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Rule2022-11128

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

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Published

May 24, 2022

Effective

July 25, 2022

Issuing agencies

Energy Department

Abstract

The Energy Policy and Conservation Act, as amended ("EPCA"), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including unfired hot water storage tanks ("UFHWSTs"). EPCA also requires the U.S. Department of Energy ("DOE" or "the Department") to periodically determine whether more-stringent, amended standards would be technologically feasible and economically justified, and would result in significant additional energy savings. In this final determination, DOE determines that the energy conservation standards for UFHWSTs do not need to be amended. DOE has determined that it lacks clear and convincing evidence that more-stringent standards for UFHWSTs would save a significant additional amount of energy and would be economically justified.

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<title>Federal Register, Volume 87 Issue 100 (Tuesday, May 24, 2022)</title>
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[Federal Register Volume 87, Number 100 (Tuesday, May 24, 2022)]
[Rules and Regulations]
[Pages 31359-31384]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-11128]

========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents.

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

[[Page 31359]]

DEPARTMENT OF ENERGY

10 CFR Part 431

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

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

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

ACTION: Final determination.

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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including unfired hot
water storage tanks (``UFHWSTs''). EPCA also requires the U.S.
Department of Energy (``DOE'' or ``the Department'') to periodically
determine whether more-stringent, amended standards would be
technologically feasible and economically justified, and would result
in significant additional energy savings. In this final determination,
DOE determines that the energy conservation standards for UFHWSTs do
not need to be amended. DOE has determined that it lacks clear and
convincing evidence that more-stringent standards for UFHWSTs would
save a significant additional amount of energy and would be
economically justified.

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

ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, public meeting attendee lists and transcripts,
comments, and other supporting documents/materials, is available for
review at <a href="http://www.regulations.gov">www.regulations.gov</a>. All documents in the docket are listed
in the <a href="http://www.regulations.gov">www.regulations.gov</a> 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 <a href="http://www.regulations.gov/docket?D=EERE-2017-BT-STD-0021">www.regulations.gov/docket?D=EERE-2017-BT-STD-0021</a>. The docket web page contains
instructions on how to access all documents, including public comments,
in the docket.
For further information on how to review the docket, contact the
Appliance and Equipment Standards Program staff at (202) 287-1445 or by
email: <a href="/cdn-cgi/l/email-protection#105160607c79717e73754364717e74716274634165756364797f7e635075753e747f753e777f66">[email&#160;protected]</a>.

FOR FURTHER INFORMATION CONTACT: Ms. Julia Hegarty, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (240) 597-6737. Email:
<a href="/cdn-cgi/l/email-protection#cd8cbdbda1a4aca3aea89eb9aca3a9acbfa9be9cb8a8beb9a4a2a3be8da8a8e3a9a2a8e3aaa2bb">[email&#160;protected]</a>.
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: <a href="/cdn-cgi/l/email-protection#4f0a3d262c611c3b2e3c0f273e612b202a61282039">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Final Determination
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for UFHWSTs
III. General Discussion
A. Product Classes and Scope of Coverage
B. Test Procedure
C. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Economic Impact on Manufacturers and Consumers
2. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
3. Energy Savings
4. Lessening of Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need for National Energy Conservation
7. Other Factors
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Scope of Coverage and Equipment Classes
2. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Analysis
2. Representative Equipment for Analysis
3. Cost Analysis
D. Energy Use Analysis
1. Tank Thermal Loss Model
a. Tank Surface Area (A<INF>i, j</INF>)
b. Tank Internal Water Temperature (T<INF>i</INF>)
c. Tank Ambient Temperature (T<INF>amb, z</INF>)
d. R-value of Insulation (R<INF>i, j</INF>)
2. Annual Energy Use Due to UFHWST Losses
3. Additional Sources of Uncertainty
E. Life-Cycle Cost and Payback Period Analysis
1. Installation Cost
2. Annual Energy Consumption
F. Shipments Analysis
1. Stock Estimates
a. Residential Stock
b. Commercial Stock
c. Industrial Stock
2. Shipments for Replacement
3. Shipments for New Construction
4. Estimated Shipments
5. Additional Sources of Uncertainty
G. National Impact Analysis
1. National Energy Savings
2. Product Lifetime
3. Energy Efficiency Distribution in the No-New-Standards Case
4. Hot Water Supply Boiler Efficiency Trend
V. Analytical Results and Conclusions
A. National Impact Analysis
1. Significance of Energy Savings
2. Net Present Value of Consumer Costs and Benefits
B. Final Determination
1. Technological Feasibility
2. Significant Conservation of Energy
3. Economic Justification
4. Summary
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act of 1995
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VII. Approval of the Office of the Secretary

[[Page 31360]]

I. Synopsis of the Final Determination

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

II. Introduction

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

A. Authority

EPCA, Public Law 94-163 (42 U.S.C. 6291-6317, as codified), among
other things, authorizes DOE to regulate the energy efficiency of a
number of consumer products and certain industrial equipment. Title
III, Part C of EPCA, added by Public Law 95-619, Title IV, section
441(a) (42 U.S.C. 6311-6317, as codified), established the Energy
Conservation Program for Certain Industrial Equipment, which sets forth
a variety of provisions designed to improve energy efficiency. This
equipment includes UFHWSTs, the subject of this rulemaking. (42 U.S.C.
6311(1)(K))
The energy conservation program under EPCA consists essentially of
four parts: (1) Testing, (2) labeling, (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of EPCA specifically include
definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C.
6313), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C.
6315), and the authority to require information and reports from
manufacturers (42 U.S.C. 6316).
Federal energy efficiency requirements for covered equipment
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6316(a) and 42 U.S.C. 6316(b); 42 U.S.C. 6297) DOE may, however,
grant waivers of Federal preemption in limited circumstances for
particular State laws or regulations, in accordance with the procedures
and other provisions set forth under EPCA. (42 U.S.C. 6297(d); 42
U.S.C. 6316(a); 42 U.S.C. 6316(b)(2)(D))
Subject to certain criteria and conditions, DOE is required to
develop test procedures to measure the energy efficiency, energy use,
or estimated annual operating cost of covered equipment. (42 U.S.C.
6314) Specifically, EPCA requires that if a test procedure referenced
in ASHRAE Standard 90.1 is updated, DOE must update its test procedure
to be consistent with the amended test procedure in ASHRAE Standard
90.1, unless DOE determines, by rule, published in the Federal Register
and supported by clear and convincing evidence, that the amended test
procedure is not reasonably designed to produce test results that
reflect the energy efficiency, energy use, or estimated operating costs
of the covered ASHRAE equipment during a representative average use
cycle. In addition, DOE must determine that the amended test procedure
is not unduly burdensome to conduct. (42 U.S.C. 6314(a)(2) and (4)) In
addition, if DOE determines that a test procedure amendment is
warranted, it must publish proposed test procedures in the Federal
Register and offer the public an opportunity (of not less than 45 days
duration) to present oral and written comments on them. (42 U.S.C.
6314(b)) In contrast, if DOE determines that test procedure revisions
are not appropriate, DOE must publish in the Federal Register its
determination not to amend the test procedures. (42 U.S.C.
6314(a)(1)(A)(ii))
Manufacturers of covered equipment must use the Federal test
procedures as the basis for: (1) Certifying to DOE that their equipment
complies with the applicable energy conservation standards adopted
pursuant to EPCA (42 U.S.C. 6316(b); 42 U.S.C. 6296), and (2) making
representations about the energy use or efficiency of that equipment
(42 U.S.C. 6314(d)). Similarly, DOE uses these test procedures to
determine whether the equipment complies with relevant standards
promulgated under EPCA. It is noted that DOE does not prescribe a test
procedure for UFHWSTs, as the current Federal standard is an insulation
design requirement of a minimum R-value of R-12.5. 10 CFR 431.110.
EPCA contains mandatory energy conservation standards for
commercial heating, air-conditioning, and water heating equipment. (42
U.S.C. 6313(a)) Specifically, the statute sets standards for small,
large, and very large commercial package air conditioning and heating
equipment, packaged terminal air conditioners and packaged terminal
heat pumps, warm-air furnaces, packaged boilers, storage water heaters,
instantaneous water heaters, and UFHWSTs. Id. In doing so, EPCA
established Federal energy conservation standards that generally
corresponded to the levels in the ASHRAE Standard 90.1 in effect on
October 24, 1992 (i.e., ASHRAE Standard 90.1-1989).
If ASHRAE Standard 90.1 is amended with respect to the standard
levels or design requirements applicable under that standard for
certain commercial

[[Page 31361]]

equipment, including UFHWSTs, not later than 180 days after the
amendment of the standard, DOE must publish in the Federal Register for
public comment an analysis of the energy savings potential of amended
energy efficiency standards. (42 U.S.C. 6313(a)(6)(A)(i)) DOE must
adopt amended energy conservation standards at the new efficiency level
in ASHRAE Standard 90.1, unless clear and convincing evidence supports
a determination that adoption of a more-stringent efficiency level as a
national standard would produce significant additional energy savings
and be technologically feasible and economically justified. (42 U.S.C.
6313(a)(6)(A)(ii))
To determine whether a standard is economically justified, EPCA
requires that DOE determine whether the benefits of the standard exceed
its burdens by considering, to the greatest extent practicable, the
following seven factors:
(1) The economic impact of the standard on manufacturers and
consumers of products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered equipment that are likely to result from the standard;
(3) The total projected amount of energy savings likely to result
directly from the standard;
(4) Any lessening of the utility or the performance of the covered
product likely to result from the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
(6) The need for national energy conservation; and
(7) Other factors the Secretary of Energy considers relevant.
(42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII) and (C)(i); 42 U.S.C.
6316(a); 42 U.S.C. 6295(o)(2)(B)(i))
If DOE adopts as a national standard the efficiency levels
specified in the amended ASHRAE Standard 90.1, DOE must establish such
a standard not later than 18 months after publication of the amended
industry standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) If DOE determines
that a more-stringent standard is appropriate under the statutory
criteria, DOE must establish the more-stringent standard not later than
30 months after publication of the revised ASHRAE Standard 90.1. (42
U.S.C. 6313(a)(6)(B)(i))
EPCA also requires that every 6 years DOE shall evaluate the energy
conservation standards for each class of certain covered commercial
equipment, including UFHWSTs, and publish either a notice of
determination that the standards do not need to be amended, or a notice
of proposed rulemaking (``NOPR'') that includes new proposed energy
conservation standards (proceeding to a final rule, as appropriate).
(42 U.S.C. 6313(a)(6)(C)(i)) EPCA further provides that, not later than
3 years after the issuance of a final determination not to amend
standards, DOE must publish either a notice of determination that
standards for the product do not need to be amended, or a NOPR
including new proposed energy conservation standards (proceeding to a
final rule, as appropriate). (42 U.S.C. 6313(a)(6)(C)(iii)(II)) DOE
must make the analysis on which the determination is based publicly
available and provide an opportunity for written comment. (42 U.S.C.
6313(a)(6)(C)(ii)) Further, a determination that more-stringent
standards would: (1) Result in significant additional conservation of
energy and (2) be both technologically feasible and economically
justified must be supported by clear and convincing evidence. (42
U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)) DOE is publishing
this final determination in satisfaction of the 6-year-lookback review
requirement in EPCA, having determined that DOE lacks clear and
convincing evidence that amended standards for UFHWSTs would result in
significant additional conservation of energy and be economically
justified.

B. Background

1. Current Standards
The initial Federal standards for UFHWSTs, established by EPCA,
corresponded to the efficiency levels contained in ASHRAE Standard
90.1-1989. On January 12, 2001, DOE amended the standards for UFHWSTs
to be equivalent to the efficiency level in ASHRAE Standard 90.1 as
revised in October 1999. 66 FR 3336 (``January 2001 final rule''). The
January 2001 final rule established an insulation design requirement of
a minimum R-value of R-12.5 for all UFHWSTs. 66 FR 3336, 3356 (Jan. 12,
2001). This remains the current Federal standard (and the standard
level specified in the most recent version of ASHRAE Standard 90.1).
The current standard is codified at 10 CFR 431.110.
2. History of Standards Rulemaking for UFHWSTs
As noted previously, the standards for UFHWSTs were most recently
amended in the January 2001 final rule. EPCA requires DOE to evaluate
the applicable energy conservation standard for UFHWSTs every 6 years
to determine whether it needs to be amended. (42 U.S.C.
6313(a)(6)(C)(i)) Thus, DOE published a request for information
(``RFI'') in the Federal Register on August 9, 2019, which identified
various issues and sought to collect data and information to inform its
determination, consistent with its obligations under EPCA, as to
whether the UFHWST standards need to be amended (the ``August 2019
RFI''). 84 FR 39220. DOE subsequently published a notice of proposed
determination (``NOPD'') in the Federal Register on June 10, 2021
(``June 2021 NOPD''), wherein DOE tentatively determined that the
energy conservation standards for UFHWSTs do not need to be amended.
DOE received six comments in response to the June 2021 NOPD from
the interested parties listed in Table II.1.

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

[[Page 31362]]

A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\3\
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\3\ The parenthetical reference provides a reference for
information located in the docket (Docket No. EERE-2017-BT-STD-0021,
which is maintained at <a href="http://www.regulations.gov">www.regulations.gov</a>). The references are
arranged as follows: (Commenter name, comment docket ID number, page
of that document).
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III. General Discussion

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

When evaluating and establishing energy conservation standards, DOE
typically divides covered equipment into equipment classes by the type
of energy used or by capacity or other performance-related features
that justify differing standards. For UFHWSTs, the current standard at
10 CFR 431.110 is applicable to a single equipment class covering all
UFHWSTs, which is consistent with the standard and structure in ASHRAE
Standard 90.1. DOE's regulations define ``unfired hot water storage
tank'' as a tank used to store water that is heated externally, and
that is industrial equipment. 10 CFR 431.102. The scope of coverage is
discussed in further detail in section IV.A.1 of this final
determination.

B. Test Procedure

EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6314(a)) As
a general matter, manufacturers of covered ASHRAE equipment must use
these test procedures to certify to DOE that their equipment complies
with energy conservation standards and to quantify the efficiency of
their equipment. (42 U.S.C. 6316(b); 42 U.S.C. 6296) DOE's current
energy conservation standards for UFHWSTs are expressed in terms of a
minimum R-value for tank insulation. (See 10 CFR 431.110.)
DOE does not prescribe a test procedure for UFHWSTs; however, DOE's
regulations define ``R-value'' as the thermal resistance of insulating
material as determined using either ASTM International (``ASTM'') C177-
13, ``Standard Test Method for Steady-State Heat Flux Measurements and
Thermal Transmission Properties by Means of the Guarded-Hot-Plate
Apparatus,'' or ASTM C518-15, ``Standard Test Method for Steady-State
Thermal Transmission Properties by Means of the Heat Flow Meter
Apparatus'' and expressed in degrees-square feet-hours per British
thermal units (``[deg]F ft\2\ h/Btu''). 10 CFR 431.102.
In response to the June 2021 NOPD, the CA IOUs and the Joint
Commenters encouraged DOE to consider a performance-based test
procedure for UFHWSTs to address standby loss before proceeding with
this energy conservation standards rulemaking. (CA IOUs, No. 17 at p.
2; Joint Commenters, No. 13 at p. 1) The CA IOUs stated that
performance-based standards are preferable to prescriptive standards
because performance-based standards present a clearer assessment of
product energy performance, allow purchasers to directly compare
product efficiencies, and would encourage innovation in terms of new
methods to reduce heat loss. (CA IOUs, No. 17 at pp. 1-2) Additionally,
the Joint Commenters stated that the current standard, in terms of
thermal resistance, does not guarantee that all tank surfaces are
sufficiently insulated. They suggested that performance-based standards
would provide a better understanding of actual energy consumption and
would likely encourage improved methods to reduce heat loss. (Joint
Commenters, No. 13 at p. 1) In contrast, Rheem recommended that the
current prescriptive design requirement (i.e., the minimum insulation
requirement of R-12.5) be retained for UFHWSTs. (Rheem, No. 15 at p. 1)
As discussed in section II.A of this document, DOE is publishing
this final determination in satisfaction of the 6-year-lookback review
requirement in EPCA, which requires DOE to evaluate the energy
conservation standards for certain commercial equipment, including
UFHWSTs. Under that provision, DOE must publish either a notice of
determination that the standards do not need to be amended, or a NOPR
that includes proposed amendments to the energy conservation standards
(proceeding to a final rule, as appropriate) every 6 years. (42 U.S.C.
6313(a)(6)(C)(i)) Because a Federal test procedure for evaluating
standby loss of UFHWSTs has not been established, DOE has only
considered potential amended standards based on updating the
prescriptive design requirement for insulation R-value. DOE will
consider the merits and feasibility of a performance test in its next
test procedure rulemaking for UFHWSTs.
Additionally, in response to the June 2021 NOPD, the CA IOUs
suggested that DOE clarify the amount of tank surface area that is
required to be insulated. (CA IOUs, No. 17 at p. 4) Aarin King stated
that heat travels upward, and, therefore, insulation placement
requirements should be at the greatest heat loss zones, such as the
relief valve and fittings on the head of the tank. (King, No. 12 at p.
1) \5\
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\5\ Commenter also provided additional comments regarding heat
transfer in tanks not applicable to this rulemaking.
---------------------------------------------------------------------------

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

[[Page 31363]]

consider such approach for this analysis.

C. Technological Feasibility

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

D. Energy Savings

1. Determination of Savings
For each efficiency level (``EL'') evaluated, DOE projected energy
savings from application of the efficiency level to UFHWSTs purchased
in the 30-year period that begins in the assumed year of compliance
with potential amended standards (2025-2054). The savings are measured
over the entire lifetime of UFHWSTs purchased in the 30-year analysis
period. DOE quantified the energy savings attributable to each
efficiency level as the difference in energy consumption between each
standards case and the no-new-standards case. The no-new-standards case
represents a projection of energy consumption that reflects how the
market for the subject equipment would likely evolve in the absence of
amended energy conservation standards.
DOE used a simplified national impact analysis (``NIA'')
spreadsheet model to estimate national energy savings (``NES'') from
potential amended standards for UFHWSTs. The simplified NIA for this
analysis quantifies the potential energy savings from potential
efficiency improvements for UFHWSTs; however, it does not estimate the
net present value (``NPV'') to the Nation of these savings that is
typically performed as part of the NIA. The simplified NIA spreadsheet
model (described in section IV.G of this document) calculates energy
savings in terms of site energy, which is the energy directly consumed
by equipment at the locations where it is used. DOE also calculates NES
in terms of full-fuel-cycle (``FFC'') energy savings. The FFC metric
includes the energy consumed in extracting, processing, and
transporting primary fuels (i.e., coal, natural gas, petroleum fuels),
and, thus, presents a more complete picture of the impacts of energy
conservation standards.\6\ DOE's approach is based on the calculation
of an FFC multiplier for each of the energy types used by covered
products or equipment. For more information on FFC energy savings, see
section IV.G.1 of this document.
---------------------------------------------------------------------------

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

2. Significance of Savings
In determining whether amended standards are needed for covered
equipment addressed by ASHRAE Standard 90.1, DOE must determine whether
such action would result in significant additional conservation of
energy. (42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)(ii)(II))
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking. For example,
the United States has now rejoined the Paris Agreement on February 19,
2021. As part of that agreement, the United States has committed to
reducing GHG emissions in order to limit the rise in mean global
temperature.\7\ Additionally, some covered products and equipment have
most of their energy consumption occur during periods of peak energy
demand. The impacts of these products on the energy infrastructure can
be more pronounced than products with relatively constant demand.
---------------------------------------------------------------------------

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

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

E. Economic Justification

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

[[Page 31364]]

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

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this
final

[[Page 31365]]

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

A. Market and Technology Assessment

DOE develops information in the market and technology assessment
that provides an overall picture of the market for the equipment
concerned, including the purpose of the equipment, the industry
structure, manufacturers, market characteristics, and technologies used
in the equipment. This activity includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. DOE also had structured, detailed interviews conducted
with representative manufacturers. During these interviews,
engineering, manufacturing, procurement, and financial topics were
discussed to validate assumptions used in DOE's analyses, and to
identify key issues or concerns. These interviews were conducted under
non-disclosure agreements (``NDAs''), so DOE does not document these
discussions in the same way that it does public comments in the comment
summaries and DOE's responses throughout the rest of this document.
The subjects addressed in the market and technology assessment for
this rulemaking include: (1) A determination of the scope of the
rulemaking and equipment classes; (2) manufacturers and industry
structure; (3) shipments information; (4) market and industry trends,
and (5) technologies or design options that could improve the energy
efficiency of UFHWSTs. The key findings of DOE's market assessment are
summarized in the following subsections.
1. Scope of Coverage and Equipment Classes
In this analysis, DOE relied on the definition of UFHWSTs in 10 CFR
431.102, which defines an UFHWST as a tank used to store water that is
heated externally, and that is industrial equipment. Any equipment
meeting the definition of an UFHWST is included in DOE's scope of
coverage. UFHWSTs are not currently divided into equipment classes
(i.e., there is a single equipment class covering all UFHWSTs).
In the June 2021 NOPD, DOE did not propose to amend the definition
of UFHWSTs or to divide UFHWSTs into separate equipment classes,
stating that there was no indication the definition would benefit from
an amendment or that further delineation of equipment classes was
justified. 86 FR 30796, 30802 (June 10, 2021). In response to the June
2021 NOPD, the CA IOUs recommend that DOE explore whether separate
product classes would remove technical and market barriers to the
setting of more stringent standards and if it would be feasible to set
different standards. Similarly, the CA IOUs requested that DOE
investigate different markets and applications for these different
types of equipment, stating that rated capacity, along with other
performance-related features, may justify the recognition of subgroups
of UFHWSTs as separate equipment classes with differing standards. (CA
IOUs, No. 17 at p. 2)
In response, DOE notes that for consumer products, EPCA provides
that DOE shall specify a level of energy use or efficiency higher or
lower than that which applies (or would apply) for such type (or class)
for any group of covered products which have the same function or
intended use, if the Secretary determines that covered products within
such group consume a different kind of energy or have a capacity or
other performance-related feature which other products within such type
(or class) do not have and such feature justifies a higher or lower
standard from that which applies (or will apply) to other products
within such type (or class). (42 U.S.C. 6295(q)(1)) However, there is
no companion provision to 42 U.S.C. 6295(q)(1) for ASHRAE equipment. In
addition, DOE continues to find that changes to the definition of
UFHWST are unnecessary.
Therefore, in this Final Determination, DOE maintains the
definition of UFWST and is not dividing UFHWSTs into separate equipment
classes.
2. Technology Options
In the June 2021 NOPD, DOE identified several technology options
that would be expected to improve the efficiency of UFHWSTs. 86 FR
30796, 30802 (June 10, 2021). These technology options were based on
manufacturer equipment literature and publicly-available technical
literature. Specifically, the technologies identified in the June 2021
NOPD included the following:

<bullet> Improved insulation R-value
[cir] Increased insulation thickness
[cir] Foam insulation
[cir] Advanced insulation types
[ssquf] Aerogel
[ssquf] Vacuum panels
[ssquf] Inert gas-filled panels
<bullet> Pipe and fitting insulation
<bullet> Greater coverage of tank surface area with foam insulation
(e.g., tank bottom)

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

B. Screening Analysis

DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in working prototypes will not
be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial equipment could not be achieved on the
scale necessary to serve the relevant market at the time of the
projected compliance date of the standard, then that technology will
not be considered further.
(3) Impacts on equipment utility or equipment availability. If it
is determined that a technology would have significant adverse impact
on the utility of the equipment to significant subgroups of consumers
or would result in the unavailability of any covered equipment type
with performance characteristics (including reliability), features,
sizes, capacities, and volumes that are substantially the same as
equipment generally available in the United States at the time, it will
not be considered further.
(4) Adverse impacts on health or safety. If it is determined that a
technology would have significant adverse impacts on health or safety,
it will not be considered further.
(5) Unique-Pathway Proprietary Technologies. If a design option
utilizes proprietary technology that represents a unique pathway to
achieving a given efficiency level, that technology will not be
considered further due to the potential for monopolistic concerns.

[[Page 31366]]

10 CFR 431.4; 10 CFR part 430, subpart C, appendix A, sections
6(b)(3) and 7(b). In sum, if DOE determines that a technology, or a
combination of technologies, fails to meet one or more of the listed
five criteria, it will be excluded from further consideration in the
engineering analysis. The reasons for eliminating any technology are
discussed in the following sections.
1. Screened-Out Technologies
In the June 2021 NOPD, DOE did not consider any advanced insulation
types as a technology option to increase the insulation R-value for
UFHWSTs. Based on feedback from manufacturers, DOE tentatively
determined that use of advanced insulation types (such as vacuum panels
or aerogels) could necessitate an extremely difficult change to the
UFHWST manufacturing process due to the rigid nature of these materials
and the high degree of customization and ports on UFHWSTs.
Additionally, DOE is not aware of any UFHWST equipment on the market
that incorporate aerogels, vacuum panels, or inert gas-filled panels.
DOE found that polyurethane foam is the most commonly used type of
insulation for meeting the minimum insulation requirement, but
fiberglass and/or Styrofoam are often used in specific regions (e.g.,
tank tops or bottoms, or regions around ports) where applying
polyurethane foam could limit access to ports or be impractical to
manufacture. As discussed in the June 2021 NOPD, DOE included a minimum
amount of insulation other than polyurethane foam around pipes and
fittings in its analysis of baseline equipment, but it did not consider
requiring different insulation materials in these regions. For similar
reasons, DOE did not consider additional insulation coverage around
pipes and fittings as a technology option for the analysis. 86 FR
30796, 30803 (June 10, 2021).
DOE did not receive any comments in response to the June 2021 NOPD
suggesting any changes to the results of its screening analysis.
2. Remaining Technologies
In the June 2021 NOPD, DOE retained improved insulation R-value due
to increased polyurethane foam thickness as a design option in the
engineering analysis. DOE determined that this technology option is
technologically feasible because it only involves an increase in
thickness of the same insulation material that is currently used on
UFHWSTs, and can be achieved with the same processes that are currently
being used in commercially-available equipment or working prototypes
(e.g., fabricating jackets or foaming). 86 FR 30796, 30803 (June 10,
2021). DOE did not receive any comments opposing the use of this design
option, and considered it for the engineering analysis for this final
determination.

C. Engineering Analysis

The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of UFHWSTs at different
levels of reduced heat loss (``efficiency levels'').\8\ There are
typically two elements to consider in the engineering analysis; the
selection of efficiency levels to analyze (i.e., the ``efficiency
analysis'') and the determination of equipment cost at each efficiency
level (i.e., the ``cost analysis''). In determining the performance of
higher-efficiency equipment, DOE considers technologies and design
option combinations not eliminated by the screening analysis. DOE then
typically estimates the baseline cost, as well as the incremental cost
for the equipment at efficiency levels above the baseline, up to the
max-tech efficiency level for each equipment class. The typical output
of the engineering analysis is a set of cost-efficiency ``curves'' that
are used in downstream analyses (i.e., the LCC and PBP analyses and the
NIA). However, for the reasons discussed in section IV.C.3 of this
document, the cost analysis was not performed for this final
determination.
---------------------------------------------------------------------------

\8\ While the UFHWSTs standard addresses heat loss through
establishing a minimum level of insulation, for the purpose of this
analysis, the levels of improvement are referred to generally as
``efficiency levels.''
---------------------------------------------------------------------------

1. Efficiency Analysis
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) Relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing equipment (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market, without regard to the specific design
options used to achieve those levels). Using the design option
approach, the efficiency levels established for the analysis are
determined through detailed engineering calculations and/or computer
simulations of the efficiency improvements from implementing specific
design options that have been identified in the technology assessment.
DOE may also rely on a combination of these two approaches.
In the June 2021 NOPD, DOE adopted a design-option approach. DOE
identified very few models of UFHWSTs on the market that are marketed
with higher insulation levels than the current baseline requirement of
R-12.5. However, as discussed later in this section, in the interim
since the publication of the June 2021 NOPD, UFHWSTs have been
certified in DOE's CCD with R-values up to R-30. Therefore, for the
current analysis, DOE is using the efficiency-level approach to
determine the ``max-tech'' efficiency level as the maximum efficiency
level available on the market. However, DOE is retaining the design-
option approach for setting intermediate efficiency levels because of
the limited range of R-values among UFHWSTs on the market between the
baseline and max-tech.
In response to the June 2021 NOPD, BWC commented that it is
concerned about foam consistency and quality at thicknesses approaching
or exceeding 3 inches. BWC stated that it is difficult to ensure that
the foam would evenly flow circumferentially, as well as vertically, on
the tank given the size and many features on tanks. BWC asserted that
this could ultimately compromise perceived efficiency improvements from
increased foam thicknesses. (BWC, No. 14 at p. 1) Similarly, Rheem
recognized that some foam systems can provide higher R-values, but the
commenter pointed out that there are variations with in-place foam
properties, such as densities within the cavity from the top to the
bottom of the tank, that will impact insulation performance. (Rheem,
No. 15 at p. 2) Rheem suggested that applying more than 3 inches of
polyurethane foam insulation to a jacketed tank is challenging and can
lead to larger variation with in-place density and foam, which it
stated would impact insulation quality and contributes to a decrease in
R-values. Rheem also stated that R-values of 6.25 per inch of
insulation can be achieved with larger cavities but said that this is
impractical and costly to manufacture, especially with the highly
customized tanks and relatively small market production quantities for
UFHWSTs. (Rheem, No. 15 at pp. 1-2)
Rheem further stated that there are diminishing returns from
increasing insulation thicknesses due to the increased surface area and
heat transfer rate. (Rheem, No. 15 at p. 2). Similarly,

[[Page 31367]]

A.O. Smith stated that in its experience, polyurethane foam insulation
collapses when expanding in a cavity greater than 3 inches (which in
turn leads to increased heat loss). The commenter stated that it did
experience greater reliability when exceeding 3 inches of thickness for
polyurethane foam insulation by sequentially adding several layers of
insulation but added that this process came at significant cost,
including increased curing time, longer manufacturing times, as well as
increased capital and labor. (A.O. Smith, No. 16 at p. 2) A.O. Smith
also recommended that the Department engage with the U.S. Environmental
Protection Agency (``EPA'') and industry moving forward regarding the
efficacy of polyurethane foam properties, given evolving chemical
regulations. (A.O. Smith, No. 16 at p. 2)
Rheem and A.O. Smith also stated that they support the insulation
thickness levels (up to 3 inches) as well as the R-value per inch
(6.25) used in DOE's analysis. (Rheem, No. 15 at p. 2; A.O. Smith, No.
16 at p. 2)
For each equipment class, DOE generally selects a baseline model as
a reference point for each class, and measures changes resulting from
potential energy conservation standards against the baseline. The
baseline model in each equipment class represents the characteristics
of equipment typical of that class (e.g., capacity, physical size).
Generally, a baseline model is one that just meets current energy
conservation standards, or, if no standards are in place, the baseline
is typically the most common or least efficient unit on the market.
Based on its review of publicly-available equipment information and
feedback from manufacturers, DOE found that 2 inches of polyurethane
foam insulation provides a level of insulation that meets the current
insulation requirement, and DOE, therefore, considered this insulation
thickness as the baseline. As discussed in section IV.B.2 of this
document, increased polyurethane foam insulation thickness was the only
technology option that was not screened-out for this analysis, and
thus, DOE considered more-stringent efficiency levels (i.e., increased
R-value) based on varying levels of increased polyurethane foam
thickness. As discussed in the June 2021 NOPD, based on feedback from
manufacturers and its own review of the UFHWST market, improvement in
R-value as insulation thickness increases beyond 3 inches for jacketed
tanks is unclear due to the lack of models on the market with thicker
insulation and manufacturers' feedback that increasing thickness beyond
3 inches is impractical. Therefore, DOE limited its analysis in the
June 2021 NOPD to considering only up to 1 additional inch of
insulation thickness above the baseline insulation level of 2 inches
(i.e., 3 inches of foam insulation was considered the max-tech
efficiency level for UFHWSTs). 86 FR 30796, 30804 (June 10, 2021).
As noted, UFHWSTs are currently certified in DOE's CCD with
insulation R-values up to R-30. From a review of product literature,\9\
DOE found that these products are insulated with polyurethane foam and
have a stated insulation thickness of 5 inches. Based on the presence
of these UFHWSTs on the market and their represented R-value, DOE
updated its analysis from the June 2021 NOPR to use R-30 as the max-
tech level, as this level of insulation has now been demonstrated to be
technologically feasible.
---------------------------------------------------------------------------

\9\ See: <a href="http://www.hotwater.com/water-heaters/commercial/storage-tanks/jacketed---hpwh-optimized/">www.hotwater.com/water-heaters/commercial/storage-tanks/jacketed---hpwh-optimized/</a> (Last accessed Feb. 21, 2022).
---------------------------------------------------------------------------

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

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

[[Page 31368]]

2. Representative Equipment for Analysis
For the engineering analysis, DOE analyzed the publicly-available
details, including storage volumes and other critical features, of
UFHWST models available on the market to determine appropriate
representative equipment to analyze. DOE also discussed the appropriate
representative characteristics with UFHWST manufacturers during
interviews. For the June 2021 NOPD, DOE determined the dimensions in
Table IV.2 to be representative of the UFHWST market.

Table IV.2--Representative Tank Characteristics Used in the June 2021 NOPD
----------------------------------------------------------------------------------------------------------------
Representative dimensions
Volume range Representative -------------------------------
volume (gal.) Height (in.) Diameter (in.)
----------------------------------------------------------------------------------------------------------------
0 to 100........................................................ 50 47 22
101 to 250...................................................... 175 65 28
251 to 500...................................................... 375 72 42
501 to 1000..................................................... 750 141 42
1,001 to 2,000.................................................. 1,500 124 60
2,001 to 5,000.................................................. 3,500 168 84
>5,000.......................................................... 5,000 180 96
----------------------------------------------------------------------------------------------------------------

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

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

[[Page 31369]]

3. Cost Analysis
The cost analysis portion of the engineering analysis is conducted
using one or a combination of cost approaches. The selection of cost
approach depends on a suite of factors, including the availability and
reliability of public information, characteristics of the regulated
equipment, the availability and timeliness of purchasing the equipment
on the market. The cost approaches are summarized as follows:
<bullet> Physical teardowns: Under this approach, DOE physically
dismantles commercially-available equipment, component-by-component, to
develop a detailed bill of materials for the equipment.
<bullet> Catalog teardowns: In lieu of physically deconstructing
equipment, DOE identifies each component using parts diagrams
(available from sources such as manufacturer websites or appliance
repair websites) to develop the bill of materials for the equipment.
<bullet> Price surveys: If neither a physical nor catalog teardown
is feasible (e.g., for tightly integrated products such as fluorescent
lamps, which are infeasible to disassemble and for which parts diagrams
are unavailable), cost-prohibitive, or otherwise impractical (e.g.,
large commercial boilers), DOE conducts price surveys using publicly-
available pricing data published on major online retailer websites and/
or by soliciting prices from distributors and other commercial
channels.
As discussed in section IV.E of this document, DOE did not conduct
a cost analysis because DOE did not have the requisite inputs to
develop its LCC model with a degree of certainty that would meet the
statute's ``clear and convincing'' evidentiary threshold. Accordingly,
DOE did not generate a cost-efficiency curve, as it would not be
necessary without an LCC model to feed into.

D. Energy Use Analysis

The purpose of the energy use analysis is to determine the annual
energy consumption of UFHWSTs at different efficiencies in
representative U.S. commercial buildings and industrial facilities, and
to assess the energy savings potential of increased UFHWST efficiency.
The energy use analysis estimates the range of energy use of UFHWSTs in
the field (i.e., as they are actually used by consumers). The energy
use analysis provides the basis for other analyses DOE performed,
particularly assessment of the energy savings that could result from
adoption of amended or new standards.
As discussed, UFHWSTs store hot water and do not directly consume
fuel or electricity for the purpose of heating water, so any potential
amendments to the standard would reduce standby loss of heat from the
stored water. Further, DOE currently only prescribes a minimum
insulation requirement (as opposed to a minimum efficiency requirement)
for UFHWSTs. Accordingly, the energy use analysis determines the annual
energy consumption of paired water heaters and boilers due to standby
loss of the UFHWSTs and assesses the energy savings potential of
increasing the stringency of the required insulation for UFHWSTs.
1. Tank Thermal Loss Model
As discussed in the June 2021 NOPD, for this determination, DOE
adapted the thermal loss model described in the technical support
document (``TSD'') for the commercial water heating (``CWH'') energy
conservation standards (``ECS'') NOPR published in the Federal Register
on May 31, 2016 (81 FR 34440; ``May 2016 CWH ECS NOPR''), with some
modifications to how the tank surface areas are defined.\10\ 86 FR
30796, 30806 (June 10, 2021). These modifications were introduced to
capture equipment performance that results from differences in surface
insulation thickness over different areas of the tank (i.e., insulation
around fittings and access ports). These differences are described in
section IV.D.1.a of this document.
---------------------------------------------------------------------------

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

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

Where:
Qhr, j = The hourly heat loss for the UFHWST for each efficiency
level j (Btu/hr).
i = The surface area of the cylindrical tank is divided into
different zones each indexed i.
Ai, j = The area of each zone i at each efficiency level j (ft\2\).
Ti = The constant internal water temperature for each tank zone i
([deg]F).
Tamb,z = The ambient air temperature for each climate zone z
([deg]F).
Ri, j = The net R-value of the insulation for each zone i at each
efficiency level j ([deg]F [middot] ft\2\ [middot] hr/Btu).
a. Tank Surface Area (Ai, j)
DOE maintained the approach it used in the June 2021 NOPD for this
final determination, where DOE used a conservative assumption in its
energy use analysis that water temperature would remain uniformly at
140 [deg]F and did not consider stratification of water temperatures
inside the tank. 86 FR 30796, 30806 (June 10, 2021). Therefore,
although tanks can be installed horizontally or vertically, there is no
difference in thermal losses between these configurations, and DOE only
used vertical tanks in its analysis. The UFHWST's total external
surface area was divided into separate zones, where i is the index for
each zone. Zones represent the different areas of an UFHWST that would
have unique insulative values.

ATankTop = When the UFHWST is oriented vertically, this represents
the tank's top surface.
AFittings = Is the sum of all uninsulated areas of the tank's
surface devoted to fittings.
AFittingInsulation = Is the sum of all insulated areas of the tank's
surface surrounding the (uninsulated) fittings.
AAccessPort = Is the sum of all insulated areas of the tank's
surface devoted to the tank's clean-out hand hole port or manhole.
ATankWall = When the UFHWST is oriented vertically, this represents
the tank's walls.
ATankBottom = When the UFHWST is oriented vertically, this
represents the tank's bottom surface.

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

[[Page 31370]]

permitted by most applicable safety codes to be covered. (A.O. Smith,
No. 16 at p. 4) In response and as discussed in this section, DOE's
Tank Thermal Loss Model accounts for small areas of uninsulated tank to
reflect losses through adjoining pipes or fittings at each of several
ports. DOE maintained the quantity of uninsulated ports that were
discussed in the June 2021 NOPD, which specifically included reference
to a temperature and pressure relief valve. 86 FR 30796, 30805 (June
10, 2021).
b. Tank Internal Water Temperature (Ti)
For the June 2021 NOPD analysis, DOE assumed that the water inside
the UFHWSTs is at a constant uniform temperature of 140 [deg]F, which
is the average water temperature required by the current Federal test
procedures for storage-type CWH equipment during standby loss testing.
86 FR 30796, 30806 (June 10, 2021). (See generally 10 CFR 431.106; 10
CFR part 431, subpart G, appendix A, section 6; 10 CFR part 431,
subpart G, appendix B, section 5.) Because UFHWSTs serve the same
function as storage-type CWH equipment in standby mode, DOE reasoned
that similar conditions would be appropriate for UFHWSTs as for
storage-type CWH equipment in standby mode. Id. DOE used a conservative
assumption that internal water temperatures would remain indefinitely
at 140 [deg]F. In reality, the rate of heat loss from a UFHWST would
decrease slowly as the temperature difference between the internal
stored water and the ambient air decreased. However, because this
effect would be minimal, DOE did not consider stratification of water
temperatures inside the tank and assumed that a tank would always be
full of hot water. Therefore, DOE held the temperature T constant
across all tank zones i. Id.
DOE received comments from a number of stakeholders regarding the
assumed constant internal water temperature of 140 [deg]F. The CA IOUs
commented that many common commercial hot water applications require
temperatures higher than 140 [deg]F and stated that the Centers for
Disease Control and Prevention notes in its Environmental Infection
Control Guidelines that a temperature of 160 [deg]F is recommended for
clothes washing in healthcare facilities. (CA IOUs, No. 17 at p. 2)
Rheem stated that typical storage water temperatures are between
120 [deg]F and 180 [deg]F for food service, laundry, and commercial
building applications or between 120 [deg]F and 130 [deg]F for
commercial buildings not requiring sanitation. Rheem stated that a
constant internal tank temperature of 140 [deg]F is an appropriate
estimate for the purposes of DOE's analysis. (Rheem, No. 15 at p. 2)
A.O. Smith stated that it agrees with DOE's use of 140 [deg]F as a
constant internal water temperature. (A.O. Smith, No. 16 at p. 3)
Given the wide range of temperatures provided by stakeholders above
and below DOE's assumed internal temperature, DOE finds the 140 [deg]F
to be reasonably representative of UFHWST use in the field. The 140
[deg]F is within the range of temperatures suggested by commenters. The
data sources examined by DOE (i.e., recent versions of the Commercial
Building Energy Consumption Survey (``CBECS'')),11 12 while
containing information on primary business activity, do not contain
information from which to infer an average internal tank water
temperature. Additionally, commenters did not provide data in terms of
percentage of applications at which the various internal temperatures
are realized. As such, DOE maintained its use of 140 [deg]F for this
final determination.
---------------------------------------------------------------------------

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

c. Tank Ambient Temperature (Tamb, z)
For the June 2021 NOPD, DOE assumed that all tanks that are
installed indoors would have a constant ambient temperature of 75
[deg]F, which is the average air temperature specified by the current
Federal test procedure for storage-type CWH equipment during standby
loss testing. 86 FR 30796, 30806 (June 10, 2021). See generally 10 CFR
431.106; 10 CFR part 431, subpart G, appendix A, section 6; 10 CFR part
431, subpart G, appendix B, section 5.
Both Rheem and A.O. Smith commented on DOE's assumed use of 75
[deg]F as the constant average ambient temperature. Rheem supported the
ambient temperature of 75 [deg]F used as a representative value for
indoor installations. (Rheem, No. 15 at p. 3) In contrast, A.O. Smith
suggested that 78 [deg]F would be more accurate for indoor ambient
temperatures. (A.O. Smith, No. 16 at p. 3)
In response, DOE understands that indoor ambient temperatures seen
in the field will be a distribution of values depending on the location
of the UFHWST within the building and that this location may be
conditioned to a temperature other than 75 [deg]F, or not conditioned
at all. As discussed, UFHWSTs serve the same function as storage-type
CWH equipment in standby mode, and DOE expects that similar conditions
would be appropriate for UFHWSTs as for storage-type CWH equipment in
standby mode. For the purpose of this simplified energy savings
estimate for this final determination, DOE finds that the use of the 75
[deg]F applicable under the CWH test procedure is appropriately
representative for UFHWSTs.
DOE notes that A.O. Smith did not provide a basis for its
suggestion to test at 78 [deg]F, which would increase the ambient air
temperature as compared to the current DOE test procedure. Increasing
the ambient temperature would lower the temperature differential
between the UFHWST's internal and ambient temperature, thereby reducing
the projected potential energy savings. Given the unsubstantiated
nature of A.O. Smith's comment and for the reasons discussed, DOE
maintained its use of 75 [deg]F as the indoor constant ambient
temperature for this final determination.
As stated in the June 2021 NOPD, based on feedback from
manufacturers during interviews conducted under NDA, DOE assumed that
90 percent of UFHWSTs would be installed indoors and that the remaining
10 percent would be installed outdoors. 86 FR 30796, 30806 (June 10,
2021).
Rheem agreed with DOE's assumption that 10 percent of all UFHWSTs
are installed outdoors. (Rheem, No. 15 at p. 3) A.O. Smith suggested
that the Department's assumption that 10 percent of all UFHWSTs are
installed outdoors may be overstated. (A.O. Smith, No. 16 at p. 3)
However, A.O. Smith did not provide a basis for its assertion and did
not provide an alternate percentage to consider. Absent additional
support for a different value, for this final determination, DOE
maintained its assumption that 10 percent of UFWHSTs are installed
outdoors.
A.O. Smith stated that outdoor tanks tend to be taller and have
larger volumes than indoor tanks, but R-values are generally consistent
with indoor tanks. (A.O. Smith, No. 16 at p. 3) Rheem stated that
typical capacities used for outdoor applications include 235, 335, 499,
534-gallon sizes; smaller tanks not specifically intended for outdoor
installation may also be placed outside with applied weatherization;
and outdoor models can have 2.5 to 3 inches of spray foam insulation
and be

[[Page 31371]]

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

\13\ The TMY data sets hold hourly values of solar radiation and
meteorological elements for a 1-year period. Their intended use is
for computer simulations of solar energy conversion systems and
building systems to facilitate performance comparisons of different
system types, configurations, and locations in the United States and
its territories. Because they represent typical rather than extreme
conditions, they are not suited for designing systems to meet the
worst-case conditions occurring at a location.
\14\ Wilcox, S. and W. Marion, 2008 User's Manual for TMY3 Data
Sets, NREL/TP-581-43156 (April 2008) (Available at: <a href="http://www.nrel.gov/docs/fy08osti/43156.pdf">www.nrel.gov/docs/fy08osti/43156.pdf</a>) (Last accessed November 2021).
\15\ Building America Best Practices Series, Volume 7.3, Guide
to determining climate regions by county 2015 (Available at:
<a href="http://www.energy.gov/sites/prod/files/2015/10/f27/ba_climate_region_guide_7.3.pdf">www.energy.gov/sites/prod/files/2015/10/f27/ba_climate_region_guide_7.3.pdf</a>).
\16\ U.S. Census Population Estimates by County, as of 2018
(Available at: <a href="http://www.census.gov/data/tables/time-series/demo/popest/2010s-counties-total.html#par_textimage">www.census.gov/data/tables/time-series/demo/popest/2010s-counties-total.html#par_textimage</a>) (Last accessed April 1,
2022).

Table IV.4--Climate Zones and Representative Cities
----------------------------------------------------------------------------------------------------------------
Climate zone Population Representative city TMY location #
----------------------------------------------------------------------------------------------------------------
1A........................................ 6,208,359 Miami............................... 722020
2A........................................ 38,418,718 Houston............................. 722430
2B........................................ 6,869,283 Phoenix............................. 722780
3A........................................ 43,230,951 Atlanta............................. 722190
3B--CA.................................... 29,951,605 Los Angeles......................... 722950
3B--Non CA................................ 5,546,151 Las Vegas........................... 723677
3C........................................ 8,596,694 San Francisco....................... 724940
4A........................................ 69,154,015 Baltimore........................... 724060
4B........................................ 2,245,023 Albuquerque......................... 723650
4C........................................ 9,696,610 Seattle............................. 727930
5A........................................ 70,727,419 Chicago............................. 725300
5B........................................ 13,119,013 Boulder............................. 724699
6A........................................ 17,705,715 Minneapolis......................... 726580
6B........................................ 2,650,907 Helena.............................. 727720
7......................................... 2,625,239 Duluth.............................. 727450
8......................................... 170,286 Fairbanks........................... 702610
----------------------------------------------------------------------------------------------------------------

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

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

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

[[Page 31372]]

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

d. R-Value of Insulation (Ri, j)
The R-value of each zone i of the UFHWST is defined for each
efficiency level j in the engineering analysis in Table IV.1 and Table
IV.3 of section IV.C of this document.
2. Annual Energy Use Due to UFHWST Losses
To calculate the energy used by the boiler attributable to the heat
losses of the UFHWSTs, DOE maintained the approach from the June 2021
NOPD and used the following equation for each efficiency level listed
in Table IV.1:
[GRAPHIC] [TIFF OMITTED] TR24MY22.008

Where:

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

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

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

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

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

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

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

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

As discussed in section IV.C.2 of this document, the inputs to
DOE's Tank Thermal Loss Model were primarily based on publicly-
available information, DOE's previous knowledge of UFHWSTs, and
feedback from manufacturers received during interviews conducted under
NDAs. To validate the model, DOE compared the results produced by the
model to results of testing previously conducted to evaluate the
performance-based test procedure proposed for UFHWSTs in the May 2016
CWH TP NOPR, which was largely based on the standby loss test procedure
for commercial storage water heaters. The proposed test procedure
included a standby loss test that would be conducted as the mean tank
water temperatures decay from 142 [deg]F to 138 [deg]F at a nominal
ambient temperature of 75 [deg]F. 81 FR 28588, 28603 (May 9, 2016).
Standby loss tests were conducted on 17 UFHWSTs with an advertised
insulation level of R-12.5

[[Page 31373]]

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

E. Life-Cycle Cost and Payback Period Analysis

To determine whether a standard is economically justified, EPCA
requires DOE to consider the economic impact of the standard on
manufacturers and consumers, as well as the savings in operating costs
throughout the estimated average life of the equipment compared to any
increase in price, initial charges, or maintenance expenses of the
equipment likely to result from the standard. (42 U.S.C.
6313(a)(6)(B)(ii)(I)-(II)) The effect of new or amended energy
conservation standards on individual consumers usually involves a
reduction in operating cost and an increase in purchase cost. To
evaluate the economic impacts of potential energy conservation
standards on consumers, in order to determine whether amended standards
would be economically justified, DOE used the following two metrics to
measure consumer impacts:
<bullet> The LCC is the total consumer expense of an appliance or
equipment over the life of that equipment, consisting of total
installed cost (manufacturer selling price, distribution chain markups,
sales tax, and installation costs) plus operating costs (expenses for
energy use, maintenance, and repair). To compute the operating costs,
DOE discounts future operating costs to the time of purchase and sums
them over the lifetime of the equipment.
<bullet> The PBP is the estimated amount of time (in years) it
takes consumers to recover the increased purchase cost (including
installation) of more-efficient equipment through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
at higher efficiency levels by the change in annual operating cost for
the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of UFHWSTs in the absence of new or
amended energy conservation standards. In contrast, the PBP for a given
efficiency level is measured relative to the baseline equipment.
1. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the equipment. In the June 2021
NOPD, DOE qualitatively examined certain factors that can impact the
installation costs of UFHWST. 86 FR 80796, 80809-80810 (June 10, 2021).
DOE acknowledged that that increasing installation costs can reduce, or
even eliminate, the future economic consumer benefits from a potential
new standard. Id. at 86 FR 80810. DOE tentatively agreed with the
commenters that a small increase in tank dimensions, a change driven by
the need to comply with a potential new standard case, could
potentially disproportionately increase the installation costs for a
fraction of consumers of replacement equipment. Id. DOE stated that
while the fraction of impacted consumers is uncertain, DOE is certain
that there will be some consumers who will experience these higher
installation costs. Id. DOE further stated that these higher
installation costs for replacement equipment create uncertainty
regarding the positive economic benefits for a potentially significant
fraction of consumers from an amended standard for UFHWSTs. Id.
In response to the June 2021 NOPD, DOE received comments regarding
information related to costs resulting from building modifications due
to increased equipment size. A.O. Smith stated that the primary
consideration of the designing/specifying engineer when replacing a
UFHWST is the required storage volume and frequency of hot water demand
for the building/application. From there, an installation
recommendation is made based upon constraints, including, but not
limited to, doorways and passageways that can accommodate the
installation of one or more new UFHWSTs. (A.O. Smith, No. 16 at p. 5)
Rheem suggested that an increase in the overall dimensions, especially
the diameter of UFHWST due

[[Page 31374]]

to increased insulation thickness, could require modifications to
existing doorways or mechanical rooms. Rheem stated that an increase in
the overall dimensions of UFHWSTs would require additional space for
installation, along with higher cost for transportation and handling of
the tank until it reaches its final location. (Rheem, No. 16 at p. 3)
Both A.O. Smith and Rheem agreed that the costs will vary substantially
depending on the tank size, building type, and whether it is going to
new construction or a replacement installation. Rheem commented that
for new construction, the UFHWST installation can be better planned and
located during the construction process, but future replacement will
still present challenges. Rheem further commented that there are
several requirements to consider in determining if restructuring a
building is cost-effective or appropriate for a given installation and
building, including compliance with building, mechanical, plumbing, and
local codes and manufacturer's instructions. Rheem stated that
installing floor tie downs, modifying fire-rated doorways and interior
passage doors, and changing exit routes in a building are some examples
of codes-related considerations. (Rheem, No. 15 at pp. 3-4; A.O. Smith,
No. 16 at p. 4) Finally, A.O. Smith suggested that buildings associated
with municipal, university, school, and hospital (``MUSH'') facilities
will typically have equipment/mechanical rooms, and access thereto,
that can accommodate the installation of UFHWSTs of slightly different
sizes, including ones with modest increases in dimensions. In the
commenter's experience, the more challenging installations are ones
associated with ``high-rise buildings'' and historic buildings, in both
urban and rural areas; according to A.O. Smith, these buildings often
have equipment/mechanical rooms in basements or on the rooftop, which
present unique and challenging circumstances for replacing a UFHWST
generally, let alone with one that may have slightly larger dimensions.
(A.O. Smith, No 16 at p. 5)
In response, the comments from A.O. Smith and Rheem reaffirmed
DOE's understanding that potential amended standards for UFHWSTs could
potentially disproportionately increase the installation costs for a
fraction of consumers of replacement equipment. Absent further
information or data on typical installations costs for UFHWST to
indicate the contrary, DOE maintains the conclusion arrived at in the
June 2021 NOPD: There is considerable uncertainty regarding future
consumer economic benefits from increasing the efficiency of UFHWSTs.
2. Annual Energy Consumption
DOE typically determines the annual energy consumption for
equipment at different efficiency levels. DOE's approach to determining
the annual energy consumption of UFHWSTs is described in section IV.D
of this document.
As discussed in section V.A.1 of this document, DOE estimates that
amended standards at the max-tech level would result in FFC energy
savings of 0.058 quads over 30 years. However, as discussed in sections
IV.D and IV.E of this document, even small adjustments to several
critical inputs to the model could have a large impact on these results
and could significantly alter the findings. For example, as explained
previously, the inputs to the Tank Thermal Loss Model are primarily
based on publicly available data and information gathered during
manufacturer interviews, but as discussed earlier, the results from
this model underestimate losses as compared to those observed during
testing of UFHWSTs that was previously done to evaluate the test
procedure proposed for UFHWSTs in the May 2016 CWH TP NOPR. As noted in
the June 2021 NOPD, when DOE conducted standby loss tests of UFHWSTs,
it found that tanks with identical storage volumes, dimensions, number
of ports, and nominal insulation levels differed by up to 8.5 percent,
whereas DOE's model would predict the same level of standby losses for
tanks with the same attributes and insulation. This finding suggests
that there are variations in the extent of R-12.5 coverage between
units, even between units from the same manufacturer. 86 FR 30796,
30808 (June 10, 2021). The unpredictable results of DOE testing meant
that DOE was unable to validate its thermal loss model to test data
with a high degree of certainty. Without being able to verify expected
levels of heat loss through testing, DOE is unable to conduct an LCC
and PBP analysis for this final determination. DOE may continue to
investigate this issue further in the future.

F. Shipments Analysis

DOE uses projections of annual equipment shipments to calculate the
national impacts of potential amended or new energy conservation
standards. The shipments model takes an accounting approach in tracking
market shares of each equipment class and the vintage of units in the
stock. Stock accounting uses equipment shipments as inputs to estimate
the age distribution of in-service equipment stocks for all years.
To project shipments and equipment stocks for 2025 through the end
of the 30-year analysis period (2054), DOE used a stock accounting
model. Future shipments are calculated based on projections in Annual
Energy Outlook 2021 (AEO 2021) (see section IV.F.3 of this document for
further details). The stock accounting model keeps track of shipments
and calculates replacement shipments based on the expected service
lifetime of UFHWSTs and a Weibull distribution that identifies a
percentage of units still in existence from a prior year that will fail
and need to be replaced in the current year.
DOE's approach begins with an estimate of the current stock of
UFHWSTs. DOE uses an estimate of average UFHWST lifetime to derive the
fraction of the stock that is replaced in each year. DOE then adds an
estimate of new UFHWSTs installed in each year.
1. Stock Estimates
DOE investigated each sector that is presumed to operate UFHWSTs:
Residential, commercial, and industrial. However, DOE was unable to
find clear indicators of how many UFHWST are used by any of these
sectors, so it developed sectoral stock estimates from publicly-
available data, as discussed in the paragraphs that follow.
a. Residential Stock
As explained in detail in the June 2021 NOPD, to estimate the stock
of UFHWSTs in the residential sector, DOE's search of the RECS database
using these assumptions yielded a sample of zero buildings that had the
potential to contain an UFHWST.\18\ 86 FR 30796, 30811 (June 10, 2021).
At that time, DOE assumed that UFHWST were not used in residential
buildings. DOE did not receive any comments on residential
installations of UFHWST. Accordingly, for this final determination, DOE
concluded that the quantity of UFHWST installed in the residential
sector is minimal, and consequently, it was not considered for the
purpose of this final determination.
---------------------------------------------------------------------------

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

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

[[Page 31375]]

June 2021 NOPD was published in the Federal Register, the 2018 edition
of CBECS (``CBECS 2018'') was made available.
CBECS 2018 introduced new building records that may contain UFHWST
equipment, as they relate to technologies that are often connected to
UFHWSTs which were absent from CBECS 2012. However, CBECS 2018 was also
limited in its characterization of buildings that may contain an UFHWST
when compared to CBECS 2012 and did not have the same fields from which
to draw a customer sample. For this final determination, in addition to
the sample based on CBECS 2012 which was presented in the June 2021
NOPD, DOE included the buildings from CBECS 2018 with the following
characteristics in addition to the stock estimates presented in the
June 2021 NOPD (see 86 FR 30796, 30811 (June 10, 2021)).
<bullet> Solar thermal used for water heating (SOWATR = 1), and
<bullet> Water loop heat pump for hot water distribution (WTLOOP_HW
= 1).
As noted previously, for the June 2021 NOPD, DOE based its
commercial stock estimates on data from CBECS 2012. Since DOE did not
receive any comments suggesting alternate stock from the estimates, the
Department has elected to maintain its use of these estimates for this
final determination in addition to the new records from CBECS 2018.
From CBEC 2012, DOE assumed that builds likely to contain an UFHWST
would be characterized as follows:
<bullet> A building with water heating equipment (WTHTEQ = 1), and
<bullet> Where the main heating equipment is boilers inside (or
adjacent to) the building that produce steam or hot water (MAINHT = 3).
The results of a search of the CBECS databases using these
assumptions yielded a commercial sample of 325,089 buildings from CBECS
2012, plus an additional 11,134 buildings from CBECS 2018. From this
sample DOE also found that 99.2 percent of these buildings use natural
gas as their primary energy source for water heating, with the
remaining 0.8 percent of buildings using district water heating,\19\
electricity, heating oil, or other fuels. For purpose of analysis, DOE
considered 100 percent of commercial buildings to use natural gas to
heat water.
---------------------------------------------------------------------------

\19\ ``District heating'' is an underground infrastructure asset
where thermal energy is provided to multiple buildings from a
central energy plant or plants. In this context, it would be
operated by local governments.
---------------------------------------------------------------------------

DOE notes that for this determination, the surveys from both CBECS
2012, and CBECS 2018 contain very course data regarding the quantity
and type of water heating technologies for each record. DOE assumed one
UFWHST per building--for all building records- regardless of building
size from the CBECS results. This is likely to be an overestimation of
UFHWST installed stock, as not all buildings matching the available
criteria from CBECS will contain UFHWSTs, even if some of these
building contain multiple units.
c. Industrial Stock
For this final determination DOE maintained its industrial stock
approach and estimate of UFWHSTs that it used in the June 2021 NOPD. As
described in the June 2021 NOPD, DOE examined the industrial data
source listed in the August 2019 ECS RFI and was not able to determine
an appropriate stock sample from the highly aggregated data
available.20 21 86 FR 30796, 30811 (June 10, 2021). DOE
maintains that UFHWSTs are used to store potable hot water for human
consumption and washing, not for industrial process water. This
assumption is supported by Rheem's comment that stated that their
UFHWSTs are not intended for non-potable water storage. (Rheem, No.15
at p. 5)
---------------------------------------------------------------------------

\20\ Energy Information Administration (EIA), 2014 Manufacturing
Energy Consumption Survey (MECS) (Available at: <a href="https://www.eia.gov/consumption/manufacturing/data/2014/">https://www.eia.gov/consumption/manufacturing/data/2014/</a>) (Last accessed April 4, 2019).
\21\ Northwest Energy Efficiency Alliance, 2014 Industrial
Facilities Site Assessment: Report & Analytic Results, 2014
(Available at: <a href="https://neea.org/img/documents/2014-industrial-facilities-stock-assessment-final-report.pdf">https://neea.org/img/documents/2014-industrial-facilities-stock-assessment-final-report.pdf</a>) (Last accessed May 3,
2021).
---------------------------------------------------------------------------

DOE maintained its assumption that the volume of hot water storage
needed would be similar across both commercial and manufacturing
sectors on a per-person basis. To estimate the stock of industrial
consumers, DOE used the number of manufacturing employees from the 2017
census.\22\ DOE then determined the ratio of UFHWSTs per commercial
employee. DOE then used the ratio of the employee count from the
commercial sample described in section IV.F.1.b of this document over
the total number of commercial employees to represent the number of
UFHWSTs in the commercial sector on a per-employee basis. DOE then
applied this ratio to the total number of manufacturing employees from
the 2017 census to produce a National stock estimate for the industrial
sector.
---------------------------------------------------------------------------

\22\ U.S. Census Bureau, All Sectors: Summary Statistics for the
U.S., States, and Selected Geographies: 2017, Table EC1700BASIC,
2017 (Available at: <a href="https://data.census.gov/cedsci/table?q=31-33%3A%20Manufacturing&hidePreview=false&tid=ECNBASIC2017.EC1700BASIC&vintage=2017">https://data.census.gov/cedsci/table?q=31-33%3A%20Manufacturing&hidePreview=false&tid=ECNBASIC2017.EC1700BASIC&vintage=2017</a>) (Last accessed: March 27, 2020).
---------------------------------------------------------------------------

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

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

[[Page 31376]]

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

2. Shipments for Replacement
For the reasons explained in the June 2021 NOPD, DOE based the
replacement rate for UFHWSTs on an average equipment lifetime of 12
years, using the equipment lifetime developed for commercial water
heaters. 86 FR 30796, 30811-30812 (June 10, 2021). In response to the
June 2021 NOPD, DOE did not receive any comments regarding its derived
annual rate of UFHWST replacement. Accordingly, for this final
determination, DOE maintained its assumption of an 8 percent per year
replacement rate for UFHWSTs.
3. Shipments for New Construction
To project shipments of UFHWSTs for new construction, DOE relied on
the trends available from the AEO 2021. DOE used the Commercial
Floorspace and Macro Indicators Employment Manufacturing trends to
project new construction for the commercial and industrial sectors,
respectively.\23\ \24\ DOE estimated a saturation rate for each
equipment type using building and equipment stock values. The
saturation rate was applied in each year, yielding shipments to new
buildings.
---------------------------------------------------------------------------

\23\ U.S. Energy Information Administration, Annual Energy
Outlook (2021), Table 22, Commercial Sector Energy Consumption,
Floorspace, Equipment Efficiency, and Distributed Generation
(Available at: <a href="https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2021&cases=ref2021&sourcekey=0">https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2021&cases=ref2021&sourcekey=0</a>) (Last accessed Feb. 21,
2022).
\24\ U.S. Energy Information Administration, Annual Energy
Outlook (2021), Table 23, Industrial Sector Macroeconomic Indicators
(Available at: <a href="https://www.eia.gov/outlooks/aeo/data/browser/#/?id=34-AEO2021&cases=ref2021&sourcekey=0">https://www.eia.gov/outlooks/aeo/data/browser/#/?id=34-AEO2021&cases=ref2021&sourcekey=0</a>) (Last accessed Feb. 21,
2022).
---------------------------------------------------------------------------

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

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

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

[[Page 31377]]

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

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

5. Additional Sources of Uncertainty
DOE recognizes that the market for UFHWSTs is a relatively highly
customized and low-volume shipments market. DOE's review of publicly-
available information indicates that annual shipments through 2030 will
be below 20,000 units (see the previous section for additional
details). In the June 2021 NOPD, DOE identified 48 UFHWST
manufacturers, 37 of which are small domestic manufacturers. 86 FR
30796, 30812 (June 10, 2021). In response to the June 2021 NOPD, BWC
stated that the number of manufacturers identified that produce UFHWSTs
reinforces the point that the market is highly customized and contains
a significant number of small, niche manufacturers. (BWC, No. 14 at p.
2)
Due to the niche nature of this marketplace, it is difficult to
accurately predict how the market would respond to amended standards
(e.g., whether any manufacturers would face disproportionately high
conversion costs, what changes may result to the distribution of tank
sizes sold, if consumers would select different equipment to meet their
water heating needs, or whether manufacturers might consolidate or exit
the market). These uncertainties may substantially impact the findings
if DOE were to complete a full economic impact analysis of amended
standards for UFHWSTs or estimate the cost-effectiveness of a more-
stringent standard.

G. National Impact Analysis

DOE conducted an NIA that assesses the NES in terms of total FFC
energy savings that would be expected to result from new or amended
standards at specific efficiency levels. DOE did not assess the net
present value (``NPV'') of the total costs and benefits experienced by
consumers as part of the NIA because of the lack of a cost analysis and
LCC analysis, as previously discussed. DOE calculates the NES for the
potential standard levels considered based on projections of annual
equipment shipments, along with the annual energy consumption from the
energy use analysis. For the present analysis, DOE projected the energy
savings over the lifetime of UFHWSTs sold from 2025 through 2054.
1. National Energy Savings
The national energy savings (``NES'') analysis involves a
comparison of national energy consumption of UFHWSTs between each
potential standards case (for this final determination represented by
efficiency level (``EL'')) and the case with no new or amended energy
conservation standards. DOE calculated the national energy consumption
by multiplying the number of units (stock) of equipment (by vintage or
age) by the unit energy consumption (also by vintage). DOE calculated
annual NES based on the difference in national energy consumption for
the no-new-standards case and for each higher-efficiency-standards
case. DOE evaluates the effects of amended standards at the national
level by comparing a case without such standards (referred to as the
no-new-standards case) with standards-case projections that
characterize the market for each UFHWST class if DOE were to adopt
amended standards at the specified energy efficiency levels for that
class. As discussed in the subsections that follow, this analysis
requires an examination of both the efficiency of the UFHWST, as well
as the efficiency of the appliance supplying heated water to that tank.
In 2011, in response to the recommendations in a report titled,
``Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement
Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards''
issued by a committee appointed by the National Academy of Sciences,
DOE announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the NIA and emissions analyses
included in future energy conservation standards rulemakings. 76 FR
51281 (August 18, 2011). After evaluating the approaches discussed in
the August 18, 2011 notice, DOE subsequently published a statement of
amended policy in the Federal Register, in which DOE explained its
determination that EIA's National Energy Modeling System (``NEMS'') is
the most appropriate tool for DOE's FFC analysis and its intention to
use NEMS for that purpose. 77 FR 49701 (August 17, 2012). NEMS is a
public domain, multi-sectoral, partial equilibrium model of the U.S.
energy sector \25\ that EIA uses to prepare its AEO. The FFC factors
incorporate losses in production, and delivery in the case of natural
gas, (including fugitive emissions) and additional energy used to
produce and deliver the various fuels used by power plants.
---------------------------------------------------------------------------

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

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

[[Page 31378]]

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

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

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

[[Page 31379]]

4. Hot Water Supply Boiler Efficiency Trend
As stated previously, a potential standard increasing the
insulation rating of UFWHST equipment would reduce thermal losses,
which would in turn reduce the energy used by a building's hot water
supply equipment to provide hot water.\26\ Determining the impact of
reduced UFHWST losses on the connected boiler(s) requires an estimate
of the boiler efficiency. To estimate the efficiency of boiler systems,
DOE used the No-New-Standards Case (EL 0) efficiency distribution data
from the May 2016 CWH ECS NOPR \27\ to calculate a single, market-
weighted, average efficiency, which was 84.4 percent in 2016. For years
beyond 2016 and future years through 2050, DOE used the AEO 2022 data
series ``Commercial: Stock Average Efficiency: Water Heating: Natural
Gas: Reference case'' to project the efficiency trend of hot-water
supply boilers.\28\
---------------------------------------------------------------------------

\26\ While there is a wide range of equipment that building
owners can use to produce hot water, for this analysis, DOE assumed
that 100 percent of all hot water is produced by a hot water supply
boiler. See section IV.E.1.b of this document for details.
\27\ Available at: <a href="https://www.regulations.gov/document?D=EERE-2014-BT-STD-0042-0016">https://www.regulations.gov/document?D=EERE-2014-BT-STD-0042-0016</a> (Last accessed: April 8, 2020).
\28\ U.S. Energy Information Administration, Annual Energy
Outlook (2022), Table 22, Commercial Sector Energy Consumption,
Floorspace, Equipment Efficiency, and Distributed Generation
(Available at: <a href="https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2020&region=0-0&cases=ref2020&start=2018&end=2050&f=A&linechart=ref2020-d112119a.45-32-AEO2020&map=&ctype=linechart&sourcekey=0">https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2020&region=0-0&cases=ref2020&start=2018&end=2050&f=A&linechart=ref2020-d112119a.45-32-AEO2020&map=&ctype=linechart&sourcekey=0</a>) (Last
accessed May 10, 2022).
---------------------------------------------------------------------------

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

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

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

V. Analytical Results and Conclusions

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

A. National Impact Analysis

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

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

OMB Circular A-4 \33\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies

[[Page 31380]]

to consider the variability of key elements underlying the estimates of
benefits and costs. For this final determination, DOE undertook a
sensitivity analysis using 9 years, rather than 30 years, of equipment
shipments. The choice of a 9-year period is a proxy for the timeline in
EPCA for the review of certain energy conservation standards and
potential revision of and compliance with such revised standards.\34\
The review timeframe established in EPCA is generally not synchronized
with the equipment lifetime, equipment manufacturing cycles, or other
factors specific to UFHWSTs. Thus, such results are presented for
informational purposes only and are not indicative of any change in
DOE's analytical methodology. The NES sensitivity analysis results
based on a 9-year analytical period are presented in Table V.2 of this
document. The impacts are counted over the lifetime of UFHWSTs
purchased in 2025-2034.
---------------------------------------------------------------------------

\33\ U.S. Office of Management and Budget, Circular A-4:
Regulatory Analysis (Sept. 17, 2003) (Available at:
<a href="http://www.whitehouse.gov/omb/circulars_a004_a-4/">www.whitehouse.gov/omb/circulars_a004_a-4/</a>).
\34\ Under 42 U.S.C. 6313(a)(6)(C)(i) and (iv), EPCA requires
DOE to review its standards for covered ASHRAE equipment every 6
years, and it requires a 3-year period after any new standard is
promulgated before compliance is required, except that in no case
may any new standards be required within 6 years of the compliance
date of the previous standards. If DOE makes a determination that
amended standards are not needed, it must conduct a subsequent
review within three years following such a determination. (42 U.S.C.
6313(a)(6)(C)(iii)(II)) Furthermore, if ASHRAE acts to amend ASHRAE
Standard 90.1 for any of the enumerated equipment covered by EPCA,
DOE is triggered to consider and adopt the amended ASHRAE levels,
unless the Department has clear and convincing evidence to support
more-stringent standard levels, which would result in significant
additional energy savings and be technologically feasible and
economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) If DOE adopts
the amended ASHRAE levels, compliance with amended Federal energy
conservation standards would be required either two or three years
after the effective date of the ASHRAE Standard 90.1 amendments
(depending upon the equipment type in question). However, if DOE
adopts more-stringent standards pursuant to the ASHRAE trigger,
compliance with such standards would be required four years after
publication of a final rule. (42 U.S.C. 6313(a)(6)(D)) As DOE is
evaluating the need to amend the standards, the sensitivity analysis
is based on the review timeframe associated with amended standards.
While adding a 6-year review to the 3-year compliance period adds up
to 9 years, DOE notes that it may undertake reviews at any time
within the 6-year period and that the 3-year compliance date may
yield to the 6-year backstop. A 9-year analysis period may not be
appropriate given the variability that occurs in the timing of
standards reviews and the fact that for some equipment, the
compliance period may be something other than 3 years.

Table V.2--Cumulative FFC National Energy Savings for UFHWSTs; 9 Years of Shipments (2025-2034)
----------------------------------------------------------------------------------------------------------------
Efficiency level
--------------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
Full-Fuel-Cycle Energy (quads)............................... 0.005 0.009 0.018
----------------------------------------------------------------------------------------------------------------

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

B. Final Determination

After carefully considering the comments on the June 2021 NOPD and
the available data and information, DOE has determined that the energy
conservation standards for UFHWSTs do not need to be amended, for the
reasons explained in the paragraphs immediately following.
EPCA specifies that for any commercial and industrial equipment
addressed under 42 U.S.C. 6313(a)(6)(A)(i), including UFHWSTs, DOE may
prescribe an energy conservation standard more stringent than the level
for such equipment in ASHRAE Standard 90.1 only if ``clear and
convincing evidence'' shows that a more-stringent standard would result
in significant additional conservation of energy and is technologically
feasible and economically justified. (42 U.S.C. 6313(a)(6)(C)(i); 42
U.S.C. 6313(a)(6)(A)(ii)(II)) The ``clear and convincing'' evidentiary
threshold applies both when DOE is triggered by ASHRAE action and when
DOE conducts a 6-year-lookback rulemaking, with the latter being the
basis for the current proceeding.
Because an analysis of potential economic justification and energy
savings first requires an evaluation of the relevant technology, DOE
first discusses the technological feasibility of amended standards. DOE
then evaluates the energy savings potential and economic justification
of potential amended standards.
1. Technological Feasibility
EPCA mandates that DOE consider whether amended energy conservation
standards for UFHWSTs would be technologically feasible. (42 U.S.C.
6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)(ii)(II)) DOE has determined
that increasing the R-value of insulation up to R-30 would improve the
efficiency of UFHWSTs. As discussed in section IV.C.1 of this document,
this increased R-value has been demonstrated in commercially-available
jacketed UFHWSTs. These tanks have an advertised polyurethane foam
thickness of 5 inches. For insulation thicknesses up to 3 inches, DOE
has determined that an R-value per inch of 6.25 is appropriate.
However, the R-value per inch of insulation appears to decrease to 6
beyond this foam thickness, so DOE used this slightly lower R-value-per
inch in its Tank Thermal Loss Model for the max-tech level. Therefore,
increasing the thickness of insulation up to a level of 5 inches has
been demonstrated to be achievable in commercially-available jacketed
UFHWSTs, and, thus, would be technologically feasible. (See section
IV.C.1 of this document for further information.) Hence, DOE has
determined that amended energy conservation standards for UFHWSTs would
be technologically feasible.
2. Significant Conservation of Energy
EPCA also mandates that DOE consider whether amended energy
conservation standards for UFHWSTs would result in result in
significant additional conservation of energy. (42 U.S.C.
6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)(ii)(II)) In the present case,
DOE estimates that amended standards for UFHWST would result in FFC
energy savings of 0.015 quads at EL 1, 0.029 quads at EL 2, and 0.058
quads at

[[Page 31381]]

EL 3 (the max-tech level) over a 30-year analysis period (2025-2054),
as realized by the connected hot-water supply boiler. However, as
discussed throughout this document, there are significant uncertainties
related to these results.
First, as discussed in section IV.C.1 of this document, there
appears to be a reduction in R-value per inch of insulation in units
with insulation thickness greater than 3 inches, generating uncertainty
with regard to the performance of models above EL 2.
Second, as discussed in section IV.D.3 of this document, when
comparing the results of the Tank Thermal Loss model to measured
standby losses, the predicted rate of standby losses ranged from as low
as 58 percent of the measured losses up to 90 percent of the measured
losses. Furthermore, DOE's model would predict the same level of
standby losses for tanks with identical storage volumes, dimensions,
number of ports, and nominal insulation levels, whereas measured
standby losses for such comparable tanks differed by up to 8.5 percent.
These findings suggest that there may be variations in the extent of R-
12.5 coverage between units, even between units from the same
manufacturer. As discussed in section IV.C.2 of this document, it may
not be practical to insulate all surfaces of UFHWSTs with polyurethane
foam due to the nature of the insulation application process or the
need to retain access to certain ports. Differences in manufacturers'
tank designs, manufacturing processes, or their interpretations of the
R-12.5 insulation requirement could lead to variations in the amount of
tank surface area that is actually insulated with R-12.5. Therefore,
tanks that appear to have the same attributes and insulation may have
different levels of standby losses in the field. This variation makes
it very difficult for DOE to characterize the representative
performance of a ``baseline'' UFHWST, or the expected performance at
any potential amended standard level, with a high degree of confidence
since there is significant variation in thermal energy losses at a
given efficiency level (R-value) that cannot be readily predicted or
otherwise accounted for in the analysis.
Third, as discussed in section IV.F.5 of this document, due to the
niche nature of this marketplace, it is difficult to accurately predict
how the market would respond to amended standards (e.g., whether any
manufacturers would face disproportionately high conversion costs, what
changes may result to the distribution of tank sizes sold, if consumers
would select different equipment to meet their water heating needs, or
whether manufacturers might consolidate or exit the market). This
uncertainty in standards-case shipments projections propagates
uncertainty into the estimates of national energy savings.
Due to the uncertainties in characterizing the efficiency
performance of models above EL 2, the uncertainties in characterizing
the representative field energy use of both baseline models and models
at all ELs, and the uncertainty in projecting standards-case shipments,
DOE has determined that it lacks clear and convincing evidence that
amended energy conservation standards for UFHWSTs would result in
significant additional conservation of energy.
3. Economic Justification
In determining whether a standard is economically justified, the
Secretary must determine whether the benefits of the standard exceed
its burdens, considering to the greatest extent practicable the seven
statutory factors discussed previously (see section II.A of this
document). (42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(B)(ii)(I)-
(VII))
One of those seven factors is the savings in operating costs
throughout the estimated average life of the product in the type (or
class) compared to any increase in the price, initial charges, or
maintenance expenses of the products that are likely to result from the
standard. (42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(B)(ii)(II))
This factor is typically assessed using the LCC and PBP analysis, as
well as the NPV.
As discussed in section IV.E.1 and V.A.2 of this document, there
are significant uncertainties with regard to installation costs of
models with increased insulation thickness. Specifically, increasing
the size of UFHWSTs could necessitate alterations to doorways and
mechanical rooms in certain replacement installations in order to get
an UFHWST to its installation destination. Further, due to significant
uncertainties regarding the costs of these alterations and the lack of
data indicating the likelihood of such alterations being required, at
this time, DOE is unable to estimate typical installation costs of
UFHWSTs.
In addition, as discussed in section IV.D.1 of this document, even
small adjustments to several critical inputs to the Thermal Tank Loss
Model could have a large impact on any energy use and LCC results and
could significantly alter the findings.
For these reasons, DOE did not conduct an economic analysis for
this rulemaking. EPCA requires that DOE determine, supported by clear
and convincing evidence, that adoption of a uniform national standard
more stringent than that in ASHRAE Standard 90.1 would result in
significant additional conservation of energy and be technologically
feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II);
emphasis added) The inability to make a determination, supported by
clear and convincing evidence, with regard to any one of the statutory
criteria prohibits DOE from adopting more-stringent standards
regardless of its determinations as to the other criteria. Due to the
significant uncertainties related to installation costs and energy use,
DOE could not reasonably conduct an analysis of economic justification,
because those uncertainties would propagate into the results of any
such analysis. Therefore, the result of such economic analysis would
fail to produce the clear and convincing evidence required under the
statute to demonstrate that amended standards for UFHWSTs would be
economically justified, thereby providing an additional basis for DOE's
decision to move forward with a final determination.
4. Summary
Based on the reasons stated in the foregoing discussion, DOE has
determined that the energy conservation standards for unfired hot water
storage tanks do not need to be amended, because it lacks ``clear and
convincing'' evidence that amended standards would result in
significant additional conservation of energy or be economically
justified.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

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

[[Page 31382]]

approaches, those approaches that maximize net benefits (including
potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity); (4) to the extent
feasible, specify performance objectives, rather than specifying the
behavior or manner of compliance that regulated entities must adopt;
and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the
desired behavior, such as user fees or marketable permits, or providing
information upon which choices can be made by the public. DOE
emphasizes as well that E.O. 13563 requires agencies to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible. In its guidance, the
Office of Information and Regulatory Affairs (``OIRA'') in the Office
of Management and Budget (``OMB'') has emphasized that such techniques
may include identifying changing future compliance costs that might
result from technological innovation or anticipated behavioral changes.
For the reasons stated in the preamble, this regulatory action is
consistent with these principles.
OMB has determined that this final determination does not
constitute a ``significant regulatory action'' under section 3(f) of
E.O. 12866. Accordingly, this action was not subject to review under
E.O. 12866 by OIRA at OMB.

B. Review Under the Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (``IRFA'')
and a final regulatory flexibility analysis (``FRFA'') for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by E.O. 13272, ``Proper Consideration of Small Entities in Agency
Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published procedures
and policies on February 19, 2003, to ensure that the potential impacts
of its rules on small entities are properly considered during the
rulemaking process. 68 FR 7990. DOE has made its procedures and
policies available on the Office of the General Counsel's website
(<a href="http://www.energy.gov/gc/office-general-counsel">www.energy.gov/gc/office-general-counsel</a>).
The Small Business Administration (``SBA'') considers a business
entity to be a small business, if, together with its affiliates, it
employs less than a threshold number of workers specified in 13 CFR
part 121. The size standards and codes are established by the 2017
North American Industry Classification System (``NAICS''). Unfired hot
water storage tank manufacturers are classified under NAICS code
333318, ''Other Commercial and Service Industry Machinery
Manufacturing.'' The SBA sets a threshold of 1,000 employees or fewer
for an entity to be considered as a small business in this category.
DOE conducted a focused inquiry into small business manufacturers of
the equipment covered by this final determination. The Department used
available public information to identify potential small manufacturers.
DOE accessed the Compliance Certification Database to create a list of
companies that import or otherwise manufacture the unfired hot water
storage tanks covered by this final determination. Using these sources,
DOE identified a total of 48 distinct manufacturers of unfired hot
water storage tanks. Of these manufacturers, DOE identified 37
manufacturers that are potential small businesses.
DOE reviewed this final determination under the provisions of the
Regulatory Flexibility Act and the policies and procedures published on
February 19, 2003. The final determination does not amend any energy
conservation standards for UFHWSTs. On the basis of the foregoing, DOE
certifies that this final determination will have no significant
economic impact on a substantial number of small entities. Accordingly,
DOE has not prepared an FRFA for this final determination. DOE will
transmit this certification and supporting statement of factual basis
to the Chief Counsel for Advocacy of the Small Business Administration
for review under 5 U.S.C. 605(b).

C. Review Under the Paperwork Reduction Act of 1995

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

D. Review Under the National Environmental Policy Act of 1969

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

E. Review Under Executive Order 13132

E.O. 13132, ``Federalism,'' 64 FR 43255 (August 10, 1999), imposes
certain requirements on Federal agencies formulating and implementing
policies or regulations that preempt State law or that have Federalism
implications. The Executive order requires agencies to examine the
constitutional and statutory authority supporting any action that would
limit the policymaking discretion of the States and to carefully assess
the necessity for such actions. The Executive order also requires
agencies to have an accountable process to ensure meaningful and timely
input by State and local officials in the development of regulatory
policies that have federalism implications. On March 14, 2000, DOE
published a statement of policy describing the intergovernmental
consultation process it will follow in the development of such
regulations. 65 FR 13735. DOE has examined this final determination and
has determined that it would not have a substantial direct effect on
the States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. EPCA governs and prescribes Federal
preemption of State regulations as to energy conservation for the
equipment that is the subject of this final determination. States can
petition DOE for exemption from such preemption to the extent, and
based on criteria, set forth in EPCA. (See 42 U.S.C. 6316(a) and (b);
42 U.S.C. 6297) As this final determination does not amend the
standards for UFHWSTs, there is no impact on the policymaking
discretion of the States. Therefore, no further

[[Page 31383]]

action is required by Executive Order 13132.

F. Review Under Executive Order 12988

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

G. Review Under the Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'')
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a regulatory action likely to result in a rule that may cause the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year
(adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
<a href="http://www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf">www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf</a>.
DOE examined this final determination according to UMRA and its
statement of policy and determined that the final determination does
not contain a Federal intergovernmental mandate, nor is it expected to
require expenditures of $100 million or more in any one year by State,
local, and Tribal governments, in the aggregate, or by the private
sector. As a result, the analytical requirements of UMRA do not apply.

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

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

I. Review Under Executive Order 12630

Pursuant to E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (March
18, 1988), DOE has determined that this final determination will not
result in any takings that might require compensation under the Fifth
Amendment to the U.S. Constitution.

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

Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to
review most disseminations of information to the public under
information quality guidelines established by each agency pursuant to
general guidelines issued by OMB. OMB's guidelines were published at 67
FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR
62446 (Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving
Implementation of the Information Quality Act (April 24, 2019), DOE
published updated guidelines which are available at: <a href="http://www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf">www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf</a>. DOE has
reviewed this final determination under the OMB and DOE guidelines and
has concluded that it is consistent with applicable policies in those
guidelines.

K. Review Under Executive Order 13211

E.O. 13211, ``Actions Concerning Regulations That Significantly
Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 (May 22,
2001), requires Federal agencies to prepare and submit to OIRA at OMB,
a Statement of Energy Effects for any significant energy action. A
``significant energy action'' is defined as any action by an agency
that promulgates or is expected to lead to promulgation of a final
rule, and that: (1) Is a significant regulatory action under Executive
Order 12866, or any successor Executive Order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any significant energy action, the
agency must give a detailed statement of any adverse effects on energy
supply, distribution, or use should the proposal be implemented, and of
reasonable alternatives to the action and their expected benefits on
energy supply, distribution, and use.
DOE has concluded that this final determination, which does not
amend energy conservation standards for UFHWSTs, is not a significant
energy action under E.O. 12866. Moreover, it will not have a
significant adverse effect on the supply, distribution, or use of
energy, nor has it been designated as a significant energy action by
the Administrator at OIRA. Accordingly, it is not a significant energy
action, and DOE has not prepared a Statement of Energy Effects.

L. Review Under the Information Quality Bulletin for Peer Review

On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (``OSTP''), issued its Final Information
Quality Bulletin for Peer Review (``the Bulletin''). 70 FR 2664 (Jan.
14, 2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the

[[Page 31384]]

Bulletin is to enhance the quality and credibility of the Government's
scientific information. Under the Bulletin, the energy conservation
standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions.'' 70 FR 2664, 2667.
In response to OMB's Bulletin, DOE conducted formal peer reviews of
the energy conservation standards development process and the analyses
that are typically used and prepared a report describing that peer
review.\35\ Generation of this report involved a rigorous, formal, and
documented evaluation using objective criteria and qualified and
independent reviewers to make a judgment as to the technical/
scientific/business merit, the actual or anticipated results, and the
productivity and management effectiveness of programs and/or projects.
Because available data, models, and technological understanding have
changed since 2007, DOE has engaged with the National Academy of
Sciences (``NAS'') to review DOE's analytical methodologies to
ascertain whether modifications are needed to improve the Department's
analyses. DOE is in the process of evaluating the resulting December
2021 NAS report.\36\
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\35\ The 2007 ``Energy Conservation Standards Rulemaking Peer
Review Report'' is available at the following website:
<a href="http://www.energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0">www.energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0</a>. (Last accessed Feb. 21,
2022.)
\36\ The December 2021 NAS report is available at
<a href="http://www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards">www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards</a>. (Last accessed Feb.
21, 2022.)
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M. Congressional Notification

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

VII. Approval of the Office of the Secretary

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

Signing Authority

This document of the Department of Energy was signed on May 18,
2022, by Kelly J. Speakes-Backman, Principal Deputy Assistant Secretary
for Energy Efficiency and Renewable Energy, pursuant to delegated
authority from the Secretary of Energy. That document with the original
signature and date is maintained by DOE. For administrative purposes
only, and in compliance with requirements of the Office of the Federal
Register, the undersigned DOE Federal Register Liaison Officer has been
authorized to sign and submit the document in electronic format for
publication, as an official document of the Department of Energy. This
administrative process in no way alters the legal effect of this
document upon publication in the Federal Register.

Signed in Washington, DC, on May 18, 2022.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energyl
[FR Doc. 2022-11128 Filed 5-23-22; 8:45 am]
BILLING CODE 6450-01-P

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