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Proposed Rule2022-13108

Energy Conservation Program: Energy Conservation Standards for Consumer Furnaces

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Published

July 7, 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 consumer furnaces. EPCA also requires the 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 energy savings. In this notice of proposed rulemaking ("NOPR"), DOE proposes amended energy conservation standards for non-weatherized gas furnaces and mobile home gas furnaces, and also announces a public meeting webinar to receive comment on these proposed standards and associated analyses and results.

Full Text

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[Federal Register Volume 87, Number 129 (Thursday, July 7, 2022)]
[Proposed Rules]
[Pages 40590-40706]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-13108]

[[Page 40589]]

Vol. 87

Thursday,

No. 129

July 7, 2022

Part II

Department of Energy

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10 CFR Part 430

Energy Conservation Program: Energy Conservation Standards for Consumer
Furnaces; Proposed Rule

Federal Register / Vol. 87 , No. 129 / Thursday, July 7, 2022 /
Proposed Rules

[[Page 40590]]

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DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2014-BT-STD-0031]
RIN 1904-AD20

Energy Conservation Program: Energy Conservation Standards for
Consumer Furnaces

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

ACTION: Notice of proposed rulemaking and request for comment.

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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including consumer
furnaces. EPCA also requires the 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 energy savings. In this notice of
proposed rulemaking (``NOPR''), DOE proposes amended energy
conservation standards for non-weatherized gas furnaces and mobile home
gas furnaces, and also announces a public meeting webinar to receive
comment on these proposed standards and associated analyses and
results.

DATES:
Comments: DOE will accept comments, data, and information regarding
this NOPR no later than September 6, 2022. See section VII, ``Public
Participation,'' of this document for details.
Comments regarding the likely competitive impact of the proposed
standard should be sent to the Department of Justice contact listed in
the ADDRESSES section on or before August 22, 2022. DOE notes that the
Department of Justice is required to transmit its determination
regarding the competitive impact of the proposed standard to DOE no
later than September 6, 2022. The determination and analysis by the
Department of Justice will be published by DOE in the Federal Register.
Commenters who want to have their comments considered by DOE as part of
any future rulemaking resulting from this NOPR also should submit such
comments to DOE in accordance with the procedures detailed in this
proposed rulemaking.
Meeting: DOE will hold a public meeting via webinar on Wednesday,
August 3, 2022, from 12:30 p.m. to 5:00 p.m. See section VII, ``Public
Participation,'' for webinar registration information, participant
instructions, and information about the capabilities available to
webinar participants.

ADDRESSES: Interested persons are encouraged to submit comments using
the Federal eRulemaking Portal at <a href="http://www.regulations.gov">www.regulations.gov</a>. Follow the
instructions for submitting comments. Alternatively, interested persons
may submit comments, identified by docket number EERE-2014-BT-STD-0031
and/or regulatory information number (``RIN'') 1904-AD20, by any of the
following methods:
(1) Federal eRulemaking Portal: <a href="http://www.regulations.gov">www.regulations.gov</a>. Follow the
instructions for submitting comments.
(2) Email: <a href="/cdn-cgi/l/email-protection#287a4d5b6e5d5a46494b4d5b1a18191c7b7c6c18181b19684d4d064c474d064f475e">[email&#160;protected]</a>. Include the docket
number EERE-2014-BT-STD-0031 in the subject line of the message.
No telefacsimilies (``faxes'') will be accepted. For detailed
instructions on submitting comments and additional information on the
rulemaking process, see section VII of this document (Public
Participation).
Although DOE has routinely accepted public comment submissions
through a variety of mechanisms, including postal mail and hand
delivery/courier, the Department has found it necessary to make
temporary modifications to the comment submission process in light of
the ongoing coronavirus (``COVID-19'') pandemic. DOE is currently
suspending receipt of public comments via postal mail and hand
delivery/courier. If a commenter finds that this change poses an undue
hardship, please contact Appliance Standards Program staff at (202)
586-1445 to discuss the need for alternative arrangements. Once the
COVID-19 pandemic health emergency is resolved, DOE anticipates
resuming all of its regular options for public comment submission,
including postal mail and hand delivery/courier.
Docket: The docket for this activity, which includes Federal
Register notices, comments, 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-2014-BT-STD-0031">www.regulations.gov/docket?D=EERE-2014-BT-STD-0031</a>. The docket web page contains
instructions on how to access all documents, including public comments,
in the docket. See section VII (Public Participation) for information
on how to submit comments through <a href="http://www.regulations.gov">www.regulations.gov</a>.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in this
proposed rule may be submitted to Office of Energy Efficiency and
Renewable Energy following the instructions at <a href="http://www.RegInfo.gov">www.RegInfo.gov</a>.
EPCA requires the U.S. Attorney General to provide DOE a written
determination of whether the proposed standard is likely to lessen
competition. The U.S. Department of Justice (``DOJ'') Antitrust
Division invites input from market participants and other interested
persons with views on the likely competitive impact of the proposed
standard. Interested persons may contact the Antitrust Division at
<a href="/cdn-cgi/l/email-protection#c3a6ada6b1a4baedb0b7a2ada7a2b1a7b083b6b0a7aca9eda4acb5">[email&#160;protected]</a> in advance of the date specified in the
DATES section. Please indicate in the ``Subject'' line of your email
the title and Docket Number of this rulemaking.

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#96d7e6e6fafff7f8f5f3c5e2f7f8f2f7e4f2e5c7e3f3e5e2fff9f8e5d6f3f3b8f2f9f3b8f1f9e0">[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#8cc9fee5efa2dff8edffcce4fda2e8e3e9a2ebe3fa">[email&#160;protected]</a>.
For further information on how to submit a comment, review other
public comments and the docket, or participate in the public meeting
webinar, contact the Appliance and Equipment Standards Program staff at
(202) 287-1445 or by email: <a href="/cdn-cgi/l/email-protection#bffecfcfd3d6ded1dcdaeccbded1dbdecddbcceecadacccbd6d0d1ccffdada91dbd0da91d8d0c9">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Notice of Proposed Rulemaking
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
1. AFUE Standards
2. Standby Mode and Off Mode Standards
3. Combined Results for Proposed AFUE Standards and Standby Mode
and Off Mode Standards
D. Conclusion
II. Introduction
A. Authority

[[Page 40591]]

B. Background
1. Current Standards
2. History of Standards Rulemaking for Consumer Furnaces
3. Current Standards in Canada
C. Deviation From Appendix A
III. General Discussion
A. Product Classes and Scope of Coverage
B. Test Procedure
C. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
F. Other Issues
1. Furnace Sizing Requirements Based on ACCA Manual J and Manual
S
2. Compliance Date
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Scope of Coverage and Product Classes
a. General Approach
b. Condensing and Non-Condensing Furnaces
c. Mobile Home Gas Furnaces
d. Standby Mode and Off Mode
2. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Analysis
a. Baseline Efficiency Level and Product Characteristics
b. Higher Energy Efficiency Levels
2. Cost Analysis
a. Teardown Analysis
b. Cost Estimation Method
c. Manufacturing Production Costs
d. Cost-Efficiency Relationship
e. Manufacturer Mark-Up
f. Manufacturer Interviews
3. Electric Furnaces
D. Mark-Ups Analysis
E. Energy Use Analysis
1. Building Sample
2. Furnace Sizing
3. Furnace Active Mode Energy Use
a. Adjustments to Energy Use Estimates
4. Furnace Electricity Use
5. Standby Mode and Off Mode
F. Life-Cycle Cost and Payback Period Analyses
1. General Method
2. Consumer Product Cost
3. Installation Cost
a. Basic Installation Costs
b. Additional Installation Costs for Non-Weatherized Gas
Furnaces
c. Additional Installation Costs for Mobile Home Gas Furnaces
d. Contractor Survey and DOE's Sources
e. Summary of Installation Costs
4. Annual Energy Consumption
5. Energy Prices
6. Maintenance and Repair Costs
7. Product Lifetime
8. Discount Rates
9. Energy Efficiency Distribution in the No-New-Standards Case
a. Condensing Furnace Market Share in Compliance Year
b. Market Shares of Different Condensing Furnace Efficiency
Levels
c. Assignment of Furnace Efficiency to Sampled Households
10. Alternative Size Thresholds for Small Consumer Gas Furnaces
a. Accounting for Impacts of Downsized Equipment
11. Accounting for Product Switching Under Potential Standards
a. Product Switching Resulting From Standards for Non-
Weatherized Gas Furnaces
b. Switching Resulting From Standards for Mobile Home Gas
Furnaces
12. Accounting for Furnace Repair as an Alternative to
Replacement Under Potential Standards
13. Payback Period Analysis
G. Shipments Analysis
1. Shipments Model and Inputs
a. Historical Shipments Data
b. Shipment Projections in No-New Standards Case
2. Impact of Potential Standards on Shipments
a. Impact of Equipment Switching
b. Impact of Repair vs. Replace
H. National Impact Analysis
1. Product Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
1. Low-Income Households
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Capital and Product Conversion Costs
d. Manufacturer Mark-up Scenarios
3. Manufacturer Interviews
a. Product Switching
b. High Installation Costs for Some Consumers
c. Negative Impacts on Industry Profitability
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
2. Monetization of Other Air Pollutants
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
8. Summary of National Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Non-Weatherized
Gas Furnace and Mobile Home Gas Furnace AFUE Standards
2. Benefits and Burdens of TSLs Considered for Non-Weatherized
Gas Furnace and Mobile Home Gas Furnace Standby Mode and Off Mode
Standards
3. Benefits and Costs of the Proposed Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Description of Reasons Why Action Is Being Considered
2. Objectives of, and Legal Basis for, Rule
3. Description of Estimated Number of Small Entities Regulated
4. Description and Estimate of Compliance Requirements Including
Differences in Cost, if Any, for Different Groups of Small Entities
a. AFUE Standards
b. Standby Mode and Off Mode Standards
5. Duplication, Overlap, and Conflict With Other Rules and
Regulations
6. Significant Alternatives to the Rule
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
VII. Public Participation
A. Participation in the Public Meeting Webinar
B. Procedure for Submitting Prepared General Statements for
Distribution
C. Conduct of the Public Meeting Webinar
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

[[Page 40592]]

I. Synopsis of the Notice of Proposed Rulemaking

Title III, Part B \1\ of EPCA established the Energy Conservation
Program for Consumer Products Other Than Automobiles.\2\ (42 U.S.C.
6291-6309) These products include non-weatherized gas furnaces
(``NWGF'') and mobile home gas furnaces (``MHGF''), the subjects of
this rulemaking. (42 U.S.C. 6292(a)(5))
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\1\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\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, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
or amended standard must result in significant conservation of energy.
(42 U.S.C. 6295(o)(3)(B)) EPCA specifically provides that DOE must
conduct two rounds of energy conservation standard rulemakings for
NWGFs and MHGFs. (42 U.S.C. 6295(f)(4)(B) and (C)) The statute also
requires that not later than 6 years after issuance of any final rule
establishing or amending a standard, DOE must publish either a notice
of determination that standards for the product do not need to be
amended, or a notice of proposed rulemaking (``NOPR'') including new
proposed energy conservation standards. (42 U.S.C. 6295(m)(1)) This
rulemaking is being undertaken pursuant to the statutorily-required
second round of rulemaking for NWGFs and MHGFs, and once completed, it
will also satisfy the statutorily-required 6-year-lookback review.
In accordance with these and other relevant statutory provisions
discussed in this document, DOE is proposing amended and new energy
conservation standards for the subject consumer furnaces (i.e., NWGFs
and MHGFs). In this document, DOE is proposing amended active mode
energy conservation standards for NWGFs and MHGFs, which are expressed
in terms of minimum annual fuel utilization efficiency (``AFUE''), and
are shown in Table I.1 of this document. DOE is also proposing new
standby mode and off mode energy standards for NWGFs and MHGFs, which
are expressed in terms of watts, and are shown in Table I.2 of this
document. These proposed standards would apply to all NWGFs and MHGFs
manufactured in, or imported into, the United States starting on the
date 5 years after the publication of the final rule for this
rulemaking.

Table I.1--Proposed AFUE Energy Conservation Standards for Non-
Weatherized Gas Furnaces and Mobile Home Gas Furnaces
------------------------------------------------------------------------
Product class AFUE (%)
------------------------------------------------------------------------
Non-Weatherized Gas Furnaces............................ 95
Mobile Home Gas Furnaces................................ 95
------------------------------------------------------------------------

Table I.2--Proposed Standby Mode and Off Mode Energy Conservation
Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces
------------------------------------------------------------------------
Standby mode Off mode
standard: standard:
Product class PW,SB (watts) PW,OFF (watts)

------------------------------------------------------------------------
Non-Weatherized Gas Furnaces............ 8.5 8.5
Mobile Home Gas Furnaces................ 8.5 8.5
------------------------------------------------------------------------

A. Benefits and Costs to Consumers

Table I.3 and Table I.4 summarize DOE's evaluation of the economic
impacts of the proposed AFUE standards and standby mode/off mode
standards, respectively, on consumers of NWGFs and MHGFs, as measured
by the average life-cycle cost (``LCC'') savings and the simple payback
period (``PBP'').\3\ The average LCC savings are positive for all
product classes, and the PBP is less than the average lifetime of both
NWGFs and MHGFs, which is estimated to be 21.4 years (see section IV.F
of this document).
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\3\ The average LCC savings refer to consumers that are affected
by a standard and are measured relative to the efficiency
distribution in the no-new-standards case, which depicts the market
in the compliance year in the absence of new or amended standards
(see section IV.F.10 of this NOPR). The simple PBP, which is
designed to compare specific efficiency levels, is measured relative
to the baseline product (see section IV.C of this NOPR).

Table I.3--Impacts of Proposed AFUE Energy Conservation Standards on
Consumers of Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces
------------------------------------------------------------------------
Average LCC
Product class savings Simple payback
(2020$) period (years)
------------------------------------------------------------------------
Non-Weatherized Gas Furnaces............ 464 7.2
Mobile Home Gas Furnaces................ 526 7.5
------------------------------------------------------------------------

[[Page 40593]]

Table I.4--Impacts of Proposed Standby Mode and Off Mode Energy
Conservation Standards on Consumers of Non-Weatherized Gas Furnaces and
Mobile Home Gas Furnaces
------------------------------------------------------------------------
Average LCC
Product class savings Simple payback
(2020$) period (years)
------------------------------------------------------------------------
Non-Weatherized Gas Furnaces............ 26 2.0
Mobile Home Gas Furnaces................ 27 1.7
------------------------------------------------------------------------

DOE's analysis of the anticipated impacts of the proposed standards
on consumers is described in section IV.F of this document.

B. Impact on Manufacturers

The industry net present value (``INPV'') is the sum of discounted
industry cash flows starting with the publication year (2022) of the
NOPR and extending over a 30-year period following the expected
compliance date of the standards (2022 to 2058). The impacts of the
AFUE standards are independently considered from the impacts of the
standby mode and off mode standards, as manufacturers would utilize
different technologies to meet these two standards. Using a real
discount rate of 6.4 percent, DOE estimates that the INPV for
manufacturers of NWGFs and MHGFs in the case without new or amended
standards is $1,411.8 million in 2020$. Under the proposed AFUE
standards, the change in INPV is estimated to range from -26.9 percent
to -2.2 percent, which is a reduction of approximately -$380.3 million
to -$30.5 million. Under the proposed standby mode and off mode
standards, the change in INPV is estimated to range from -0.1 percent
to 0.4 percent, which is a change of approximately -$2.1 million to
$5.0 million. When evaluating the proposed AFUE and proposed standby
mode and off mode standards together, the INPV impacts are additive.
The combined change in INPV is estimated to range from -27.1 percent to
-1.8 percent, which is a reduction of approximately -$382.4 million to
-$25.5 million. In order to bring products into compliance with the
proposed new and amended standards, DOE expects industry to incur total
conversion costs of $150.6 million. DOE's analysis of the impacts of
the proposed energy conservation standards on manufacturers is
described in section IV.J of this document. The analytic results of the
MIA are presented in section V.B.2 of this document.

C. National Benefits and Costs 4
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\4\ All monetary values in this document are expressed in 2020
dollars (2020$).
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Benefits and costs for the proposed AFUE standards are presented
and considered separately from benefits and costs for the proposed
standby mode and off mode standards because it was not feasible to
develop a single, integrated standard. As discussed in the October 20,
2010, test procedure final rule for consumer furnaces and boilers, DOE
concluded that due to the magnitude of the active mode energy
consumption as compared to the standby mode and off mode electrical
consumption, an integrated metric would not be feasible because the
standby mode and off mode electrical consumption would be a de minimis
portion of the overall energy consumption. 75 FR 64621, 64627. Thus, an
integrated metric could not be used to effectively regulate the standby
mode and off mode energy consumption.
1. AFUE Standards
DOE's analyses indicate that the proposed energy conservation
standards for NWGFs and MHGFs would save a significant amount of
energy. Relative to the case without amended AFUE standards, the
lifetime energy savings for NWGFs and MHGFs purchased in the 30-year
period that begins in the anticipated year of compliance with the
amended AFUE standards (2029-2058), are estimated to be amount to 5.48
quadrillion British thermal units (``Btu''), or ``quads.'' \5\ This
represents a savings of 3.5 percent relative to the energy use of these
products in the case without amended or new standards (referred to as
the ``no-new-standards case'').
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\5\ This quantity refers to full-fuel-cycle (``FFC'') energy
savings. FFC energy savings 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 efficiency standards. For more
information on the FFC metric, see section IV.H.2 of this NOPR.
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The cumulative net present value (``NPV'') of total consumer
benefits of the proposed standards for NWGFs and MHGFs ranges from $6.2
billion (at a 7-percent discount rate) to $21.6 billion (at a 3-percent
discount rate). This NPV expresses the estimated total value of future
operating-cost savings minus the estimated increased product and
installation costs for NWGFs and MHGFs purchased in 2029-2058.
In addition, the proposed AFUE standards for NWGFs and MHGFs are
projected to yield significant environmental benefits. DOE estimates
that the proposed standards would result in cumulative emission
reductions (over the same period as for energy savings) of 363 million
metric tons (``Mt'') \6\ of carbon dioxide (``CO<INF>2</INF>''), 0.8
million tons of nitrogen oxides (``NO<INF>X</INF>''), and 5.1 million
tons of methane (``CH<INF>4</INF>''). The proposed standards would
result in cumulative emission increases of 52 thousand tons of sulfur
dioxide (``SO<INF>2</INF>''), 0.3 thousand tons of nitrous oxide
(``N<INF>2</INF>O''), and 0.3 tons of mercury (``Hg'').\7\
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\6\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO<INF>2</INF> are presented in short tons.
\7\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 2021 (``AEO2021''). AEO2021 represents current Federal and
State legislation and final implementation of regulations as of the
time of its preparation. See section IV.K for further discussion of
AEO2021 assumptions that effect air pollutant emissions. The
increase in emissions of some pollutants is due to an increase in
electricity consumption.
---------------------------------------------------------------------------

DOE estimates the value of climate benefits from a reduction in
greenhouse gases using four different estimates of the social cost of
CO<INF>2</INF> (``SC-CO<INF>2</INF>''), the social cost of methane
(``SC-CH<INF>4</INF>''), and the social cost of nitrous oxide (``SC-
N<INF>2</INF>O''). Together these represent the social cost of
greenhouse gases (SC-GHG). DOE used interim SC-GHG values developed by
an Interagency Working Group on the Social Cost of Greenhouse Gases
(IWG).\8\ The derivation of these values is discussed in section IV.L
of this document. For

[[Page 40594]]

presentational purposes, the climate benefits associated with the
average SC-GHG at a 3-percent discount rate are estimated to be $16.2
billion. DOE does not have a single central SC-GHG point estimate and
it emphasizes the importance and value of considering the benefits
calculated using all four SC-GHG estimates.\9\
---------------------------------------------------------------------------

\8\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC (February 2021) (Available at: <a href="http://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf">www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf</a>)
(Last accessed March 17, 2022).
\9\ On March 16, 2022, the Fifth Circuit Court of Appeals (No.
22-30087) granted the Federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
result of the Fifth Circuit's order, the preliminary injunction is
no longer in effect, pending resolution of the Federal government's
appeal of that injunction or a further court order. Among other
things, the preliminary injunction enjoined the defendants in that
case from ``adopting, employing, treating as binding, or relying
upon'' the interim estimates of the social cost of greenhouse
gases--which were issued by the Interagency Working Group on the
Social Cost of Greenhouse Gases on February 26, 2021--to monetize
the benefits of reducing greenhouse gas emissions. In the absence of
further intervening court orders, DOE will revert to its approach
prior to the injunction and present monetized benefits where
appropriate and permissible under law.
---------------------------------------------------------------------------

DOE also estimates health benefits from SO<INF>2</INF> and
NO<INF>X</INF> emissions reductions. DOE estimates the present value of
the health benefits would be $5.9 billion using a 7-percent discount
rate, and $19.3 billion using a 3-percent discount rate. DOE is
currently only monetizing (for SO<INF>2</INF> and NO<INF>X</INF>)
PM<INF>2.5</INF> precursor health benefits and (for NO<INF>X</INF>)
ozone precursor health benefits but will continue to assess the ability
to monetize other effects such as health benefits from reductions in
direct PM<INF>2.5</INF> emissions.
Table I.5 summarizes the monetized benefits and costs expected to
result from the proposed AFUE standards for NWGFs and MHGFs. There are
other important unquantified effects, including certain unquantified
climate benefits, unquantified public health benefits from the
reduction of toxic air pollutants and other emissions, unquantified
energy security benefits, and distributional effects, among others.

Table I.5--Summary of Monetized Benefits and Costs of Proposed AFUE
Energy Conservation Standards for Non-Weatherized Gas Furnaces and
Mobile Home Gas Furnaces (TSL 8)
------------------------------------------------------------------------
Billion 2020$
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 29.7
Climate Benefits *...................................... 16.2
Net Health Benefits **.................................. 19.3
Total Benefits [dagger]................................. 65.2
Consumer Incremental Product Costs [Dagger]............. 8.2
Net Benefits............................................ 57.1
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 10.2
Climate Benefits *...................................... 16.2
Net Health Benefits **.................................. 5.9
Total Benefits [dagger]................................. 32.2
Consumer Incremental Product Costs [Dagger]............. 4.0
Net Benefits............................................ 28.2
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
consumer furnaces shipped in 2029-2058. These results include benefits
to consumers which accrue after 2058 from the products shipped in 2029-
2058.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
discount rates; 95th percentile at 3 percent discount rate), as shown
in Table V.36, Table V.38, and Table V.40. Together these represent
the global social cost of greenhouse gases (SC-GHG). For
presentational purposes of this table, the climate benefits associated
with the average SC-GHG at a 3 percent discount rate are shown, but
the Department does not have a single central SC-GHG point estimate.
See section. IV.L of this document for more details. On March 16,
2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the
Federal government's emergency motion for stay pending appeal of the
February 11, 2022, preliminary injunction issued in Louisiana v.
Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth
Circuit's order, the preliminary injunction is no longer in effect,
pending resolution of the Federal government's appeal of that
injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. In the absence of further
intervening court orders, DOE will revert to its approach prior to the
injunction and present monetized benefits where appropriate and
permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be monetized. For presentation purposes,
total and net benefits for both the 3-percent and 7-percent cases are
presented using the average SC-GHG with 3-percent discount rate, but
the Department does not have a single central SC-GHG point estimate.
DOE emphasizes the importance and value of considering the benefits
calculated using all four SC-GHG estimates. See Table V.46 for net
benefits using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs, as well as
installation costs.

The benefits and costs of the proposed AFUE standards, for NWGFs
and MHGFs sold in 2029-2058, can also be expressed in terms of
annualized values. The monetary values for the total annualized net
benefits are: (1) the reduced consumer operating costs, minus (2) the
increases in product purchase costs and installation costs, plus (3)
the value of climate and health benefits of emission reductions, all
annualized.\10\
---------------------------------------------------------------------------

\10\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2029, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2030), and then discounted the present value from each year
to 2029. The calculation uses discount rates of 3 and 7 percent for
all costs and benefits, as shown in Table I.6 of this document.
Using the present value, DOE then calculated the fixed annual
payment over a 30-year period, starting in the compliance year that
yields the same present value.
---------------------------------------------------------------------------

[[Page 40595]]

$1,320 million in reduced equipment operating costs, $1,015 million in
climate benefits, and $760 million in health benefits (accounting for
reduced NO<INF>X</INF> emissions and increased SO<INF>2</INF>
emissions). In this case, the net benefit amounts to $2,571 million per
year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the proposed AFUE standards for NWGFs and MHGFs is
$511 million per year in increased equipment costs, while the estimated
annual benefits would be $1,865 million in reduced operating costs,
$1,015 million in climate benefits, and $1,213 million in health
benefits (accounting for reduced NO<INF>X</INF> emissions and increased
SO<INF>2</INF> emissions). In this case, the net benefit would amount
to $3,581 million per year.

Table I.6--Annualized Monetized Benefits and Costs of Proposed AFUE Standards for Non-Weatherized Gas Furnaces
and Mobile Home Gas Furnaces (TSL 8)
----------------------------------------------------------------------------------------------------------------
Million 2020$/year
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 1,865 1,891 1,937
Climate Benefits *.............................................. 1,015 1,000 1,042
Health Benefits **.............................................. 1,213 1,197 1,251
Total Benefits [dagger]......................................... 4,093 4,088 4,230
Consumer Incremental Product Costs [Dagger]..................... 511 508 461
Net Benefits.................................................... 3,581 3,580 3,769
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 1,320 1,338 1,352
Climate Benefits *.............................................. 1,015 1,000 1,042
Health Benefits **.............................................. 760 751 780
Total Benefits [dagger]......................................... 3,095 3,089 3,173
Consumer Incremental Product Costs [Dagger]..................... 524 516 471
Net Benefits.................................................... 2,571 2,573 2,702
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with consumer furnaces shipped in 2029-2058. These
results include benefits to consumers which accrue after 2058 from the products shipped in 2029-2058.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC-
GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal
government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
preliminary injunction is no longer in effect, pending resolution of the federal government's appeal of that
injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. In the
absence of further intervening court orders, DOE will revert to its approach prior to the injunction and
presents monetized benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.L of this document for more details.
[dagger] Total benefits infor both the 3-percent and 7-percent cases are presented using the average SC-GHG with
3-percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE
emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs, as well as installation costs.

DOE's analysis of the national impacts of the proposed standards is
described in sections IV.H, IV.K, and IV.L of this document.
2. Standby Mode and Off Mode Standards
For standby mode and off mode standards, relative to the case
without new standards, the lifetime energy savings for NWGFs and MHGFs
purchased in the 30-year period that begins in the anticipated year of
compliance with the new standby mode and off mode standards (2029-
2058), are estimated to be amount to 0.28 quads.\11\ This represents a
savings of 16 percent relative to the energy use of these products in
the no-new-standards case.
---------------------------------------------------------------------------

\11\ This quantity refers to FFC energy savings. FFC energy
savings 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 efficiency standards. For more information on the FFC
metric, see section IV.H.2 of this NOPR.
---------------------------------------------------------------------------

The cumulative NPV of total consumer benefits of the proposed
standby mode and off mode standards for NWGFs and MHGFs ranges from
$1.1 billion (at a 7-percent discount rate) to $3.4 billion (at a 3-
percent discount rate). This NPV expresses the estimated total value of
future operating-cost savings minus the estimated increased product
costs for NWGFs and MHGFs purchased in 2029-2058.
In addition, the proposed standby mode and off mode standards for
NWGFs and MHGFs are projected to yield significant environmental
benefits. DOE estimates that the proposed standards would result in
cumulative emission reductions (over the same period as for energy
savings) of 9.6 Mt of CO<INF>2</INF>, 4.5 thousand tons of
SO<INF>2</INF>, 13.5 thousand tons of NO<INF>X</INF>, 65.9 thousand
tons of CH<INF>4</INF>, 0.1 thousand tons of N<INF>2</INF>O, and 0.03
tons of mercury Hg.
DOE estimates the value of climate benefits from a reduction in
greenhouse gases using four different estimates of the SC-
CO<INF>2</INF>, the SC-CH<INF>4</INF>, and the SC-N<INF>2</INF>O.
Together these represent the SC-

[[Page 40596]]

GHG. DOE used interim SC-GHG values developed by an IWG on the Social
Cost of Greenhouse Gases.\12\ The derivation of these values is
discussed in section IV.L of this document. For presentational
purposes, the climate benefits associated with the average SC-GHG at a
3-percent discount rate are estimated to be $0.4 billion. DOE does not
have a single central SC-GHG point estimate and it emphasizes the
importance and value of considering the benefits calculated using all
four SC-GHG estimates.\13\
---------------------------------------------------------------------------

\12\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021. Available at: <a href="http://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf">www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf</a>
(last accessed March 17, 2022).
\13\ On March 16, 2022, the Fifth Circuit Court of Appeals (No.
22-30087) granted the Federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
result of the Fifth Circuit's order, the preliminary injunction is
no longer in effect, pending resolution of the Federal government's
appeal of that injunction or a further court order. Among other
things, the preliminary injunction enjoined the defendants in that
case from ``adopting, employing, treating as binding, or relying
upon'' the interim estimates of the social cost of greenhouse
gases--which were issued by the Interagency Working Group on the
Social Cost of Greenhouse Gases on February 26, 2021--to monetize
the benefits of reducing greenhouse gas emissions. In the absence of
further intervening court orders, DOE will revert to its approach
prior to the injunction and present monetized benefits where
appropriate and permissible under law.
---------------------------------------------------------------------------

DOE also estimates health benefits from SO<INF>2</INF> and
NO<INF>X</INF> emissions reductions.\14\ DOE estimates the present
value of the health benefits would be $0.2 billion using a 7-percent
discount rate, and $0.6 billion using a 3-percent discount rate. DOE is
currently only monetizing (for SO<INF>2</INF> and NO<INF>X</INF>)
PM<INF>2.5</INF> precursor health benefits and (for NO<INF>X</INF>)
ozone precursor health benefits but will continue to assess the ability
to monetize other effects such as health benefits from reductions in
direct PM<INF>2.5</INF> emissions.
---------------------------------------------------------------------------

\14\ DOE estimated the monetized value of SO<INF>2</INF> and
NO<INF>X</INF> emissions reductions associated with site and
electricity savings using benefit-per-ton estimates from the
scientific literature. See section IV.L.2 of this document for
further discussion.
---------------------------------------------------------------------------

Table I.7 summarizes the monetized benefits and costs expected to
result from the proposed standby mode and off mode standards for NWGFs
and MHGFs. There are other important unquantified effects, including
certain unquantified climate benefits, unquantified public health
benefits from the reduction of toxic air pollutants and other
emissions, unquantified energy security benefits, and distributional
effects, among others.

Table I.7--Summary of Monetized Benefits and Costs of Proposed Standby
Mode and Off Mode Energy Conservation Standards for Non-Weatherized Gas
Furnaces and Mobile Home Gas Furnaces (TSL 3)
------------------------------------------------------------------------
Billion 2020$
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 3.6
Climate Benefits *...................................... 0.4
Health Benefits **...................................... 0.6
Total Benefits [dagger]................................. 4.6
Consumer Incremental Product Costs [Dagger]............. 0.2
Net Benefits............................................ 4.4
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 1.2
Climate Benefits *...................................... 0.4
Health Benefits **...................................... 0.2
Total Benefits [dagger]................................. 1.8
Consumer Incremental Product Costs [Dagger]............. 0.1
Net Benefits............................................ 1.7
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
consumer furnaces shipped in 2029-2058. These results include benefits
to consumers which accrue after 2058 from the products shipped in 2029-
2058.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
discount rates; 95th percentile at 3 percent discount rate), as shown
in Table V.37, Table V.39, Table V.41. Together these represent the
global social cost of greenhouse gases (SC-GHG). For presentational
purposes of this table, the climate benefits associated with the
average SC-GHG at a 3 percent discount rate are shown, but the
Department does not have a single central SC-GHG point estimate. See
section. IV.L of this document for more details. On March 16, 2022,
the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal
government's emergency motion for stay pending appeal of the February
11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21-
cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order,
the preliminary injunction is no longer in effect, pending resolution
of the Federal government's appeal of that injunction or a further
court order. Among other things, the preliminary injunction enjoined
the defendants in that case from ``adopting, employing, treating as
binding, or relying upon'' the interim estimates of the social cost of
greenhouse gases--which were issued by the Interagency Working Group
on the Social Cost of Greenhouse Gases on February 26, 2021--to
monetize the benefits of reducing greenhouse gas emissions. In the
absence of further intervening court orders, DOE will revert to its
approach prior to the injunction and present monetized benefits where
appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be monetized. For presentation purposes,
total and net benefits for both the 3-percent and 7-percent cases are
presented using the average SC-GHG with 3-percent discount rate, but
the Department does not have a single central SC-GHG point estimate.
DOE emphasizes the importance and value of considering the benefits
calculated using all four SC-GHG estimates. See Table V.47 for net
benefits using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs, as well as
installation costs.

The benefits and costs of the proposed standby mode and off mode
standards, for NWGFs and MHGFs sold in 2029-2058, can also be expressed
in terms of annualized values. The monetary values for the total
annualized net benefits are:

[[Page 40597]]

(1) the reduced consumer operating costs, minus (2) the increases in
product purchase prices, plus (3) the value of climate and health
benefits of emission reductions, all annualized.\15\
---------------------------------------------------------------------------

\15\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2029, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2030), and then discounted the present value from each year
to 2029. The calculation uses discount rates of 3 and 7 percent for
all costs and benefits, as shown in Table I.8 of this document.
Using the present value, DOE then calculated the fixed annual
payment over a 30-year period, starting in the compliance year that
yields the same present value.
---------------------------------------------------------------------------

The national operating cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered products and are measured for the lifetime of NWGFs and MHGFs
shipped in 2029-2058. The health benefits associated with reduced
emissions achieved as a result of the proposed standards are also
calculated based on the lifetime of NWGFs and MHGFs shipped in 2029-
2058. Total benefits for both the 3-percent and 7-percent cases are
presented using the average GHG social costs with 3-percent discount
rate. Estimates of SC-GHG values are presented for all four discount
rates in section V.B.8 of this document. Table I.8 presents the total
estimated monetized benefits and costs associated with the proposed
standby and off mode standard, expressed in terms of annualized values.
The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced SO<INF>2</INF> and NO<INF>X</INF>
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated cost of the proposed standby
mode and off mode standards for NWGFs and MHGFs is $12.2 million per
year in increased equipment costs, while the estimated annual benefits
would be $160 million in reduced equipment operating costs, $23 million
in climate benefits, and $25 million in health benefits. In this case,
the net benefit would amount to $196 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the proposed standby mode and off mode standards for
NWGFs and MHGFs is $12.4 million per year in increased equipment costs,
while the estimated annual benefits would be $224 million in reduced
operating costs, $23 million in climate benefits, and $40 million in
health benefits. In this case, the net benefit would amount to $275
million per year.

Table I.8--Annualized Monetized Benefits and Costs of Proposed Standby Mode and Off Mode Standards for Non-
Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 3)
----------------------------------------------------------------------------------------------------------------
Million 2020$/year
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 224 214 251
Climate Benefits *.............................................. 23 23 24
Health Benefits **.............................................. 40 40 43
Total Benefits [dagger]......................................... 287 276 318
Consumer Incremental Product Costs [Dagger]..................... 12 12 13
Net Benefits.................................................... 275 264 305
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 160 155 176
Climate Benefits *.............................................. 23 23 24
Health Benefits **.............................................. 25 25 27
Total Benefits [dagger]......................................... 208 203 227
Consumer Incremental Product Costs [Dagger]..................... 12 12 13
Net Benefits.................................................... 196 190 214
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with consumer furnaces shipped in 2029-2058. These
results include benefits to consumers which accrue after 2058 from the products shipped in 2029-2058.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC-
GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal
government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
preliminary injunction is no longer in effect, pending resolution of the federal government's appeal of that
injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. In the
absence of further intervening court orders, DOE will revert to its approach prior to the injunction and
presents monetized benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
the importance and value of considering the benefits calculated using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs, as well as installation costs.

[[Page 40598]]

DOE's analysis of the national impacts of the proposed standards is
described in sections IV.H, IV.K, and IV.L of this document.
3. Combined Results for Proposed AFUE Standards and Standby Mode and
Off Mode Standards
DOE considers and evaluates these standards independently under
EPCA and the analytical process outlined in DOE's Process Rule (as
amended). However, DOE is also presenting the combined effects of these
standards for the benefit of the public and in compliance with E.O.
12866, as shown in Table I.9. and Table I.10 of this document \16\ The
results under the primary estimate for Table I.10 are as follows.
---------------------------------------------------------------------------

\16\ To obtain the combined results, DOE added the results for
the proposed AFUE standards in Table I.6 of this document with the
results for the proposed standby mode and off mode standards in
Table I.8 of this document. Slight differences in totals may reflect
the effects of rounding.
---------------------------------------------------------------------------

Using a 7-percent discount rate for consumer benefits and costs and
health benefits from SO<INF>2</INF> and NO<INF>X</INF> emission
changes, and the 3-percent discount rate case for climate benefits from
reduced GHG emissions, the estimated cost of the proposed standards in
this rule is $536 million per year in increased equipment costs, while
the estimated annual benefits would be $1,480 million in reduced
equipment operating costs, $1,038 million in climate benefits, and $785
million in health benefits (accounting for reduced NO<INF>X</INF>
emissions and increased SO<INF>2</INF> emissions)., In this case, the
net benefit amounts to $2,767 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the proposed standards in this rule is $524 million
per year in increased equipment costs, while the estimated annual
benefits would be $2,089 million in reduced operating costs, $1,038
million in climate benefits, and $1,253 million in health benefits
(accounting for reduced NO<INF>X</INF> emissions and increased
SO<INF>2</INF> emissions). In this case, the net benefit would amount
to $3,856 million per year.

Table I.9--Emissions Reductions of AFUE (TSL 8) and Standby Mode and Off
Mode (TSL 3) Standards for Non-Weatherized Gas Furnaces and Mobile Home
Gas Furnaces
------------------------------------------------------------------------

------------------------------------------------------------------------
Power Sector Emissions
------------------------------------------------------------------------
CO2 (million metric tons)............................... 327
SO2 (thousand tons)..................................... (48)
NOX (thousand tons)..................................... 137
Hg (tons)............................................... (0.3)
CH4 (thousand tons)..................................... 0.6
N2O (thousand tons)..................................... (0.3)
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
CO2 (million metric tons)............................... 45
SO2 (thousand tons)..................................... (0.3)
NOX (thousand tons)..................................... 696
Hg (tons)............................................... 0.0
CH4 (thousand tons)..................................... 5,133
N2O (thousand tons)..................................... (0.05)
------------------------------------------------------------------------
Total FFC Emissions
------------------------------------------------------------------------
CO2 (million metric tons)............................... 373
SO2 (thousand tons)..................................... (47)
NOX (thousand tons)..................................... 833
Hg (tons)............................................... (0.3)
CH4 (thousand tons)..................................... 5,134
N2O (thousand tons)..................................... (0.2)
------------------------------------------------------------------------

Table I.10--Monetized Benefits and Costs of Proposed AFUE (TSL 8) and
Standby Mode and Off Mode (TSL 3) Standards for Non-Weatherized Gas
Furnaces and Mobile Home Gas Furnaces
------------------------------------------------------------------------
Annualized Total present
(million 2020$/ value (billion
yr) 2020$)
------------------------------------------------------------------------
3%
------------------------------------------------------------------------
Consumer Operating Cost Savings..... 2,089 33.3
Climate Benefits *.................. 1,038 16.5
Health Benefits **.................. 1,253 20.0
Total Benefits [dagger]............. 4,380 69.8
Consumer Incremental Product Costs 524 8.3
[Dagger]...........................
Net Benefits........................ 3,856 61.5
------------------------------------------------------------------------
7%
------------------------------------------------------------------------
Consumer Operating Cost Savings..... 1,480 11.4
Climate Benefits *.................. 1,038 16.5
Health Benefits **.................. 785 6.1
Total Benefits [dagger]............. 3,303 34.0

[[Page 40599]]

Consumer Incremental Product Costs 536 4.1
[Dagger]...........................
Net Benefits........................ 2,767 29.9
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
consumer furnaces shipped in 2029-2058. These results include benefits
to consumers which accrue after 2058 from the products shipped in 2029-
2058.
* Climate benefits are calculated using four different estimates of the
global SC-GHG (see section IV.L of this document). For presentational
purposes of this table, the climate benefits associated with the
average SC-GHG at a 3 percent discount rate are shown, but the
Department does not have a single central SC-GHG point estimate, and
it emphasizes the importance and value of considering the benefits
calculated using all four SC-GHG estimates. On March 16, 2022, the
Fifth Circuit Court of Appeals (No. 22-30087) granted the federal
government's emergency motion for stay pending appeal of the February
11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21-
cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order,
the preliminary injunction is no longer in effect, pending resolution
of the federal government's appeal of that injunction or a further
court order. Among other things, the preliminary injunction enjoined
the defendants in that case from ``adopting, employing, treating as
binding, or relying upon'' the interim estimates of the social cost of
greenhouse gases--which were issued by the Interagency Working Group
on the Social Cost of Greenhouse Gases on February 26, 2021--to
monetize the benefits of reducing greenhouse gas emissions. In the
absence of further intervening court orders, DOE will revert to its
approach prior to the injunction and presents monetized benefits where
appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are
presented using the average SC-GHG with 3-percent discount rate, but
the Department does not have a single central SC-GHG point estimate.
DOE emphasizes the importance and value of considering the benefits
calculated using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs, as well as
installation costs.

DOE's analysis of the national impacts of the proposed standards is
described in sections IV.H, IV.K, and IV.L of this document.

D. Conclusion

DOE has tentatively concluded that the proposed AFUE standards and
standby mode and off mode standards represent the maximum improvement
in energy efficiency that is technologically feasible and economically
justified, and would result in significant conservation of energy.
Specifically, with regards to technological feasibility, products
achieving these standard levels are already commercially available for
the product classes covered by the proposed standards. As for economic
justification, DOE's analysis shows that the benefits of the proposed
standards exceed, to a great extent, the burdens of the proposed
standards. Using a 7-percent discount rate for consumer benefits and
costs and health benefits from SO<INF>2</INF> and NO<INF>X</INF>
emission changes, and the 3-percent discount rate case for climate
benefits from reduced GHG emissions, the estimated cost of the proposed
standards in this rule is $536 million per year in increased equipment
costs, while the estimated annual benefits are $1,480 million in
reduced equipment operating costs, $1,038 million in climate benefits,
and $785 million in health benefits (accounting for reduced
NO<INF>X</INF> emissions and increased SO<INF>2</INF> emissions). The
net benefit amounts to $2,767 million per year.
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.\17\ For
example, the United States rejoined the Paris Agreement on February 19,
2021. As part of that agreement, the United States has committed to
reducing greenhouse (``GHG'') emissions in order to limit the rise in
mean global temperature. As such, energy savings that reduce GHG
emissions have taken on greater importance. Additionally, some covered
products and equipment have substantial 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. Accordingly, DOE evaluates the significance
of energy savings on a case-by-case basis.
---------------------------------------------------------------------------

\17\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------

As previously mentioned, the standards are projected to result in
estimated national energy savings of 5.76 quads and an estimated
cumulative emissions reduction of 373 Mt of CO<INF>2</INF>. The
consumer benefit to the Nation (i.e., cumulative net present value of
total consumer savings less costs) is estimated to be between $7.3
billion and $25.0 billion (discounted at 7 percent and 3 percent,
respectively) in 2020$. DOE has initially determined the energy savings
from the proposed standard levels are ``significant'' within the
meaning of 42 U.S.C. 6295(o)(3)(B). A more detailed discussion of the
basis for these tentative conclusions is contained in the remainder of
this document and the accompanying TSD.
DOE also considered more-stringent energy efficiency levels as
potential standards, and the Department is still considering them in
this rulemaking. However, DOE has tentatively concluded that the
potential burdens of the more-stringent energy efficiency levels would
outweigh the projected benefits.
Based on consideration of the public comments DOE receives in
response to this document and related information collected and
analyzed during the course of this rulemaking effort, DOE may adopt
energy efficiency levels presented in this document that are either
higher or lower than the proposed standards, or some combination of
level(s) that incorporate the proposed standards in part.

II. Introduction

The following section briefly discusses the statutory authority
underlying this NOPR, as well as some of the relevant historical
background related to the proposed standards for residential NWGFs and
MHGFs.

A. Authority

The Energy Policy and Conservation Act, as amended, Public Law 94-
163 (42 U.S.C. 6291-6317, as codified) authorizes DOE to regulate the
energy efficiency of a number of consumer products and certain
industrial equipment. Title III, Part B of EPCA

[[Page 40600]]

established the Energy Conservation Program for Consumer Products Other
Than Automobiles. These products include the consumer furnaces that are
the subject of this document. (42 U.S.C. 6292 (a)(5)) EPCA prescribed
energy conservation standards for these products (42 U.S.C. 6295(f)(1)
and (2)), and directs DOE to conduct future rulemakings to determine
whether to amend these standards. (42 U.S.C. 6295(f)(4)) EPCA further
provides that, not later than six years after the issuance of any final
rule establishing or amending a standard, DOE must publish either a
notice of determination that standards for the product do not need to
be amended, or a notice of proposed rulemaking including new proposed
energy conservation standards (proceeding to a final rule, as
appropriate). (42 U.S.C. 6295(m)(1))
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. 6291), test procedures (42 U.S.C. 6293),
labeling provisions (42 U.S.C. 6294), energy conservation standards (42
U.S.C. 6295), and the authority to require information and reports from
manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal
preemption in limited instances for particular State laws or
regulations, in accordance with the procedures and other provisions set
forth under EPCA. 42 U.S.C. 6297(d).
Subject to certain statutory criteria and conditions, DOE is
required to develop test procedures that are reasonably designed to
produce test results which measure the energy efficiency, energy use,
or estimated annual operating cost of each covered product during a
representative average use cycle and that are not unduly burdensome to
conduct. (42 U.S.C. 6293(b)(3)) Manufacturers of covered products must
use the prescribed Federal test procedure as the basis for: (1)
certifying to DOE that their products comply with the applicable energy
conservation standards adopted pursuant to EPCA and (2) making
representations about the energy use or efficiency of those products.
(42 U.S.C. 6293(c) and 42 U.S.C. 6295(s)) Similarly, DOE must use these
test procedures to determine whether the products comply with the
relevant energy conservation standards promulgated under EPCA. (42
U.S.C. 6295(s)) The DOE test procedures for residential furnaces appear
at title 10 of the Code of Federal Regulations (``CFR'') part 430,
subpart B, appendix N.
DOE must follow specific statutory criteria for prescribing new or
amended energy conservation standards for covered products. Any new or
amended standard for a covered product must be designed to achieve the
maximum improvement in energy efficiency that the Secretary of Energy
determines is technologically feasible and economically justified. (42
U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B)) Furthermore, DOE may
not adopt any standard that would not result in the significant
conservation of energy. (42 U.S.C. 6295(o)(3))
Moreover, DOE may not prescribe a standard: (1) for certain
products, including residential furnaces, if no test procedure has been
established for the product, or (2) if DOE determines by rule that the
standard is not technologically feasible or economically justified. (42
U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is
economically justified, DOE must determine whether the benefits of the
standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make
this determination after receiving views and comments on the proposed
standard, and by considering, to the greatest extent practicable, the
following seven factors:
(1) The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water)
savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered
products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (``Secretary'') considers
relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA establishes a rebuttable presumption that a standard
is economically justified if the Secretary finds that the additional
cost to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the energy savings during the first year that the consumer will receive
as a result of the standard, as calculated under the applicable test
procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA also contains what is known as an ``anti-backsliding''
provision, which prevents the Secretary from prescribing any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended
or new standard if the Secretary finds (and publishes such finding)
that interested persons have established by a preponderance of the
evidence that the standard is likely to result in the unavailability in
the United States in any covered product type (or class) of performance
characteristics (including reliability), features, sizes, capacities,
and volumes that are substantially the same as those generally
available in the United States. (42 U.S.C. 6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an
energy conservation standard for a covered product that has two or more
subcategories that warrant separate product classes and energy
conservation standards with a level of energy efficiency or energy use
either higher or lower than that which would apply for such group of
covered products which have the same function or intended use. DOE must
specify a different standard level for a type or class of products that
has the same function or intended use if DOE determines that products
within such group: (A) consume a different kind of energy from that
consumed by other covered products within such type (or class); or (B)
have a capacity or other performance-related feature which other
products within such type (or class) do not have and such feature
justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In
determining whether capacity or another performance-related feature
justifies a different standard for a group of products, DOE must
consider such factors as the utility to the consumer of such a feature
and other factors DOE deems appropriate. Id. Any rule prescribing such
a standard must include an explanation of the basis on which such
higher or lower level was established. (42 U.S.C. 6295(q)(2))
Pursuant to amendments contained in the Energy Independence and
Security

[[Page 40601]]

Act of 2007 (EISA 2007), Public Law 110-140, DOE may consider the
establishment of regional energy conservation standards for furnaces
(except boilers). (42 U.S.C. 6295(o)(6)) Specifically, in addition to a
base national standard for a product, DOE may establish for furnaces a
single more-restrictive regional standard. (42 U.S.C. 6295(o)(6)(B))
The regions must include only contiguous States (with the exception of
Alaska and Hawaii, which may be included in regions with which they are
not contiguous), and each State may be placed in only one region (i.e.,
an entire State cannot simultaneously be placed in two regions, nor can
it be divided between two regions). (42 U.S.C. 6295(o)(6)(C)) Further,
DOE can establish the additional regional standards only: (1) where
doing so would produce significant energy savings in comparison to a
single national standard; (2) if the regional standards are
economically justified; and (3) after considering the impact of these
standards on consumers, manufacturers, and other market participants,
including product distributors, dealers, contractors, and installers.
(42 U.S.C. 6295(o)(6)(D))
Finally, pursuant to the amendments contained in EISA 2007, any
final rule for new or amended energy conservation standards promulgated
after July 1, 2010, is required to address standby mode and off mode
energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a
standard for a covered product after that date, it must, if justified
by the criteria for adoption of standards under EPCA (42 U.S.C.
6295(o)), incorporate standby mode and off mode energy use into a
single standard, or, if that is not feasible, adopt a separate standard
for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B))
DOE's current test procedures for residential furnaces address standby
mode and off mode energy use for all covered residential furnaces.
DOE's energy conservation standards address standby mode and off mode
energy use only for non-weatherized oil-fired and electric furnaces. 10
CFR 430.32(e)(1)(iii). In this NOPR, DOE is proposing to develop
separate energy conservation standards that would address the standby
mode and off mode energy use of NWGFs and MHGFs.

B. Background

1. Current Standards
EPCA established the energy conservation standards that apply to
most consumer furnaces currently being manufactured. The original
standards established a minimum AFUE of 75 percent for mobile home
furnaces. For all other furnaces, the original standards generally
established a minimum AFUE of 78 percent. However, Congress recognized
the potential need for a separate standard based on the capacity of a
furnace and directed DOE to undertake a rulemaking to establish a
standard for ``small'' gas furnaces (i.e., those having an input of
less than 45,000 Btu per hour). (42 U.S.C. 6295(f)(1)-(2)) Through a
final rule published in the Federal Register on November 17, 1989, DOE
initially established standards for small furnaces at the same level as
furnaces generally (i.e., a minimum AFUE of 78 percent). 54 FR 47916,
47944.
EPCA also required DOE to conduct two rounds of rulemaking to
consider amended standards for consumer furnaces. (42 U.S.C.
6295(f)(4)(B)-(C)). In addition, EPCA requires a six-year-lookback
review of energy conservation standards for all covered products. (42
U.S.C. 6295(m)(1)) In a final rule published in the Federal Register on
November 19, 2007 (November 2007 final rule), DOE prescribed amended
energy conservation standards for consumer furnaces manufactured on or
after November 19, 2015. 72 FR 65136. The November 2007 final rule
revised the energy conservation standards to 80-percent AFUE for NWGFs,
to 81-percent AFUE for weatherized gas furnaces, to 80-percent AFUE for
MHGFs, and to 82-percent AFUE for non-weatherized oil-fired
furnaces.\18\ 72 FR 65136, 65169. Based on market assessment and the
standard levels at issue, the November 2007 final rule established
standards without regard to the certified input capacity of a furnace.
Id.
---------------------------------------------------------------------------

\18\ Although the November 2007 final rule did not explicitly
state the standards for oil-fired furnaces were applicable only to
non-weatherized oil-fired furnaces, the NOPR that preceded the final
rule made clear that DOE did not perform analysis of and was not
proposing standards for weatherized oil-fired furnaces or mobile
home oil-fired furnaces. 71 FR 59203, 52914 (October 6, 2006). Thus,
the proposed standards that were ultimately adopted in the November
2007 final rule only applied to non-weatherized oil-fired furnaces.
---------------------------------------------------------------------------

Following DOE's adoption of the November 2007 final rule, several
parties jointly sued DOE in the United States Court of Appeals for the
Second Circuit (``Second Circuit'') to invalidate the rule. Petition
for Review, State of New York, et al. v. Department of Energy, et al.,
Nos. 08-0311-ag(L); 08-0312-ag(con) (2d Cir. filed Jan. 17, 2008). The
petitioners asserted that the standards for furnaces promulgated in the
November 2007 final rule did not reflect the ``maximum improvement in
energy efficiency'' that ``is technologically feasible and economically
justified'' under 42 U.S.C. 6295(o)(2)(A). On April 16, 2009, DOE filed
with the Court a motion for voluntary remand that the petitioners did
not oppose. The motion did not state that the November 2007 final rule
would be vacated, but indicated that DOE would revisit its initial
conclusions outlined in the November 2007 final rule in a subsequent
rulemaking action. DOE also agreed that the final rule in that
subsequent rulemaking action would address both regional standards for
furnaces, as well as the effects of alternate standards on natural gas
prices. The Second Circuit granted DOE's motion on April 21, 2009. DOE
notes that the Second Circuit's order did not vacate the energy
conservation standards set forth in the November 2007 final rule, and
during the remand, they went into effect as originally scheduled.
On June 27, 2011, DOE published a direct final rule (``DFR'') in
the Federal Register (``June 2011 DFR'') amending the energy
conservation standards for residential central air conditioners and
consumer furnaces. (76 FR 37408) Subsequently, on October 31, 2011, DOE
published a notice of effective date and compliance dates in the
Federal Register (``October 2011 notice'') to confirm amended energy
conservation standards and compliance dates contained in the June 2011
DFR. 76 FR 67037. The November 2007 final rule and the June 2011 DFR
represented the first and the second rounds, respectively, of the two
rulemakings required under 42 U.S.C. 6295(f)(4)(B)-(C) to consider
amending the energy conservation standards for consumer furnaces.
The June 2011 DFR and October 2011 notice of effective date and
compliance dates amended, in relevant part, the energy conservation
standards and compliance dates for three product classes of consumer
furnaces (i.e., NWGFs, MHGFs, and non-weatherized oil furnaces).\19\
The existing standards were left in place for three classes of consumer
furnaces (i.e., weatherized oil-fired furnaces, mobile home oil-fired
furnaces, and electric furnaces). For one class of consumer furnaces
(weatherized gas furnaces), the existing standard was left in place,
but the compliance date was amended. Electrical standby mode and off
mode energy consumption

[[Page 40602]]

standards were established for non-weatherized gas and oil-fired
furnaces (including mobile home furnaces) and electric furnaces.
Compliance with the energy conservation standards promulgated in the
June 2011 DFR was to be required on May 1, 2013, for non-weatherized
furnaces and on January 1, 2015, for weatherized furnaces. 76 FR 37408,
37547-37548 (June 27, 2011); 76 FR 67037, 67051 (Oct. 31, 2011). The
amended energy conservation standards and compliance dates in the June
2011 DFR superseded those standards and compliance dates promulgated by
the November 2007 final rule for NWGFs, MHGFs, and non-weatherized oil
furnaces. Similarly, the amended compliance date for weatherized gas
furnaces in the June 2011 DFR superseded the compliance date in the
November 2007 final rule.
---------------------------------------------------------------------------

\19\ For NWGFs and MHGFs, the standards were amended to a level
of 80-percent AFUE nationally with a more-stringent 90-percent AFUE
requirement in the Northern Region. For non-weatherized oil-fired
furnaces, the standard was amended to 83-percent AFUE nationally. 76
FR 37408, 37410 (June 27, 2011).
---------------------------------------------------------------------------

After publication of the October 2011 notice, the American Public
Gas Association (``APGA'') sued DOE \20\ in the United States Court of
Appeals for the District of Columbia Circuit (``D.C. Circuit'') to
invalidate that rule as it pertained to NWGFs (as discussed further in
section II.B.2 of this document). Petition for Review, American Public
Gas Association, et al. v. Department of Energy, et al., No. 11-1485
(D.C. Cir. filed Dec. 23, 2011). The parties to the litigation engaged
in settlement negotiations which ultimately led to filing of an
unopposed motion on March 11, 2014, seeking to vacate DOE's rule in
part and to remand to the agency for further rulemaking. On April 24,
2014, the Court granted the motion and ordered that the standards
established for NWGFs and MHGFs be vacated and remanded to DOE for
further rulemaking. As a result, the standards established by the June
2011 DFR for NWGFs and MHGFs did not go into effect, and thus, required
compliance with the standards established in the November 2007 final
rule for these products began on November 19, 2015. As stated
previously, the AFUE standards for weatherized oil-fired furnaces,
mobile home oil-fired furnaces, and electric furnaces were unchanged,
and as such, the original standards for those product classes remain in
effect. Further, the amended standard for non-weatherized oil furnaces
were not subject to the Court order, and went into effect as specified
in the June 2011 DFR.
---------------------------------------------------------------------------

\20\ After APGA filed its petition for review on December 23,
2011, various entities subsequently intervened.
---------------------------------------------------------------------------

The AFUE standards currently applicable to all residential
furnaces, including the two product classes for which DOE is proposing
amended standards in this NOPR, are set forth in DOE's regulations at
10 CFR 430.32(e)(1)(ii). Table II.1 presents the currently applicable
standards for NWGF and MHGF and the date on which compliance with that
standard was required.

Table II.1--Current Federal Energy Conservation Standards for Non-
Weatherized Gas Furnaces and Mobile Home Gas Furnaces
------------------------------------------------------------------------
Minimum annual
fuel Compliance
Product class utilization date
efficiency (%)
------------------------------------------------------------------------
Non-weatherized Gas..................... 80 11/19/2015
Mobile Home Gas......................... 80 11/19/2015
------------------------------------------------------------------------

2. History of Standards Rulemaking for Consumer Furnaces
Given the somewhat complicated interplay of recent DOE rulemakings
and statutory provisions related to consumer furnaces, DOE provides the
following regulatory history as background leading to this document.
Amendments to EPCA in the National Appliance Energy Conservation Act of
1987 (NAECA; Pub. L. 100-12) established EPCA's original energy
conservation standards for furnaces, consisting of the minimum AFUE
levels described above for mobile home furnaces and for all other
furnaces except ``small'' gas furnaces. (42 U.S.C. 6295(f)(1)-(2))
Pursuant to 42 U.S.C. 6295(f)(1)(B), in November 1989, DOE adopted a
mandatory minimum AFUE level for ``small'' furnaces. 54 FR 47916 (Nov.
17, 1989). The standards established by NAECA and the November 1989
final rule for ``small'' gas furnaces are still in effect for mobile
home oil-fired furnaces, weatherized oil-fired furnaces, and electric
furnaces.
Pursuant to EPCA, DOE was required to conduct two rounds of
rulemaking to consider amended energy conservation standards for
furnaces. (42 U.S.C. 6295(f)(4)(B) and (C)) In satisfaction of this
first round of amended standards rulemaking under 42 U.S.C.
6295(f)(4)(B), as noted above, DOE published the November 2007 final
rule that revised these standards for most furnaces, but left them in
place for two product classes (i.e., mobile home oil-fired furnaces and
weatherized oil-fired furnaces). The standards amended in the November
2007 final rule were to apply to furnaces manufactured or imported on
and after November 19, 2015. 72 FR 65136 (Nov. 19, 2007). The energy
conservation standards in the November 2007 final rule consist of a
minimum AFUE level for each of the six classes of furnaces. Id. at 72
FR 65169. As previously noted, based on the market analysis for the
November 2007 final rule and the standards established under that rule,
the November 2007 final rule eliminated the distinction between
furnaces based on their certified input capacity, (i.e., the standards
applicable to ``small' furnaces were established at the same level and
as part of their appropriate class of furnace generally). Id.
As described previously in section II.B.1 of this document, on June
27, 2011, DOE published in the Federal Register the June 2011 DFR
revising the energy conservation standards for residential furnaces
pursuant to the voluntary remand in State of New York, et al. v.
Department of Energy, et al. 76 FR 37408 (June 27, 2011). In the June
2011 DFR, DOE considered the amendment of the same six product classes
considered in the November 2007 final rule analysis plus electric
furnaces. As discussed in section II.B.1 of this document, the June
2011 DFR amended the existing AFUE energy conservation standards for
NWGFs, MHGFs, and non-weatherized oil furnaces, and amended the
compliance

[[Page 40603]]

date (but left the existing standards in place) for weatherized gas
furnaces. The June 2011 DFR also established electrical standby mode
and off mode energy conservation standards for NWGFs, non-weatherized
oil furnaces, and electric furnaces. DOE confirmed the standards and
compliance dates promulgated in the June 2011 DFR in a notice of
effective date and compliance dates published in the Federal Register
on October 31, 2011. 76 FR 67037.
As noted earlier, following DOE's adoption of the June 2011 DFR,
APGA filed a petition for review with the United States Court of
Appeals for the District of Columbia Circuit to invalidate the DOE rule
as it pertained to NWGFs. Petition for Review, American Public Gas
Association, et al. v. Department of Energy, et al., No. 11-1485 (D.C.
Cir. filed Dec. 23, 2011). On April 24, 2014, the Court granted a
motion that approved a settlement agreement that was reached between
DOE and APGA, in which DOE agreed to a partial vacatur and remand of
the NWGFs and MHGFs portions of the June 2011 DFR in order to conduct
further notice-and-comment rulemaking. Accordingly, the Court's order
vacated the June 2011 DFR in part (i.e., those portions relating to
NWGFs and MHGFs) and remanded to the agency for further rulemaking.
As part of the settlement, DOE agreed to use best efforts to issue
a notice of proposed rulemaking within one year of the remand, and to
issue a final rule within the later of two years of the issuance of
remand, or one year of the issuance of the proposed rule, including at
least a ninety-day public comment period. Due to the extensive and
recent rulemaking history for residential furnaces, as well as the
associated opportunities for notice and comment described previously,
DOE forwent the typical earlier rulemaking stages (e.g., Framework
Document, preliminary analysis) and instead published a NOPR on March
12, 2015 (March 2015 NOPR). 80 FR 13120. DOE concluded that there was a
sufficient recent exchange of information between interested parties
and DOE regarding the energy conservation standards for residential
furnaces such as to allow for this proceeding to move directly to the
NOPR stage. Moreover, DOE notes that under 42 U.S.C. 6295(p) and 5
U.S.C. 553(b) and (c), DOE is only required to publish a notice of
proposed rulemaking and accept public comments before amending energy
conservation standards in a final rule (i.e., DOE is not required to
conduct any earlier rulemaking stages).\21\
---------------------------------------------------------------------------

\21\ This aligns with the direction provided in the final rule
published in the Federal Register on December 13, 2021, regarding
the procedures, interpretations, and policies for consideration in
new or revised energy conservation standards and test procedures for
consumer products and commercial/industrial equipment (``December
2021 Final Rule''). 86 FR 70892, 70922.
---------------------------------------------------------------------------

In the March 2015 NOPR, DOE proposed adopting a national standard
of 92-percent AFUE for all NWGFs and MHGFs. 80 FR 13120, 13198 (March
12, 2015). In response, while some stakeholders supported the national
92-percent AFUE standard, others opposed the proposed standards and
encouraged DOE to withdraw the March 2015 NOPR.
Multiple parties suggested that DOE should create a separate
product class for furnaces based on input capacity and set lower
standards for ``small furnaces'' in order to mitigate some of the
negative impacts of the proposed standards. Among other reasons,
commenters suggested that such an approach would reduce the number of
low-income consumers switching to electric heat due to higher
installation costs, because those consumers typically have smaller
homes in which a furnace with a lower input capacity would be installed
and, therefore, would not be impacted if a condensing standard were
adopted only for higher-input-capacity furnaces. To explore the
potential impacts of such an approach, DOE published a notice of data
availability (``NODA'') in the Federal Register on September 14, 2015
(September 2015 NODA). 80 FR 55038. The September 2015 NODA contained
analysis that considered thresholds for defining the small NWGF product
class from 45 kBtu/h to 65 kBtu/h certified input capacity and
maintaining a non-condensing 80-percent AFUE standard for that product
class, while increasing the standard to a condensing level (i.e.,
either 90-percent, 92-percent, 95-percent, or 98-percent AFUE) for
large NWGFs. Id. at 80 FR 55042. The results indicated that life-cycle
cost savings increased and the share of consumers with net costs
decreased as a result of an 80-percent AFUE standard for a small NWGF
product class. Id. at 80 FR 55042-55044. It also showed that national
energy savings increased because fewer consumers switched to electric
heat.\22\ Id. at 80 FR 55308, 55044.
---------------------------------------------------------------------------

\22\ In terms of full-fuel-cycle energy, switching from gas to
electricity increases energy use because of the losses in thermal
electricity generation.
---------------------------------------------------------------------------

Therefore, DOE published a supplemental notice of proposed
rulemaking (``SNOPR'') in the Federal Register on September 23, 2016
(September 2016 SNOPR) that proposed separate standards for small and
large NWGF.\23\ 81 FR 65720. For NWGF with input capacities of 55 kBtu/
h or less, DOE proposed to maintain the standard at 80-percent AFUE.
Id. at 81 FR 65852. For all other NWGF and for all MHGF, DOE proposed a
standard of 92-percent AFUE. Id. As was the case in the September 2015
NODA, a small NWGF product class was shown to reduce the number of
consumers experiencing net costs due to higher installation costs for
condensing furnaces or switching to electric heat. In the September
2016 SNOPR, DOE initially determined that the combination of a 55 kBtu/
h product class threshold and a 92-percent AFUE standard for all NWGF
above that size appropriately balanced the costs and benefits. DOE also
noted in that SNOPR that a 60 kBtu/h threshold may also be economically
justified based on the analysis, and sought further comment regarding
the particular size threshold proposed. 81 FR 65720, 65755 (Sept. 23,
2016).
---------------------------------------------------------------------------

\23\ DOE initially provided 60 days for comment on the SNOPR,
and subsequently reopened the comment period an additional 30 days.
81 FR 87493 (Dec. 5, 2016).
---------------------------------------------------------------------------

In addition, for the March 2015 NOPR and September 2016 SNOPR, DOE
analyzed energy conservation standards for the standby mode and off
mode energy use of NWGF and MHGF, as required by EPCA. (42 U.S.C.
6295(gg)(3); 80 FR 13120, 13198; 81 FR 65720, 65759-65760) In both the
March 2015 NOPR and the September 2016 SNOPR, DOE proposed a maximum
energy use of 8.5 watts in both standby mode and off mode for NWGF and
MHGF. 80 FR 13120, 13198 (March 12, 2015) and 81 FR 65720, 65852 (Sept.
23, 2016).
On January 15, 2021, in response to a petition for rulemaking \24\
submitted by the American Public Gas Association, Spire, Inc., the
Natural Gas Supply Association, the American Gas Association, and the
National Propane Gas Association (the ``Gas Industry Petition''), DOE
published a final interpretive rule (``the January 2021 final
interpretive rule'') in the Federal Register, determining that, in the
context of residential furnaces, commercial water heaters, and
similarly-situated products/equipment, use of non-condensing technology
(and associated venting) constitutes a performance-related ``feature''
under EPCA that cannot be eliminated through adoption of an energy
conservation standard. 86 FR 4776. Correspondingly,

[[Page 40604]]

on the same day, DOE published in the Federal Register a notification
withdrawing the March 2015 NOPR and the September 2016 SNOPR for NWGFs
and MHGFs. 86 FR 3873 (Jan. 15, 2021).
---------------------------------------------------------------------------

\24\ DOE published the Gas Industry Petition in the Federal
Register for comment on November 1, 2018. 83 FR 54838.
---------------------------------------------------------------------------

On January 20, 2021, the White House issued Executive Order 13990,
``Protecting Public Health and the Environment and Restoring Science to
Tackle the Climate Crisis.'' 86 FR 7037 (Jan. 25, 2021). Section 1 of
that Order lists several policies related to the protection of public
health and the environment, including reducing greenhouse gas emissions
and bolstering the Nation's resilience to climate change. Id. at 86 FR
7037. Section 2 of the Order also instructs all agencies to review
``existing regulations, orders, guidance documents, policies, and any
other similar agency actions (agency actions) promulgated, issued, or
adopted between January 20, 2017, and January 20, 2021, that are or may
be inconsistent with, or present obstacles to, [these policies].'' Id.
Agencies are then directed, as appropriate and consistent with
applicable law, to consider suspending, revising, or rescinding these
agency actions and to immediately commence work to confront the climate
crisis. Id. In light of E.O. 13990, DOE undertook a re-evaluation of
the final interpretation and withdrawal of proposed rulemakings
published in the Federal Register on January 15, 2021, and the
Department published a proposed interpretive rule in the Federal
Register on August 27, 2021, to once again address this matter. 86 FR
48049.
Following the re-evaluation of the January 2021 final interpretive
rule and consideration of public comments, DOE published a final
interpretive rule in the Federal Register on December 29, 2021
(``December 2021 final interpretive rule'') that returns to the
Department's previous and long-standing interpretation (in effect prior
to the January 15, 2021 final interpretive rule), under which the
technology used to supply heated air or hot water is not a performance-
related ``feature'' that provides a distinct consumer utility under
EPCA. 86 FR 73947. Residential furnaces were one of the two primary
focuses of the December 2021 final interpretive rule (along with
commercial water heaters), and in that document, the Department offered
an extensive explanation as to its rationale for why it does not view
noncondensing technology and associated venting to be a performance-
related feature warranting a separate product class for furnaces. Among
these are the consumer utility of the product (i.e., providing heat,
irrespective of venting type) and the availability of technological
alternatives for difficult installation situations (which are costs
concerns properly addressed under consideration of a standard's
economic justification). However, DOE has stated that it will consider
any particular concerns regarding specific installation circumstances
in the context of individual rulemakings, and the Department welcomes
such comments in response to this NOPR.
Consistent with the December 2021 final interpretive rule, in
conducting the analysis for this NOPR, DOE does not divide product
classes based on condensing technologies and associated venting systems
when analyzing potential energy conservation standards.
As illustrated by the preceding discussion, the rulemaking for
consumer furnaces has been subject to multiple rounds of public
comment, including public meetings, and extensive records have been
developed in the relevant dockets. (See Docket Number EERE-2011-BT-STD-
0011). Consequently, the information obtained through those earlier
rounds of public comment, information exchange, and data gathering have
been considered in this rulemaking, and DOE is building upon the
existing record through further analysis and further notice and
comment. DOE has tentatively found that the relevant furnaces market
has stayed sufficiently similar since the time of these past
rulemakings such that much of the previously-collected feedback and
data continue to be relevant. However, as discussed in section IV of
this NOPR, DOE has updated analytical inputs in its analyses where
appropriate and welcomes further data, information, and comments.
In the withdrawn September 2016 SNOPR, DOE preliminarily addressed
the comments received in response to the March 2015 NOPR and September
2015 NODA. In response to the withdrawn September 2016 SNOPR, DOE
received a number of written comments from interested parties during
the comment period on that document. Table II.2 identifies those
commenters. Although DOE withdrew the September 2016 SNOPR, DOE
considered these comments, as well as comments from the September 2016
SNOPR public meeting, to the extent relevant in preparing this
document.

Table II.2--Interested Parties Providing Written Comment on the Withdrawn September 2016 SNOPR for Non-
Weatherized Gas Furnaces and Mobile Home Gas Furnaces
----------------------------------------------------------------------------------------------------------------
Name Acronyms/ abbreviation Type
----------------------------------------------------------------------------------------------------------------
A Ware Productions................................... A Ware...................... CR
African American Environmentalist Association........ AAEA........................ CR
American Gas Association and American Public Gas AGA and APGA................ U
Association.
American Gas Association, American Public Gas AGA, APGA, and GTI.......... U
Association, and Gas Technology Institute.
AGL Resources........................................ ............................ U
Air Conditioning Contractors of America.............. ACCA........................ TA
Air-Conditioning, Heating, and Refrigeration AHRI........................ TA
Institute.
Alliance to Save Energy.............................. ASE......................... EA
Allied Air........................................... ............................ M
American Association of Blacks in Energy............. AABE........................ CR
American Council for an Energy-Efficient Economy..... ACEEE....................... EA
American Council for an Energy-Efficient Economy, ACEEE, ASAP, & ASE.......... EA
Appliance Standards Awareness Project, and Alliance
to Save Energy.
American Council for an Energy-Efficient Economy, Efficiency Advocates........ EA
Appliance Standards Awareness Project, Alliance to
Save Energy, Natural Resource Defense Council,
Northeast Energy Efficiency Partnerships, Northwest
Energy Efficiency Alliance.
American Energy Alliance............................. AEA......................... EA
American Gas Association............................. AGA......................... U
American Public Gas Association...................... APGA........................ U
American Public Power Association.................... APPA........................ U

[[Page 40605]]

Anonymous............................................ ............................ I
Appliance Standards Awareness Project................ ASAP........................ EA
Austell Natural Gas System........................... Austell..................... U
Borough of Chambersburg, PA.......................... Chambersburg................ G
California Energy Commission......................... CEC......................... G
Cato Institute....................................... ............................ PP
CenterPoint Energy................................... ............................ U
City of Adairsville, Georgia......................... Adairsville................. G
City of Cairo, Georgia............................... Cairo....................... G
City of Camilla, Georgia............................. Camilla..................... G
City of Cartersville, Georgia........................ Cartersville................ G
City of Commerce, Georgia............................ Commerce.................... G
City of Covington, Georgia........................... Covington................... G
City of Dublin, Georgia.............................. Dublin...................... G
City of Lawrenceville, Georgia....................... Lawrenceville............... G
City of Louisville, Georgia.......................... Louisville.................. G
City of Monroe, Georgia.............................. Monroe...................... G
City of Moultrie, Georgia............................ Moultrie.................... G
City of Sugar Hill, Georgia.......................... Sugar Hill.................. G
City of Sylvania, Georgia............................ Sylvania.................... G
City of Thomasville, Georgia......................... Thomasville................. G
City of Tifton, Georgia.............................. Tifton...................... G
City of Toccoa/Toccoa Natural Gas.................... Toccoa...................... G/U
Clearwater Gas System................................ CGS......................... U
Members of the U.S. Congress *....................... Joint Congress Members...... G
Gregory W. Meeks (Member of Congress)................ Meeks....................... G
Sanford D. Bishop, Jr. (Member of Congress).......... Bishop...................... G
Donald M. Payne, Jr. (Member of Congress)............ Payne....................... G
Consumer Federation of America, National Consumer Law Joint Consumer Commenters... CR
Center, Massachusetts Union of Public Housing
Tenants, and Texas Ratepayers' Organization to Save
Energy.
Contractor Advisors.................................. ............................ C
Arthur Corbin........................................ Corbin...................... I
Jim Darling.......................................... Darling..................... I
DC Jobs or Else...................................... DC Jobs or Else............. CR
Earthjustice......................................... ............................ EA
Edison Electric Institute............................ EEI......................... U
Energy Association of Pennsylvania................... ............................ U
Environmental Defense Fund, Institute for Policy Joint Advocates............. EA
Integrity at NYU School of Law, Natural Resources
Defense Council, and Union of Concerned Scientists.
Fitzgerald Utilities................................. Fitzgerald.................. U
Catherine Fletcher................................... Fletcher.................... I
Florida Natural Gas Association...................... FNGA........................ U
Gas Technology Institute............................. GTI......................... U
Goodman Global, Inc.................................. Goodman..................... M
Heating, Air-Conditioning & Refrigeration HARDI....................... TA
Distributors International.
Jennifer Hombach..................................... Hombach..................... I
Ingersoll Rand....................................... Ingersoll Rand.............. M
David Johnson........................................ Johnson..................... I
Johnson Controls, Inc................................ JCI......................... M
Jointly Owned Natural Gas............................ ............................ U
Aaron Kelly.......................................... Kelly....................... I
The Laclede Group, Inc/Spire, Inc. **................ Laclede/Spire............... U
Law Offices of Barton Day, PLLC ***.................. Day......................... U
Lennox International Inc............................. Lennox...................... M
Liberty Utilities.................................... ............................ U
Manufactured Housing Institute....................... MHI......................... TA
Mark Nayes........................................... Nayes....................... I
Mercatus Center at George Mason University........... Abdukadirov et al........... I
Metal-Fab............................................ ............................ CS
Metropolitan Utilities District, Omaha, NE........... Metropolitan Utilities U
District.
Don Meyers........................................... Meyers...................... I
Cameron Moore........................................ Moore....................... I
Mortex Products, Inc................................. Mortex...................... M
Municipal Gas Authority of Georgia................... Gas Authority............... U
National Association of Home Builders................ NAHB........................ TA
National Energy & Utility Affordability Coalition.... NEUAC....................... CR
National Multifamily Housing Council, National NMHC, NAA, NLHA............. TA
Apartment Association, National Leased Housing
Association.
National Propane Gas Association..................... NPGA........................ U

[[Page 40606]]

Natural Gas Association of Georgia................... NGA......................... U
Natural Resources Defense Council.................... NRDC........................ EA
New Jersey Natural Gas............................... NJNG........................ U
NiSource Inc......................................... NiSource.................... U
Nortek Global HVAC................................... Nortek...................... M
Northeast Energy Efficiency Partnerships............. NEEP........................ EA
ONE Gas, Inc......................................... ONE Gas..................... U
Pacific Gas and Electric Company..................... PG&E........................ U
Pennsylvania Chamber of Business and Industry........ ............................ TA
Pennsylvania Department of Environmental Protection.. PA DEP...................... G
Philadelphia Gas Works............................... PGW......................... U
Plumbing-Heating-Cooling Contractors................. PHCC........................ C
Prime Energy Partners, LLC........................... Prime Energy Partners....... EA
Questar Gas Company.................................. Questar Gas................. U
Rheem Manufacturing Company.......................... Rheem....................... M
David Schroeder...................................... Schroeder................... I
Terry Small.......................................... Small....................... I
Southern California Gas Company...................... SoCalGas.................... U
Southern Company..................................... ............................ U
Southern Gas Association............................. SGA......................... U
Southside Heating and Air Conditioning............... ............................ C
State of Indiana..................................... Indiana..................... G
Kimberly Swanson..................................... Swanson..................... I
Town of Rockford, Alabama............................ Rockford.................... G
Ubuntu Center of Chicago............................. Ubuntu...................... CR
United Technologies Building and Industrial Systems-- Carrier..................... M
Carrier Corporation.
United States Joint Representatives [dagger]......... Joint Representatives....... G
University of Pennsylvania, Kleinman Center for Kleinman Center............. EI
Energy Policy.
U.S. Chamber of Commerce, the American Chemistry Associations................ TA
Council, the American Coke and Coal Chemicals
Institute, the American Forest & Paper Association,
the American Fuel & Petrochemical Manufacturers, the
American Petroleum Institute, the Brick Industry
Association, the Council of Industrial Boiler
Owners, the National Association of Home Builders,
the National Association of Manufacturers, the
National Mining Association, the National Oilseed
Processors Association, and the Portland Cement
Association.
Vectren Corporation.................................. Vectren..................... U
John von Harz........................................ von Harz.................... I
Washington Gas Light Company......................... Washington Gas.............. U
Walter Wood.......................................... Wood........................ I
----------------------------------------------------------------------------------------------------------------
C: Mechanical Contractor; CR: Consumer Representative; CS: Component Supplier; EA: Efficiency/Environmental
Advocate; EI: Educational Institution; G: Government; I: Individual; M: Manufacturer; PP: Public Policy
Research Organization; TA: Trade Association; U: Utility or Utility Trade Association.
* Paul D. Tonka, Ra[uacute]l M. Grijalva, Michael M. Honda, Scott H. Peters, Alan S. Lowenthal, Jerrold Nadler,
Sander M. Levin, Chris Van Hollen, Alan S. Lowenthal, Rep.Ted Lieu, Donald S. Beyer, Jr., Louise M. Slaughter,
Rep. Lois Capps, and Donna F. Edwards.
** The Laclede Group, Inc. changed its name to Spire, Inc. during this rulemaking.
*** Representing Spire Inc., a gas utility.
[dagger] Mo Brooks, Tom Price, Lou Barletta, Bradley Byrne, Glenn `GT' Thompson, Steve Russell, Joe Heck, Gary
Palmer, Kevin Yoder, Jim Bridenstine, Scott Tipton, Robert Pittenger, Chuck Fleischmann, Robert Aderholt, Mimi
Walters, Barry Loudermilk, Gregg Harper, Mark Walker, Brian Babin, Candice S. Miller, Chris Stewart, Mike D.
Rogers, Jim Renacci, Bob Gibbs, Dave Brat, Jeff Miller, Phil Roe, David Schweikert, Tom Marino, David B.
McKinley, Scott DesJarlais, Marc Veasey, Ralph Abraham, Matt Salmon, David Rouzer, Richard Hudson, Cresent
Hardy, Buddy Carter, Mike Pompeo, Martha Roby, Glenn Grothman, Tom Emmer, Paul Gosar, Ted S. Yoho, Rick Allen,
Dan Benishek, David Young, Randy Weber, Mark Meadows, Kay Granger, Blake Farenthold, Bill Flores, Kevin
Cramer, Daniel Webster, Tim Huelskamp, Markwayne Mullin, Chris Collins, Jason Smith, Steve Womack, Diane
Black, Keith Rothfus, Sean P. Duffy, Renee Ellmers, Alex X. Mooney, Jim Costa, Brad Wenstrup, Sam Graves,
Charles W. Boustany, Jr., Andy Barr, Mike Bost, Doug Collins, Jody Hice, Mike Kelly, Jim Jordan, Lynn Jenkins,
Andy Harris, Billy Long, Bill Johnson, Rob Woodall, David W. Jolly, Rodney Davis, Joe Barton, Gus M.
Bilirakis, Pete Olson, Randy Forbes, Ed Whitfield, Ken Calvert, John Duncan, Henry Cuellar, Steve King, John
Shimkus, Jeb Hensarling, Pete Sessions, Vicky Hartzler, Adrian Smith, Louie Gohmert, Marsha Blackburn, Sam
Johnson, Tom McClintock, Walter Jones, Patrick T. McHenry, Steve Chabot, Doug Lamborn, Frank D. Lucas, Sanford
D. Bishop, Jr., Lamar Smith, Austin Scott, Mick Mulvaney, Steve Pearce, Brett Guthrie, Trent Franks, Blaine
Luetkemeyer, Tom Graves, Mike Coffman, Robert E. Latta, F. James Sensenbrenner, Jr., Stephen Fincher, Tom
Cole, Lynn Westmoreland, John Ratcliffe, and John Moolenaar.

A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\25\
---------------------------------------------------------------------------

\25\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for NWGF and MHGF. (Docket No. EERE-
2014-BT-STD-0031, 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).
---------------------------------------------------------------------------

3. Current Standards in Canada
Consumer furnaces are a regulated product in Canada and are subject
to energy efficiency regulations. On December 24, 2008, Natural
Resources Canada published regulations in the Canada Gazette, Part II
amending the energy efficiency regulations for consumer furnaces, among
other appliances and equipment.\26\ The revised regulation, required on
or after December 31, 2009, sets a minimum

[[Page 40607]]

efficiency of 90-percent AFUE for gas furnaces. This standard is
applicable to gas furnaces, other than those with an integrated cooling
component that are outdoor or through-the-wall gas furnaces, that have
an input rate no greater than 65.92 kW (225,000 Btu/h), and that use
single-phase electric current.
---------------------------------------------------------------------------

\26\ See Canada Gazette, Part II, Vol. 142, No. 26, pp. 2512-
2570. (Available at: <a href="http://www.gazette.gc.ca/rp-pr/p2/2008/2008-12-24/pdf/g2-14226.pdf">www.gazette.gc.ca/rp-pr/p2/2008/2008-12-24/pdf/g2-14226.pdf</a>) (Last accessed Feb. 15, 2022).
---------------------------------------------------------------------------

On June 12, 2019, Natural Resources Canada published regulations in
the Canada Gazette, Part II amending the energy efficiency regulations
for consumer furnaces, among other appliances and equipment.\27\ The
definition of gas furnaces was clarified to exclude gas furnaces for
relocatable buildings (e.g., MHGFs). The revised regulation, required
on or after July 3, 2019, sets a minimum efficiency of 95-percent AFUE
for gas furnaces. Furthermore, the revised regulation also sets a
minimum efficiency of 80-percent AFUE for gas furnaces for relocatable
buildings.\28\
---------------------------------------------------------------------------

\27\ See Canada Gazette, Part II, Vol. 153, No. 12, pp. 2423-
2517. (Available at: <a href="http://www.gazette.gc.ca/rp-pr/p2/2019/2019-06-12/pdf/g2-15312.pdf">www.gazette.gc.ca/rp-pr/p2/2019/2019-06-12/pdf/g2-15312.pdf</a>) (Last accessed Feb. 15, 2022).
\28\ ``Gas furnace for relocatable buildings'' is defined in
that regulation as a gas furnace that is intended for use in a
temporary modular building that can be relocated from one site to
another and is marked for use in relocatable buildings.
---------------------------------------------------------------------------

C. Deviation From Appendix A

In accordance with section 3(a) of 10 CFR part 430, subpart C,
appendix A (``appendix A''), DOE notes that it is deviating from the
provision in appendix A regarding the pre-NOPR stages for an energy
conservation standards rulemaking. Section 6(a)(2) of appendix A states
that if the Department determines it is appropriate to proceed with a
rulemaking, the preliminary stages of a rulemaking to issue or amend an
energy conservation standard that DOE will undertake will be a
framework document and preliminary analysis, or an advance notice of
proposed rulemaking. For the reasons that follow, DOE finds it
necessary and appropriate to deviate from this step in appendix A and
to instead publish this NOPR without once again conducting these
preliminary stages. Completion of this furnaces rulemaking is overdue
under the relevant statutory deadline, so DOE seeks to complete its
statutory obligations as expeditiously as possible. Moreover, DOE finds
that there would be little benefit in repeating the preliminary stages
of this rulemaking. The earlier stages of a rulemaking are intended to
introduce the various analyses DOE conducts during the rulemaking
process, present preliminary results, and request initial feedback from
interested parties to seek early input. Although the most recent
rulemaking notices for NWGFs and MHGFs (the March 2015 NOPR and
September 2016 SNOPR) have been withdrawn, as discussed in section
II.B.2 of this document, this analysis builds upon the previous
rulemaking stages. As DOE is using similar analytical methods in this
NOPR (with differences described in the sections that follow),
publication of a framework document, preliminary analysis, or ANOPR
would be largely redundant of previously published documents.
Stakeholders have previously provided numerous rounds of input on these
methodologies in the most recent rulemaking. Further, as discussed in
section II.A, EPCA provides that DOE must conduct two rounds of energy
conservation standard rulemakings for NWGFs and MHGFs. (42 U.S.C.
6295(f)(4)(B) and (C)) The statute also requires that not later than 6
years after issuance of any final rule establishing or amending a
standard, 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. (42 U.S.C.
6295(m)(1)) The energy conservation standards for NWGF and MHGF were
last amended in the November 2007 final rule. Additionally, as
discussed in section II.B.2 of this document, in settling the lawsuit
filed by APGA following the June 2011 DFR (Petition for Review,
American Public Gas Association, et al. v. Department of Energy, et
al., No. 11-1485 (D.C. Cir. filed Dec. 23, 2011)), DOE agreed to use
best efforts to issue a NOPR within one year of the remand (i.e., by
April 24, 2015), and to issue a final rule within the later of two
years of the issuance of remand, or one year of the issuance of the
proposed rule (i.e., by April 24, 2016).\29\ As it has been more than 8
years since the settlement agreement and over 6 years past the original
target date for issuance of a final rule, DOE has determined that
moving as expeditiously as is reasonably practical is the approach most
consistent with the terms of the settlement agreement as well as the
requirements of EPCA. As such, DOE is not publishing pre-NOPR
documents. DOE has tentatively found that the portions of analysis done
for previous rulemakings continue to apply to the current market for
the furnaces at issue. However, as discussed in section IV of this
NOPR, DOE has updated analytical inputs in its analyses where
appropriate and welcomes submission of additional data, information,
and comments.
---------------------------------------------------------------------------

\29\ DOE issued the March 2015 NOPR on February 10, 2015. 80 FR
13120, 13197. Therefore, the later of the two dates is April 24,
2016.
---------------------------------------------------------------------------

Section 6(f)(2) of appendix A provides that the length of the
public comment period for the NOPR will be at least 75 days. For this
NOPR, DOE finds it necessary and appropriate to provide a 60-day
comment period. As stated previously, DOE faces an overdue statutory
deadline for this rulemaking and, furthermore, the analytical methods
used for this NOPR are similar to those used in previous rulemaking
notices. Consequently, DOE has determined it is necessary and
appropriate to provide a 60-day comment period, which the Department
has determined provides sufficient time for interested parties to
review the NOPR and develop comments.

III. General Discussion

DOE developed this proposed rule after considering comments, data,
and information from interested parties that represent a variety of
interests. This NOPR addresses all relevant issues raised by commenters
since the last published proposal in this rulemaking proceeding.

A. Product Classes and Scope of Coverage

When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used, or by capacity or other performance-related features that justify
differing standards. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such
factors as the utility of the feature to the consumer and other factors
DOE determines are appropriate. (42 U.S.C. 6295(q))
In this proposed rule, DOE is only analyzing a subset of consumer
furnace classes. DOE agreed to the partial vacatur and remand of the
June 2011 DFR, specifically as it related to energy conservation
standards for NWGFs and MHGFs in the settlement agreement to resolve
the litigation in American Public Gas Ass'n v. U.S. Dept. of Energy
(No. 11-1485, D.C. Cir. Filed Dec 23, 2011). 80 FR 13120, 13130-13132
(March 12, 2015). Therefore, in this proposed rule, DOE is only
proposing amended standards for NWGFs and for MHGFs. For a detailed
discussion of the product classes considered for this NOPR, see section
IV.A.1 of this document.

B. Test Procedure

EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test

[[Page 40608]]

procedures. (42 U.S.C. 6293) Manufacturers of covered products must use
these test procedures to certify to DOE that their product complies
with energy conservation standards and to quantify the efficiency of
their product. (42 U.S.C. 6295(s)) DOE's current energy conservation
standards for consumer furnaces are expressed in terms of AFUE (see 10
CFR 430.32(e)(1)). AFUE is an annualized fuel efficiency metric that
accounts for fossil fuel consumption in active, standby, and off modes.
The existing DOE test procedure for determining the AFUE of consumer
furnaces is located at 10 CFR part 430, subpart B, appendix N. The DOE
test procedure for consumer furnaces was originally established by a
May 12, 1997 final rule, which incorporates by reference the American
Society of Heating, Refrigerating and Air-Conditioning Engineers
(``ASHRAE'')/American National Standards Institute (``ANSI'') Standard
103-1993, Method of Testing for Annual Fuel Utilization Efficiency of
Residential Central Furnaces and Boilers (1993). 62 FR 26140, 26157.
Since the initial adoption of the consumer furnaces test procedure,
DOE has undertaken a number of additional rulemakings related to that
test procedure, including ones to account for measurement of standby
mode and off mode energy use (see 75 FR 64621 (Oct. 20, 2010); 77 FR
76831 (Dec. 31, 2012)) and to supply necessary equations related to
optional heat-up and cool-down tests (see 78 FR 41265 (July 10, 2013)).
Most recently, DOE published a final rule in the Federal Register
on January 15, 2016, that further amended the test procedure for
consumer furnaces (January 2016 TP final rule). 81 FR 2628. The
revisions included:
<bullet> Clarification of the electrical power term ``PE'';
<bullet> Adoption of a smoke stick test for determining use of
minimum default draft factors;
<bullet> Allowance for the measurement of condensate under steady-
state conditions;
<bullet> Reference to manufacturer's installation and operation
manual and clarifications for when that manual does not specify test
set-up;
<bullet> Specification of ductwork requirements for units that are
installed without a return duct; and
<bullet> Revision of the requirements regarding AFUE reporting
precision.

81 FR 2628, 2629-2630.

As such, the most current version of the test procedure (published
in January 2016) has now been in place for several years and is
available to commenters when considering the proposals presented in
this NOPR.

C. Technological Feasibility

1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and 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. DOE considers technologies incorporated in
commercially-available products or in working prototypes to be
technologically feasible. See 10 CFR part 430, subpart C, appendix A
(``Process Rule''), sections 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 product utility or availability; (3) adverse impacts on
health or safety; and (4) unique-pathway proprietary technologies.
Sections 6(b)(3)(ii)-(v) and 7(b)(2)-(5) of the Process Rule. Section
IV.B of this document discusses the results of the screening analysis
for NWGF and MHGF, particularly the designs DOE considered, those it
screened out, and those that are the basis for the potential standards
considered in this rulemaking. For further details on the screening
analysis for this rulemaking, see chapter 4 of the technical support
document (``TSD'').
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for NWGFs and
MHGFs, using the design parameters for the most efficient products
available on the market or in working prototypes. The max-tech levels
that DOE determined for this rulemaking are described in section
IV.C.1.b of this NOPR and in chapter 5 of the TSD.

D. Energy Savings

1. Determination of Savings
For each trial standard level (``TSL''), DOE projected energy
savings from application of the TSL to NWGFs and MHGFs purchased in the
30-year period that begins in the expected first year of compliance
with the proposed amended or new standards (2029-2058).\30\ The savings
are measured over the entire lifetime of products purchased in the 30-
year analysis period. DOE quantified the energy savings attributable to
each TSL 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 a product would likely evolve in the absence of amended or
new energy conservation standards.
---------------------------------------------------------------------------

\30\ DOE also presents a sensitivity analysis that considers
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

DOE used its national impact analysis (``NIA'') spreadsheet models
to estimate national energy savings (``NES'') from potential amended
and new standards for NWGFs and MHGFs. The NIA spreadsheet model
(described in section IV.H of this NOPR) calculates) energy savings in
terms of site energy, which is the energy directly consumed by products
at the locations where they are used. For electricity, DOE reports
national energy savings in terms of primary (source) energy savings,
which is the savings in the energy that is used to generate and
transmit the site electricity. For natural gas, the primary energy
savings are considered to be equal to the site energy savings. To
calculate the primary energy impacts, DOE derives annual conversion
factors from the model used to prepare the Energy Information
Administration's (``EIA'') most recent Annual Energy Outlook (``AEO'')
currently AEO 2021. 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.\31\ DOE's
approach is based on

[[Page 40609]]

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.H.2 of this NOPR.
---------------------------------------------------------------------------

\31\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51282 (August 18, 2011), as
amended at 77 FR 49701 (August 17, 2012).
---------------------------------------------------------------------------

2. Significance of Savings
To adopt any new or amended standards for a covered product, DOE
must determine that such action would result in significant energy
savings. (42 U.S.C. 6295(o)(3)(B))
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.\32\ For
example, the United States has rejoined the Paris Agreement and will
exert leadership in confronting the climate crisis.\33\ 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. In evaluating the
significance of energy savings, DOE considers differences in primary
energy and FFC effects for different covered products and equipment
when determining whether energy savings are significant. Primary energy
and FFC effects include the energy consumed in electricity production
(depending on load shape), in distribution and transmission, and in
extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and, thus, present a more complete
picture of the impacts of energy conservation standards.
---------------------------------------------------------------------------

\32\ The numeric threshold for determining the significance of
energy savings, which was established in a final rule published in
the Federal Register on February 14, 2020 (85 FR 8626, 8705), was
subsequently eliminated in a final rule published in the Federal
Register on December 13, 2021 (86 FR 70892, 70901-70906).
\33\ See Executive Order 14008, ``Tackling the Climate Crisis at
Home and Abroad,'' 86 FR 7619 (Feb. 1, 2021).
---------------------------------------------------------------------------

Accordingly, DOE is evaluating the significance of energy savings
on a case-by-case basis, taking into account the significance of
cumulative FFC national energy savings, the cumulative FFC emissions
reductions, and the need to confront the global climate crisis, among
other factors. As discussed in section V.C of this document, DOE is
proposing to adopt TSL 8 for AFUE, which would save an estimated 5.76
quads of energy (FFC) over 30 years, and TSL 3 for standby mode and off
mode, which would save an estimated 0.28 quads over 30 years. Based on
this amount of FFC savings, the corresponding reduction in emissions,
and need to confront the global climate crisis, DOE has initially
determined the energy savings from the proposed standard levels are
``significant'' within the meaning of 42 U.S.C. 6295(o)(3)(B).

E. Economic Justification

1. Specific Criteria
As noted previously, EPCA provides seven factors to be evaluated in
determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of potential amended standards on
manufacturers, DOE conducts an MIA, as discussed in section IV.J of
this document. DOE first uses an annual cash-flow approach to determine
the quantitative impacts. This step includes both a short-term
assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term assessment over a 30-year
period. The industry-wide impacts analyzed include (1) INPV, which
values the industry on the basis of expected future cash flows; (2)
cash flows by year; (3) changes in revenue and income; and (4) other
measures of impact, as appropriate. Second, DOE analyzes and reports
the impacts on different types of manufacturers, including impacts on
small manufacturers. Third, DOE considers the impact of standards on
domestic manufacturer employment and manufacturing capacity, as well as
the potential for standards to result in plant closures and loss of
capital investment. Finally, DOE takes into account cumulative impacts
of various DOE regulations and other product-specific regulatory
requirements on manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and 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 LCC impacts of potential standards on
identifiable subgroups of consumers that may be affected
disproportionately by a national standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered product
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analyses.
The LCC is the sum of the purchase price of a product (including
its installation) and the operating expense (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC analysis requires a variety of inputs, such as
product prices, product energy consumption, energy prices, maintenance
and repair costs, product lifetime, and discount rates appropriate for
consumers. To account for uncertainty and variability in specific
inputs, such as product 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 a more-efficient product through lower operating
costs. In general, 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.
For its LCC and PBP analyses, DOE assumes that consumers will
purchase the covered products 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. DOE's LCC and
PBP analyses is discussed in further detail in section IV.F of this
document.
c. 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. 6295(o)(2)(B)(i)(III)) As
discussed in section IV.H of this document, DOE uses the NIA
spreadsheet models to project national energy savings.

[[Page 40610]]

d. Lessening of Utility or Performance of Products
In establishing product classes, and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data
available to DOE, the standards proposed in this document would not
reduce the utility or performance of the products under consideration
in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from a proposed standard. (42 U.S.C.
6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine
the impact, if any, of any lessening of competition likely to result
from a proposed standard and to transmit such determination to the
Secretary within 60 days of the publication of a proposed rule,
together with an analysis of the nature and extent of the impact. (42
U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy of this proposed
rule to the Attorney General with a request that the Department of
Justice (``DOJ'') provide its determination on this issue. DOE will
publish and respond to the Attorney General's determination in the
final rule. DOE invites comment from the public regarding the
competitive impacts that are likely to result from this proposed rule.
In addition, stakeholders may also provide comments separately to DOJ
regarding these potential impacts. See the ADDRESSES section for
information to send comments to DOJ.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new or amended standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy
savings from the proposed standards are likely to provide improvements
to the security and reliability of the Nation's energy system.
Reductions in the demand for electricity also may result in reduced
costs for maintaining the reliability of the Nation's electricity
system. DOE conducts a utility impact analysis to estimate how
potential standards may affect the Nation's needed power generation
capacity, as discussed in section IV.M of this document.
DOE maintains that environmental and public health benefits
associated with the more efficient use of energy are important to take
into account when considering the need for national energy
conservation. The proposed standards are likely to result in
environmental benefits in the form of reduced emissions of air
pollutants and GHGs associated with energy production and use. DOE
conducts an emissions analysis to estimate how potential standards may
affect these emissions, as discussed in section IV.K of this document;
the estimated emissions impacts are reported in section V.B.6 of this
document. DOE also estimates the monetized value of health benefits of
certain emissions reductions resulting from the considered TSLs, as
discussed in section IV.L of this document.
g. Other Factors
In determining whether an energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To
the extent DOE identifies any relevant information regarding economic
justification that does not fit into the other categories described
above, DOE could consider such information under ``other factors.''
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first full year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effect potential amended
energy conservation standards would have on the payback period for
consumers. These analyses include, but are not limited to, the 3-year
payback period contemplated under the rebuttable-presumption test. In
addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the Nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). The rebuttable presumption payback calculation
is discussed in section IV.F of this proposed rule.

F. Other Issues

1. Furnace Sizing Requirements Based on ACCA Manual J and Manual S
On June 30, 2016, AGA presented information to DOE and the Office
of Information and Regulatory Affairs (``OIRA'') that AGA asserted
supports a 70 kBtu/h maximum capacity threshold for small furnaces.\34\
Specifically, AGA submitted calculations performed by a consultant, HTR
Engineering, that used the ACCA Manual J methodology to determine the
heating load for various types of houses in various locations.\35\ For
each scenario, AGA submitted Microsoft Excel worksheets and PDF ``J1-
ALP'' forms with the summary inputs, assumptions, and corresponding
components of the overall heating load to DOE.\36\ In addition to the
Manual J results for each scenario, in its presentation, AGA also
provided information on the appropriate furnace size for each scenario
based on ACCA Manual S. DOE subsequently presented a slide at the
October 2016 public meeting covering the September 2016 SNOPR that
summarized the information provided by AGA for further discussion among
all interested parties.\37\ DOE noted that Manual S requires that
furnaces be sized at between 1.0 and 1.4 times the Manual J calculated
load, and the ``appropriate furnace size'' presented by AGA based on
the Manual S requirement did not appear to be within that range, based
on the Manual J data provided by AGA.
---------------------------------------------------------------------------

\34\ AGA presented this information in a PowerPoint slide deck
titled, ``Additional Information for OIRA Staff DOE Furnace SNOPR''
(June 30, 2016). This presentation is located at the docket at:
<a href="http://www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0209">www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0209</a>.
\35\ AGA provided results for four building types at two levels
of efficiency and in five locations. The four building types were:
two-story townhome with basement; two-story townhome without
basement; three-story townhome without basement; and small single
family detached home. The two efficiency levels were a highly
efficient home built to 2015 code and a highly inefficient home
built to 1950s era practices and standards. The five locations were
Atlanta, Chicago, Minneapolis, Salt Lake City, and Oklahoma City.
\36\ See: <a href="http://www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0209">www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0209</a>.
\37\ See: <a href="http://www.regulations.gov/document/EERE-2014-BT-STD-0031-0236">www.regulations.gov/document/EERE-2014-BT-STD-0031-0236</a>.
---------------------------------------------------------------------------

In their subsequent written comments, AGA stated that DOE
misrepresented the information from the HTR Engineering furnace sizing
study to support the proposed standard. First, AGA commented that DOE
incorrectly described the data in the table presented at the SNOPR
public meeting as AGA's data and AGA's methodology, even

[[Page 40611]]

though the analysis was done by a third-party consultant. Second, AGA
stated that the numbers DOE presented in the public meeting only
included the results from the building envelope efficiency assessment
of the HTR study and excluded the load associated with the duct system
efficiency assessment and the outdoor air requirements presented in the
study, thereby significantly understating the actual building heating
loads. Third, AGA asserted that due to the use of what it stated are
the incorrect building load numbers, the calculated preferred output
and input capacity, as presented by DOE, were also incorrect. Fourth,
AGA commented that if DOE had used what AGA deemed to be the correct
building load numbers, the ``AGA'' oversize factors (as presented by
DOE) would reflect the 1.4 oversize factor from ACCA Manual S. AGA
presented a revised version of the table shown in the public meeting
with corrected values. Lastly, AGA asserted that if DOE were to use
what AGA understood to be the correct building heating load, a 55,000
Btu/h NWGF would not be able to serve the heating needs of the type of
home assessed. (AGA, No. 306-1 at pp. 13, 52-54) PHCC stated that the
heating loads submitted by AGA and presented on DOE's slide 30 of the
October 17, 2016 Public Meeting are understated. PHCC commented that it
appears that infiltration losses and the possibility of unoccupied
space may not have been fully accounted for in these calculations. As a
result, PHCC stated that this analytical flaw puts in question the
calculations used to justify the input capacity limit for exemption
from the proposed standard. PHCC presented alternative calculations
based on a 1,500 square foot townhouse, which it asserted show that a
1500 square foot townhouse similar to the one analyzed by AGA would not
be a candidate for a 55,000 Btu/h furnace on a 25 [deg]F day. (PHCC,
No. 298 at p. 2)
In response, DOE notes that in the summary spreadsheets provided by
AGA, the output from the Manual J load calculation, as listed on the
J1-ALP forms, is used for the Manual S furnace sizing. In other words,
Manual S specifies that the appropriate equipment size be based on the
load calculation resulting from Manual J. When compared to the
information presented by AGA regarding the appropriate furnace size for
each scenario (Additional Information for OIRA Staff DOE Furnace SNOPR,
June 30, 2016 presented in slide #7), these values imply an oversize
factor of approximately 2, which is inconsistent with the Manual S
requirement for an oversize factor of 1.0-1.4 for these buildings. In
their written comments, AGA provided a table (AGA, No. 306-1 at p. 52)
which includes heating load numbers (labeled Heating Load Numbers from
HTR Furnace Sizing Study); however, these values were not previously
provided as the basis for the furnace sizing requirements for the
scenarios by AGA. More specifically, AGA did not provide information to
DOE regarding its assumptions or calculations for the load associated
with the duct system efficiency assessment or the outdoor air
requirements. Therefore, DOE maintains that its characterization of the
original data submittal compared to the presented data is appropriate.
However, when considering AGA's ``corrected'' version of the table,
DOE notes that for the ranges presented in the column for ``ACCA Manual
S preferred input capacity '' show that in most cases (all but one--
Minneapolis), a 55,000 Btu/h furnace could meet the required load.
While AGA's ``corrected'' table shows the ``Appropriate Furnace Size
for a 1,500 s.f. Inefficient Townhouse presented in AGA slide deck to
OMB (kBtu/h)'' is based on a 1.4 oversize factor, DOE notes that Manual
S specifies that the factor can be anywhere from 1.0 to 1.4, and Manual
S recommends sizing the furnace as close to 1.0 as possible. Thus,
while oversizing a furnace up to 40 percent is acceptable, it is
preferred to size it appropriately according to the calculated load in
Manual S. Therefore, the ``preferred'' input capacity would be the low
end of the range presented in AGA's table, which for four of the five
scenarios presented is below 55,000 Btu/h (and in the fifth case is
62,200 Btu/h). Thus, based on the data submitted by AGA, a threshold of
55,000 Btu/h would alleviate impacts in the majority of situations,
except in the most extreme cases (such as Minneapolis). Even in these
situations, such as in Minneapolis, a 55,000 Btu/h furnace would likely
be able to meet the majority of the heating load, with a small amount
of supplemental heating required from other sources. Therefore, DOE
maintains its position that 55 kBtu/h is appropriate for consideration
as a potential threshold for defining small furnaces, and further
discusses its decision with regard to this in sections IV.A.1.a and
V.C.1 of this document. Furnaces at or above this threshold would
represent approximately 86% of furnace shipments in the no-new-
standards case. In response to PHCC, DOE notes that the files submitted
by AGA do appear to account for infiltration losses, and some scenarios
include unoccupied basement space. However, some of the assumptions
used by PHCC in its calculations appear to differ from those made in
the data submitted by AGA, including the dimensions of exterior walls
and area and type of windows, among other parameters, which may account
for the difference in results.
2. Compliance Date
As discussed in the withdrawn September 2016 SNOPR, missed
deadlines in the furnace rulemaking history have resulted in ambiguity
in terms of the applicable statutory compliance date for any potential
amended standards that result from this rulemaking. 81 FR 65720, 65746
(Sept. 23, 2016). DOE explained that, in light of this ambiguity, it is
informed by Congress's most recent direction regarding the lead time
specific to furnace rulemakings (i.e., 5 years) under the 6-year review
requirement (42 U.S.C. 6295(m)(4)(A)(ii)). 81 FR 65720, 65747 (Sept.
23, 2016). DOE posited that a lead time for compliance of 5 years after
publication of the final rule for amended furnaces standards,
consistent with the requirements of both 42 U.S.C. 6295(f)(4)(C) and
(m)(4)(A)(ii), would be in alignment with the provision in the 6-year-
lookback authority that manufacturers shall not be subject to new
standards for a covered product for which other new standards have been
required in the past 6 years. (42 U.S.C. 6295(m)(4)(B); the relevant
date being November 19, 2015--the compliance date of the last
amendments applicable to NWGFs and MHGFs.) Id. Further, DOE asserted
that the compliance date of the July 2014 Furnace Fan Final Rule \38\
(i.e., July 3, 2019) is not relevant to the minimum 6-year period
required under 42 U.S.C. 6295(m)(4)(B), stating that furnace fan
standards are to be treated as a separate covered product and are not
to be understood as a standard on furnaces. Id. DOE continues to adhere
to this view and is proposing a five-year lead time for compliance with
any amended energy conservation standards for NWGFs and MHGFs, for the
reasons that follow.
---------------------------------------------------------------------------

\38\ See 79 FR 38130 (July 3, 2014).
---------------------------------------------------------------------------

DOE interprets furnaces and furnace fans as separate products under
EPCA. The 6-year period under 42 U.S.C. 6295(m)(4)(B) is applicable in
the context of standards directly applicable to the product in
question. As such, the standards for furnace fans are not a
consideration when applying the 6-year period to new or amended
standards for furnaces. DOE acknowledges that

[[Page 40612]]

``furnace fan'' is not expressly defined by EPCA as a ``covered
product.'' However, EPCA, and the relevant amending statutes, provide
for the treatment of furnace fans as a product separate from furnaces,
and DOE's standards for furnace fans are separate and distinct from the
standards for furnaces. DOE is expressly authorized to establish energy
conservation standards for electricity used for purpose of circulating
air through duct work. (42 U.S.C. 6295(f)(4)(D)) An energy conservation
standard is a performance standard ``which prescribes a minimum level
of energy efficiency or a maximum quantity of energy use . . . for a
covered product.'' (42 U.S.C. 6291(6)) DOE has interpreted EPCA as
providing direction to the Department to establish an energy
conservation standard for furnace fans, which are to be treated as a
separate consumer product.
Further, the authority to establish such standards was added to
EPCA by section 135, of the Energy Policy Act of 2005, which was titled
``Energy Conservation Standards for Other Products,'' again indicating
that the standards are to be treated as standards applicable to a
product separate from furnaces. Public Law 109-58, section 135 (August
8, 2005); 119 Stat. 594, 624. The establishment of such standards was
made mandatory under section 304 of the Energy Independence and
Security Act of 2007 (EISA 2007), which was titled ``Furnace Fan
Standard Process,'' further indicating that furnace fans are to be
considered as a covered product separate from furnaces. Public Law 110-
140, section 304 (Dec. 19, 2007); 121 Stat. 1492, 1553.
The authority to establish energy conservation standards for
``electricity used for purposes of circulating air through duct work''
does not expressly reference furnaces. (See 42 U.S.C. 6295(f)(4)(D))
Where EPCA has required the establishment of standards for furnaces, it
has done so expressly. ``Furnaces (other than furnaces designed solely
for installation in mobile homes) manufactured on or after January 1,
1992, shall have an annual fuel utilization efficiency of not less than
78 percent[.]'' (42 U.S.C. 6295(f)(1)); ``Furnaces which are designed
solely for installation in mobile homes and which are manufactured on
or after September 1, 1990, shall have an annual fuel utilization
efficiency of not less than 75 percent.'' (42 U.S.C. 6295(f)(2)); ``The
Secretary shall publish a final rule no later than January 1, 1994, to
determine whether the standards established by this subsection for
furnaces (including mobile home furnaces) should be amended.'' (42
U.S.C. 6295(f)(4)(C)) Instead of directing DOE to establish furnace
standards for electricity used for the purpose of circulating air, or
standards for electricity used by furnaces for the purpose of
circulating air through duct work, EPCA directs DOE to establish
standards for electricity used for purposes of circulating air through
duct work without reference to furnaces in that paragraph. Further, DOE
has found that this language could be interpreted as encompassing
electrically-powered devices used in any residential heating,
ventilation, and air-conditioning (``HVAC'') product to circulate air
through duct work, not just furnaces. 79 FR 500, 504 (Jan. 3, 2014).
Consistent with treating the furnace fan standards and the furnace
standards as standards on separate products, EPCA established two
separate timeframes for the furnace fan and furnace rulemakings.
Section 304 of EISA 2007, Furnace Fan Standard Process, amended the
provision regarding standards for electricity used for the purpose of
circulating air through duct work by requiring DOE to establish such
standards by December 31, 2013. EISA 2007, Public Law 110-140, section
304 (Dec. 19, 2007); 121 Stat. 1492, 1553; 42 U.S.C. 6295(f)(4)(D). In
the section immediately following the Furnace Fan Standard Process
section, EISA 2007 amended EPCA to establish the 6-year-lookback review
requirement for energy conservation standards. EISA 2007, Public Law
110-140, section 305 (Dec. 19, 2007); 121 Stat. 1492, 1553; 42 U.S.C.
6295(m). EPCA required DOE to establish an amended final rule for
furnaces no later than January 1, 2007, with a compliance date of
January 1, 2012. (42 U.S.C. 6295(f)(4)(C)) As a result of the 6-year
review provision added under EISA 2007, DOE had to either a publish a
determination that no amendment of the furnace standards is needed or
issue a notice of proposed rulemaking to amend the furnace standards by
January 1, 2013. Instead of aligning the furnace fan rulemaking with
the furnace rulemaking schedule, EPCA, as amended by EISA 2007,
established a distinct December 1, 2013 deadline, further indicating
that furnace fans are to be treated separately from furnaces.
As DOE acknowledged in a 2013 notice of proposed rulemaking for
furnace fan energy conservation standards, standards for furnace fans
may require manufacturers to redesign the furnaces in which the fans
are installed. 78 FR 64068, 64103 (Oct. 25, 2013). However, the
compliance date mandated by EPCA for amendments to standards under the
6-year review requirement does not permit DOE to account for standards
applicable to other products, even if such standards for other products
may impact the product subject to the amendment. (42 U.S.C. 6295(m)(4))
EPCA directs DOE to prescribe a compliance date in consideration of
both the publication date of the final rule and the date of the last
amended standards with which that product was required to comply. (42
U.S.C. 6295(m)(4)(A)-(B)) Standards with which furnaces are not
required to comply are not a consideration under 42 U.S.C. 6295
(m)(4)(A)-(B) even if those standards have an impact on furnaces. As
discussed, EPCA treats furnaces and furnace fans as two separate
products. As such, DOE has not considered the furnace fan standards
when establishing the compliance date of furnace standards under 42
U.S.C. 6295(m)(4)(A)-(B).

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this
rulemaking with regard to NWGFs and MHGFs. Separate subsections address
each component of DOE's analyses. Comments on the methodology and DOE's
responses are presented in each section.
DOE used several analytical tools to estimate the impact of the
standards considered in this document. The first tool is a spreadsheet
that calculates the LCC savings and PBP of potential amended or new
energy conservation standards. The national impacts analysis uses a
second spreadsheet set that provides shipments projections and
calculates national energy savings and net present value of total
consumer costs and savings expected to result from potential energy
conservation standards. DOE uses the third spreadsheet tool, the
Government Regulatory Impact Model (``GRIM''), to assess manufacturer
impacts of potential standards. These three spreadsheet tools are
available on the DOE website for this rulemaking: <a href="http://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=59&action=viewlive">www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=59&action=viewlive</a>. Additionally, DOE used
output from AEO 2021 for the emissions and utility impact analyses.

A. Market and Technology Assessment

DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. This activity

[[Page 40613]]

includes both quantitative and qualitative assessments, based primarily
on publicly-available information. The subjects addressed in the market
and technology assessment for this rulemaking include: (1) a
determination of the scope of the rulemaking and product classes; (2)
manufacturers and industry structure; (3) existing efficiency programs;
(4) shipments information; (5) market and industry trends, and (6)
technologies or design options that could improve the energy efficiency
of NWGFs and MHGFs. The key findings of DOE's market assessment are
summarized below. See chapter 3 of the TSD for further discussion of
the market and technology assessment.
1. Scope of Coverage and Product Classes
a. General Approach
EPCA defines a ``furnace'' as ``a product which utilizes only
single-phase electric current, or single-phase electric current or DC
current in conjunction with natural gas, propane, or home heating oil,
and which:
(1) Is designed to be the principal heating source for the living
space of a residence;
(2) Is not contained within the same cabinet with a central air
conditioner whose rated cooling capacity is above 65,000 Btu per hour;
(3) Is an electric central furnace, electric boiler, forced-air
central furnace, gravity central furnace, or low pressure steam or hot
water boiler; and
(4) Has a heat input rate of less than 300,000 Btu per hour for
electric boilers and low pressure steam or hot water boilers and less
than 225,000 Btu per hour for forced-air central furnaces, gravity
central furnaces, and electric central furnaces.'' (42 U.S.C. 6291(23))
DOE has incorporated this definition into its regulations in the
Code of Federal Regulations (``CFR'') at 10 CFR 430.2.
EPCA's definition of a ``furnace'' covers the following types of
products: (1) gas furnaces (non-weatherized and weatherized); (2) oil-
fired furnaces (non-weatherized and weatherized); (3) mobile home
furnaces (gas and oil-fired); (4) electric resistance furnaces; (5) hot
water boilers (gas and oil-fired); (6) steam boilers (gas and oil-
fired); and (7) combination space/water heating appliances (water-
heater/fancoil combination units and boiler/tankless coil combination
units). As discussed in section II.B.1 of this document, DOE agreed to
the partial vacatur and remand of the June 2011 DFR, specifically as it
related to energy conservation standards for NWGFs and MHGFs in the
settlement agreement to resolve the litigation in American Public Gas
Ass'n v. U.S. Dept. of Energy (No. 11-1485, D.C. Cir. Filed Dec. 23,
2011). 80 FR 13120, 13130-13132 (March 12, 2015). Therefore, DOE only
considered amending the energy conservation standards for these two
product classes of residential furnaces (i.e., NWGFs and MHGFs) for
this NOPR.
At various rulemaking stages, interested parties have raised
concerns pertaining to potential impacts of a national condensing
standard on certain consumers as a result of either increased
installation costs (due to the increased cost of the condensing furnace
itself and/or related venting modifications) or switching to electric
heat (potentially resulting in higher monthly bills). In response to
these concerns, DOE first published the September 2015 NODA, which
contained analyses examining the potential impacts of a separate
product class for furnaces with a lower input capacity, one of the
statutory bases for establishing a separate product class. Such an
approach was suggested by stakeholders as a potential way to reduce
negative impacts on some furnace consumers while maintaining the
overall economic and environmental benefits of amended standards for
consumer furnaces. 80 FR 55038, 55038-55039 (Sept. 14, 2015). In
response to the September 2015 NODA, DOE received further comments from
several stakeholders recommending that DOE establish separate product
classes based on furnace capacity, in order to preserve the
availability of non-condensing NWGF for buildings with lower heating
loads, thereby helping to alleviate the negative impacts of the
proposed standards. DOE responded to these comments in the withdrawn
September 2016 SNOPR, in which the Department tentatively concluded
that the establishment of a small furnace class would have merit.
Accordingly, after considering energy savings and economic benefits of
several potential input capacity thresholds, DOE proposed to establish
a separate product class for small NWGF, defined as those furnaces with
a certified input capacity of less than or equal to 55 kBtu/h, and the
Department proposed to retain a minimum standard of 80-percent AFUE for
this class. 81 FR 65720, 65752 and 65837 (Sept. 23, 2016).
For the current NOPR analysis, DOE again considered whether a
``small furnace'' product class is justified for NWGFs and MHGFs and
evaluated several input capacity thresholds, including the 55 kBtu/h
threshold that was proposed in the withdrawn 2016 SNOPR, along with
several others. DOE analyzed a range of potential input capacity cut-
offs and considered the benefits and burdens of each. However, as
discussed in section V.C.1 of this document, after considering the
benefits and burdens of the various approaches, DOE is not proposing to
divide furnace product classes by capacity in this document.
b. Condensing and Non-Condensing Furnaces
DOE has recently considered whether different venting technologies
should be considered a necessary feature. On January 15, 2021, in
response to a petition for rulemaking \39\ submitted by the American
Public Gas Association, Spire, Inc., the Natural Gas Supply
Association, the American Gas Association, and the National Propane Gas
Association (the ``Gas Industry Petition''), DOE published the January
2021 final interpretive rule in the Federal Register determining that,
in the context of residential furnaces, commercial water heaters, and
similarly-situated products/equipment, use of non-condensing technology
(and associated venting) constitutes a performance-related ``feature''
under EPCA that cannot be eliminated through adoption of an energy
conservation standard. 86 FR 4776. Correspondingly, on the same day,
DOE published in the Federal Register a notification withdrawing the
March 2015 NOPR and the September 2015 SNOPR for NWGFs and MHGFs. 86 FR
3873 (Jan. 15, 2021).
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\39\ DOE published the Gas Industry Petition in the Federal
Register for comment on November 1, 2018. 83 FR 54883.
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However, as explained in section II.B.2 of this document, DOE
subsequently published a final interpretive rule in the Federal
Register that returns to the Department's previous and long-standing
interpretation (in effect prior to the January 15, 2021 final
interpretive rule), under which the technology used to supply heated
air or hot water is not a performance-related ``feature'' that provides
a distinct consumer utility under EPCA. 86 FR 73947 (Dec. 29, 2021).
Accordingly, for purposes of the analyses conducted for this NOPR, DOE
did not analyze separate equipment classes for non-condensing and
condensing furnaces. However, as discussed in section IV.A.1.a of this
document, the current analysis does consider various capacity
thresholds to establish a separate product class for small NWGFs for
which DOE would propose less stringent energy conservation standards.
The

[[Page 40614]]

consideration of capacity-based product classes for MHGFs is discussed
in section IV.A.1.c of this document.
c. Mobile Home Gas Furnaces
In response to the September 2016 SNOPR (subsequently withdrawn),
some stakeholders requested that DOE establish a small furnace product
class for MHGFs. MHI suggested that DOE should exempt all MHGFs from
this rule, but it stated that if MHGFs are included, DOE should adopt a
small furnace MHGFs product class with a threshold of 80 kBtu/h. Nortek
and MHI commented that tight construction of manufactured homes reduces
the structure's air leakage, which results in lower heating loads and
negates the need for a more expensive 92-percent AFUE furnace in many
climates, especially in the South. (Nortek, No. 300 at p. 2; MHI, No.
282 at p. 2) Nortek and MHI further stated that because the majority of
manufactured home buyers are low- to median-income consumers, it is
important that any increase in home cost resulting from new energy
conservation standards be economically justified and not burden
affordability by increasing up-front costs without mitigating resulting
access barriers. Nortek stated that without a small MHGFs product
class, potential homebuyers with modest incomes will be forced to
purchase MHGFs that are unnecessary for their home. (Nortek, No. 300 at
pp. 5-6; MHI, No. 282 at p. 4)
Mortex argued that the standard level for MHGFs should not be
changed due to the small market size, and the commenter also stated
that an input capacity threshold for MHGFs at any level does not make
sense because it would create a smaller, less significant market size
for each class (above and below the threshold). (Mortex, No. 305 at p.
2)
AHRI stated that DOE must reevaluate its analysis for MHGFs so as
to set an appropriate breakpoint for such products that maintains a
non-condensing option for that market. (AHRI, No. 303 at p. 1) AHRI and
Nortek noted that in previous comments submitted by AHRI in response to
the September 2015 NODA, AHRI had requested that DOE analyze potential
separate standard levels for small and large MHGF in order to minimize
potential negative aspects of the proposed standard in the (now
withdrawn) March 2015 NOPR. (AHRI, No. 303 at p. 18; Nortek, No. 300 at
p. 3) In particular, AHRI's comments responding to the September 2015
NODA expressed concerns regarding the number of consumers that would be
negatively affected or would switch heating fuels if an AFUE standard
set at a condensing level were adopted as the minimum efficiency
standard for MHGFs. Furthermore, AHRI expressed its concerns with the
tools utilized in the (now withdrawn) March 2015 NOPR analysis would
apply equally to MHGFs. (AHRI, No. 195 at p. 1)
AHRI and Nortek also argued that DOE reached a number of incorrect
conclusions in the September 2016 SNOPR, including: (1) that condensing
gas furnaces in new mobile homes will cost about the same as non-
condensing models; (2) that replacing an existing non-condensing MHGF
with a condensing MHGF would not have a significant increased
installation cost; and (3) that very few residents living in mobile
homes will experience negative life cycle costs.\40\ AHRI and Nortek
stated that U.S. Department of Housing and Urban Development (``HUD'')
regulations for the construction of mobile (manufactured) homes,
require that a MHGF be installed such that it is isolated from the
conditioned space of the mobile home, and that all combustion and
ventilation air must be taken from the outdoors, and the vent system
must vent vertically through a roof jack. Additionally, the commenters
noted that the space in which a MHGF is installed is minimized to the
smallest size that safety and performance considerations will allow
because space is at a premium in mobile homes. (AHRI, No. 303 at pp.
18-19; Nortek, No. 300 at pp. 3-4)
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\40\ AHRI and Nortek also provided more specific arguments
stating that: (1) replacing a non-condensing MHGF with a condensing
MHGF is not a simple drop-in; (2) a condensing furnace, with the
added heat exchanger needed to achieve condensing operation, may not
be dimensionally the same as the original non-condensing furnace
installed in the mobile home when it was manufactured; (3) rework
may be needed to install the new PVC venting system; and (4) there
will be the added cost of the labor to remove the old venting
system.
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After considering these comments regarding a ``small'' MHGF product
class, DOE has preliminarily determined that that some of the potential
negative outcomes for MHGF consumers could be mitigated by
consideration of a separate standard for ``small'' MHGF similar to the
analysis done for NWGF. Accordingly, DOE analyzed a separate standard
for small MHGFs for this NOPR. However, as discussed in section
IV.A.1.a of this document, after considering the benefits and burdens
of potential capacity-based product classes, DOE has decided not to
propose to establish classes based on capacity in this document.
Section V.C.1 of this document contains discussion that explains DOE's
weighting of the burdens and benefits of the potential new and amended
energy conservation standards analyzed for this NOPR. Additionally, DOE
does not agree that condensing MHGFs are necessarily larger than
noncondensing MHGFs. Based on a review of product literature, it
appears that noncondensing and condensing MHGFs are often designed with
similar cabinet sizes, and, thus, DOE does not expect that replacing a
noncondensing MHGF with a condensing MHGF would necessitate a larger
footprint.
d. Standby Mode and Off Mode
As discussed in section II.A of this document, EPCA requires any
final rule for new or amended energy conservation standards promulgated
after July 1, 2010, to address standby mode and off mode energy use.
(42 U.S.C. 6295(gg)(3)) Accordingly, this rulemaking considers standby
mode and off mode energy consumption of NWGFs and MHGFs, and this
notice includes proposed standards for these operational modes.
``Standby mode'' and ``off mode'' energy use are defined in the DOE
test procedure for residential furnaces and boilers (i.e., ``Uniform
Test Method for Measuring the Energy Consumption of Furnaces and
Boilers,'' 10 CFR part 430, subpart B, appendix N). In that test
procedure, DOE defines ``standby mode'' for consumer furnaces and
boilers as any mode in which the furnace or boiler is connected to a
mains power source and offers one or more of the following space
heating functions that may persist: (a) To facilitate the activation of
other modes (including activation or deactivation of active mode) by
remote switch (including thermostat or remote control), internal or
external sensors, or timer; and (b) Continuous functions, including
information or status displays or sensor based functions. (10 CFR part
430, subpart B, appendix N, section 2.12) ``Off mode'' for consumer
furnaces and boilers is defined as a mode in which the furnace or
boiler is connected to a mains power source and is not providing any
active mode or standby mode function, and where the mode may persist
for an indefinite time. The existence of an off switch in off position
(a disconnected circuit) is included within the classification of off
mode. (10 CFR part 430, subpart B, appendix N, section 2.9) An ``off
switch'' is defined as the switch on the furnace or boiler that, when
activated, results in a measurable change in energy consumption between
the standby and off modes. (10 CFR part 430, subpart B, appendix N,
section 2.10.) As discussed

[[Page 40615]]

previously, DOE does not currently prescribe standby mode or off mode
standards for NWGFs and MHGFs. DOE's analysis of standby mode and off
mode standards is discussed further in section IV.C of this document.
2. Technology Options
In the market analysis and technology assessment, DOE has
identified 12 technology options that would be expected to improve the
AFUE efficiency of NWGFs and MHGFs, as measured by the DOE test
procedure: (1) using a condensing secondary heat exchanger; (2)
increasing the heat exchanger surface area; (3) heat exchanger baffles;
(4) heat exchanger surface feature improvements; (5) two-stage
combustion; (6) step-modulating combustion; (7) pulse combustion; (8)
premix burners; (9) burner de-rating; (10) insulation improvements;
(11) off-cycle dampers; and (12) direct venting. In addition, DOE
identified three technologies that would reduce the standby mode and
off mode energy consumption of residential furnaces: (1) low-loss
linear transformer (``LL-LTX''); (2) switching mode power supply
(``SMPS''); and (3) control relay for models with brushless permanent
magnet (``BPM'') motors. A detailed discussion of each technology
option identified is contained in chapter 3 of the NOPR TSD.
DOE considered each technology further in the screening analysis
(see section IV.B of this document or chapter 4 of the NOPR TSD) to
determine which could be considered further in the analysis and which
should be eliminated.

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 products 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 product utility or product availability. If it is
determined that a technology would have significant adverse impacts on
the utility of the product to significant subgroups of consumers or
would result in the unavailability of any covered product with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
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.

10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b).
In summary, if DOE determines that a technology, or a combination
of technologies, fails to meet one or more of the above 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.
The subsequent sections include comments from interested parties
pertinent to the screening criteria, DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be excluded (``screened
out'') based on the screening criteria.
1. Screened-Out Technologies
For this NOPR, DOE has screened out the following technologies:
pulse combustion, burner de-rating, and control relay to depower BPM
motors. Each of these will be discussed in turn.
As mentioned, DOE screened out the use of pulse combustion. Pulse
combustion furnaces use self-sustaining pressure waves to draw a fresh
fuel-air mixture into the combustion chamber, heat it by way of
compression, and then ignite it using a spark. This technology option
was screened out due to past reliability and safety issues, which has
resulted in manufacturers generally not considering their use a viable
option to improve efficiency. In addition, furnace manufacturers can
achieve similar or greater efficiencies through the use of other
technologies that do not operate with positive pressure in the heat
exchanger, such as those relying on induced draft.
DOE also screened out burner de-rating. Burner de-rating reduces
the burner firing rate while maintaining the same heat exchanger
geometry/surface area and fuel-air ratio, which increases the ratio of
heat transfer surface area to energy input, which increases efficiency.
This technology option was screened out because it reduces the burner
firing rate while maintaining the same heat exchanger geometry/surface
area and fuel-air ratio, resulting in less heat being provided to the
user than is provided using conventional burner firing rates.
Lastly, DOE screened out use of a control relay to depower BPM
motors. For this option, a switch is spring-loaded to a disconnected
position and can only close to allow a supply of electrical power to
the BPM motor upon an inrush of current. This technology option was
screened out because manufacturer interviews previously indicated that
using a control relay to depower BPM motors could reduce the lifetime
of the motors.
It is noted that in earlier rulemaking analyses (e.g., for the
since withdrawn September 2016 SNOPR), DOE had screened out premix
burners from further analysis because premix burners had not yet been
successfully incorporated into a consumer furnace design, raising
concerns about the technological feasibility of premix burners in
furnaces. Incorporating this technology into furnaces on a large scale
at that time would have required further research and development due
to the technical constraints imposed by current furnace burner and heat
exchanger design. However, in conducting the market and technology
assessment and screening analysis for this NOPR, DOE has now identified
NWGF furnaces with premix burners on the market and, therefore, has not
screened this technology option out of its analysis, because the
technological feasibility and practicability to manufacture such
designs has been demonstrated. However, DOE notes that the premix
burner designs observed on the market were implemented in ultra low
NO<INF>X</INF> \41\ models, indicating that the development of premix
burner designs has been primarily driven by NO<INF>X</INF>
requirements. The efficiencies of these models are the same as those
achieved by more conventional non-premix burner designs used in
furnaces. Therefore, while the use of premix burners was not screened
out, it was not considered a primary driver for improving efficiency.
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\41\ ``Ultra low NO<INF>X</INF>'' furnaces produce no more than
14 nanograms of NO<INF>X</INF> per Joule.
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