Energy Conservation Program for Appliance Standards: Energy Conservation Standards for Residential Furnaces and Commercial Water Heaters, 48049-48058 [2021-18017]

Download as PDF Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules Mississippi, Missouri, Arkansas, Virginia, Oklahoma, and New Mexico) to attend its annual meeting on February 3, 2021. Most of the Executive Directors for certified peanut producer organizations attended this meeting. All the Board’s meetings are open to the public and interested persons are invited to participate and express their views. The Board announced that it voted to increase the threshold level from 10,000 to 20,000 per ton on a 3year average production for a state to become a primary peanut-producing state. No concerns were raised. We have performed this initial RFA analysis regarding the impact of this proposed action on small entities, and we invite comments concerning potential effects of this action on small businesses. USDA has determined that this proposed rule is consistent with and would effectuate the purposes of the 1996 Act. A 30-day comment period is provided to allow interested persons to respond to this proposal. All written comments received in response to this proposed rule will be considered prior to finalizing this action. List of Subjects in 7 CFR Part 1216 Administrative practice and procedure, Advertising, Consumer information, Marketing agreements, Peanut promotion, Reporting and recordkeeping requirements. For reasons set forth in the preamble, 7 CFR part 1216 is proposed to be amended as follows: PART 1216—PEANUT PROMOTION, RESEARCH, AND INFORMATION ORDER 1. The authority citation for 7 CFR part 1216 continues to read as follows: ■ Authority: 7 U.S.C. 7411–7425; 7 U.S.C. 7401. 2. Section 1216.15 is revised to read as follows: ■ lotter on DSK11XQN23PROD with PROPOSALS1 § 1216.15 Primary peanut-producing Primary peanut-producing states means Alabama, Arkansas, Florida, Georgia, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Texas and Virginia, provided these VerDate Sep<11>2014 16:25 Aug 26, 2021 Jkt 253001 § 1216.40 Establishment and membership. (a) Establishment of a National Peanut Board. There is hereby established a National Peanut Board, hereinafter called the Board, comprised of no more than 12 peanut producers and alternates, appointed by the Secretary from nominations as follows: (1) Eleven members and alternates. One member and one alternate shall be appointed from each primary peanutproducing state, who are producers and whose nominations have been submitted by certified peanut producer organizations within a primary peanutproducing state. * * * * * Bruce Summers, Administrator, Agricultural Marketing Service. [FR Doc. 2021–18536 Filed 8–26–21; 8:45 am] BILLING P DEPARTMENT OF ENERGY 10 CFR Parts 430 and 431 [EERE–2018–BT–STD–0018] RIN 1904–AE39 Energy Conservation Program for Appliance Standards: Energy Conservation Standards for Residential Furnaces and Commercial Water Heaters Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Notification of proposed interpretive rule; request for comment. AGENCY: On January 15, 2021, the Department of Energy (DOE or Department) published a final interpretive rule in the Federal Register determining that, in the context of residential furnaces, commercial water heaters, and similarly-situated products or equipment, use of non-condensing technology (and associated venting) constitutes a performance-related ‘‘feature’’ under the Energy Policy and Conservation Act, as amended (EPCA), that cannot be eliminated through adoption of an energy conservation standard. DOE deems it prudent to revisit its interpretation. For the reasons stated in this document, the Department proposes to return to its previous and SUMMARY: Minor peanut-producing states. Minor peanut-producing states means all peanut-producing states with the exception of Alabama, Arkansas, Florida, Georgia, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Texas and Virginia. ■ 3. Section 1216.21 is revised to read as follows: § 1216.21 states. states maintain a 3-year average production of at least 20,000 tons of peanuts. ■ 4. In § 1216.40, paragraphs (a) introductory text and (a)(1) are revised to read as follows: PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 48049 long-standing interpretation (in effect prior to the January 15, 2021 final interpretive rule), under which the technology used to supply heated air or hot water is not a performance-related ‘‘feature’’ that provides a distinct consumer utility under EPCA. DOE requests comment on its proposed interpretation. Once DOE has arrived at a final interpretation, the Department plans to again evaluate whether amended energy conservation standards would result in significant savings of energy, be technologically feasible, and be economically justified, consistent with its interpretation. DATES: DOE will accept comments, data, and information regarding this proposed interpretive rule no later than September 27, 2021. ADDRESSES: Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at www.regulations.gov. Follow the instructions for submitting comments. Alternatively, interested persons may submit comments, identified by docket number EERE–2018–BT–STD–0018 and/or RIN number 1904–AE39, by email: to ResFurnaceCommWaterHeater 2018STD0018@ee.doe.gov. Include docket number EERE–2018–BT–STD– 0018 and/or RIN number 1904–AE39 in the subject line of the message. Submit electronic comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and avoid the use of special characters or any form of encryption. Although DOE has routinely accepted public comment submissions through a variety of mechanisms, including postal mail and hand delivery/courier, the Department has found it necessary to make temporary modifications to the comment submission process in light of the ongoing COVID–19 pandemic. DOE is currently suspending receipt of public comments via postal mail and hand delivery/courier. If a commenter finds that this change poses an undue hardship, please contact Appliance Standards Program staff at (202) 586– 1445 to discuss the need for alternative arrangements. Once the COVID–19 pandemic health emergency is resolved, DOE anticipates resuming all of its regular options for public comment submission, including postal mail and hand delivery/courier. No telefacsimiles (faxes) will be accepted. For detailed instructions on submitting comments and additional information on this process, see section IV (Public Participation) of this document. Docket: The docket for this activity, which includes Federal Register notices, comments, and other E:\FR\FM\27AUP1.SGM 27AUP1 48050 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules 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/ #!docketDetail;D=EERE-2018-BT-STD0018. The docket web page contains instructions on how to access all documents, including public comments, in the docket. FOR FURTHER INFORMATION CONTACT: Ms. Catherine Rivest, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE–5B, 1000 Independence Avenue SW, Washington, DC 20585–0121. Telephone: (202) 586– 7335. Email: ApplianceStandardsQuestions@ ee.doe.gov. 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: Eric.Stas@hq.doe.gov. For further information on how to submit a comment or review other public comments and the docket, contact the Appliance and Equipment Standards Program staff at (202) 287– 1445 or by email: ApplianceStandardsQuestions@ ee.doe.gov. SUPPLEMENTARY INFORMATION: Table of Contents lotter on DSK11XQN23PROD with PROPOSALS1 I. Introduction and Background A. Authority B. Historic Interpretation of the ‘‘Features’’ Provision C. January 15, 2021 Final Interpretive Rule Regarding Non-Condensing Technology II. Proposed Interpretive Rule III. Conclusion IV. Public Participation V. Approval of the Office of the Secretary I. Introduction and Background The following sections discuss the statutory authority underlying this proposed interpretive rule, as well as the relevant background related to determination of what constitutes a ‘‘feature’’ for the purpose of establishing energy conservation standards under EPCA. Additionally, these sections address DOE’s historic interpretation, DOE’s interpretation in the January 15, 2021 final interpretive rule (86 FR 4776), and the issuance of Executive Order 13990. This background sets the stage for presentation of DOE’s current VerDate Sep<11>2014 16:25 Aug 26, 2021 Jkt 253001 proposed interpretive rule addressing whether non-condensing technology (and associated venting) constitutes a performance-related ‘‘feature’’ under EPCA which may not be eliminated by an energy conservation standard. A. Authority EPCA 1, Public Law 94–163 (42 U.S.C. 6291 et seq.), as amended, authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. When establishing new or amended standards for covered products, DOE is directed to consider any lessening of the utility or the performance of covered products likely to result from the imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Moreover, the Secretary of Energy (Secretary) may not prescribe an amended or new standard if the Secretary finds (and publishes such finding) that interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes (collectively referred to hereafter as ‘‘features’’) that are substantially the same as those generally available in the United States at the time of the Secretary’s finding. (42 U.S.C. 6295(o)(4); the ‘‘features’’ provision) EPCA provides a companion provision at 42 U.S.C. 6295(q)(1), which requires that a rule prescribing an energy conservation standard for a type of covered products shall specify a level of energy use or efficiency higher or lower than that which applies (or would apply) to any group of covered products which have the same function or intended use, if the Secretary determines that covered products within such group: (A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performancerelated feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard from that which applies (or will apply) to other products within such type (or class). In making a determination of whether a performance-related feature justifies the establishment of a higher or lower standard, the Secretary must consider such factors as the utility to the consumer of such a feature, and such 1 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). PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 other factors as the Secretary deems appropriate. (42 U.S.C. 6295(q)(1)) These provisions apply generally to covered commercial and industrial equipment, other than ASHRAE equipment,2 through the crosswalk provision at 42 U.S.C. 6316(a). ASHRAE equipment has its own separate statutory scheme under EPCA, with the default situation being that DOE must adopt the level set forth in ASHRAE Standard 90.1 unless the Department has clear and convincing evidence to adopt a more stringent standard (see 42 U.S.C. 6313(a)(6)). Under 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa), there is a provision similar to the ‘‘features’’ provision previously discussed that states that the Secretary may not prescribe an amended standard under this subparagraph if the Secretary finds (and publishes the finding) that interested persons have established by a preponderance of the evidence that a standard is likely to result in the unavailability in the United States in any product type (or class) of performance characteristics (including reliability, features, sizes, capacities, and volumes) that are substantially the same as those generally available in the United States at the time of the finding of the Secretary. However, it is noted that this provision contains the specific limitation that it applies to an amended standard prescribed under this subparagraph (i.e., when DOE is acting under its authority to set a morestringent standard). There is no companion ‘‘features’’ provision under 42 U.S.C. 6313(a)(6)(A), which is the provision that would apply when DOE is triggered to adopt the levels set by ASHRAE. There is likewise no companion provision to 42 U.S.C. 6295(q)(1) for ASHRAE equipment. In addition, on January 20, 2021, the White House issued Executive Order 13990, ‘‘Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.’’ 86 FR 7037 (Jan. 25, 2021). Section 1 of that Order lists several policies related to the protection of public health and the environment, including reducing greenhouse gas emissions and bolstering 2 ‘‘ASHRAE’’ refers to the American Society of Heating, Refrigerating and Air-Conditioning Engineers. Under EPCA, ‘‘ASHRAE equipment’’ refers to small commercial package air conditioning and heating equipment, large commercial package air conditioning and heating equipment, very large commercial package air conditioning and heating equipment, packaged terminal air conditioners, packaged terminal heat pumps, warm-air furnaces, packaged boilers, storage water heaters, instantaneous water heaters, and unfired hot water storage tanks, which are addressed by ASHRAE in ASHRAE Standard 90.1, Energy Standard for Buildings Except Low-Rise Residential Buildings. (See 42 U.S.C. 6313(a)(6)) E:\FR\FM\27AUP1.SGM 27AUP1 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules lotter on DSK11XQN23PROD with PROPOSALS1 the Nation’s resilience to climate change. Id. at 86 FR 7037, 7041. Section 2 of the Order also instructs all agencies to review ‘‘existing regulations, orders, guidance documents, policies, and any other similar agency actions (agency actions) promulgated, issued, or adopted between January 20, 2017, and January 20, 2021, that are or may be inconsistent with, or present obstacles to, [these policies].’’ Id. Agencies are then directed, as appropriate and consistent with applicable law, to consider suspending, revising, or rescinding these agency actions and to immediately commence work to confront the climate crisis. Id. In light of E.O. 13990, DOE has undertaken a review of the final interpretation and withdrawal of proposed rulemakings published in the Federal Register on January 15, 2021. While E.O. 13990 triggered the Department’s re-evaluation, DOE is relying on the analysis presented below, based upon EPCA, to re-examine the January 2021 Final Interpretive Rule. Accordingly, the Department has initially determined that the historic application of the ‘‘features’’ provision to non-condensing technology reflects the better reading of the requirements in EPCA. B. Historic Interpretation of the ‘‘Features’’ Provision As discussed, when evaluating and establishing energy conservation standards, DOE is required to divide covered products into product classes by the type of energy used, by capacity, or by other performance-related features that DOE determines justify a different standard. In making a determination of whether a performance-related feature justifies a different standard, the Department must consider factors such as the utility to the consumer of the feature and other factors DOE determines are appropriate. (42 U.S.C. 6295(q)) As the product class provision is complementary to the ‘‘features’’ provision, consideration of what constitutes a feature and what constitutes utility for the purpose of establishing a product class is germane to the application of the ‘‘features’’ provision. At a basic level, a ‘‘feature’’ is a trait, attribute, or function of a product. The usefulness and benefit provided to a consumer by a feature is the feature’s ‘‘utility.’’ Given the multitude of covered products and equipment for which DOE is responsible, the Department has found the concept of ‘‘feature’’ to be very case-specific. 86 FR 4776, 4797 (Jan. 15, 2021). No single definition could effectively capture the VerDate Sep<11>2014 16:25 Aug 26, 2021 Jkt 253001 potential for features across the broad array of consumer products and commercial equipment subject to EPCA’s regulatory scheme. Id. That is why DOE developed the concept of consumer utility and how the consumer interacts with the product/equipment for when DOE is assessing ‘‘features.’’ Id. Historically, DOE has viewed utility as an aspect of the product that is accessible to the layperson and is based on user operation and interaction with the product. This interpretation has been applied in DOE’s previous rulemakings by determining utility through the value the item brings to the consumer, rather than through analyzing complicated design features that do not impact what the consumer perceives as the value of the product, or costs that anyone, including the consumer, manufacturer, installer, or utility companies, may bear. DOE reasoned that this approach is consistent with EPCA’s requirement for a separate and extensive analysis of economic justification for the adoption of any new or amended energy conservation standard (see 42 U.S.C. 6295(o)(2)(A)–(B) and (3)). Examples of prior consideration of the ‘‘features’’ provision, utility, and product/ equipment classes are provided in the following paragraphs. In a final rule addressing energy conservation standards for cooking products, DOE did not consider a design option that eliminated oven door windows. 63 FR 48038, 48041 (Sept. 8, 1998). A number of commenters asserted that the oven door window provides consumer utility by alleviating the need for users to open the oven door to check on the contents. Id. DOE agreed with commenters that the removal of the oven door window would increase the frequency in which consumers open the oven door. Id. DOE also found this increased opening would have the potential to increase energy usage. Id. DOE further indicated that it would reevaluate oven door window designs should a window material with higher thermal insulation properties become a proven technology. Id. In the case of residential clothes washers, DOE has maintained a product class distinction based on axis of loading (i.e., front-loading and toploading units). Based on comments received during rulemakings, DOE identified axis of loading as a feature that impacts consumer utility (i.e., the longer cycle times of front-loading residential clothes washers versus cycle times for top-loaders are likely to impact consumer utility). 77 FR 32307, 32319 (May 31, 2012). Conversely, DOE PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 48051 eliminated the suds-saving product class because the market had changed, and, at the time of the rulemaking, DOE did not identify any suds-saving residential clothes washers on the market in the United States. 77 FR 32307, 32317 (May 31, 2012). In a 2011 rulemaking, DOE created separate product classes for vented and ventless residential clothes dryers based on DOE’s recognition of the ‘‘unique utility’’ that ventless clothes dryers offer to consumers. 76 FR 22454, 22485 (April 21, 2011). This utility could be characterized as the ability to have a clothes dryer in a living area where vents are impossible to install (i.e., an apartment in a high-rise building). As explained in the accompanying technical support document, ventless dryers can be installed in locations where venting dryers would be precluded due to venting restrictions.3 But in another rulemaking, DOE found that water heaters that utilize heat pump technology did not need to be put in a separate product class from conventional types of hot water heaters that utilize electric resistance technology, even though water heaters utilizing heat pumps require the additional installation of a condensate drain that a hot water heater utilizing electric resistance technology does not require. 75 FR 20112, 20135 (April 16, 2010). Regardless of the installation factors, DOE did not find the mode of heating water to be a performancerelated feature or provide a unique utility. Id. DOE also noted comments stating that in the then-current market, water heaters that employed heat pump technology were advertised as replacements for water heaters that employed electric resistance technology. Id. However, DOE has cautioned that disparate products may have very different consumer utilities, thereby making direct comparisons difficult and potentially misleading. 76 FR 22454, 22485 (April 21, 2011). C. January 15, 2021 Final Interpretive Rule Regarding Non-Condensing Technology On March 12, 2015, DOE published a notice of proposed rulemaking (NOPR) in the Federal Register to amend energy conservation standards for residential non-weatherized gas furnaces and mobile home furnaces, in furtherance of its statutory obligation to determine whether more stringent amended standards would be technologically 3 See pp. 3–59 of the technical support document, available at www.regulations.gov/document/EERE– 2007-BT-STD-0010-0053. E:\FR\FM\27AUP1.SGM 27AUP1 lotter on DSK11XQN23PROD with PROPOSALS1 48052 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules feasible and economically justified, and would save a significant amount of energy. 80 FR 13120 (March 2015 Furnace NOPR). To provide further consideration of comments suggesting a separate product class for furnaces based on input capacity and in order to mitigate some of the negative impacts of the proposed standards, DOE published a notice of data availability (NODA) in the Federal Register on September 14, 2015. 80 FR 55038 (September 2015 Furnaces NODA). DOE subsequently published a supplemental notice of proposed rulemaking (SNOPR) for this rulemaking in the Federal Register on September 23, 2016, in which DOE proposed to establish capacity-based product classes. 81 FR 65720 (September 2016 Furnaces SNOPR). On May 31, 2016, DOE published in the Federal Register a proposal to amend the energy conservation standards for commercial water heaters. 81 FR 34440 (May 2016 Commercial Water Heaters NOPR). In both the residential furnaces rulemaking and the commercial water heaters rulemaking, DOE proposed amended energy conservation standards that would effectively require products/ equipment in certain classes to use condensing technology to meet the amended standards. See 81 FR 65720, 65852 (Sept. 23, 2016) and 81 FR 34440, 34503–34504 (May 31, 2016). For the product/equipment classes where such standards were proposed, if finalized, the amended standards would have effectively eliminated all noncondensing products/equipment that are currently on the market in those classes. In the March 2015 Furnace NOPR, DOE tentatively concluded that the methods by which a furnace is vented— which is a significant differentiator of condensing and non-condensing furnaces—do not provide any separate performance-related impacts. Therefore, DOE had no statutory basis for defining a separate class based on venting and drainage characteristics because venting methods do not provide unique utility to consumers beyond the basic function of providing heat, which all furnaces perform. 80 FR 13120, 13138 (March 12, 2015). In the September 2016 Furnace SNOPR, DOE reiterated its tentative conclusion that methods of venting do not provide any performance-related utility separate from the basic function of a furnace. 81 FR 65720, 65753 (Sept. 23, 2016). Similarly, in the May 2016 Commercial Water Heater NOPR, DOE tentatively concluded that both noncondensing and condensing gas-fired commercial water heating equipment provide the same hot water for use by commercial consumers, and, therefore, VerDate Sep<11>2014 16:25 Aug 26, 2021 Jkt 253001 separate equipment classes could not be justified. 81 FR 34440, 34463 (May 31, 2016). On October 18, 2018, DOE received a petition for rulemaking submitted by the American Public Gas Association, Spire, Inc., the Natural Gas Supply Association, the American Gas Association, and the National Propane Gas Association, collectively referred to as the ‘‘Gas Industry Petitioners,’’ asking DOE to: (1) Issue an interpretive rule stating that DOE’s proposed energy conservation standards for residential furnaces and commercial water heaters would result in the unavailability of ‘‘performance characteristics’’ within the meaning of EPCA, specifically by eliminating from the market units utilizing non-condensing technology, and (2) withdraw the proposed energy conservation standards for residential furnaces and commercial water heaters based upon such findings. DOE published the notice of petition in the Federal Register on November 1, 2018 and requested public comment.4 83 FR 54883. Following consideration of the comments on the petition, DOE published a notice of proposed interpretive rule on July 11, 2019, presenting DOE’s tentative interpretation that, in the context of residential furnaces, commercial water heaters, and similarly-situated products/ equipment, use of non-condensing technology (and associated venting) would constitute a performance-related ‘‘feature’’ under EPCA that cannot be eliminated through adoption of an energy conservation standard. 84 FR 33011 (July 2019 Proposed Interpretive Rule).5 DOE also provided that, if such interpretation were to be finalized, it anticipated developing supplemental notices of proposed rulemaking that would implement the new legal interpretation for the subject residential furnaces and commercial water heaters. 84 FR 33011, 33021 (July 11, 2019). DOE published a supplemental notice of proposed interpretation in the Federal Register on September 24, 2020, which proposed alternative approaches to product/equipment class setting in this context. 85 FR 60090. The supplemental proposed interpretive rule was in response to comments expressing 4 In response to requests submitted by two stakeholders, DOE extended the initial 90-day comment period for an additional 30 days. 84 FR 449 (Jan. 29, 2019). 5 The July 2019 Proposed Interpretive Rule granted the request for an interpretive rule but initially denied the Gas Industry Petitioners’ request to withdraw DOE’s earlier proposed rules for residential furnaces and commercial water heaters. 84 FR 33011, 33021 (July 11, 2019). PO 00000 Frm 00007 Fmt 4702 Sfmt 4702 concern with the proposed focus on ‘‘non-condensing’’ technology as the performance-related feature. 85 FR 60090, 60094–60095 (Sept. 24, 2020). Alternatively, the supplemental notice of proposed interpretation considered venting compatibility as a possible ‘‘feature.’’ 85 FR 60095 (Sept. 24, 2020). DOE requested comment on this alternative approach. Id. On January 15, 2021, DOE published in the Federal Register a final interpretive rule determining that, in the context of residential furnaces, commercial water heaters, and similarly-situated products/equipment, use of non-condensing technology (and associated venting) constitutes a performance-related ‘‘feature’’ under EPCA that cannot be eliminated through adoption of an energy conservation standard. 86 FR 4776 (January 2021 Final Interpretation). Following consideration of comments and data submitted by stakeholders in response to the proposed interpretation and supplemental proposal, DOE found that when used by the appliances in question, non-condensing technology (and associated venting) constitutes a performance-related feature that provides consumer utility distinct from that provided by such appliances that employ condensing technology. More specifically, in contrast to condensing units, non-condensing units: (1) Avoid complex installations in certain locations constrained by space, existing venting, and available drainage; (2) avoid the encroachment on usable space that would occur in certain installations, and (3) do not enhance the level of fuel switching that might accompany standard setting absent a separate product/equipment class for non-condensing appliance. 86 FR 4776, 4816 (Jan. 15, 2021). DOE stated that such an interpretation would extend to all relevant/applicable cases involving consumer products, non-ASHRAE commercial equipment, and ASHRAE equipment where DOE adopts a level more stringent than the ASHRAE level. 86 FR 4776, 4816–4817 (Jan. 15, 2021). In light of this final interpretation, DOE withdrew its March 12, 2015 proposed rule and September 23, 2016 supplemental proposed rule for energy conservation standards for nonweatherized gas furnace and mobile home gas furnaces, as well as its May 31, 2016 proposed rule for energy conservation standards for commercial water heating equipment. 86 FR 3873 (Jan. 15, 2021). However, DOE has not implemented the January 15, 2021 final interpretation in the context of any individual energy conservation E:\FR\FM\27AUP1.SGM 27AUP1 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules lotter on DSK11XQN23PROD with PROPOSALS1 standards rulemakings for affected covered products/equipment. II. Proposed Interpretive Rule Based on DOE’s reconsideration of the January 2021 Final Interpretation, the Department is proposing to revise its interpretation of EPCA’s ‘‘features’’ provision in the context of condensing and non-condensing technology used in furnaces, water heating equipment, and similarly-situated appliances. Consistent with the interpretation presented in the May 2015 Furnaces NOPR, the September 2016 Furnaces SNOPR, and the May 2016 Commercial Water Heaters NOPR, DOE tentatively concludes that in the context of residential furnaces, commercial water heaters, and similarly-situated products or equipment, use of non-condensing technology (and associated venting) is not a performance-related ‘‘feature’’ for the purpose of the EPCA prohibitions at 42 U.S.C. 6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa). DOE initially finds that non-condensing technology (and the associated venting) does not provide unique utility to consumers separate from an appliance’s function of providing heated air or water, as applicable. Upon further consideration, DOE has tentatively concluded that utility is determined through the benefits and values the feature provides to the consumer while interacting with the product, not through analyzing or making comparisons to more complicated design features, or costs that anyone, including the consumer, manufacturer, installer, or utility companies, may bear. Stated differently, DOE has tentatively determined that differences in cost or complexity of installation between different methods of venting (e.g.., a condensing furnace versus a non-condensing furnace) do not make any method of venting a performance-related feature under 42 U.S.C. 6295(o)(4), as would justify separating the products/equipment into different product/equipment classes under 42 U.S.C. 6295(q)(1). Again, this approach is consistent with EPCA’s requirement for a separate and extensive analysis of economic justification for the adoption of any new or amended energy conservation standard (see 42 U.S.C. 6295(o)(2)–(3); 42 U.S.C. 6313(a)(6)(A)– (C); 42 U.S.C. 6316(a)). Therefore, because DOE has come to see that the issues underlying its January 15, 2021 final interpretive rule are appropriately framed as matters of cost, this proposed interpretation would return those issues for resolution to their proper sphere as part of DOE’s economic analysis in individual energy VerDate Sep<11>2014 16:25 Aug 26, 2021 Jkt 253001 conservation standards rulemakings. DOE initially finds this interpretation to be the best reading of the relevant provisions of EPCA, which is consistent with the intent and purposes of the statute. In DOE’s view, the proposed interpretation would align better with EPCA’s goals of increasing the energy efficiency of covered products and equipment through the establishment and amendment of energy conservation standards and promoting conservation measures when feasible. (42 U.S.C. 6291 et seq., as amended) The following paragraphs set forth DOE’s rationale for its proposed revised interpretation in further detail. As background, DOE must follow specific statutory criteria for prescribing new or amended standards for covered products and covered equipment. In general, a new or amended standard must be designed to achieve the maximum improvement in energy efficiency that the Secretary determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A); 42 U.S.C. 6295(o)(3)(B); 42 U.S.C. 6316(a)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens after receiving comments on the proposed standard and by considering, to the greatest extent practicable, seven factors (see footnote 6). One of the seven factors for consideration is the lessening of the utility or the performance of the covered products likely to result from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(IV); 42 U.S.C. 6313(a)(6)(B)(ii)(IV); 42 U.S.C. 6316(a)) As discussed, EPCA further directs that the Secretary may not prescribe an amended or new standard if the Secretary finds (and publishes such finding) that interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary’s finding. (42 U.S.C. 6295(o)(4); 42 U.S.C. 6313(a)(6)(B)(iii)(II); 42 U.S.C. 6316(a)) Also, as discussed, when prescribing an energy conservation standard, DOE must consider whether separate product/equipment classes are justified based on performance-related features and their associated utility. (42 U.S.C. 6295(q)(1); 42 U.S.C. 6316(a)) The ‘‘features’’ provision, the seven factors for economic justification, and the product class provisions are all required PO 00000 Frm 00008 Fmt 4702 Sfmt 4702 48053 considerations in establishing new and amended energy conservation standards. As mentioned previously, a ‘‘feature’’ is a trait, attribute, or function of a product. The usefulness and benefit provided to a consumer by a feature is the feature’s ‘‘utility,’’ and consumer utility is used to evaluate whether a purported feature justifies a separate product class. DOE has historically viewed utility of a product or equipment as an aspect of the appliance that is accessible to the layperson consumer and is based upon user operation and interaction with that appliance. Examples of features, such as oven door windows and angle of access for clothes washers, are illustrative of this principle. Consumers use the oven door window (in conjunction with the oven lamp) to gauge the progress of food undergoing baking, without the need to open the oven door. Needing to open the oven door entails loss of heat, which would decrease the energy efficiency of the oven. The oven door window is a feature which consumers generally appreciate and with which they routinely interact when cooking. The window’s elimination would result in the loss of a performance-related feature that provides valued utility for consumers. Another example would be the angle of access of a clothes washer. Currently, consumers have two options when purchasing clothes washers: Front-loading machines and top-loading machines. Some consumers, such as the elderly, may prefer a top-loading clothes washer, because it is easier to reach the laundry without excessive bending, which is in contrast to the angle of access of a front-loading washer. A broader spectrum of consumers recognizes and appreciates the ability of a top-loading washer to readily accept additional clothing items, even after a wash cycle has begun. Other consumers, such as those with disabilities, may prefer a front-loading machine because that angle of access better suits their access needs. The two angles provided consumer utility in terms of ease of use to different consumer subgroups. Consequently, consistent with the requirements of EPCA, DOE viewed angle of access as a performance-related feature for clothes washers that cannot be eliminated from the market through adoption of an energy conservation standard. In contrast to the examples discussed in the preceding paragraph, DOE has historically viewed a consumer’s interaction with a furnace or water heater to be a simple one, whereby the user only interacts to place a call for heated air or water. After the consumer E:\FR\FM\27AUP1.SGM 27AUP1 lotter on DSK11XQN23PROD with PROPOSALS1 48054 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules adjusts the thermostat or faucet, the user receives the requested heated air or water. There is no noticeable difference to the consumer in access or output based upon the type of technology or venting used by the appliance. As noted previously, this had been DOE’s longstanding interpretation of EPCA’s ‘‘features’’ provision in the context of these appliances until the January 15. 2021 final interpretive rule, and for the reasons explained in the following paragraphs, DOE proposes to once again return to an interpretation that different venting methods of natural gas, propane gas, and/or oil-fired furnaces, water heaters, and similarly-situated products or equipment are not features that provide unique utility to consumers independent from such appliances’ function of providing heated air or water, as applicable. Furthermore, DOE has tentatively concluded that it gave insufficient weight to other policy arguments in development of the January 15, 2021 final interpretive rule. Most importantly, as explained in prior rulemakings, tying the concept of ‘‘feature’’ to a specific technology would effectively lock in the currently existing technology as the ceiling for product efficiency and eliminate DOE’s ability to address technological advances that could yield significant consumer benefits in the form of lower energy costs while providing the same functionality/utility for the consumer. 81 FR 65720, 65752 (Sept. 23, 2016). Because the statute effectively accords performance-related features a protected status, the Department must take great care when making a features determination. Although DOE acknowledges that the January 15, 2021 final interpretive rule suggested that making a features determination would not impede innovation and the development of more efficient technologies, after careful reevaluation, the agency has tentatively reached a different conclusion, for the reasons explained in this proposed interpretive rule. DOE is concerned that determining features solely on product technology, rather than on how the consumer interacts with and benefits from the feature, could undermine the Appliance Standards Program as established by EPCA. See id. If DOE is required to maintain separate product classes to preserve less efficient technologies, then future advancements in the energy efficiency of covered products would become largely voluntary, an outcome in conflict with Congress’s purposes and goals in enacting EPCA. DOE’s proposed VerDate Sep<11>2014 16:25 Aug 26, 2021 Jkt 253001 interpretation would avoid such deleterious outcomes. Finally, the proposed revised interpretation would maintain consideration of installation costs as part of the extensive analysis of economic justification for the adoption of any new or amended energy conservation standard, as required by EPCA, thereby avoiding what would amount to double-counting of cost considerations as arguably would occur through the January 15, 2021 final interpretive rule. In order for DOE to set an energy conservation standard, EPCA requires that such standard must be designed to achieve the maximum improvement in energy savings that is technologically feasible and economically justified. The statute further recites seven factors for use when considering economic justification.6 (42 U.S.C. 6295(o)(2)–(3); 42 U.S.C. 6313(a)(6)(A)–(C); 42 U.S.C. 6316(a)) DOE again notes that the statute’s ‘‘features’’ provision makes no mention of cost as a relevant consideration. (42 U.S.C. 6295(o)(4); 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa)) As required by EPCA, DOE conducts a comprehensive economic analysis as part of each standards rulemaking. In this case, DOE originally considered the additional costs associated with installing condensing residential furnaces and condensing commercial water heaters in the rulemaking proceedings for those appliances that were withdrawn in conjunction with the January 2021 interpretive rule (See 81 FR 65720, 65776–65783 (Sept. 23, 6 Specifically, at 42 U.S.C. 6295(o)(2)(B)(i) (and with essentially the same language at 42 U.S.C. 6313(a)(6)(B)(ii)), EPCA provides: In determining whether a standard is economically justified, the Secretary shall, after receiving views and comments furnished with respect to the proposed standard, determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering— (I) the economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard; (II) 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 products which are likely to result from the imposition of the standard; (III) the total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard; (IV) any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard; (V) the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard; (VI) the need for national energy and water conservation; and (VII) other factors the Secretary considers relevant. PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 2016); 81 FR 34440, 34484–34485 (May 31, 2016)) and would do so again in future rulemakings if the interpretation in this proposal were to be finalized. The Department acknowledges that in its January 2021 final interpretive rule, it extended its view of consumer utility of furnaces and water heaters beyond those appliances’ primary function of providing heated air or water, giving considerable weight to installation situations that could require the addition of new pipes or venting to the usable space of a home or business, major modifications to a utility room, or encroachment upon an existing window or patio. 86 FR 4776, 4786 (Jan. 15, 2021). However, upon further evaluation, DOE realizes that its change in interpretation was unnecessary and arguably beyond what the statute can support, because even if the Department had definitive evidence regarding the extent of difficult or impossible installation situations, loss of usable residential or commercial space, or fuel switching effects, DOE nonetheless had a strong statutorily-based rationale for its historic interpretation, as would support a subsequent return thereto. If consumer utility turns on the layperson’s operation and interaction with the product (i.e., calling for and enjoying the heated air or water which the appliance in question provides) rather than type of venting, then all furnaces and water heaters provide the same basic utility: heated air or water. While DOE acknowledges that installation of condensing products/ equipment requires modifications to the installed space in some applications (e.g., concealing vent pipes that pass through the living space by inclusion in a soffit), such modifications may impact the installation cost and/or complexity, but once installed, they do not impact the user’s operation and interaction with the appliance. Moreover, the Department understands that there are technological solutions for most difficult installation situations and that consumers also have heating and waterheating options other than installation of a condensing appliance. Consequently, the agency tentatively finds that the matter essentially boils down to one of cost, which is a topic properly analyzed and adequately addressed under the economic justification provisions of EPCA. DOE’s reasoning, which is consistent with the Department’s historic interpretation, is discussed in further detail in the paragraphs that follow. However, before turning to that rationale, DOE would add furthermore that it has tentatively concluded that it gave undue weight to E:\FR\FM\27AUP1.SGM 27AUP1 lotter on DSK11XQN23PROD with PROPOSALS1 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules these arguments presented by the Gas Industry Petitioners, which were largely based upon anecdotal accounts and limited installer survey data. After reexamining the record, DOE has preliminarily determined that the qualitative arguments made by the Gas Industry Petitioners were not accompanied by sufficient evidence to establish the existence or magnitude of the alleged problem, as would support the significant change from DOE’s historic interpretation to the interpretation contained in the January 2021 final interpretive rule. As noted previously, upon reconsideration, DOE has tentatively concluded that consumers have other options for resolving difficult installation situations—the situations that provided two of the three reasons for the January 15, 2021 final interpretive rule—without the need for the Department to declare noncondensing technology and associated venting to be a performance-related feature under EPCA. This provides a further basis for DOE’s proposed return to its historic interpretation. In short, consumers facing difficult installation situations can either: (1) Utilize a technological solution to resolve their installation problem, or (2) switch to an appliance utilizing alternative technologies. Either approach would allow those consumers with potentially difficult installation situations to choose how best to avoid loss of usable space, extensive building modifications, or extreme installation costs identified in the January 15, 2021 final interpretive rule. The first option is to use new technology to overcome identified installation problems. It has been DOE’s historic position that there is a technological solution to accommodate virtually all of the difficult installation situations involving gas-fired appliances, although some might be costly (e.g., requiring new venting). Although a critical piece of the Gas Industry Petitioners’ argument in support of their petition was that it may be impossible to install a condensing appliance in certain replacement applications, they never provided any definitive proof as to the existence of this problem or its extent. In promulgating the January 15, 2021 final interpretive rule, DOE found these theories persuasive, but upon further examination, there is at best weak foundational support to challenge the Appliance Standards Program’s record of evidence that it is technologically feasible to install condensing appliances in virtually all replacement applications. If the consumer’s affinity VerDate Sep<11>2014 16:25 Aug 26, 2021 Jkt 253001 for gas-fueled appliances is sufficiently high to warrant their continued use, the consumer will choose to make such changes when installing the more efficient appliance, which reflects an economic decision. Technological solutions should also resolve the specific issue of orphaned water heaters identified by the Gas Industry Petitioners. (An ‘‘orphaned water heater’’ refers to the situation in which a non-condensing furnace and non-condensing water heater share a common vent, but, upon replacement of the non-condensing furnace with a condensing furnace, they can no longer share that same venting due to differences in venting requirements.) DOE has, in fact, identified a newer technology for which comprehensive data are currently unavailable, but when mature, it could address the issue of orphaned appliances, allow consumers to switch from a non-condensing furnace to a condensing furnace, and permit continued use of existing common venting in a greater variety of applications.7 86 FR 4776, 4781 (Jan. 15, 2021). More specifically, this venting technology may allow a consumer to obtain the efficiency of a condensing furnace using the existing venting in a residence by sharing venting space with a water heater. It would significantly reduce the cost burden associated with installing condensing furnaces and reduce potential instances of ‘‘orphaned’’ water heaters. This technology could allow consumers to switch from a non-condensing furnace to a condensing furnace in a greater variety of applications, such as urban row houses. See 80 FR 13120, 13138 (March 12, 2015). DOE is concerned that characterizing the method of venting as a ‘‘feature’’ due to concerns over orphaned water heaters would limit future advancements in this technology, because establishment of separate product or equipment classes for noncondensing appliances would limit the market for such innovative devices that allow condensing and non-condensing appliances to share the same venting.8 7 In the technical support documents accompanying the proposed rules for residential furnaces, DOE referenced a study from the Oak Ridge National Laboratory that identified various approaches to address the orphaned water heater problem without the need for expensive renovations. See Momen, A. M., J. Munk, K. Biswas, and P. Hughes, Condensing Furnace Venting Part 2: Evaluation of Same-Chimney Vent Systems for Condensing Furnaces and Natural Draft Water Heaters (2015) Oak Ridge National Laboratory: Oak Ridge, TN. Report No. ORNL/TM–2014/656 (Available at: web.ornl.gov/sci/buildings/docs/ Condensing-Furnace-Venting-Part1-Report.pdf) (Last accessed May 6, 2021). 8 Although DOE argued in the January 15, 2021 final interpretive rule that establishment of separate PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 48055 Consequently, DOE has reconsidered and changed its view regarding the argument put forth in the January 2021 Final Interpretation—that replacement of a non-condensing furnace with a condensing unit may result in an orphaned water heater. 86 FR 4776, 4785 (Jan. 15, 2021). DOE would also clarify that the present case of non-condensing gas-fired residential furnaces and commercial water heaters is distinguishable from certain other products that the Department has regulated in the past, such as space-constrained central air conditioners and ventless and compact clothes dryers. DOE explained in two direct final rules that the latter products necessitated design differences related to their reduced size or ventless operation that inherently limited their energy efficiency, and the agency set separate classes on that basis. For ventless clothes dryers, DOE also found that certain consumers (e.g., high-rise apartment dwellers) might not be able to have a clothes dryer at all, unless a ventless option were available. See 76 FR 37408, 37439–37440 (June 27, 2011); 76 FR 22454, 22485 (April 21, 2011). In contrast, there are insufficient data to show that consumers would be without furnace and water heater options in the absence of non-condensing furnaces and water heaters. Furthermore, the subject non-condensing furnaces and water heaters are not significantly different in overall footprint or size from their condensing counterparts (although the composition of the venting used may be different), and the energy efficiency differences are a result of the technology used, a design parameter that is dictated by considerations other than size. The second option for resolving difficult installation situations would be for the consumer to replace a gas-fired furnace or water heater with an electric heat pump or water heater, thereby product or equipment classes would not limit innovation or market trends toward condensing appliances (see 86 FR 4776, 4805), the Department has come to question whether such view is correct, given the potential for a substantial portion of the relevant appliance market to remain at significantly lower levels of efficiency. Even if current trends toward condensing appliances hold, the market might stall before achieving the full energy-savings benefits that EPCA might capture through adoption of an appropriate energy conservation standard(s), a result contrary to the statute’s goals. The same principle holds in the context of innovative ventsharing technologies, because in addressing difficult installations, the January 15, 2021 final interpretive rule essentially undermines a significant component of the market for such technological solutions. Rather than encourage a technological solution with a high energy-savings potential, the Department has come to see that the January 15, 2021 final interpretive rule inappropriately substituted maintenance of a status quo with lower energy-savings potential. E:\FR\FM\27AUP1.SGM 27AUP1 48056 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules lotter on DSK11XQN23PROD with PROPOSALS1 obviating the need for extensive changes to existing venting. Consumers routinely make such choices where they deem it appropriate, which reflects an economic decision. This option would accommodate the needs of consumers who are predominantly concerned with loss of usable space or aesthetics 9 because it would obviate the need to make significant changes to the residential or commercial space. Nothing in EPCA precludes such effects, as long as DOE’s standard would not eliminate the appliance of that fuel type entirely, and in this case, maintaining non-condensing and condensing units under a single class of product or equipment would not eliminate the availability of natural gas, propane, or other fuel type models from the U.S. market. It bears noting that while EPCA recognizes that various fuel types exist in the appliance marketplace and provides certain protections, it does not directly address fuel switching or mandate that DOE take regulatory action to preclude such marketplace effects. In certain appropriate cases, Congress set statutory energy conservation standard levels for products, such as consumer water heaters (see 42 U.S.C. 6295(e)(1)) and consumer boilers (see 42 U.S.C. 6295(f)(3)), based on fuel type (e.g., gas, oil, electricity). EPCA also recognizes differences in fuel type under 42 U.S.C. 6295(q)(1)(A), which provides for setting separate classes where appliances ‘‘consume a different kind of energy from that consumed by other covered products within such type (or class).’’ Notably, however, ECPA’s ‘‘features’’ provision at 42 U.S.C. 6295(o)(4) does not include fuel type within its ambit. Thus, Congress structured EPCA to recognize fuel-type distinctions and to create a level playing field, while balancing the need for overall energy savings. In historically implementing the Appliance Standards Program, DOE has similarly sought to adhere to a policy of fuel neutrality, where consistent with EPCA. DOE 9 DOE notes that in the January 15, 2021 final interpretive rule, the Department clarified that in discussing ‘‘aesthetics,’’ it sought to distinguish between purely subjective considerations (e.g., even the slightest change in color or shape) and physical modifications to a dwelling or business that would be appreciably noticed by the consumer and impact the use of the living or commercial space. In that final interpretive rule, DOE explained that it would limit consideration of performance-related features to the latter group, because a proliferation of product/equipment classes was neither intended nor desired. 86 FR 4776, 4799–4800. However, in this current proposed interpretive rule, the option to replace a non-condensing, gas-fired appliance with a comparable electric appliance empowers individual consumers to make the choice of when aesthetic concerns warrant such change. VerDate Sep<11>2014 16:25 Aug 26, 2021 Jkt 253001 develops energy conservation standards in compliance with the statutory requirements of EPCA, which does not generally involve cross-class comparisons for standard setting. Although DOE typically analyzes fuelswitching effects, the agency is generally free to set an appropriate level under the applicable statutory criteria regardless of any ancillary fuelswitching effects. Thus, to the extent the January 15, 2021 final interpretive rule sought to enshrine an agency obligation to prevent fuel-switching, such action was without statutory basis. Moreover, DOE finds the Gas Industry Petitioners’ arguments about potential fuel switching to be likely overstated for the reasons explained subsequently. To start, the January 15, 2021 final interpretive rule was misguided in suggesting that any rule that would result in fuel switching violates the fuel neutrality principle, because fuel switching occurs frequently and most certainly in the context of new energy conservation standards. Fuel switching is a natural part of market operation for the subject appliances, and it may occur even in the absence of amended energy conservation standards. Installation costs may influence consumer decisions regarding fuel choice, and at any time, a segment of consumers may choose replacement products that rely on a different fuel source than that of the unit being replaced. With that said, the mere potential for fuel switching should not serve as the basis for establishment of a performance-related feature under EPCA. The appropriate threshold for when fuel switching violates the fuel neutrality principle requires a degree of fuel switching that is much greater than typically found in DOE energy conservation standards rulemakings. Given DOE’s policy of fuel neutrality and because fuel switching may be impacted by the adoption of standards, when conducting an energy conservation standards rulemaking, the Department routinely accounts for potential fuel switching in its consumer choice model, which is one part of its full suite of analyses. In certain applications, consumers may choose to replace natural gas or propane gas products with electric products that provide the same utility in the face of changed standards. The extent to which consumers might replace natural gas or propane products with electric products is dependent in part on the stringency of the standards.10 See e.g., 81 FR 65720, 65791–65793 (Sept. 23, 2016). DOE has typically found fuel switching to occur in a small number of cases in any given rulemaking, and based upon currently available information, the Department does not expect that instances of fuel switching would be significantly different for the subject residential furnaces, commercial water heaters, and similarly-situated products or equipment. For example, DOE notes that it was required by statute in a prior rulemaking to consider differential standards for small furnaces based upon input capacity as a means to address fuel switching. Specifically, under 42 U.S.C. 6295(f)(1)(B), Congress directed DOE to consider the appropriate standard level to be set for furnaces with an input capacity of less than 45 kBtu/h. In doing so, Congress directed DOE to consider a standard level within a specified range that was not likely to result in a significant shift from gas heating to electric resistance heating with respect to either residential construction or furnace replacement. Id. See also 54 FR 47916 (Nov. 17, 1989) (final rule adopting energy conservation standards for ‘‘small’’ furnaces). In the September 2016 Furnace SNOPR, DOE considered the potential for reduction of fuelswitching in proposing the capacitybased standards. 81 FR 65720, 65755 (Sept. 23, 2016). Regarding commercial water heaters, DOE initially determined that fuel switching beyond the continuation of historical trends would be unlikely due to differences in operating costs and differences in hot water delivery capacity. 81 FR 34440, 34494 (May 31, 2016). Although the Gas Industry Petitioners made vocal arguments to the contrary about fuel switching in support of their petition and in the context of various rulemaking proceedings, they did not provide data to substantiate these claims. In this case, there is insufficient evidence that fuel switching would be greater than is typically encountered in DOE rulemakings. DOE notes that the incidence of fuel switching for the subject appliances may be mitigated further by the availability of technological solutions such as the ventsharing device discussed previously. For all of these reasons, DOE does not find potential fuel switching alone to be a basis to support a determination that non-condensing technology and associated venting constitute a performance-related feature. 10 For the trial standard levels evaluated in the September 2016 SNOPR, DOE estimated between 1.5 percent and 16.0 percent of customers would replace a non-weatherized gas furnace with either a heat pump or an electric furnace, depending on the stringency of the evaluated standard levels. PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 E:\FR\FM\27AUP1.SGM 27AUP1 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules lotter on DSK11XQN23PROD with PROPOSALS1 Based on the foregoing discussion, DOE proposes to revise its interpretation of EPCA’s ‘‘features’’ provision in the context of condensing and noncondensing technology used in furnaces, water heating equipment, and similarly-situated appliances (where permitted by EPCA) along the lines discussed previously. Accordingly, DOE tentatively concludes that in the context of residential furnaces, commercial water heaters, and similarly-situated products/equipment, use of noncondensing technology (and associated venting) is not a performance-related ‘‘feature’’ for the purpose of the EPCA prohibitions at 42 U.S.C. 6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa). III. Conclusion DOE has initially determined that its proposed interpretation is the best reading of the language of EPCA and DOE’s statutory obligation to establish energy conservation standards for covered products and equipment. Additionally, the proposed interpretation would allow DOE to consider more efficient standards for certain products and equipment. DOE is proposing to revise its application of the ‘‘features’’ provisions in 42 U.S.C. 6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa) as an interpretive rule within the meaning of the Administrative Procedure Act (APA). 5 U.S.C. 551(4); 5 U.S.C. 553(b). DOE is publishing this proposed interpretive rule to solicit comment and to provide the public with a clear and transparent explanation of DOE’s view of a specific legal question, thereby following a process similar to that which resulted in the January 2021 final interpretive rule. DOE wishes to make clear that an interpretive rule is a type of rule or regulation within the meaning of those terms in the Administrative Procedure Act, 5 U.S.C. 551(4). It is well established under the APA that agencies have the authority to issue interpretive rules, and that these rules are a valuable tool for an agency to use to advise the public prospectively and in a clear and transparent manner of the agency’s construction of a statute it administers. Once again, it is noted that DOE withdrew its March 12, 2015 proposed rule and September 23, 2016 supplemental proposed rule for energy conservation standards for nonweatherized gas furnace and mobile home gas furnaces, as well as its May 31, 2016 proposed rule for energy conservation standards for commercial water heating equipment, for further proceedings consistent with the interpretation contained in the January VerDate Sep<11>2014 16:25 Aug 26, 2021 Jkt 253001 15, 2021 final interpretive rule. 86 FR 4776, 4817 (Jan. 15, 2021); see also 86 FR 3873 (Jan. 15, 2021). As explained in this document, DOE is once again examining its interpretation of the relevant statutory provisions in the context of residential furnaces, commercial water heating equipment, and similarly-situated products/ equipment. When this proceeding is complete, DOE plans to again evaluate whether amended energy conservation standards would result in significant savings of energy, be technologically feasible, and be economically justified, consistent with its latest interpretation. However, in any future rulemaking, DOE would make clear that the rulemakings for residential furnaces and commercial water heating equipment have been subject to multiple rounds of public comment, including public meetings, and that extensive records have been developed in the relevant dockets. (See Docket Number EERE– 2014–BT–STD–0031 and Docket Number EERE–2014–BT–STD–0042, respectively). Consequently, DOE wishes to reassure stakeholders that the information obtained through those earlier rounds of public comment, information exchange, and data gathering have not gone to waste. Instead, DOE anticipates building upon the existing record through further notice and comment rulemaking. Such an approach also reflects DOE’s cognizance of the statutory deadlines associated with the energy conservation standards for residential furnaces and commercial water heating equipment. Review Under Executive Order 12866 The Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) waived review of this proposed interpretive rule under Executive Order 12866, ‘‘Regulatory Planning and Review.’’ 58 FR 51735 (Oct. 4, 1993). IV. Public Participation DOE invites all interested parties to submit in writing by the date listed in the DATES section of this document, comments and information regarding this proposed interpretive rule. Interested parties may submit comments, data, and other information using any of the methods described in the ADDRESSES section at the beginning of this document. Submitting comments via www.regulations.gov. The www.regulations.gov web page will require you to provide your name and contact information. Your contact information will be viewable to DOE Building Technologies staff only. Your PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 48057 contact information will not be publicly viewable except for your first and last names, organization name (if any), and submitter representative name (if any). If your comment is not processed properly because of technical difficulties, DOE will use this information to contact you. If DOE cannot read your comment due to technical difficulties and cannot contact you for clarification, DOE may not be able to consider your comment. However, your contact information will be publicly viewable if you include it in the comment itself or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Otherwise, persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments. Do not submit to www.regulations.gov information for which disclosure is restricted by statute, such as trade secrets and commercial or financial information (hereinafter referred to as Confidential Business Information (CBI)). Comments submitted through www.regulations.gov cannot be claimed as CBI. Comments received through the website will waive any CBI claims for the information submitted. For information on submitting CBI, see the Confidential Business Information section. DOE processes submissions made through www.regulations.gov before posting. Normally, comments will be posted within a few days of being submitted. However, if large volumes of comments are being processed simultaneously, your comment may not be viewable for up to several weeks. Please keep the comment tracking number that www.regulations.gov provides after you have successfully uploaded your comment. Submitting comments via email. Comments and documents submitted via email also will be posted to www.regulations.gov. If you do not want your personal contact information to be publicly viewable, do not include it in your comment or any accompanying documents. Instead, provide your contact information in a cover letter. Include your first and last names, email address, telephone number, and optional mailing address. The cover letter will not be publicly viewable as long as it does not include any comments. Include contact information each time you submit comments, data, documents, E:\FR\FM\27AUP1.SGM 27AUP1 48058 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules and other information to DOE. No telefacsimiles (faxes) will be accepted. Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, that are written in English, and that are free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author. Campaign form letters. Please submit campaign form letters by the originating organization in batches of between 50 to 500 form letters per PDF or as one form letter with a list of supporters’ names compiled into one or more PDFs. This reduces comment processing and posting time. Confidential Business Information. Pursuant to 10 CFR 1004.11, any person submitting information that he or she believes to be confidential and exempt by law from public disclosure should submit via email two well-marked copies: one copy of the document marked ‘‘confidential’’ including all the information believed to be confidential, and one copy of the document marked ‘‘non-confidential’’ with the information believed to be confidential deleted. DOE will make its own determination about the confidential status of the information and treat it according to its determination. It is DOE’s policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure). lotter on DSK11XQN23PROD with PROPOSALS1 V. Approval of the Office of the Secretary The Secretary of Energy has approved publication of this notification of proposed interpretive rule. Signing Authority This document of the Department of Energy was signed on August 17, 2021, by Kelly Speakes-Backman, Principal Deputy Assistant Secretary and Acting Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for VerDate Sep<11>2014 16:25 Aug 26, 2021 Jkt 253001 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 August 18, 2021. Treena V. Garrett, Federal Register Liaison Officer, U.S. Department of Energy. [FR Doc. 2021–18017 Filed 8–26–21; 8:45 am] BILLING CODE 6450–01–P DEPARTMENT OF ENERGY 10 CFR Part 431 [EERE–2019–BT–STD–0018] RIN 1904–AE12 Energy Conservation Program: Energy Conservation Standards for Distribution Transformers, Webinar and Availability of the Preliminary Technical Support Document Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Notification of a webinar and availability of preliminary technical support document. AGENCY: The U.S. Department of Energy (DOE) will hold a webinar to discuss and receive comments on the preliminary analysis it has conducted for purposes of evaluating energy conservation standards for distribution transformers. The webinar will cover the analytical framework, models, and tools that DOE is using to evaluate potential standards for this equipment; the results of preliminary analyses performed by DOE for this equipment; the potential energy conservation standard levels derived from these analyses that DOE could consider for this product should it determine that proposed amendments are necessary; and any other issues relevant to the evaluation of energy conservation standards for distribution transformers. In addition, DOE encourages written comments on these subjects. DATES: Meeting: DOE will hold a webinar on Wednesday, September 29, 2021, from 10 a.m. to 2 p.m. See section IV, ‘‘Public Participation,’’ for webinar registration information, participant instructions and information about the capabilities available to webinar participants. Comments: Written comments and information will be accepted on or before, November 10, 2021. ADDRESSES: Interested persons are encouraged to submit comments using SUMMARY: PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 the Federal eRulemaking Portal at www.regulations.gov. Follow the instructions for submitting comments. Alternatively, interested persons may submit comments, identified by docket number EERE–2019–BT–STD–0018, by any of the following methods: 1. Federal eRulemaking Portal: www.regulations.gov. Follow the instructions for submitting comments. 2. Email: to DistributionTransfromers 2019STD0018@ee.doe.gov. Include docket number EERE–2019–BT–STD– 0018 in the subject line of the message. No telefacsimiles (‘‘faxes’’) will be accepted. For detailed instructions on submitting comments and additional information on this process, see section IV of this document. Although DOE has routinely accepted public comment submissions through a variety of mechanisms, including the Federal eRulemaking Portal, email, postal mail, or hand delivery/courier, the Department has found it necessary to make temporary modifications to the comment submission process in light of the ongoing Covid–19 pandemic. DOE is currently suspending receipt of public comments via postal mail and hand delivery/courier. If a commenter finds that this change poses an undue hardship, please contact Appliance Standards Program staff at (202) 586– 1445 to discuss the need for alternative arrangements. Once the Covid–19 pandemic health emergency is resolved, DOE anticipates resuming all of its regular options for public comment submission, including postal mail and hand delivery/courier. Docket: The docket for this activity, which includes Federal Register notices, comments, public meeting transcripts, 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, some documents listed in the index, such as those containing information that is exempt from public disclosure, may not be publicly available. The docket web page can be found at www.regulations.gov/docket?D=EERE2019-BT-STD-0018. The docket web page contains instructions on how to access all documents, including public comments in the docket. See section IV for information on how to submit comments through www.regulations.gov. To inform interested parties and to facilitate this process, DOE has prepared an agenda, a preliminary technical support document (‘‘TSD’’), and briefing materials, which are available on the E:\FR\FM\27AUP1.SGM 27AUP1

Agencies

[Federal Register Volume 86, Number 164 (Friday, August 27, 2021)]
[Proposed Rules]
[Pages 48049-48058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18017]


=======================================================================
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DEPARTMENT OF ENERGY

10 CFR Parts 430 and 431

[EERE-2018-BT-STD-0018]
RIN 1904-AE39


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

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

ACTION: Notification of proposed interpretive rule; request for 
comment.

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

SUMMARY: On January 15, 2021, the Department of Energy (DOE or 
Department) published a final interpretive rule in the Federal Register 
determining that, in the context of residential furnaces, commercial 
water heaters, and similarly-situated products or equipment, use of 
non-condensing technology (and associated venting) constitutes a 
performance-related ``feature'' under the Energy Policy and 
Conservation Act, as amended (EPCA), that cannot be eliminated through 
adoption of an energy conservation standard. DOE deems it prudent to 
revisit its interpretation. For the reasons stated in this document, 
the Department proposes to return to its previous and long-standing 
interpretation (in effect prior to the January 15, 2021 final 
interpretive rule), under which the technology used to supply heated 
air or hot water is not a performance-related ``feature'' that provides 
a distinct consumer utility under EPCA. DOE requests comment on its 
proposed interpretation. Once DOE has arrived at a final 
interpretation, the Department plans to again evaluate whether amended 
energy conservation standards would result in significant savings of 
energy, be technologically feasible, and be economically justified, 
consistent with its interpretation.

DATES: DOE will accept comments, data, and information regarding this 
proposed interpretive rule no later than September 27, 2021.

ADDRESSES: Interested persons are encouraged to submit comments using 
the Federal eRulemaking Portal at www.regulations.gov. Follow the 
instructions for submitting comments. Alternatively, interested persons 
may submit comments, identified by docket number EERE-2018-BT-STD-0018 
and/or RIN number 1904-AE39, by email: to 
[email protected]. Include docket number 
EERE-2018-BT-STD-0018 and/or RIN number 1904-AE39 in the subject line 
of the message. Submit electronic comments in WordPerfect, Microsoft 
Word, PDF, or ASCII file format, and avoid the use of special 
characters or any form of encryption.
    Although DOE has routinely accepted public comment submissions 
through a variety of mechanisms, including postal mail and hand 
delivery/courier, the Department has found it necessary to make 
temporary modifications to the comment submission process in light of 
the ongoing COVID-19 pandemic. DOE is currently suspending receipt of 
public comments via postal mail and hand delivery/courier. If a 
commenter finds that this change poses an undue hardship, please 
contact Appliance Standards Program staff at (202) 586-1445 to discuss 
the need for alternative arrangements. Once the COVID-19 pandemic 
health emergency is resolved, DOE anticipates resuming all of its 
regular options for public comment submission, including postal mail 
and hand delivery/courier.
    No telefacsimiles (faxes) will be accepted. For detailed 
instructions on submitting comments and additional information on this 
process, see section IV (Public Participation) of this document.
    Docket: The docket for this activity, which includes Federal 
Register notices, comments, and other

[[Page 48050]]

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/#!docketDetail;D=EERE-2018-BT-STD-0018. The docket web page contains 
instructions on how to access all documents, including public comments, 
in the docket.

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

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction and Background
    A. Authority
    B. Historic Interpretation of the ``Features'' Provision
    C. January 15, 2021 Final Interpretive Rule Regarding Non-
Condensing Technology
II. Proposed Interpretive Rule
III. Conclusion
IV. Public Participation
V. Approval of the Office of the Secretary

I. Introduction and Background

    The following sections discuss the statutory authority underlying 
this proposed interpretive rule, as well as the relevant background 
related to determination of what constitutes a ``feature'' for the 
purpose of establishing energy conservation standards under EPCA. 
Additionally, these sections address DOE's historic interpretation, 
DOE's interpretation in the January 15, 2021 final interpretive rule 
(86 FR 4776), and the issuance of Executive Order 13990. This 
background sets the stage for presentation of DOE's current proposed 
interpretive rule addressing whether non-condensing technology (and 
associated venting) constitutes a performance-related ``feature'' under 
EPCA which may not be eliminated by an energy conservation standard.

A. Authority

    EPCA \1\, Public Law 94-163 (42 U.S.C. 6291 et seq.), as amended, 
authorizes DOE to regulate the energy efficiency of a number of 
consumer products and certain industrial equipment. When establishing 
new or amended standards for covered products, DOE is directed to 
consider any lessening of the utility or the performance of covered 
products likely to result from the imposition of the standard. (42 
U.S.C. 6295(o)(2)(B)(i)(IV)) Moreover, the Secretary of Energy 
(Secretary) may not prescribe an amended or new standard if the 
Secretary finds (and publishes such finding) that interested persons 
have established by a preponderance of the evidence that the standard 
is likely to result in the unavailability in the United States in any 
covered product type (or class) of performance characteristics 
(including reliability), features, sizes, capacities, and volumes 
(collectively referred to hereafter as ``features'') that are 
substantially the same as those generally available in the United 
States at the time of the Secretary's finding. (42 U.S.C. 6295(o)(4); 
the ``features'' provision)
---------------------------------------------------------------------------

    \1\ 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).
---------------------------------------------------------------------------

    EPCA provides a companion provision at 42 U.S.C. 6295(q)(1), which 
requires that a rule prescribing an energy conservation standard for a 
type of covered products shall specify a level of energy use or 
efficiency higher or lower than that which applies (or would apply) to 
any group of covered products which have the same function or intended 
use, if the Secretary determines that covered products within such 
group:

    (A) consume a different kind of energy from that consumed by 
other covered products within such type (or class); or
    (B) have a capacity or other performance-related feature which 
other products within such type (or class) do not have and such 
feature justifies a higher or lower standard from that which applies 
(or will apply) to other products within such type (or class).

    In making a determination of whether a performance-related feature 
justifies the establishment of a higher or lower standard, the 
Secretary must consider such factors as the utility to the consumer of 
such a feature, and such other factors as the Secretary deems 
appropriate. (42 U.S.C. 6295(q)(1))
    These provisions apply generally to covered commercial and 
industrial equipment, other than ASHRAE equipment,\2\ through the 
crosswalk provision at 42 U.S.C. 6316(a). ASHRAE equipment has its own 
separate statutory scheme under EPCA, with the default situation being 
that DOE must adopt the level set forth in ASHRAE Standard 90.1 unless 
the Department has clear and convincing evidence to adopt a more 
stringent standard (see 42 U.S.C. 6313(a)(6)). Under 42 U.S.C. 
6313(a)(6)(B)(iii)(II)(aa), there is a provision similar to the 
``features'' provision previously discussed that states that the 
Secretary may not prescribe an amended standard under this subparagraph 
if the Secretary finds (and publishes the finding) that interested 
persons have established by a preponderance of the evidence that a 
standard is likely to result in the unavailability in the United States 
in any product type (or class) of performance characteristics 
(including reliability, features, sizes, capacities, and volumes) that 
are substantially the same as those generally available in the United 
States at the time of the finding of the Secretary. However, it is 
noted that this provision contains the specific limitation that it 
applies to an amended standard prescribed under this subparagraph 
(i.e., when DOE is acting under its authority to set a more-stringent 
standard). There is no companion ``features'' provision under 42 U.S.C. 
6313(a)(6)(A), which is the provision that would apply when DOE is 
triggered to adopt the levels set by ASHRAE. There is likewise no 
companion provision to 42 U.S.C. 6295(q)(1) for ASHRAE equipment.
---------------------------------------------------------------------------

    \2\ ``ASHRAE'' refers to the American Society of Heating, 
Refrigerating and Air-Conditioning Engineers. Under EPCA, ``ASHRAE 
equipment'' refers to small commercial package air conditioning and 
heating equipment, large commercial package air conditioning and 
heating equipment, very large commercial package air conditioning 
and heating equipment, packaged terminal air conditioners, packaged 
terminal heat pumps, warm-air furnaces, packaged boilers, storage 
water heaters, instantaneous water heaters, and unfired hot water 
storage tanks, which are addressed by ASHRAE in ASHRAE Standard 
90.1, Energy Standard for Buildings Except Low-Rise Residential 
Buildings. (See 42 U.S.C. 6313(a)(6))
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    In addition, on January 20, 2021, the White House issued Executive 
Order 13990, ``Protecting Public Health and the Environment and 
Restoring Science to Tackle the Climate Crisis.'' 86 FR 7037 (Jan. 25, 
2021). Section 1 of that Order lists several policies related to the 
protection of public health and the environment, including reducing 
greenhouse gas emissions and bolstering

[[Page 48051]]

the Nation's resilience to climate change. Id. at 86 FR 7037, 7041. 
Section 2 of the Order also instructs all agencies to review ``existing 
regulations, orders, guidance documents, policies, and any other 
similar agency actions (agency actions) promulgated, issued, or adopted 
between January 20, 2017, and January 20, 2021, that are or may be 
inconsistent with, or present obstacles to, [these policies].'' Id. 
Agencies are then directed, as appropriate and consistent with 
applicable law, to consider suspending, revising, or rescinding these 
agency actions and to immediately commence work to confront the climate 
crisis. Id.
    In light of E.O. 13990, DOE has undertaken a review of the final 
interpretation and withdrawal of proposed rulemakings published in the 
Federal Register on January 15, 2021. While E.O. 13990 triggered the 
Department's re-evaluation, DOE is relying on the analysis presented 
below, based upon EPCA, to re-examine the January 2021 Final 
Interpretive Rule. Accordingly, the Department has initially determined 
that the historic application of the ``features'' provision to non-
condensing technology reflects the better reading of the requirements 
in EPCA.

B. Historic Interpretation of the ``Features'' Provision

    As discussed, when evaluating and establishing energy conservation 
standards, DOE is required to divide covered products into product 
classes by the type of energy used, by capacity, or by other 
performance-related features that DOE determines justify a different 
standard. In making a determination of whether a performance-related 
feature justifies a different standard, the Department must consider 
factors such as the utility to the consumer of the feature and other 
factors DOE determines are appropriate. (42 U.S.C. 6295(q)) As the 
product class provision is complementary to the ``features'' provision, 
consideration of what constitutes a feature and what constitutes 
utility for the purpose of establishing a product class is germane to 
the application of the ``features'' provision.
    At a basic level, a ``feature'' is a trait, attribute, or function 
of a product. The usefulness and benefit provided to a consumer by a 
feature is the feature's ``utility.'' Given the multitude of covered 
products and equipment for which DOE is responsible, the Department has 
found the concept of ``feature'' to be very case-specific. 86 FR 4776, 
4797 (Jan. 15, 2021). No single definition could effectively capture 
the potential for features across the broad array of consumer products 
and commercial equipment subject to EPCA's regulatory scheme. Id. That 
is why DOE developed the concept of consumer utility and how the 
consumer interacts with the product/equipment for when DOE is assessing 
``features.'' Id.
    Historically, DOE has viewed utility as an aspect of the product 
that is accessible to the layperson and is based on user operation and 
interaction with the product. This interpretation has been applied in 
DOE's previous rulemakings by determining utility through the value the 
item brings to the consumer, rather than through analyzing complicated 
design features that do not impact what the consumer perceives as the 
value of the product, or costs that anyone, including the consumer, 
manufacturer, installer, or utility companies, may bear. DOE reasoned 
that this approach is consistent with EPCA's requirement for a separate 
and extensive analysis of economic justification for the adoption of 
any new or amended energy conservation standard (see 42 U.S.C. 
6295(o)(2)(A)-(B) and (3)). Examples of prior consideration of the 
``features'' provision, utility, and product/equipment classes are 
provided in the following paragraphs.
    In a final rule addressing energy conservation standards for 
cooking products, DOE did not consider a design option that eliminated 
oven door windows. 63 FR 48038, 48041 (Sept. 8, 1998). A number of 
commenters asserted that the oven door window provides consumer utility 
by alleviating the need for users to open the oven door to check on the 
contents. Id. DOE agreed with commenters that the removal of the oven 
door window would increase the frequency in which consumers open the 
oven door. Id. DOE also found this increased opening would have the 
potential to increase energy usage. Id. DOE further indicated that it 
would re-evaluate oven door window designs should a window material 
with higher thermal insulation properties become a proven technology. 
Id.
    In the case of residential clothes washers, DOE has maintained a 
product class distinction based on axis of loading (i.e., front-loading 
and top-loading units). Based on comments received during rulemakings, 
DOE identified axis of loading as a feature that impacts consumer 
utility (i.e., the longer cycle times of front-loading residential 
clothes washers versus cycle times for top-loaders are likely to impact 
consumer utility). 77 FR 32307, 32319 (May 31, 2012). Conversely, DOE 
eliminated the suds-saving product class because the market had 
changed, and, at the time of the rulemaking, DOE did not identify any 
suds-saving residential clothes washers on the market in the United 
States. 77 FR 32307, 32317 (May 31, 2012).
    In a 2011 rulemaking, DOE created separate product classes for 
vented and ventless residential clothes dryers based on DOE's 
recognition of the ``unique utility'' that ventless clothes dryers 
offer to consumers. 76 FR 22454, 22485 (April 21, 2011). This utility 
could be characterized as the ability to have a clothes dryer in a 
living area where vents are impossible to install (i.e., an apartment 
in a high-rise building). As explained in the accompanying technical 
support document, ventless dryers can be installed in locations where 
venting dryers would be precluded due to venting restrictions.\3\
---------------------------------------------------------------------------

    \3\ See pp. 3-59 of the technical support document, available at 
www.regulations.gov/document/EERE-2007-BT-STD-0010-0053.
---------------------------------------------------------------------------

    But in another rulemaking, DOE found that water heaters that 
utilize heat pump technology did not need to be put in a separate 
product class from conventional types of hot water heaters that utilize 
electric resistance technology, even though water heaters utilizing 
heat pumps require the additional installation of a condensate drain 
that a hot water heater utilizing electric resistance technology does 
not require. 75 FR 20112, 20135 (April 16, 2010). Regardless of the 
installation factors, DOE did not find the mode of heating water to be 
a performance-related feature or provide a unique utility. Id. DOE also 
noted comments stating that in the then-current market, water heaters 
that employed heat pump technology were advertised as replacements for 
water heaters that employed electric resistance technology. Id.
    However, DOE has cautioned that disparate products may have very 
different consumer utilities, thereby making direct comparisons 
difficult and potentially misleading. 76 FR 22454, 22485 (April 21, 
2011).

C. January 15, 2021 Final Interpretive Rule Regarding Non-Condensing 
Technology

    On March 12, 2015, DOE published a notice of proposed rulemaking 
(NOPR) in the Federal Register to amend energy conservation standards 
for residential non-weatherized gas furnaces and mobile home furnaces, 
in furtherance of its statutory obligation to determine whether more 
stringent amended standards would be technologically

[[Page 48052]]

feasible and economically justified, and would save a significant 
amount of energy. 80 FR 13120 (March 2015 Furnace NOPR). To provide 
further consideration of comments suggesting a separate product class 
for furnaces based on input capacity and in order to mitigate some of 
the negative impacts of the proposed standards, DOE published a notice 
of data availability (NODA) in the Federal Register on September 14, 
2015. 80 FR 55038 (September 2015 Furnaces NODA). DOE subsequently 
published a supplemental notice of proposed rulemaking (SNOPR) for this 
rulemaking in the Federal Register on September 23, 2016, in which DOE 
proposed to establish capacity-based product classes. 81 FR 65720 
(September 2016 Furnaces SNOPR). On May 31, 2016, DOE published in the 
Federal Register a proposal to amend the energy conservation standards 
for commercial water heaters. 81 FR 34440 (May 2016 Commercial Water 
Heaters NOPR).
    In both the residential furnaces rulemaking and the commercial 
water heaters rulemaking, DOE proposed amended energy conservation 
standards that would effectively require products/equipment in certain 
classes to use condensing technology to meet the amended standards. See 
81 FR 65720, 65852 (Sept. 23, 2016) and 81 FR 34440, 34503-34504 (May 
31, 2016). For the product/equipment classes where such standards were 
proposed, if finalized, the amended standards would have effectively 
eliminated all non-condensing products/equipment that are currently on 
the market in those classes.
    In the March 2015 Furnace NOPR, DOE tentatively concluded that the 
methods by which a furnace is vented--which is a significant 
differentiator of condensing and non-condensing furnaces--do not 
provide any separate performance-related impacts. Therefore, DOE had no 
statutory basis for defining a separate class based on venting and 
drainage characteristics because venting methods do not provide unique 
utility to consumers beyond the basic function of providing heat, which 
all furnaces perform. 80 FR 13120, 13138 (March 12, 2015). In the 
September 2016 Furnace SNOPR, DOE reiterated its tentative conclusion 
that methods of venting do not provide any performance-related utility 
separate from the basic function of a furnace. 81 FR 65720, 65753 
(Sept. 23, 2016). Similarly, in the May 2016 Commercial Water Heater 
NOPR, DOE tentatively concluded that both non-condensing and condensing 
gas-fired commercial water heating equipment provide the same hot water 
for use by commercial consumers, and, therefore, separate equipment 
classes could not be justified. 81 FR 34440, 34463 (May 31, 2016).
    On October 18, 2018, DOE received a petition for rulemaking 
submitted by the American Public Gas Association, Spire, Inc., the 
Natural Gas Supply Association, the American Gas Association, and the 
National Propane Gas Association, collectively referred to as the ``Gas 
Industry Petitioners,'' asking DOE to: (1) Issue an interpretive rule 
stating that DOE's proposed energy conservation standards for 
residential furnaces and commercial water heaters would result in the 
unavailability of ``performance characteristics'' within the meaning of 
EPCA, specifically by eliminating from the market units utilizing non-
condensing technology, and (2) withdraw the proposed energy 
conservation standards for residential furnaces and commercial water 
heaters based upon such findings. DOE published the notice of petition 
in the Federal Register on November 1, 2018 and requested public 
comment.\4\ 83 FR 54883.
---------------------------------------------------------------------------

    \4\ In response to requests submitted by two stakeholders, DOE 
extended the initial 90-day comment period for an additional 30 
days. 84 FR 449 (Jan. 29, 2019).
---------------------------------------------------------------------------

    Following consideration of the comments on the petition, DOE 
published a notice of proposed interpretive rule on July 11, 2019, 
presenting DOE's tentative interpretation that, in the context of 
residential furnaces, commercial water heaters, and similarly-situated 
products/equipment, use of non-condensing technology (and associated 
venting) would constitute a performance-related ``feature'' under EPCA 
that cannot be eliminated through adoption of an energy conservation 
standard. 84 FR 33011 (July 2019 Proposed Interpretive Rule).\5\ DOE 
also provided that, if such interpretation were to be finalized, it 
anticipated developing supplemental notices of proposed rulemaking that 
would implement the new legal interpretation for the subject 
residential furnaces and commercial water heaters. 84 FR 33011, 33021 
(July 11, 2019).
---------------------------------------------------------------------------

    \5\ The July 2019 Proposed Interpretive Rule granted the request 
for an interpretive rule but initially denied the Gas Industry 
Petitioners' request to withdraw DOE's earlier proposed rules for 
residential furnaces and commercial water heaters. 84 FR 33011, 
33021 (July 11, 2019).
---------------------------------------------------------------------------

    DOE published a supplemental notice of proposed interpretation in 
the Federal Register on September 24, 2020, which proposed alternative 
approaches to product/equipment class setting in this context. 85 FR 
60090. The supplemental proposed interpretive rule was in response to 
comments expressing concern with the proposed focus on ``non-
condensing'' technology as the performance-related feature. 85 FR 
60090, 60094-60095 (Sept. 24, 2020). Alternatively, the supplemental 
notice of proposed interpretation considered venting compatibility as a 
possible ``feature.'' 85 FR 60095 (Sept. 24, 2020). DOE requested 
comment on this alternative approach. Id.
    On January 15, 2021, DOE published in the Federal Register a final 
interpretive rule determining that, in the context of residential 
furnaces, commercial water heaters, and similarly-situated products/
equipment, use of non-condensing technology (and associated venting) 
constitutes a performance-related ``feature'' under EPCA that cannot be 
eliminated through adoption of an energy conservation standard. 86 FR 
4776 (January 2021 Final Interpretation). Following consideration of 
comments and data submitted by stakeholders in response to the proposed 
interpretation and supplemental proposal, DOE found that when used by 
the appliances in question, non-condensing technology (and associated 
venting) constitutes a performance-related feature that provides 
consumer utility distinct from that provided by such appliances that 
employ condensing technology. More specifically, in contrast to 
condensing units, non-condensing units: (1) Avoid complex installations 
in certain locations constrained by space, existing venting, and 
available drainage; (2) avoid the encroachment on usable space that 
would occur in certain installations, and (3) do not enhance the level 
of fuel switching that might accompany standard setting absent a 
separate product/equipment class for non-condensing appliance. 86 FR 
4776, 4816 (Jan. 15, 2021). DOE stated that such an interpretation 
would extend to all relevant/applicable cases involving consumer 
products, non-ASHRAE commercial equipment, and ASHRAE equipment where 
DOE adopts a level more stringent than the ASHRAE level. 86 FR 4776, 
4816-4817 (Jan. 15, 2021).
    In light of this final interpretation, DOE withdrew its March 12, 
2015 proposed rule and September 23, 2016 supplemental proposed rule 
for energy conservation standards for non-weatherized gas furnace and 
mobile home gas furnaces, as well as its May 31, 2016 proposed rule for 
energy conservation standards for commercial water heating equipment. 
86 FR 3873 (Jan. 15, 2021). However, DOE has not implemented the 
January 15, 2021 final interpretation in the context of any individual 
energy conservation

[[Page 48053]]

standards rulemakings for affected covered products/equipment.

II. Proposed Interpretive Rule

    Based on DOE's reconsideration of the January 2021 Final 
Interpretation, the Department is proposing to revise its 
interpretation of EPCA's ``features'' provision in the context of 
condensing and non-condensing technology used in furnaces, water 
heating equipment, and similarly-situated appliances. Consistent with 
the interpretation presented in the May 2015 Furnaces NOPR, the 
September 2016 Furnaces SNOPR, and the May 2016 Commercial Water 
Heaters NOPR, DOE tentatively concludes that in the context of 
residential furnaces, commercial water heaters, and similarly-situated 
products or equipment, use of non-condensing technology (and associated 
venting) is not a performance-related ``feature'' for the purpose of 
the EPCA prohibitions at 42 U.S.C. 6295(o)(4) and 42 U.S.C. 
6313(a)(6)(B)(iii)(II)(aa). DOE initially finds that non-condensing 
technology (and the associated venting) does not provide unique utility 
to consumers separate from an appliance's function of providing heated 
air or water, as applicable.
    Upon further consideration, DOE has tentatively concluded that 
utility is determined through the benefits and values the feature 
provides to the consumer while interacting with the product, not 
through analyzing or making comparisons to more complicated design 
features, or costs that anyone, including the consumer, manufacturer, 
installer, or utility companies, may bear. Stated differently, DOE has 
tentatively determined that differences in cost or complexity of 
installation between different methods of venting (e.g.., a condensing 
furnace versus a non-condensing furnace) do not make any method of 
venting a performance-related feature under 42 U.S.C. 6295(o)(4), as 
would justify separating the products/equipment into different product/
equipment classes under 42 U.S.C. 6295(q)(1). Again, this approach is 
consistent with EPCA's requirement for a separate and extensive 
analysis of economic justification for the adoption of any new or 
amended energy conservation standard (see 42 U.S.C. 6295(o)(2)-(3); 42 
U.S.C. 6313(a)(6)(A)-(C); 42 U.S.C. 6316(a)).
    Therefore, because DOE has come to see that the issues underlying 
its January 15, 2021 final interpretive rule are appropriately framed 
as matters of cost, this proposed interpretation would return those 
issues for resolution to their proper sphere as part of DOE's economic 
analysis in individual energy conservation standards rulemakings. DOE 
initially finds this interpretation to be the best reading of the 
relevant provisions of EPCA, which is consistent with the intent and 
purposes of the statute. In DOE's view, the proposed interpretation 
would align better with EPCA's goals of increasing the energy 
efficiency of covered products and equipment through the establishment 
and amendment of energy conservation standards and promoting 
conservation measures when feasible. (42 U.S.C. 6291 et seq., as 
amended) The following paragraphs set forth DOE's rationale for its 
proposed revised interpretation in further detail. As background, DOE 
must follow specific statutory criteria for prescribing new or amended 
standards for covered products and covered equipment. In general, a new 
or amended standard must be designed to achieve the maximum improvement 
in energy efficiency that the Secretary determines is technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A); 42 
U.S.C. 6295(o)(3)(B); 42 U.S.C. 6316(a)) In deciding whether a proposed 
standard is economically justified, DOE must determine whether the 
benefits of the standard exceed its burdens after receiving comments on 
the proposed standard and by considering, to the greatest extent 
practicable, seven factors (see footnote 6). One of the seven factors 
for consideration is the lessening of the utility or the performance of 
the covered products likely to result from the standard. (42 U.S.C. 
6295(o)(2)(B)(i)(IV); 42 U.S.C. 6313(a)(6)(B)(ii)(IV); 42 U.S.C. 
6316(a)) As discussed, EPCA further directs that the Secretary may not 
prescribe an amended or new standard if the Secretary finds (and 
publishes such finding) that interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States in any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States at the time of 
the Secretary's finding. (42 U.S.C. 6295(o)(4); 42 U.S.C. 
6313(a)(6)(B)(iii)(II); 42 U.S.C. 6316(a)) Also, as discussed, when 
prescribing an energy conservation standard, DOE must consider whether 
separate product/equipment classes are justified based on performance-
related features and their associated utility. (42 U.S.C. 6295(q)(1); 
42 U.S.C. 6316(a)) The ``features'' provision, the seven factors for 
economic justification, and the product class provisions are all 
required considerations in establishing new and amended energy 
conservation standards.
    As mentioned previously, a ``feature'' is a trait, attribute, or 
function of a product. The usefulness and benefit provided to a 
consumer by a feature is the feature's ``utility,'' and consumer 
utility is used to evaluate whether a purported feature justifies a 
separate product class. DOE has historically viewed utility of a 
product or equipment as an aspect of the appliance that is accessible 
to the layperson consumer and is based upon user operation and 
interaction with that appliance. Examples of features, such as oven 
door windows and angle of access for clothes washers, are illustrative 
of this principle. Consumers use the oven door window (in conjunction 
with the oven lamp) to gauge the progress of food undergoing baking, 
without the need to open the oven door. Needing to open the oven door 
entails loss of heat, which would decrease the energy efficiency of the 
oven. The oven door window is a feature which consumers generally 
appreciate and with which they routinely interact when cooking. The 
window's elimination would result in the loss of a performance-related 
feature that provides valued utility for consumers. Another example 
would be the angle of access of a clothes washer. Currently, consumers 
have two options when purchasing clothes washers: Front-loading 
machines and top-loading machines. Some consumers, such as the elderly, 
may prefer a top-loading clothes washer, because it is easier to reach 
the laundry without excessive bending, which is in contrast to the 
angle of access of a front-loading washer. A broader spectrum of 
consumers recognizes and appreciates the ability of a top-loading 
washer to readily accept additional clothing items, even after a wash 
cycle has begun. Other consumers, such as those with disabilities, may 
prefer a front-loading machine because that angle of access better 
suits their access needs. The two angles provided consumer utility in 
terms of ease of use to different consumer subgroups. Consequently, 
consistent with the requirements of EPCA, DOE viewed angle of access as 
a performance-related feature for clothes washers that cannot be 
eliminated from the market through adoption of an energy conservation 
standard.
    In contrast to the examples discussed in the preceding paragraph, 
DOE has historically viewed a consumer's interaction with a furnace or 
water heater to be a simple one, whereby the user only interacts to 
place a call for heated air or water. After the consumer

[[Page 48054]]

adjusts the thermostat or faucet, the user receives the requested 
heated air or water. There is no noticeable difference to the consumer 
in access or output based upon the type of technology or venting used 
by the appliance. As noted previously, this had been DOE's longstanding 
interpretation of EPCA's ``features'' provision in the context of these 
appliances until the January 15. 2021 final interpretive rule, and for 
the reasons explained in the following paragraphs, DOE proposes to once 
again return to an interpretation that different venting methods of 
natural gas, propane gas, and/or oil-fired furnaces, water heaters, and 
similarly-situated products or equipment are not features that provide 
unique utility to consumers independent from such appliances' function 
of providing heated air or water, as applicable.
    Furthermore, DOE has tentatively concluded that it gave 
insufficient weight to other policy arguments in development of the 
January 15, 2021 final interpretive rule. Most importantly, as 
explained in prior rulemakings, tying the concept of ``feature'' to a 
specific technology would effectively lock in the currently existing 
technology as the ceiling for product efficiency and eliminate DOE's 
ability to address technological advances that could yield significant 
consumer benefits in the form of lower energy costs while providing the 
same functionality/utility for the consumer. 81 FR 65720, 65752 (Sept. 
23, 2016). Because the statute effectively accords performance-related 
features a protected status, the Department must take great care when 
making a features determination. Although DOE acknowledges that the 
January 15, 2021 final interpretive rule suggested that making a 
features determination would not impede innovation and the development 
of more efficient technologies, after careful reevaluation, the agency 
has tentatively reached a different conclusion, for the reasons 
explained in this proposed interpretive rule. DOE is concerned that 
determining features solely on product technology, rather than on how 
the consumer interacts with and benefits from the feature, could 
undermine the Appliance Standards Program as established by EPCA. See 
id. If DOE is required to maintain separate product classes to preserve 
less efficient technologies, then future advancements in the energy 
efficiency of covered products would become largely voluntary, an 
outcome in conflict with Congress's purposes and goals in enacting 
EPCA. DOE's proposed interpretation would avoid such deleterious 
outcomes.
    Finally, the proposed revised interpretation would maintain 
consideration of installation costs as part of the extensive analysis 
of economic justification for the adoption of any new or amended energy 
conservation standard, as required by EPCA, thereby avoiding what would 
amount to double-counting of cost considerations as arguably would 
occur through the January 15, 2021 final interpretive rule. In order 
for DOE to set an energy conservation standard, EPCA requires that such 
standard must be designed to achieve the maximum improvement in energy 
savings that is technologically feasible and economically justified. 
The statute further recites seven factors for use when considering 
economic justification.\6\ (42 U.S.C. 6295(o)(2)-(3); 42 U.S.C. 
6313(a)(6)(A)-(C); 42 U.S.C. 6316(a)) DOE again notes that the 
statute's ``features'' provision makes no mention of cost as a relevant 
consideration. (42 U.S.C. 6295(o)(4); 42 U.S.C. 
6313(a)(6)(B)(iii)(II)(aa)) As required by EPCA, DOE conducts a 
comprehensive economic analysis as part of each standards rulemaking. 
In this case, DOE originally considered the additional costs associated 
with installing condensing residential furnaces and condensing 
commercial water heaters in the rulemaking proceedings for those 
appliances that were withdrawn in conjunction with the January 2021 
interpretive rule (See 81 FR 65720, 65776-65783 (Sept. 23, 2016); 81 FR 
34440, 34484-34485 (May 31, 2016)) and would do so again in future 
rulemakings if the interpretation in this proposal were to be 
finalized.
---------------------------------------------------------------------------

    \6\ Specifically, at 42 U.S.C. 6295(o)(2)(B)(i) (and with 
essentially the same language at 42 U.S.C. 6313(a)(6)(B)(ii)), EPCA 
provides: In determining whether a standard is economically 
justified, the Secretary shall, after receiving views and comments 
furnished with respect to the proposed standard, determine whether 
the benefits of the standard exceed its burdens by, to the greatest 
extent practicable, considering--
    (I) the economic impact of the standard on the manufacturers and 
on the consumers of the products subject to such standard;
    (II) 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 products which are likely to 
result from the imposition of the standard;
    (III) the total projected amount of energy, or as applicable, 
water, savings likely to result directly from the imposition of the 
standard;
    (IV) any lessening of the utility or the performance of the 
covered products likely to result from the imposition of the 
standard;
    (V) the impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    (VI) the need for national energy and water conservation; and
    (VII) other factors the Secretary considers relevant.
---------------------------------------------------------------------------

    The Department acknowledges that in its January 2021 final 
interpretive rule, it extended its view of consumer utility of furnaces 
and water heaters beyond those appliances' primary function of 
providing heated air or water, giving considerable weight to 
installation situations that could require the addition of new pipes or 
venting to the usable space of a home or business, major modifications 
to a utility room, or encroachment upon an existing window or patio. 86 
FR 4776, 4786 (Jan. 15, 2021). However, upon further evaluation, DOE 
realizes that its change in interpretation was unnecessary and arguably 
beyond what the statute can support, because even if the Department had 
definitive evidence regarding the extent of difficult or impossible 
installation situations, loss of usable residential or commercial 
space, or fuel switching effects, DOE nonetheless had a strong 
statutorily-based rationale for its historic interpretation, as would 
support a subsequent return thereto. If consumer utility turns on the 
layperson's operation and interaction with the product (i.e., calling 
for and enjoying the heated air or water which the appliance in 
question provides) rather than type of venting, then all furnaces and 
water heaters provide the same basic utility: heated air or water. 
While DOE acknowledges that installation of condensing products/
equipment requires modifications to the installed space in some 
applications (e.g., concealing vent pipes that pass through the living 
space by inclusion in a soffit), such modifications may impact the 
installation cost and/or complexity, but once installed, they do not 
impact the user's operation and interaction with the appliance. 
Moreover, the Department understands that there are technological 
solutions for most difficult installation situations and that consumers 
also have heating and water-heating options other than installation of 
a condensing appliance. Consequently, the agency tentatively finds that 
the matter essentially boils down to one of cost, which is a topic 
properly analyzed and adequately addressed under the economic 
justification provisions of EPCA. DOE's reasoning, which is consistent 
with the Department's historic interpretation, is discussed in further 
detail in the paragraphs that follow. However, before turning to that 
rationale, DOE would add furthermore that it has tentatively concluded 
that it gave undue weight to

[[Page 48055]]

these arguments presented by the Gas Industry Petitioners, which were 
largely based upon anecdotal accounts and limited installer survey 
data. After reexamining the record, DOE has preliminarily determined 
that the qualitative arguments made by the Gas Industry Petitioners 
were not accompanied by sufficient evidence to establish the existence 
or magnitude of the alleged problem, as would support the significant 
change from DOE's historic interpretation to the interpretation 
contained in the January 2021 final interpretive rule.
    As noted previously, upon reconsideration, DOE has tentatively 
concluded that consumers have other options for resolving difficult 
installation situations--the situations that provided two of the three 
reasons for the January 15, 2021 final interpretive rule--without the 
need for the Department to declare non-condensing technology and 
associated venting to be a performance-related feature under EPCA. This 
provides a further basis for DOE's proposed return to its historic 
interpretation. In short, consumers facing difficult installation 
situations can either: (1) Utilize a technological solution to resolve 
their installation problem, or (2) switch to an appliance utilizing 
alternative technologies. Either approach would allow those consumers 
with potentially difficult installation situations to choose how best 
to avoid loss of usable space, extensive building modifications, or 
extreme installation costs identified in the January 15, 2021 final 
interpretive rule.
    The first option is to use new technology to overcome identified 
installation problems. It has been DOE's historic position that there 
is a technological solution to accommodate virtually all of the 
difficult installation situations involving gas-fired appliances, 
although some might be costly (e.g., requiring new venting). Although a 
critical piece of the Gas Industry Petitioners' argument in support of 
their petition was that it may be impossible to install a condensing 
appliance in certain replacement applications, they never provided any 
definitive proof as to the existence of this problem or its extent. In 
promulgating the January 15, 2021 final interpretive rule, DOE found 
these theories persuasive, but upon further examination, there is at 
best weak foundational support to challenge the Appliance Standards 
Program's record of evidence that it is technologically feasible to 
install condensing appliances in virtually all replacement 
applications. If the consumer's affinity for gas-fueled appliances is 
sufficiently high to warrant their continued use, the consumer will 
choose to make such changes when installing the more efficient 
appliance, which reflects an economic decision.
    Technological solutions should also resolve the specific issue of 
orphaned water heaters identified by the Gas Industry Petitioners. (An 
``orphaned water heater'' refers to the situation in which a non-
condensing furnace and non-condensing water heater share a common vent, 
but, upon replacement of the non-condensing furnace with a condensing 
furnace, they can no longer share that same venting due to differences 
in venting requirements.) DOE has, in fact, identified a newer 
technology for which comprehensive data are currently unavailable, but 
when mature, it could address the issue of orphaned appliances, allow 
consumers to switch from a non-condensing furnace to a condensing 
furnace, and permit continued use of existing common venting in a 
greater variety of applications.\7\ 86 FR 4776, 4781 (Jan. 15, 2021). 
More specifically, this venting technology may allow a consumer to 
obtain the efficiency of a condensing furnace using the existing 
venting in a residence by sharing venting space with a water heater. It 
would significantly reduce the cost burden associated with installing 
condensing furnaces and reduce potential instances of ``orphaned'' 
water heaters. This technology could allow consumers to switch from a 
non-condensing furnace to a condensing furnace in a greater variety of 
applications, such as urban row houses. See 80 FR 13120, 13138 (March 
12, 2015). DOE is concerned that characterizing the method of venting 
as a ``feature'' due to concerns over orphaned water heaters would 
limit future advancements in this technology, because establishment of 
separate product or equipment classes for non-condensing appliances 
would limit the market for such innovative devices that allow 
condensing and non-condensing appliances to share the same venting.\8\ 
Consequently, DOE has reconsidered and changed its view regarding the 
argument put forth in the January 2021 Final Interpretation--that 
replacement of a non-condensing furnace with a condensing unit may 
result in an orphaned water heater. 86 FR 4776, 4785 (Jan. 15, 2021).
---------------------------------------------------------------------------

    \7\ In the technical support documents accompanying the proposed 
rules for residential furnaces, DOE referenced a study from the Oak 
Ridge National Laboratory that identified various approaches to 
address the orphaned water heater problem without the need for 
expensive renovations. See Momen, A. M., J. Munk, K. Biswas, and P. 
Hughes, Condensing Furnace Venting Part 2: Evaluation of Same-
Chimney Vent Systems for Condensing Furnaces and Natural Draft Water 
Heaters (2015) Oak Ridge National Laboratory: Oak Ridge, TN. Report 
No. ORNL/TM-2014/656 (Available at: web.ornl.gov/sci/buildings/docs/Condensing-Furnace-Venting-Part1-Report.pdf) (Last accessed May 6, 
2021).
    \8\ Although DOE argued in the January 15, 2021 final 
interpretive rule that establishment of separate product or 
equipment classes would not limit innovation or market trends toward 
condensing appliances (see 86 FR 4776, 4805), the Department has 
come to question whether such view is correct, given the potential 
for a substantial portion of the relevant appliance market to remain 
at significantly lower levels of efficiency. Even if current trends 
toward condensing appliances hold, the market might stall before 
achieving the full energy-savings benefits that EPCA might capture 
through adoption of an appropriate energy conservation standard(s), 
a result contrary to the statute's goals. The same principle holds 
in the context of innovative vent-sharing technologies, because in 
addressing difficult installations, the January 15, 2021 final 
interpretive rule essentially undermines a significant component of 
the market for such technological solutions. Rather than encourage a 
technological solution with a high energy-savings potential, the 
Department has come to see that the January 15, 2021 final 
interpretive rule inappropriately substituted maintenance of a 
status quo with lower energy-savings potential.
---------------------------------------------------------------------------

    DOE would also clarify that the present case of non-condensing gas-
fired residential furnaces and commercial water heaters is 
distinguishable from certain other products that the Department has 
regulated in the past, such as space-constrained central air 
conditioners and ventless and compact clothes dryers. DOE explained in 
two direct final rules that the latter products necessitated design 
differences related to their reduced size or ventless operation that 
inherently limited their energy efficiency, and the agency set separate 
classes on that basis. For ventless clothes dryers, DOE also found that 
certain consumers (e.g., high-rise apartment dwellers) might not be 
able to have a clothes dryer at all, unless a ventless option were 
available. See 76 FR 37408, 37439-37440 (June 27, 2011); 76 FR 22454, 
22485 (April 21, 2011). In contrast, there are insufficient data to 
show that consumers would be without furnace and water heater options 
in the absence of non-condensing furnaces and water heaters. 
Furthermore, the subject non-condensing furnaces and water heaters are 
not significantly different in overall footprint or size from their 
condensing counterparts (although the composition of the venting used 
may be different), and the energy efficiency differences are a result 
of the technology used, a design parameter that is dictated by 
considerations other than size.
    The second option for resolving difficult installation situations 
would be for the consumer to replace a gas-fired furnace or water 
heater with an electric heat pump or water heater, thereby

[[Page 48056]]

obviating the need for extensive changes to existing venting. Consumers 
routinely make such choices where they deem it appropriate, which 
reflects an economic decision. This option would accommodate the needs 
of consumers who are predominantly concerned with loss of usable space 
or aesthetics \9\ because it would obviate the need to make significant 
changes to the residential or commercial space. Nothing in EPCA 
precludes such effects, as long as DOE's standard would not eliminate 
the appliance of that fuel type entirely, and in this case, maintaining 
non-condensing and condensing units under a single class of product or 
equipment would not eliminate the availability of natural gas, propane, 
or other fuel type models from the U.S. market.
---------------------------------------------------------------------------

    \9\ DOE notes that in the January 15, 2021 final interpretive 
rule, the Department clarified that in discussing ``aesthetics,'' it 
sought to distinguish between purely subjective considerations 
(e.g., even the slightest change in color or shape) and physical 
modifications to a dwelling or business that would be appreciably 
noticed by the consumer and impact the use of the living or 
commercial space. In that final interpretive rule, DOE explained 
that it would limit consideration of performance-related features to 
the latter group, because a proliferation of product/equipment 
classes was neither intended nor desired. 86 FR 4776, 4799-4800. 
However, in this current proposed interpretive rule, the option to 
replace a non-condensing, gas-fired appliance with a comparable 
electric appliance empowers individual consumers to make the choice 
of when aesthetic concerns warrant such change.
---------------------------------------------------------------------------

    It bears noting that while EPCA recognizes that various fuel types 
exist in the appliance marketplace and provides certain protections, it 
does not directly address fuel switching or mandate that DOE take 
regulatory action to preclude such marketplace effects. In certain 
appropriate cases, Congress set statutory energy conservation standard 
levels for products, such as consumer water heaters (see 42 U.S.C. 
6295(e)(1)) and consumer boilers (see 42 U.S.C. 6295(f)(3)), based on 
fuel type (e.g., gas, oil, electricity). EPCA also recognizes 
differences in fuel type under 42 U.S.C. 6295(q)(1)(A), which provides 
for setting separate classes where appliances ``consume a different 
kind of energy from that consumed by other covered products within such 
type (or class).'' Notably, however, ECPA's ``features'' provision at 
42 U.S.C. 6295(o)(4) does not include fuel type within its ambit. Thus, 
Congress structured EPCA to recognize fuel-type distinctions and to 
create a level playing field, while balancing the need for overall 
energy savings. In historically implementing the Appliance Standards 
Program, DOE has similarly sought to adhere to a policy of fuel 
neutrality, where consistent with EPCA. DOE develops energy 
conservation standards in compliance with the statutory requirements of 
EPCA, which does not generally involve cross-class comparisons for 
standard setting. Although DOE typically analyzes fuel-switching 
effects, the agency is generally free to set an appropriate level under 
the applicable statutory criteria regardless of any ancillary fuel-
switching effects. Thus, to the extent the January 15, 2021 final 
interpretive rule sought to enshrine an agency obligation to prevent 
fuel-switching, such action was without statutory basis. Moreover, DOE 
finds the Gas Industry Petitioners' arguments about potential fuel 
switching to be likely overstated for the reasons explained 
subsequently.
    To start, the January 15, 2021 final interpretive rule was 
misguided in suggesting that any rule that would result in fuel 
switching violates the fuel neutrality principle, because fuel 
switching occurs frequently and most certainly in the context of new 
energy conservation standards. Fuel switching is a natural part of 
market operation for the subject appliances, and it may occur even in 
the absence of amended energy conservation standards. Installation 
costs may influence consumer decisions regarding fuel choice, and at 
any time, a segment of consumers may choose replacement products that 
rely on a different fuel source than that of the unit being replaced. 
With that said, the mere potential for fuel switching should not serve 
as the basis for establishment of a performance-related feature under 
EPCA.
    The appropriate threshold for when fuel switching violates the fuel 
neutrality principle requires a degree of fuel switching that is much 
greater than typically found in DOE energy conservation standards 
rulemakings. Given DOE's policy of fuel neutrality and because fuel 
switching may be impacted by the adoption of standards, when conducting 
an energy conservation standards rulemaking, the Department routinely 
accounts for potential fuel switching in its consumer choice model, 
which is one part of its full suite of analyses. In certain 
applications, consumers may choose to replace natural gas or propane 
gas products with electric products that provide the same utility in 
the face of changed standards. The extent to which consumers might 
replace natural gas or propane products with electric products is 
dependent in part on the stringency of the standards.\10\ See e.g., 81 
FR 65720, 65791-65793 (Sept. 23, 2016). DOE has typically found fuel 
switching to occur in a small number of cases in any given rulemaking, 
and based upon currently available information, the Department does not 
expect that instances of fuel switching would be significantly 
different for the subject residential furnaces, commercial water 
heaters, and similarly-situated products or equipment.
---------------------------------------------------------------------------

    \10\ For the trial standard levels evaluated in the September 
2016 SNOPR, DOE estimated between 1.5 percent and 16.0 percent of 
customers would replace a non-weatherized gas furnace with either a 
heat pump or an electric furnace, depending on the stringency of the 
evaluated standard levels.
---------------------------------------------------------------------------

    For example, DOE notes that it was required by statute in a prior 
rulemaking to consider differential standards for small furnaces based 
upon input capacity as a means to address fuel switching. Specifically, 
under 42 U.S.C. 6295(f)(1)(B), Congress directed DOE to consider the 
appropriate standard level to be set for furnaces with an input 
capacity of less than 45 kBtu/h. In doing so, Congress directed DOE to 
consider a standard level within a specified range that was not likely 
to result in a significant shift from gas heating to electric 
resistance heating with respect to either residential construction or 
furnace replacement. Id. See also 54 FR 47916 (Nov. 17, 1989) (final 
rule adopting energy conservation standards for ``small'' furnaces). In 
the September 2016 Furnace SNOPR, DOE considered the potential for 
reduction of fuel-switching in proposing the capacity-based standards. 
81 FR 65720, 65755 (Sept. 23, 2016). Regarding commercial water 
heaters, DOE initially determined that fuel switching beyond the 
continuation of historical trends would be unlikely due to differences 
in operating costs and differences in hot water delivery capacity. 81 
FR 34440, 34494 (May 31, 2016). Although the Gas Industry Petitioners 
made vocal arguments to the contrary about fuel switching in support of 
their petition and in the context of various rulemaking proceedings, 
they did not provide data to substantiate these claims.
    In this case, there is insufficient evidence that fuel switching 
would be greater than is typically encountered in DOE rulemakings. DOE 
notes that the incidence of fuel switching for the subject appliances 
may be mitigated further by the availability of technological solutions 
such as the vent-sharing device discussed previously. For all of these 
reasons, DOE does not find potential fuel switching alone to be a basis 
to support a determination that non-condensing technology and 
associated venting constitute a performance-related feature.

[[Page 48057]]

    Based on the foregoing discussion, DOE proposes to revise its 
interpretation of EPCA's ``features'' provision in the context of 
condensing and non-condensing technology used in furnaces, water 
heating equipment, and similarly-situated appliances (where permitted 
by EPCA) along the lines discussed previously. Accordingly, DOE 
tentatively concludes that in the context of residential furnaces, 
commercial water heaters, and similarly-situated products/equipment, 
use of non-condensing technology (and associated venting) is not a 
performance-related ``feature'' for the purpose of the EPCA 
prohibitions at 42 U.S.C. 6295(o)(4) and 42 U.S.C. 
6313(a)(6)(B)(iii)(II)(aa).

III. Conclusion

    DOE has initially determined that its proposed interpretation is 
the best reading of the language of EPCA and DOE's statutory obligation 
to establish energy conservation standards for covered products and 
equipment. Additionally, the proposed interpretation would allow DOE to 
consider more efficient standards for certain products and equipment.
    DOE is proposing to revise its application of the ``features'' 
provisions in 42 U.S.C. 6295(o)(4) and 42 U.S.C. 
6313(a)(6)(B)(iii)(II)(aa) as an interpretive rule within the meaning 
of the Administrative Procedure Act (APA). 5 U.S.C. 551(4); 5 U.S.C. 
553(b). DOE is publishing this proposed interpretive rule to solicit 
comment and to provide the public with a clear and transparent 
explanation of DOE's view of a specific legal question, thereby 
following a process similar to that which resulted in the January 2021 
final interpretive rule.
    DOE wishes to make clear that an interpretive rule is a type of 
rule or regulation within the meaning of those terms in the 
Administrative Procedure Act, 5 U.S.C. 551(4). It is well established 
under the APA that agencies have the authority to issue interpretive 
rules, and that these rules are a valuable tool for an agency to use to 
advise the public prospectively and in a clear and transparent manner 
of the agency's construction of a statute it administers.
    Once again, it is noted that DOE withdrew its March 12, 2015 
proposed rule and September 23, 2016 supplemental proposed rule for 
energy conservation standards for non-weatherized gas furnace and 
mobile home gas furnaces, as well as its May 31, 2016 proposed rule for 
energy conservation standards for commercial water heating equipment, 
for further proceedings consistent with the interpretation contained in 
the January 15, 2021 final interpretive rule. 86 FR 4776, 4817 (Jan. 
15, 2021); see also 86 FR 3873 (Jan. 15, 2021). As explained in this 
document, DOE is once again examining its interpretation of the 
relevant statutory provisions in the context of residential furnaces, 
commercial water heating equipment, and similarly-situated products/
equipment. When this proceeding is complete, DOE plans to again 
evaluate whether amended energy conservation standards would result in 
significant savings of energy, be technologically feasible, and be 
economically justified, consistent with its latest interpretation.
    However, in any future rulemaking, DOE would make clear that the 
rulemakings for residential furnaces and commercial water heating 
equipment have been subject to multiple rounds of public comment, 
including public meetings, and that extensive records have been 
developed in the relevant dockets. (See Docket Number EERE-2014-BT-STD-
0031 and Docket Number EERE-2014-BT-STD-0042, respectively). 
Consequently, DOE wishes to reassure stakeholders that the information 
obtained through those earlier rounds of public comment, information 
exchange, and data gathering have not gone to waste. Instead, DOE 
anticipates building upon the existing record through further notice 
and comment rulemaking. Such an approach also reflects DOE's cognizance 
of the statutory deadlines associated with the energy conservation 
standards for residential furnaces and commercial water heating 
equipment.

Review Under Executive Order 12866

    The Office of Information and Regulatory Affairs (OIRA) in the 
Office of Management and Budget (OMB) waived review of this proposed 
interpretive rule under Executive Order 12866, ``Regulatory Planning 
and Review.'' 58 FR 51735 (Oct. 4, 1993).

IV. Public Participation

    DOE invites all interested parties to submit in writing by the date 
listed in the DATES section of this document, comments and information 
regarding this proposed interpretive rule. Interested parties may 
submit comments, data, and other information using any of the methods 
described in the ADDRESSES section at the beginning of this document.
    Submitting comments via www.regulations.gov. The 
www.regulations.gov web page will require you to provide your name and 
contact information. Your contact information will be viewable to DOE 
Building Technologies staff only. Your contact information will not be 
publicly viewable except for your first and last names, organization 
name (if any), and submitter representative name (if any). If your 
comment is not processed properly because of technical difficulties, 
DOE will use this information to contact you. If DOE cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, DOE may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (CBI)). Comments submitted through 
www.regulations.gov cannot be claimed as CBI. Comments received through 
the website will waive any CBI claims for the information submitted. 
For information on submitting CBI, see the Confidential Business 
Information section.
    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email. Comments and documents submitted via 
email also will be posted to www.regulations.gov. If you do not want 
your personal contact information to be publicly viewable, do not 
include it in your comment or any accompanying documents. Instead, 
provide your contact information in a cover letter. Include your first 
and last names, email address, telephone number, and optional mailing 
address. The cover letter will not be publicly viewable as long as it 
does not include any comments.
    Include contact information each time you submit comments, data, 
documents,

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and other information to DOE. No telefacsimiles (faxes) will be 
accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email two well-marked copies: one copy of the document marked 
``confidential'' including all the information believed to be 
confidential, and one copy of the document marked ``non-confidential'' 
with the information believed to be confidential deleted. DOE will make 
its own determination about the confidential status of the information 
and treat it according to its determination.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

V. Approval of the Office of the Secretary

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

Signing Authority

    This document of the Department of Energy was signed on August 17, 
2021, by Kelly Speakes-Backman, Principal Deputy Assistant Secretary 
and Acting Assistant Secretary for Energy Efficiency and Renewable 
Energy, pursuant to delegated authority from the Secretary of Energy. 
That document with the original signature and date is maintained by 
DOE. For administrative purposes only, and in compliance with 
requirements of the Office of the Federal Register, the undersigned DOE 
Federal Register Liaison Officer has been authorized to sign and submit 
the document in electronic format for publication, as an official 
document of the Department of Energy. This administrative process in no 
way alters the legal effect of this document upon publication in the 
Federal Register.

    Signed in Washington, DC, on August 18, 2021.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2021-18017 Filed 8-26-21; 8:45 am]
BILLING CODE 6450-01-P