Specifically, increasing 
the size of 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.
    In addition, as discussed in section IV.D.1 of this document, even 
small adjustments to several critical inputs to the Thermal Tank Loss 
Model could have a large impact on any energy use and LCC results and 
could significantly alter the findings.
    For these reasons, DOE did not conduct an economic analysis for 
this rulemaking. EPCA requires that DOE determine, supported by clear 
and convincing evidence, that adoption of a uniform national standard 
more stringent than that in ASHRAE Standard 90.1 would result in 
significant additional conservation of energy and be technologically 
feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II); 
emphasis added) The inability to make a determination, supported by 
clear and convincing evidence, with regard to any one of the statutory 
criteria prohibits DOE from adopting more-stringent standards 
regardless of its determinations as to the other criteria. Due to the 
significant uncertainties related to installation costs and energy use, 
DOE could not reasonably conduct an analysis of economic justification, 
because those uncertainties would propagate into the results of any 
such analysis. Therefore, the result of such economic analysis would 
fail to produce the clear and convincing evidence required under the 
statute to demonstrate that amended standards for UFHWSTs would be 
economically justified, thereby providing an additional basis for DOE's 
decision to move forward with a final determination.
4. Summary
    Based on the reasons stated in the foregoing discussion, DOE has 
determined that the energy conservation standards for unfired hot water 
storage tanks do not need to be amended, because it lacks ``clear and 
convincing'' evidence that amended standards would result in 
significant additional conservation of energy or be economically 
justified.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Executive Order (``E.O.'') 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), as supplemented and reaffirmed by 
E.O. 13563, ``Improving Regulation and Regulatory Review,'' 76 FR 3821 
(Jan. 21, 2011), requires agencies, to the extent permitted by law, to: 
(1) Propose or adopt a regulation only upon a reasoned determination 
that its benefits justify its costs (recognizing that some benefits and 
costs are difficult to quantify); (2) tailor regulations to impose the 
least burden on society, consistent with obtaining regulatory 
objectives, taking into account, among other things, and to the extent 
practicable, the costs of cumulative regulations; (3) select, in 
choosing among alternative regulatory

[[Page 31382]]

approaches, those approaches that maximize net benefits (including 
potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity); (4) to the extent 
feasible, specify performance objectives, rather than specifying the 
behavior or manner of compliance that regulated entities must adopt; 
and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public. DOE 
emphasizes as well that E.O. 13563 requires agencies to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible. In its guidance, the 
Office of Information and Regulatory Affairs (``OIRA'') in the Office 
of Management and Budget (``OMB'') has emphasized that such techniques 
may include identifying changing future compliance costs that might 
result from technological innovation or anticipated behavioral changes. 
For the reasons stated in the preamble, this regulatory action is 
consistent with these principles.
    OMB has determined that this final determination does not 
constitute a ``significant regulatory action'' under section 3(f) of 
E.O. 12866. Accordingly, this action was not subject to review under 
E.O. 12866 by 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'') 
and a final regulatory flexibility analysis (``FRFA'') for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by 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 
(www.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 conducted a focused inquiry into small business manufacturers of 
the equipment covered by this final determination. The Department used 
available public information to identify potential small manufacturers. 
DOE accessed the Compliance Certification Database to create a list of 
companies that import or otherwise manufacture the unfired hot water 
storage tanks covered by this final determination. 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.
    DOE reviewed this final determination under the provisions of the 
Regulatory Flexibility Act and the policies and procedures published on 
February 19, 2003. The final determination does not amend any energy 
conservation standards for UFHWSTs. On the basis of the foregoing, DOE 
certifies that this final determination will have no significant 
economic impact on a substantial number of small entities. Accordingly, 
DOE has not prepared an FRFA for this final 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 of 1995

    This final determination, which determines that amended energy 
conservation standards for UFHWSTs are unneeded under the applicable 
statutory criteria, imposes 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 has analyzed this final determination in accordance with the 
National Environmental Policy Act (``NEPA'') and DOE's NEPA 
implementing regulations (10 CFR part 1021). DOE's regulations include 
a categorical exclusion for actions including interpretations and 
ruling with respect to existing regulation. 10 CFR part 1021, subpart 
D, appendix A4. DOE has completed the necessary review under NEPA and 
has determined that this final determination would not have a 
significant individual or cumulative impact to human health and/or 
environment, and is consistent with actions contained in DOE 
categorical exclusion A4. See 10 CFR 1021.410. Therefore, DOE has 
determined that promulgation of this final determination is not a major 
Federal action significantly affecting the quality of the human 
environment within the meaning of NEPA, and does not require an 
environmental assessment or an environmental impact statement.

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 final determination and 
has determined that it would not have a substantial direct effect on 
the States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. EPCA governs and prescribes Federal 
preemption of State regulations as to energy conservation for the 
equipment that is the subject of this final 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 final determination does not amend the 
standards for UFHWSTs, there is no impact on the policymaking 
discretion of the States. Therefore, no further

[[Page 31383]]

action is required by Executive Order 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 
E.O. 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 final 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 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 ``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 
www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    DOE examined this final determination according to UMRA and its 
statement of policy and determined that the final 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 final 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 
18, 1988), DOE has determined that this final determination will 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: www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has 
reviewed this final determination 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 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 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.
    DOE has concluded that this final determination, which does not 
amend energy conservation standards for UFHWSTs, is not a significant 
energy action under E.O. 12866. Moreover, it will 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. Accordingly, it is not a significant energy 
action, and 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

[[Page 31384]]

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.'' 70 FR 2664, 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 prepared a report describing that peer 
review.\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. 
Because available data, models, and technological understanding have 
changed since 2007, DOE has engaged with the National Academy of 
Sciences (``NAS'') to review DOE's analytical methodologies to 
ascertain whether modifications are needed to improve the Department's 
analyses. DOE is in the process of evaluating the resulting December 
2021 NAS report.\36\
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    \35\ The 2007 ``Energy Conservation Standards Rulemaking Peer 
Review Report'' is available at the following website: 
www.energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0. (Last accessed Feb. 21, 
2022.)
    \36\ The December 2021 NAS report is available at 
www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards. (Last accessed Feb. 
21, 2022.)
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M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of this final determination prior to its effective date. 
The report will state that it has been determined that the final 
determination is not a ``major rule'' as defined by 5 U.S.C. 804(2).

VII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
determination.

Signing Authority

    This document of the Department of Energy was signed on May 18, 
2022, by Kelly J. Speakes-Backman, Principal Deputy 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 May 18, 2022.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energyl
[FR Doc. 2022-11128 Filed 5-23-22; 8:45 am]
BILLING CODE 6450-01-P