Home/Federal/Federal Register/2023-25514

Rule2023-25514

Energy Conservation Program: Energy Conservation Standards for Consumer Furnaces

Primary source

Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.

Published

December 18, 2023

Effective

February 16, 2024

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 U.S. Department of Energy ("DOE" or "the Department") to determine periodically whether more stringent standards would be technologically feasible and economically justified, and would result in significant energy savings. In this final rule, DOE is adopting amended energy conservation standards for consumer furnaces, specifically non-weatherized gas furnaces and mobile home gas furnaces. The Department has determined that the amended energy conservation standards for the subject products would result in significant conservation of energy, and are technologically feasible and economically justified.

Full Text

<html>
<head>
<title>Federal Register, Volume 88 Issue 241 (Monday, December 18, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 241 (Monday, December 18, 2023)]
[Rules and Regulations]
[Pages 87502-87649]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25514]

[[Page 87501]]

Vol. 88

Monday,

No. 241

December 18, 2023

Part II

Department of Energy

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

10 CFR Part 63

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

Federal Register / Vol. 88 , No. 241 / Monday, December 18, 2023 /
Rules and Regulations

[[Page 87502]]

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

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: Final rule.

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

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 U.S. Department of Energy (``DOE'' or
``the Department'') to determine periodically whether more stringent
standards would be technologically feasible and economically justified,
and would result in significant energy savings. In this final rule, DOE
is adopting amended energy conservation standards for consumer
furnaces, specifically non-weatherized gas furnaces and mobile home gas
furnaces. The Department has determined that the amended energy
conservation standards for the subject products would result in
significant conservation of energy, and are technologically feasible
and economically justified.

DATES:
Effective date: The effective date of this rule is February 16,
2024.
Compliance date: Compliance with the amended standards established
for the subject consumer furnaces in this final rule is required on and
after December 18, 2028.

ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, public meeting attendee lists and transcripts,
comments, and other supporting documents/materials, is available for
review at <a href="http://www.regulations.gov">www.regulations.gov</a>. All documents in the docket are listed
in the <a href="http://www.regulations.gov">www.regulations.gov</a> index. However, not all documents listed in
the index may be publicly available, such as information that is exempt
from public disclosure.
The docket web page can be found at <a href="http://www.regulations.gov/docket/EERE-2014-BT-STD-0031">www.regulations.gov/docket/EERE-2014-BT-STD-0031</a>. The docket web page contains instructions on how
to access all documents, including public comments, in the docket.

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#fabb8a8a96939b94999fa98e9b949e9b889e89ab8f9f898e93959489ba9f9fd49e959fd49d958c">[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#1a5f68737934496e7b695a726b347e757f347d756c">[email&#160;protected]</a>.
For further information on how to review the docket, contact the
Appliance and Equipment Standards Program staff at (202) 287-1445 or by
email: <a href="/cdn-cgi/l/email-protection#3b7a4b4b57525a55585e684f5a555f5a495f486a4e5e484f525455487b5e5e155f545e155c544d">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Final Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Consumer Furnaces
3. Current Standards in Canada
III. General Discussion
A. General Comments
1. Comments Regarding Authority
2. Comments Opposing the July 2022 Proposal
3. Comments Expressing Support for the July 2022 Proposal
4. Regional Standards
5. Recommendations for Analytical Changes
6. Opportunity for Public Input
7. Federal Financial Assistance
8. Standby Mode and Off Mode Power Consumption Standards
B. Product Classes and Scope of Coverage
C. Test Procedure
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. 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
G. Compliance Date
H. Impact From Other Rulemakings
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Scope of Coverage and Product Classes
a. General Approach
b. Through-the-Wall Units
c. Condensing and Non-Condensing Furnaces
d. Mobile Home Gas Furnaces
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 Efficiency Levels
2. Cost Analysis
a. Teardown Analysis
b. Cost Estimation Method
c. Manufacturing Production Costs
d. Cost-Efficiency Relationship
e. Manufacturer Markup
f. Manufacturer Interviews
g. Electric Furnaces
D. Markups 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
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. 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
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
8. 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
9. Alternative Size Thresholds for Small Consumer Gas Furnaces
a. Accounting for Impacts of Downsized Equipment
10. Accounting for Product Switching Under Potential Standards
a. Product Switching Resulting From Amended Standards for Non-
Weatherized Gas Furnaces
b. Product Switching Resulting From Amended Standards for Mobile
Home Gas Furnaces
11. Accounting for Furnace Repair as an Alternative to
Replacement Under Potential Standards
12. Payback Period Analysis
G. Shipments Analysis

[[Page 87503]]

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 Markup Scenarios
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 Emissions Impacts
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. Annualized Benefits and Costs of the Adopted Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

The Energy Policy and Conservation Act, Public Law 94-163, (42
U.S.C. 6291-6317, as codified) as amended (``EPCA''),\1\ authorizes DOE
to regulate the energy efficiency of a number of consumer products and
certain industrial equipment. Title III, Part B \2\ of EPCA established
the Energy Conservation Program for Consumer Products Other Than
Automobiles. (42 U.S.C. 6291-6309) These products include non-
weatherized gas furnaces (NWGFs) and mobile home gas furnaces (MHGFs),
the subject of this rulemaking. (42 U.S.C. 6292(a)(5))
---------------------------------------------------------------------------

\1\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law 116-260 (Dec.
27, 2020), which reflect the last statutory amendments that impact
Parts A and A-1 of EPCA.
\2\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
---------------------------------------------------------------------------

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)) EPCA also provides
that not later than six 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 (proceeding to a final rule, as
appropriate). (42 U.S.C. 6295(m)) This rulemaking is being undertaken
pursuant to the statutorily-required second round of rulemaking for
NWGFs and MHGFs, and it also satisfies the statutorily-required 6-year-
lookback review.
In accordance with these and other relevant statutory provisions
discussed in this document, DOE is adopting amended energy conservation
standards for the subject consumer furnaces (i.e., NWGFs and MHGFs).
The adopted standards, which are expressed in terms of minimum annual
fuel utilization efficiency (``AFUE''), are shown in Table I.1. These
standards apply to all products listed in Table I.1 and manufactured
in, or imported into, the United States starting on December 18, 2028.
For the reasons discussed in section III.A of this document, DOE is not
adopting standby mode or off mode power consumption standards for NWGFs
and MHGFs in this final rule.

Table I.1--AFUE Energy Conservation Standards for Non-Weatherized Gas
Furnaces and Mobile Home Gas Furnaces
[Compliance Starting December 18, 2028]
------------------------------------------------------------------------
Product class AFUE (%)
------------------------------------------------------------------------
Non-Weatherized Gas Furnaces............................ 95.0
Mobile Home Gas Furnaces................................ 95.0
------------------------------------------------------------------------

A. Benefits and Costs to Consumers

Table I.2 summarizes DOE's evaluation of the economic impacts of
the adopted standards 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 21.5 years (see section IV.F
of this document).
---------------------------------------------------------------------------

\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 of this document). The simple PBP, which is
designed to compare specific efficiency levels, is measured relative
to the baseline product (see section IV.F of this document).

[[Page 87504]]

Table I.2--Impacts of Adopted Energy Conservation Standards on Consumers
of Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces
------------------------------------------------------------------------
Average LCC
Furnace class savings Simple payback
(2022$) period (years)
------------------------------------------------------------------------
Non-Weatherized Gas Furnaces............ 350 7.6
Mobile Home Gas Furnaces................ 616 3.2
------------------------------------------------------------------------

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

B. Impact on Manufacturers 4
---------------------------------------------------------------------------

\4\ All monetary values in this document are expressed in 2022
dollars (2022$).
---------------------------------------------------------------------------

The industry net present value (INPV) is the sum of the discounted
cash flows to the industry from the base year through the end of the
analysis period (2023-2058). The change in INPV is the present value of
all changes in industry cash flow, including changes in production
costs, conversion costs, and manufacturer profit margins. Using a real
discount rate of 6.4 percent, DOE estimates that the INPV for
manufacturers of NWGFs and MHGFs in the case without amended standards
is $1,371.8 million in 2022$. Under the adopted standards, DOE
estimates the change in INPV to range from -26.8 percent to -2.5
percent, which is a reduction of approximately -$367.3 million to -
$33.8 million. In order to bring products into compliance with amended
standards, it is estimated that industry will incur total conversion
costs of $162.0 million (which are incorporated into the calculation of
INPV).
DOE's analysis of the impacts of the adopted energy conservation
standards on manufacturers is described in sections IV.J and V.B.2 of
this document.

C. National Benefits and Costs

DOE's analyses indicate that the adopted AFUE energy conservation
standards for NWGFs and MHGFs would save a significant amount of
energy. Relative to the case without amended 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 standards
(2029-2058), are estimated to amount to 4.77 quadrillion British
thermal units (``Btu''), or quads.\5\ This represents a savings of 3.2
percent relative to the energy use of these products in the case
without amended standards (referred to as the ``no-new-standards
case'').
---------------------------------------------------------------------------

\5\ The quantity refers to full-fuel-cycle (FFC) energy savings.
FFC energy savings include 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 document.
---------------------------------------------------------------------------

The cumulative net present value (``NPV'') of total consumer
benefits of the amended standards for NWGFs and MHGFs ranges from $4.8
billion (at a 7-percent discount rate) to $16.3 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 years 2029 through
2058.
In addition, the adopted standards for NWGFs and MHGFs are
projected to yield significant environmental benefits. DOE estimates
that the amended standards will result in cumulative emission
reductions (over the same period as for energy savings) of 332 million
metric tons (Mt) \6\ of carbon dioxide (CO<INF>2</INF>), 4.3 million
tons of methane (CH<INF>4</INF>), 0.38 thousand tons of nitrous oxide
(N<INF>2</INF>O), and 0.9 million tons of nitrogen oxides
(NO<INF>X</INF>). The amended standards will result in cumulative
emission increases of 10.0 thousand tons of sulfur dioxide
(SO<INF>2</INF>) and 0.08 tons of mercury (Hg).\7\
---------------------------------------------------------------------------

\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 2023 (AEO2023). AEO2023 represents current Federal and State
legislation and final implementation of regulations as of the time
of its preparation. See section IV.K of this document for further
discussion of AEO2023 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 (GHG) 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 GHG (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.1 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 $17.3 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 sets of SC-GHG estimates.
---------------------------------------------------------------------------

\8\ To monetize the benefits of reducing GHG emissions this
analysis uses the interim estimates presented in the Technical
Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide
Interim Estimates Under Executive Order 13990 published in February
2021 by the IWG. (February 2021 SC-GHG TSD) (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 August 1, 2023).
---------------------------------------------------------------------------

DOE estimated the monetized net health benefits of NO<INF>X</INF>
and SO<INF>2</INF> emissions changes, using benefit per ton estimates
from the scientific literature, as discussed in section IV.L of this
document.\9\ DOE estimated the present value of the health benefits
would be $8.7 billion using a 7-percent discount rate, and $26.6
billion using a 3-percent discount rate.\10\ DOE is currently only
monetizing (for SO<INF>2</INF> and NO<INF>X</INF>) particulate matter
(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.
---------------------------------------------------------------------------

\9\ DOE did not monetize mercury emissions because the quantity
is very small.
\10\ DOE estimates the economic value of these emissions
reductions resulting from the considered TSLs for the purpose of
complying with the requirements of Executive Order 12866.
---------------------------------------------------------------------------

Table I.3 summarizes the monetized benefits and costs expected to
result from the amended 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.

[[Page 87505]]

Table I.3--Summary of Monetized Benefits and Costs of Adopted AFUE
Energy Conservation Standards for Non-Weatherized Gas Furnaces and
Mobile Home Gas Furnaces
[Trial Standard Level (TSL) 8]
------------------------------------------------------------------------
Billion 2022$
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings................ 24.8
Climate Benefits *............................. 17.3
Net Health Benefits **......................... 26.6
------------------------
Total Monetized Benefits [dagger].............. 68.7
Consumer Incremental Product Costs [Dagger].... 8.5
------------------------
Net Monetized Benefits......................... 60.2
------------------------------------------------------------------------
Change in Producer Cashflow (INPV (0.37)--(0.03)
[Dagger][Dagger]).............................
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings................ 9.3
Climate Benefits * (3% discount rate).......... 17.3
Net Health Benefits **......................... 8.7
------------------------
Total Monetized Benefits [dagger].............. 35.3
Consumer Incremental Product Costs [Dagger].... 4.5
------------------------
Net Monetized Benefits..................... 30.8
------------------------------------------------------------------------
Change in Producer Cashflow (INPV (0.37)--(0.03)
[Dagger][Dagger]).............................
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with the
subject 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) (see
section IV.L of this document). Together these represent the global 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; however, DOE emphasizes the importance and value of considering
the benefits calculated using all four sets of SC-GHG estimates. To
monetize the benefits of reducing GHG emissions, this analysis uses
the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the IWG.
** 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 quantified and 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.
[Dagger] Costs include incremental equipment costs as well as
installation costs.
[Dagger][Dagger] Operating Cost Savings are calculated based on the LCC
analysis and national impact analysis as discussed in detail below.
See sections IV.F and IV.H of this document. DOE's national impact
analysis includes all impacts (both costs and benefits) along the
distribution chain beginning with the increased costs to the
manufacturer to manufacture the product and ending with the increase
in price experienced by the consumer. DOE also separately conducts a
detailed analysis on the impacts on manufacturers (the MIA). See
section IV.J of this document. In the detailed MIA, DOE models
manufacturers' pricing decisions based on assumptions regarding
investments, conversion costs, cashflow, and margins. The MIA produces
a range of impacts, which is the rule's expected impact on the INPV.
The change in INPV is the present value of all changes in industry
cash flow, including changes in production costs, capital
expenditures, and manufacturer profit margins. Change in INPV is
calculated using the industry weighted average cost of capital value
of 6.4 percent that is estimated in the MIA (see chapter 12 of the
final rule technical support document (``TSD'') for a complete
description of the industry weighted average cost of capital). For
NWGFs and MHGFs, those values are -$367 million to -$34 million. DOE
accounts for that range of likely impacts in analyzing whether a TSL
is economically justified. See section V.C of this document. DOE is
presenting the range of impacts to the INPV under two manufacturer
markup scenarios: the Preservation of Gross Margin scenario, which is
the manufacturer markup scenario used in the calculation of Consumer
Operating Cost Savings in this table, and the Tiered scenario, which
models a reduction of manufacturer markups due to reduced product
differentiation as a result of amended standards. DOE includes the
range of estimated INPV in the above table, drawing on the MIA
explained further in section IV.J of this document, to provide
additional context for assessing the estimated impacts of this final
rule to society, including potential changes in production and
consumption, which is consistent with the Office of Management and
Budget's (OMB) Circular A-4 and E.O. 12866. If DOE were to include the
INPV into the net benefit calculation for this final rule, the net
benefits would range from $59.83 billion to $60.17 billion at 3-
percent discount rate and would range from $30.43 billion to $30.77
billion at 7-percent discount rate. Parentheses ( ) indicate negative
values.

[[Page 87506]]

The benefits and costs of the adopted standards 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 increase in product purchase prices and
installation costs, plus (3) the value of climate and health benefits
of emission reductions, all annualized.\11\
---------------------------------------------------------------------------

\11\ 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. 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 adopted 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.\12\ Estimates of total benefits are presented for all four SC-GHG
discount rates in section V.B of this document.
---------------------------------------------------------------------------

\12\ As discussed in section IV.L.1 of this document, DOE agrees
with the IWG that using consumption-based discount rates (e.g., 3
percent) is appropriate when discounting the value of climate
impacts. Combining climate effects discounted at an appropriate
consumption-based discount rate with other costs and benefits
discounted at a capital-based rate (i.e., 7 percent) is reasonable
because of the different nature of the types of benefits being
measured.
---------------------------------------------------------------------------

Table I.4 presents the total estimated monetized benefits and costs
associated with the adopted 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 effects from changes in NO<INF>X</INF> and SO<INF>2</INF>
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated cost of the standards adopted
in this rule is $511 million per year in increased equipment costs,
while the estimated annual benefits are $1,054 million in reduced
equipment operating costs, $1,021 million in climate benefits, and $987
million in net health benefits. In this case, the net benefit amounts
to $2,551 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the adopted standards is $500 million per year in
increased equipment costs, while the estimated annual benefits are
$1,467 million in reduced operating costs, $1,021 million in climate
benefits, and $1,574 million in net health benefits. In this case, the
net benefit amounts to $3,561 million per year.

Table I.4--Annualized Monetized Benefits and Costs of Adopted Standards for Non-Weatherized Gas Furnaces and
Mobile Home Gas Furnaces
[TSL 8]
----------------------------------------------------------------------------------------------------------------
Million 2022$/year
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 1,467 1,528 1,440
Climate Benefits *.............................................. 1,021 1,003 1,028
Net Health Benefits **.......................................... 1,574 1,546 1,585
Total Monetized Benefits [dagger]........................... 4,061 4,077 4,053
Consumer Incremental Product Costs [Dagger]..................... 500 520 489
Net Monetized Benefits.......................................... 3,561 3,557 3,564
Change in Producer Cashflow (INPV [Dagger][Dagger])............. (27)-(2) (27)-(2) (27)-(2)
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 1,054 1,094 1,051
Climate Benefits * (3% discount rate)........................... 1,021 1,003 1,028
Health Benefits **.............................................. 987 972 994
Total Monetized Benefits [dagger]............................... 3,062 3,069 3,073
Consumer Incremental Product Costs [Dagger]..................... 511 528 501
Net Monetized Benefits.......................................... 2,551 2,541 2,572
----------------------------------------------------------------------------------------------------------------
Change in Producer Cashflow (INPV [Dagger][Dagger])............. (27)-(2) (27)-(2) (27)-(2)
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with the subject consumer furnaces shipped in 2029-
2058. These results include consumer, health, and climate benefits 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; however, DOE emphasizes the importance and value of considering the
benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG
emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost
of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021
by the IWG.
**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 disbenefits 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.
[Dagger] Costs include incremental equipment costs as well as installation costs.

[[Page 87507]]

[Dagger][Dagger] Operating Cost Savings are calculated based on the LCC analysis and national impact analysis as
discussed in detail below. See sections IV.F and IV.H of this document. DOE's national impact analysis
includes all impacts (both costs and benefits) along the distribution chain beginning with the increased costs
to the manufacturer to manufacture the product and ending with the increase in price experienced by the
consumer. DOE also separately conducts a detailed analysis on the impacts on manufacturers (the MIA). See
section IV.J of this document. In the detailed MIA, DOE models manufacturers' pricing decisions based on
assumptions regarding investments, conversion costs, cashflow, and margins. The MIA produces a range of
impacts, which is the rule's expected impact on the INPV. The change in INPV is the present value of all
changes in industry cash flow, including changes in production costs, capital expenditures, and manufacturer
profit margins. The annualized change in INPV is calculated using the industry weighted average cost of
capital value of 6.4 percent that is estimated in the manufacturer impact analysis (see chapter 12 of the
final rule TSD for a complete description of the industry weighted average cost of capital). For NWGFs and
MHGFs, those values are -$27 million to -$2 million. DOE accounts for that range of likely impacts in
analyzing whether a TSL is economically justified. See section V.C of this document. DOE is presenting the
range of impacts to the INPV under two manufacturer markup scenarios: the Preservation of Gross Margin
scenario, which is the manufacturer markup scenario used in the calculation of Consumer Operating Cost Savings
in this table, and the Tiered scenario, where DOE assumed amended standards would result in a reduction of
product differentiation and a compression of the markup tiers. DOE includes the range of estimated annualized
change in INPV in the above table, drawing on the MIA explained further in section IV.J of this document, to
provide additional context for assessing the estimated impacts of this final rule to society, including
potential changes in production and consumption, which is consistent with OMB's Circular A-4 and E.O. 12866.
If DOE were to include the INPV into the annualized net benefit calculation for this final rule, the
annualized net benefits would range from $3,534 million to $3,559 million at 3-percent discount rate and would
range from $2,524 million to $2,549 million at 7-percent discount rate. Parentheses ( ) indicate negative
values.

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

D. Conclusion

DOE concludes that the standards adopted in this final rule
represent the maximum improvement in energy efficiency that is
technologically feasible and economically justified, and would result
in the significant conservation of energy. Specifically, with regards
to technological feasibility, products achieving these standard levels
are already commercially available for all product classes covered by
this final rule. As for economic justification, DOE's analysis shows
that the benefits of the standards exceed, to a great extent, the
burdens of the standards.
Using a 7-percent discount rate for consumer benefits and costs and
NO<INF>X</INF> and SO<INF>2</INF> emissions reduction benefits, and a
3-percent discount rate case for GHG social costs, the estimated cost
of the standards for NWGFs and MHGFs is $511 million per year in
increased product costs, while the estimated annual benefits are $1,054
million in reduced product operating costs, $1,021 million in climate
benefits, and $987 million in health benefits. The net benefit amounts
to $2,551 million per year. DOE notes that the net benefits are
substantial even in the absence of the climate benefits,\13\ and DOE
would adopt the same standards in the absence of such benefits.
---------------------------------------------------------------------------

\13\ The information on climate benefits is provided in
compliance with Executive Order 12866.
---------------------------------------------------------------------------

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.\14\ For
example, 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. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------

\14\ 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 4.77 quad (full-fuel-cycle
(``FFC'')), the equivalent of the primary annual energy use of 51
million homes. Based on these findings, DOE has determined that the
energy savings from the standard levels adopted in this final rule are
``significant'' within the meaning of 42 U.S.C. 6295(o)(3)(B). A more
detailed discussion of the basis for these conclusions is contained in
the remainder of this document and the accompanying technical support
document (``TSD'').

II. Introduction

The following section briefly discusses the statutory authority
underlying this final rule, as well as some of the relevant historical
background related to the amended standards for consumer NWGFs and
MHGFs.

A. Authority

EPCA authorizes DOE to regulate the energy efficiency of a number
of consumer products and certain industrial equipment. Title III, Part
B of EPCA established the Energy Conservation Program for Consumer
Products Other Than Automobiles. (42 U.S.C. 6291-6309) 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 NOPR
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 the EPCA specifically include
definitions (42 U.S.C. 6291), coverage (42 U.S.C. 6292), 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 that 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), 6295(o)(3)(A), and 6295(r))
Manufacturers of covered products must use the prescribed Federal test
procedure as the basis for: (1) certifying to DOE that their products
comply with

[[Page 87508]]

the applicable energy conservation standards adopted pursuant to EPCA
and (2) making representations regarding the energy use or efficiency
of those products. (42 U.S.C. 6293(c) and 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 consumer 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, including
consumer furnaces. 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
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 NWGFs and MHGFs, 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 comments on the proposed standard,
and by considering, to the greatest extent practicable, the following
seven statutory factors:
(1) The economic impact of the standard on manufacturers and on
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 of, initial charges for, or maintenance expenses
of, the covered products which are likely to result from the imposition
of the standard;
(3) The total projected amount of energy (or as applicable, water)
savings likely to result directly from the imposition of the standard;
(4) Any lessening of the utility or the performance of the covered
products likely to result from the imposition of 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
imposition of 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 at the time of the Secretary's finding.
(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 different level of energy efficiency or
energy use 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
a 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 Act of 2007 (EISA 2007), Public Law 110-140, DOE may consider
the establishment of a regional energy conservation standard 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 region must include only contiguous States (with the
exception of Alaska and Hawaii, which may be included in a region 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).\15\ (42 U.S.C.
6295(o)(6)(C)) Further, DOE can establish the additional regional
standard for furnaces only: (1) where doing so would produce
significant energy savings in comparison to a single national standard;
(2) if the regional standard is economically justified; and (3) after
considering the impact of such standard on consumers, manufacturers,
and other market participants, including product distributors, dealers,
contractors, and installers. (42 U.S.C. 6295(o)(6)(D))
---------------------------------------------------------------------------

\15\ DOE notes that the regional standards provision at 42
U.S.C. 6295(o)(6) also applies to central air conditioners and heat
pumps, products for which the statute permits either one or two
regional standards. This is in contrast to furnaces, for which EPCA
permits only one regional standard. As a result, the statute
frequently employs plural language in these provisions.
---------------------------------------------------------------------------

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 if doing so would be consistent
with section 6295(o). (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's current test
procedures for consumer furnaces address standby mode and off mode

[[Page 87509]]

energy use for all covered consumer 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 the NOPR published in the Federal Register on July 7, 2022 (``the
July 2022 NOPR''), DOE proposed to specify new energy conservation
standards to address the standby mode and off mode energy use of NWGFs
and MHGFs. 87 FR 40590, 40706. However, for the reasons discussed in
section III.A.8 of this document, DOE has concluded that it would not
be consistent with section 6295(o) to adopt standby mode and off mode
energy standards for NWGFs and MHGFs in this final rule. DOE will
continue to investigate and analyze appropriate standby mode and off
mode energy consumption standards for these products in a future
rulemaking.

B. Background

1. Current Standards
The most recent energy conservation standards for NWGFs and MHGFs
were adopted in a final rule published in the Federal Register on
November 19, 2007 (``November 2007 Final Rule''), in which 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.\16\ 72 FR 65136, 65169. Based on market assessment and
the standard levels under consideration (and that were ultimately
adopted), the November 2007 Final Rule established standards without
regard to the certified input capacity of a furnace. Id.
---------------------------------------------------------------------------

\16\ 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 (Oct. 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 a series of publications described in section II.B.2 of
this document and discussed in further detail in the July 2022 NOPR
(see 87 FR 40590, 40601-40602 (July 7, 2022)), required compliance with
the standards established in the November 2007 Final Rule for these
products began on November 19, 2015. The standards currently applicable
to all consumer furnaces, including the two product classes for which
DOE is amending standards in this final rule, are set forth in DOE's
regulations at 10 CFR 430.32(e)(1)(ii). Table II.1 presents the
currently applicable standards for NWGFs and MHGFs 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
Product class utilization Compliance
efficiency date
(%)
------------------------------------------------------------------------
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''), Public Law 100-12, established EPCA's original energy
conservation standards for furnaces, consisting of the minimum AFUE
levels for mobile home furnaces \17\ and for all other furnaces except
``small'' gas furnaces. (42 U.S.C. 6295(f)(1)-(2)) The original
standards established a minimum AFUE of 75 percent for mobile home
furnaces and 78 percent for all other furnaces. Pursuant to 42 U.S.C.
6295(f)(1)(B), in a final rule published in the Federal Register on
November 17, 1989 (``the November 1989 Final Rule''), DOE adopted a
mandatory minimum AFUE level for ``small'' furnaces. 54 FR 47916. 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.
---------------------------------------------------------------------------

\17\ DOE notes that prior to June 15, 1976, prefabricated homes
that were built in a factory were commonly referred to as ``mobile
homes,'' as reflected in the terminology used in EPCA. However, such
dwellings built after that date came to be known as ``manufactured
homes'' and have to meet specific construction standards required by
the U.S. Department of Housing and Urban Development (HUD) Code. (24
CFR part 3280) DOE's mobile home furnace standards apply to furnaces
designed for and intended to be used in both mobile and manufactured
homes that meet DOE's ``mobile home furnace'' definition at 10 CFR
430.2.
---------------------------------------------------------------------------

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 previously, 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).\18\ The standards amended
in the November 2007 Final Rule were to apply to furnaces manufactured
or imported on and after November 19, 2015; this compliance date was
consistent with the 8-year statutory lead time provided under 42 U.S.C.
6295(f)(4)(B). 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

[[Page 87510]]

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.
---------------------------------------------------------------------------

\18\ The November 2007 Final Rule adopted amended standards for
``oil-fired furnaces'' generally. However, on July 28, 2008, DOE
published a final rule technical amendment in the Federal Register
that clarified that the amended standards adopted in the November
2007 Final Rule for oil-fired furnaces did not apply to mobile home
oil-fired furnaces and weatherized oil-fired furnaces; rather they
were only applicable for non-weatherized oil-fired furnaces. 73 FR
43611, 43613.
---------------------------------------------------------------------------

On June 27, 2011, DOE published a direct final rule (``DFR'') in
the Federal Register (``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. Id. at 76
FR 37445. The June 2011 DFR amended the existing AFUE energy
conservation standards for NWGFs, MHGFs, and non-weatherized oil
furnaces, and amended the compliance date (but left the existing
standards in place) for weatherized gas furnaces.\19\ Id. at 76 FR
37410. The existing AFUE 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). The June 2011 DFR also
established electrical standby mode and off mode energy conservation
standards for NWGFs (including mobile home furnaces), non-weatherized
oil furnaces (including mobile home 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.
---------------------------------------------------------------------------

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

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.
Following DOE's adoption of the June 2011 DFR, the American Public
Gas Association (``APGA'') filed a petition for review with the United
States Court of Appeals for the District of Columbia Circuit (``D.C.
Circuit'') to invalidate the DOE rule as it pertained to NWGFs.
Petition for Review, American Public Gas Ass'n, et al. v. U.S. Dep't of
Energy, et al., No. 11-1485 (D.C. Cir. filed Dec. 23, 2011).\20\ 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 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.
---------------------------------------------------------------------------

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

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 90-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 in the Federal
Register 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, under 42 U.S.C. 6295(p)
and 5 U.S.C. 553(b) and (c), EPCA requires that DOE publish only a
notice of proposed rulemaking and accept public comments before
amending energy conservation standards in a final rule (i.e., DOE is
not required by statute 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 thousand British thermal units per hour
(``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 that 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
55038, 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

[[Page 87511]]

Register on September 23, 2016 (``September 2016 SNOPR'') that proposed
separate standards for small and large NWGFs.\23\ 81 FR 65720. For
NWGFs 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 NWGFs and for all MHGFs, 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 NWGFs 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 NWGFs and MHGFs, 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 (``W'') in both standby mode and off mode for
NWGFs and MHGFs. 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 (``January 2021 Final Interpretive
Rule'') \25\ 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 2016 SNOPR for NWGFs and MHGFs,
because DOE determined that those rulemaking documents were
inconsistent with its revised interpretation. 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.
\25\ DOE published a proposed interpretive rule (``July 2019
Proposed Interpretive Rule'') in the Federal Register for comment on
July 11, 2019. 84 FR 22011. DOE also published a supplemental
proposed interpretive rule (``September 2020 Supplemental Proposed
Interpretive Rule'') in the Federal Register for comment on
September 24, 2020. 85 FR 60090.
---------------------------------------------------------------------------

The interpretation adopted by the January 2021 Final Interpretive
Rule reflected a significant departure from DOE's previous and long-
standing interpretation (reflected in practice through decades of
rulemaking and explicitly discussed in the December 2021 Final
Interpretive Rule, with examples) that the type of technology (e.g.,
non-condensing technology (and associated venting)) used to generate a
furnace's heat did not provide a distinct consumer utility as would
constitute a performance-related ``feature'' pursuant to 42 U.S.C.
6295(o)(4) that DOE may not eliminate by way of an energy conservation
standard. The January 2021 Final Interpretive Rule justified this
change by focusing on: (1) the potential space constraints arising from
switching from non-condensing furnaces (and associated venting) to
condensing furnaces (and associated venting) in replacement
applications, including certain situations where such changes may not
be possible; (2) the potential need for significant and unwelcome
physical modifications to a home or business (e.g., by adding new
venting into the living/commercial space or decreasing closet or other
storage/retail space), thereby impacting consumer utility, and (3) a
policy decision to remain neutral regarding competing energy sources in
the marketplace and maintaining a broader range of consumer choice for
the relevant appliances across fuel types. 86 FR 4776, 4816 (Jan. 15,
2021). (See the January 2021 Final Interpretive Rule for a more
complete discussion of DOE's rationale for its changed interpretation.)
The anticipated result of DOE's change in interpretation was that the
Department would set separate product classes and standards for
condensing and non-condensing furnaces in its ongoing furnaces energy
conservation standards rulemaking.
On January 20, 2021, the President 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 asks 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 the requirements under the EPCA, and in a
manner consistent with 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 DOE 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''),\26\ that returns to DOE's
previous and long-standing interpretation (in effect prior to the
January 2021 Final Interpretive Rule).\27\ 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, DOE offered an extensive explanation for why it does not view
non-condensing technology and associated venting to be a performance-
related feature warranting

[[Page 87512]]

a separate product class for such furnaces. As noted previously, in the
December 2021 Final Interpretive Rule, DOE also included examples in
other rules that are consistent with DOE's previous and long-standing
interpretation. As DOE explained, non-condensing technology is not a
performance-related feature because it does not affect the consumer
utility of the product (i.e., providing heat, irrespective of venting
type). DOE noted the availability of technological alternatives for
difficult installation situations and explained that it would properly
account for the costs of such installations when considering a
standard's economic justification. DOE has considered concerns
regarding specific installation circumstances in the context of this
product-specific rulemaking. See 86 FR 73947 (Dec. 29, 2021).
---------------------------------------------------------------------------

\26\ DOE published a proposed interpretive rule (``August 2021
Proposed Interpretive Rule'') in the Federal Register for comment on
August 27, 2021. 86 FR 48049.
\27\ Prior to the January 2021 Final Interpretive Rule, DOE had
not had a formal interpretation of EPCA's ``features'' provision at
42 U.S.C. 6295(o)(4), but instead, it had examined the consumer
utility of potential appliance features in the context of individual
energy conservation standards rulemakings. These rulemakings, which
outline relevant DOE precedent prior to the January 2021 Final
Interpretive Rule, are presented in some detail in the December 2021
Final Interpretive Rule (see 86 FR 73947, 73952-73958 (Dec. 29,
2021)).
---------------------------------------------------------------------------

In conducting its review of the January 2021 Final Interpretive
Rule under the requirements of EPCA and in a manner consistent with
E.O. 13990, DOE ultimately arrived at a different determination in the
December 2021 Final Interpretive Rule, based on a policy that
emphasizes furtherance of the congressional purpose of improving the
energy efficiency of covered products and equipment. DOE reasoned that
maintaining less-efficient technologies which do not provide distinct
consumer utility is contrary to the purposes of EPCA ``to conserve
energy supplies through energy conservation programs, and, where
necessary, the regulation of certain energy uses'' (42 U.S.C. 6201(4))
and ``to provide for improved energy efficiency of . . . major
appliances, and certain other consumer products'' (42 U.S.C. 6201(5)).
Such purposes are further reflected in the specific provisions of EPCA
granting DOE authority to prescribe energy conservation standards
designed to achieve the maximum improvement in energy efficiency, which
are technologically feasible and economically justified. (42 U.S.C.
6295(o)(2)(A)). As discussed more fully in the December 2021 Final
Interpretive Rule, DOE concluded that the concerns motivating its
changed interpretation reflected in the January 2021 Final Interpretive
Rule (i.e., space constraints/difficult installation situations, the
potential for unwanted physical modifications, and maintaining consumer
choice of appliances across fuel types) could be addressed by other
means. DOE found that these issues could be resolved through available
technological solutions or by switching to an appliance using
alternative technologies (e.g., a heat pump). 86 FR 73947, 73960 (Dec.
29, 2021). DOE further concluded that the potential for fuel switching
is likely to be limited and that there will continue to be a range of
product availability across fuel types. Id. at 86 FR 73964.
Given the binary nature of the question at hand--whether non-
condensing technology (and associated venting) is or is not a
``feature'' under 42 U.S.C. 6295(o)(4)--DOE did not identify any other
policy alternatives on this matter. DOE further notes that it does not
anticipate any strong reliance interests associated with the rescinded
January 2021 Final Interpretive Rule, given that it was rescinded less
than a year after its issuance and the fact that it was never applied
in the context of any energy conservation standards rulemaking for a
specific appliance.\28\
---------------------------------------------------------------------------

\28\ A number of States and municipalities filed a legal
challenge to the January 2021 Final Interpretive Rule in the U.S.
Circuit Court of Appeals for the Second Circuit on March 16, 2021.
State of New York, et al. v. U.S. Dep't of Energy, No. 21-602 (2d
Cir. filed March 16, 2021).
---------------------------------------------------------------------------

On July 7, 2022, DOE published the July 2022 NOPR in the Federal
Register. 87 FR 40590. Consistent with the December 2021 Final
Interpretive Rule, in conducting the analysis for the July 2022 NOPR,
DOE did not consider identifying separate product classes based on
condensing technologies and associated venting systems when analyzing
potential energy conservation standards. Based on the results of the
NOPR analysis, DOE proposed amended AFUE standards at 95-percent AFUE
for both NWGFs and MHGFs, as well as an 8.5 W energy use standard for
standby mode and off mode energy consumption. 87 FR 40590, 40706 (July
7, 2022). Additionally, on August 30, 2022, DOE published in the
Federal Register a Notice of Data Availability (NODA) (August 2022
NODA) announcing an extension of the comment period, making available a
revised version of the LCC spreadsheet supporting the July 2022 NOPR,
and announcing a public meeting webinar on September 6, 2022, to assist
stakeholders with operation of the LCC spreadsheet. 87 FR 52861.
DOE received 3,636 comments in response to the July 2022 NOPR and
August 2022 NODA from the interested parties listed in Table II.2.
(Note that of these total comments, 3,552 comments were ``form letter''
email submissions contained in docket entry EERE-2014-BT-STD-0031-0348.
Additionally, several commenters submitted more than one comment to the
docket.)
---------------------------------------------------------------------------

\29\ Although the stakeholders who authored the comments EERE-
2014-BT-STD-0031-0330, EERE-2014-BT-STD-0031-0345, EERE-2014-BT-STD-
0031-0356, and EERE-2014-BT-STD-0031-0362 refer to themselves as the
``Joint Requestors,'' Atmos Energy was not listed as a contributor
to EERE-2014-BT-STD-0031-0330. Therefore, to distinguish the groups
of authors, the authors of EERE-2014-BT-STD-0031-0330 are herein
referred to as the ``Joint Gas Commenters.''

Table II.2--July 2022 NOPR Comments
----------------------------------------------------------------------------------------------------------------
Comment number in
Commenter(s) Abbreviation the Docket Commenter type
----------------------------------------------------------------------------------------------------------------
Eduardo Veiga.......................... Veiga.................... 326 Individual.
Scott Willis........................... Willis................... 327 Individual.
Johanna E. Neumann..................... Neumann.................. 328 Individual.
Anonymous 1............................ Anonymous 1.............. 329 Individual.
American Public Gas Association; Joint Gas Commenters \29\ 330 Utilities and Utility
American Gas Association; Spire Inc.; Trade Associations.
Spire Missouri Inc.; Spire Alabama
Inc.; National Propane Gas Association.
A. Kessler Consulting, LLC............. A. Kessler Consulting.... 331 Industry Representative.
Natalie Guarin......................... Guarin................... 332 Individual.
Hayes Arnold........................... Arnold................... 333 Individual.
Christina Haag......................... Haag..................... 334 Individual.
Adelita G. Cantu....................... Cantu.................... 335 Individual.
Kim Marcellini......................... Marcellini............... 336 Individual.
Kaitlynn Liset......................... Liset.................... 338 Individual.
Raelene Shippee-Rice................... Shippee-Rice............. 339 Individual.

[[Page 87513]]

Lee's Air, Plumbing, & Heating......... Lee's Air, Plumbing, & 342 Industry Representative.
Heating.
Natural Gas Supply Association......... NGSA..................... 343 Utility Trade
Association.
Manufactured Housing Institute......... MHI...................... 344; 363; 365 Trade Association.
American Public Gas Association; Joint Requesters......... 345; 356; 362 Utilities and Utility
American Gas Association; Spire Inc.; Trade Associations.
Spire Missouri Inc.; Spire Alabama
Inc.; National Propane Gas
Association; Atmos Energy.
Anonymous 2............................ Anonymous 2.............. 346 Individual.
Ohio Partners for Affordable Energy.... OPAE..................... 347 Efficiency Advocate.
Individual Commenters.................. Individual Commenters.... 348 Individual.
Todd Snyder............................ Snyder................... 349 Individual.
Middle Tennessee Natural Gas Utility MTNGUD................... 350 Utility.
District.
Watertown Municipal Utilities.......... WMU...................... 351 Utility.
Southwest Gas Corporation.............. Southwest Gas Corporation 353 Utility.
Consumer Energy Alliance............... Consumer Energy Alliance. 354 Efficiency Advocate.
Lake Apopka Natural Gas District....... LANGD.................... 355 Utility.
Christopher Lish....................... Lish..................... 358 Individual.
National Caucus of Environmental National Caucus of 359 State/Local Government
Legislators. Environmental Officials.
Legislators.
Theodore Trampe........................ Trampe................... 361 Individual.
Consumer Federation of America......... CFA...................... 363 Consumer Advocate.
Edison Electric Institute.............. Edison Electric Institute 363; 4099 Trade Association.
Environment America.................... Environment America...... 363 Efficiency/Environmental
Advocate.
National Consumer Law Center........... NCLC..................... 363 Consumer Advocate.
Natural Resources Defense Council...... NRDC..................... 363 Efficiency/Environmental
Advocate.
Philadelphia Solar Energy Association.. PSEA..................... 363 Efficiency/Environmental
Advocate.
Physicians for Social Responsibility... Physicians for Social 363 Consumer Advocate.
Responsibility.
Evergreen Action....................... Evergreen Action......... 364 Environmental Advocate.
Mark Strauch........................... Mark Strauch............. 366 Individual.
Municipal Gas Authority of Georgia..... Georgia Gas Authority.... 367 Utility.
Northwest Energy Efficiency Alliance... NEEA..................... 368 Efficiency/Environmental
Advocates.
Competitive Enterprise Institute, Joint Market and Consumer 369, 373 Other Stakeholders.
Consumers' Research, Center for the Organizations.
American Experiment, <a href="http://JunkScience.com">JunkScience.com</a>,
Project 21, Caesar Rodney Institute,
Rio Grande Foundation, Committee for a
Constructive Tomorrow, FreedomWorks
Foundation, Heartland Institute,
Thomas Jefferson Institute,
Independent Women's Forum, Independent
Women's Voice, and Institute for
Energy Research.
National Comfort Products.............. NCP...................... 370 Manufacturer.
Green & Healthy Homes Initiative....... GHHI..................... 363; 371 Efficiency/Environmental
Advocates.
Distribution Contractors Association... DCA...................... 372 Trade Association.
Napoleon (aka Wolf Steel Limited)...... Napoleon................. 374 Manufacturer.
Pennsylvania Department of State Agencies........... 375 State Agencies.
Environmental Protection; State of
Nevada; New Jersey Board of Public
Utilities; New York State Energy
Research and Development Authority;
Washington State Department of
Commerce; Colorado Energy Office; New
Mexico Energy, Minerals, and Natural
Resources Department; California
Energy Commission; Vermont Department
of Public Service; Hawai'i State
Energy Office.
The Heartland Institute................ The Heartland Institute.. 376 Other Stakeholder.
Carrier Global Corporation............. Carrier.................. 377 Manufacturer.
The Manufactured Housing Institute; The Coalition............ 378 Trade Associations.
National Apartment Association;
National Association of Home Builders;
National Leased Housing Association;
National Multifamily Housing Council.
New York State Energy Research and NYSERDA.................. 379 State Agency.
Development Authority.
The Natural Gas Association of Georgia. NGA of Georgia........... 380 Utility Trade
Association.

[[Page 87514]]

The Appliance Standards Awareness Joint Efficiency 381 Efficiency/Environmental
Project; American Council for Energy- Commenters. Advocates.
Efficient Economy, CLASP, Consumer
Federation of America, Government of
the District of Columbia--Department
of Energy & Environment, National
Consumer Law Center; Natural Resources
Defense Council; Northeast Energy
Efficiency Partnerships; Southwest
Energy Efficiency Project.
California Energy Commission........... CEC...................... 382 State Agency.
The National Consumer Law Center on NCLC et al............... 383 Consumer Advocates.
behalf of its low-income clients:
Alliance for Affordable Energy;
Pennsylvania Utility Law Project;
Consumer Federation of America;
Southface; Massachusetts Energy
Directors' Association; Green Energy
Consumers Alliance; Georgia Watch;
North Carolina Justice Center; Texas
Legal Services Center; Consumers
Council of Missouri; Wildfire; Renew
Missouri; Virginia Citizens Consumer
Council.
Heating, Air-conditioning & HARDI.................... 384 Trade Association.
Refrigeration Distributors
International.
Gas Analytic & Advocacy Services....... GAS...................... 385 Other Stakeholder.
Weil-McLain; Williamson-Thermoflo; The Marley Companies..... 386 Manufacturers.
Marley Engineered Products, LLC;
Patterson-Kelley, LLC.
American Public Gas Association........ APGA..................... 387 Utility Trade
Association.
Center for Climate and Energy Climate Commenters....... 388 Efficiency/Environmental
Solutions; Institute for Policy Advocates.
Integrity, New York University School
of Law; Montana Environmental
Information Center; Natural Resources
Defense Council; Sierra Club; Union of
Concerned Scientists.
Lennox International Inc............... Lennox................... 389 Manufacturer.
Jack Spencer and Kevin Dayaratna, Ph.D. Spencer and Dayaratna.... 390 Other Stakeholder.
American Gas Association American; AGA et al................ 391 Manufacturers, Trade
Pipeline Contractors Association; Associations, and Other
American Public Gas Association; Stakeholders.
American Society of Gas Engineers;
American Supply Association; Arkansas
Gas Association; Consumer Energy
Alliance; Distribution Contractors
Association; Hearth, Patio & Barbecue
Association; Hispanics in Energy;
Louisiana Gas Association;
Manufactured Housing Institute;
National Apartment Association;
National Association of Home Builders;
National Leased Housing Association;
National Multifamily Housing Council;
National Propane Gas Association;
National Utility Contractors
Association; Natural Gas Supply
Association; Northeast Gas
Association; Plastics Pipe Institute;
Plumbing-Heating-Cooling Contractors
Association; Rinnai America
Corporation; Thermo Products LLC; U.S.
Chamber of Commerce; Utility Workers
Union of America, AFL-CIO; Williams
Furnace Co. dba Williams Comfort
Products or Williams.
American Coke and Coal Chemicals The Associations......... 392 Trade Associations.
Institute; American Gas Association;
American Public Gas Association;
Independent Petroleum Association of
America; National Mining Association;
Plumbing-Heating-Cooling Contractors--
National Association; U.S. Chamber of
Commerce.
Climate Smart Missoula; Environmental Climate Smart Missoula et 393 Efficiency/Environmental
Defense Fund; Elevate Energy; Energy al. Advocates.
Efficiency Alliance of New Jersey;
Campaign for 100% Renewable Energy;
Evergreen Action; Green Energy
Consumers Alliance; Green & Healthy
Homes Initiative; Keystone Energy
Efficiency Alliance; Montana
Environmental Info Center; New
Buildings Institute; New York
Geothermal Energy Organization;
Climate & Clean Energy Program;
Rewiring America; RMI; Sealed; Sierra
Club; Union of Concerned Scientists;
Urban Green Council; Utah Clean Energy.
Rheem Manufacturing Company............ Rheem.................... 394 Manufacturer.
National Propane Gas Association....... NPGA..................... 395 Utility Trade
Association.

[[Page 87515]]

ACTION-Housing Inc.; Audubon Mid- ACTION-Housing Inc. et 396 Other Stakeholders.
Atlantic; Clean Air Council; Community al.
Action Association of Pennsylvania;
Conservation Voters of Pennsylvania;
Energy Coordinating Agency;
Environmental Justice Center of
Chestnut Hill United Church;
Evangelical Environmental Network;
Green Building United; Green & Healthy
Homes Initiative; Housing Alliance of
Pennsylvania; Keystone Energy
Efficiency Alliance; National Housing
Trust; PA Jewish Earth Alliance;
PennEnvironment; Pennsylvania Council
of Churches; Pennsylvania Interfaith
Power and Light; Pennsylvania Utility
Law Project; Performance Systems
Development; Philadelphia Energy
Authority; Philadelphia Solar Energy
Association; Physicians for Social
Responsibility Pennsylvania;
Schuylkill Community Action; Vote
Solar; Working for Justice Ministry.
Black Hills Energy..................... Black Hills Energy....... 397 Utility.
Air Condition Contractors of America... ACCA..................... 398 Trade Association.
Allergy & Asthma Network; Alliance of Climate and Health 399 Efficiency/Environmental
Nurses for Healthy Environments; Coalition. Advocates.
American Geophysical Union; American
Lung Association; American Public
Health Association; American Thoracic
Society; Asthma and Allergy Foundation
of America; Children's Environmental
Health Network; Climate for Health/
ecoAmerica; National Carbon Monoxide
Awareness Association; Oregon
Physicians for Social Responsibility;
Physicians for Social Responsibility;
Physicians for Social Responsibility
Florida; Physicians for Social
Responsibility Pennsylvania; Texas
Physicians for Social Responsibility;
Washington Physicians for Social
Responsibility.
Pacific Gas and Electric Company, San The CA IOUs.............. 400 Utilities.
Diego Gas and Electric, and Southern
California Edison; collectively
referred to as ``the California
Investor-Owned Utilities''.
Sierra Club and Earthjustice........... Sierra Club et al........ 401 Efficiency/Environmental
Advocates.
Avangrid; Consolidated Edison; The Joint Utilities...... 402 Utilities.
Eversource; Exelon; Liberty Utilities;
National Grid; Unitil; PG&E
Corporation; Xcel.
Plumbing-Heating-Cooling Contractors-- PHCC..................... 403 Trade Association.
National Association.
Plastics Pipe Institute................ PPI...................... 404 Trade Association.
American Gas Association............... AGA...................... 405 Utility Trade
Association.
Nortek Global HVAC, LLC................ Nortek................... 406 Manufacturer.
National Grid.......................... National Grid............ 407 Utility.
Offices of the Attorney General for the Attorneys General........ 408 State/Local Government
States of Illinois, Maine, Maryland, Agencies.
Minnesota, Nevada, New Jersey, New
Mexico, New York, Oregon, and Vermont,
Washington, The Commonwealth of
Massachusetts, the District of
Columbia, and the City of New York.
State of Washington, Department of State of Washington...... 409 State Agency.
Commerce.
Mortex Products, Inc................... Mortex................... 410 Manufacturer.
Johnson Controls....................... JCI...................... 411 Manufacturer.
Trane Technologies..................... Trane.................... 412 Manufacturer.
Spire Inc.; Spire Alabama Inc.; Spire Spire.................... 413; 4099 Utilities.
Missouri Inc..
Air-Conditioning, Heating, & AHRI..................... 414 Trade Association.
Refrigeration Institute.
Atmos Energy Corporation............... Atmos Energy............. 415 Utility.
Daikin Comfort Technologies Daikin................... 416 Manufacturer
Manufacturing, L.P..
----------------------------------------------------------------------------------------------------------------

A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\30\
To the extent that interested parties have provided written comments
that are substantively consistent with any oral comments provided
during the public meetings held on August 3, 2022,\31\ or September 6,
2022,\32\ DOE cites the written comments throughout this final rule.
---------------------------------------------------------------------------

\30\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for NWGFs and MHGFs. (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).
\31\ The transcript for the August 3, 2022, public meeting can
be found at Docket No. EERE-2014-BT-STD-0031-0363, which is
maintained at <a href="http://www.regulations.gov">www.regulations.gov</a>.
\32\ The transcript for the September 6, 2022, public meeting
can be found at Docket No. EERE-2014-BT-STD-0031-4099, which is
maintained at <a href="http://www.regulations.gov">www.regulations.gov</a>.
---------------------------------------------------------------------------

3. Current Standards in Canada
Although climate and fuel prices differ between the United States
and Canada and will yield different results

[[Page 87516]]

in terms of costs and benefits of the standard, there are similarities
in the equipment and venting materials used in both the United States
and Canada with respect to NWGFs. Because the stock of buildings using
NWGFs in Canada has many similarities to the stock using NWGFs in
northern parts of the United States, the Canadian experience in terms
of installation of condensing furnaces has relevance to the United
States. As such, multiple stakeholders discussed the Canadian standards
in their comments on the July 2022 NOPR, and DOE references these
standards several times later in this document. Further, as discussed
in section V.C.1 of this document, the standard levels adopted for
NWGFs by this final rule align with the Canadian regulations.
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.\33\ The revised regulation, required on
or after December 31, 2009, sets a minimum 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 kilowatts (``kW'') (225,000 Btu/h), and that use single-
phase electric current.
---------------------------------------------------------------------------

\33\ 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.\34\ In
addition to the definition of ``gas furnaces,'' Natural Resources
Canada added a separate definition for ``gas furnaces for relocatable
buildings'' (e.g., MHGFs). The revised regulation, which applies to
covered gas furnaces (excluding gas furnaces for relocatable building,
replacement gas furnaces, outdoor furnaces with an integrated cooling
component, and through-the wall furnaces with an integrated cooling
component) manufactured for sale or import into the Canadian market on
or after July 3, 2019, sets a minimum efficiency of 95-percent AFUE.
Furthermore, the revised regulation also sets a minimum efficiency of
80-percent AFUE for gas furnaces for relocatable buildings.\35\
---------------------------------------------------------------------------

\34\ 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)
\35\ ``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.
---------------------------------------------------------------------------

III. General Discussion

DOE developed this final rule after considering comments, data, and
information from interested parties that represent a variety of
interests. The following discussion addresses issues raised by these
commenters regarding rulemaking timing and process, product classes and
scope of coverage, the test procedure, technological feasibility,
significance of energy savings, economic justification, the compliance
date, and impacts from other rulemakings.

A. General Comments

This section summarizes general comments received from interested
parties regarding rulemaking timing and process.
1. Comments Regarding Authority
The Marley Companies commented that the regulation of multiple
levels of components (e.g., motors and furnace fans, which are
themselves covered products under EPCA) internal to an appliance limits
the utility of the appliance, because the specifications for such
components (necessary for compliance with DOE energy conservation
standards for those components as covered products) place constraints
on the covered product's design and operation. (The Marley Companies,
No. 386 at pp. 7-9) The Marley Companies argued that changes to the
efficiency of a component, prescriptive requirements, and test
procedures are all cumulatively subject to the 6-year window between
standards provided to manufacturers per 42 U.S.C. 6295(m)(4)(B), so
according to the commenter, any change to the standard for a covered
product, to the standard for an internal component of that product, or
to the test procedure should preclude further regulation of that
product for six years pursuant to 42 U.S.C. 6295(m)(4)(B). (Id. at p.
7) Further, Marley asserted that the cumulative impact of multiple
component efficiency regulations within a regulated appliance is that
the operating range of the entire product is reduced. (Id.) The Marley
Companies commented that the definition of ``energy conservation
standard'' includes a reference to 42 U.S.C. 6295(r), which discusses
the inclusion in standards of test procedures and other requirements,
and, therefore, the term ``standard'' includes test procedures used to
determine the efficiency of covered products. (Id. at p. 9) The Marley
Companies commented that 42 U.S.C. 6293(e)(4) conveys that Congress
realized and stated in EPCA that test procedures should not be altered
at the same time as appliance level efficiencies, and, therefore, the
Marley Companies asserted that Congress established that any change in
an efficiency of any component, combination of components, or the
entire covered product, as well as any required construction change
through prescriptive requirements and any change in the test procedure
used to determine efficiency, would reset the 6-year timeframe
established by 42 U.S.C. 6295(m)(4)(B). (Id. at p. 9) In contrast,
Sierra Club et al. commented that DOE correctly interprets furnaces and
furnaces fan as two separate products for the purposes of the ``6-year
lock-out'' provision at 42 U.S.C. 6295(m)(4)(B). (Sierra Club et al.,
No. 401 at p. 3)
There are two products that can be found as a component of a
consumer furnace and which are separately regulated by DOE: consumer
furnace fans and certain types of electric motors. In response to
comments from Marley Companies and the Sierra Club, DOE notes that
consumer furnaces, consumer furnace fans, and electric motors are all
separately covered products under EPCA. (42 U.S.C. 6292(a)(5); 42
U.S.C. 6295(f)(4)(D); 42 U.S.C. 6311(1)(A)) As such, DOE considers
their timelines separately in the context of the requirement
established by 42 U.S.C. 6295(m)(4)(B) that a manufacturer ``shall not
be required to apply new standards to a product with respect to which
other new standards have been required during the prior 6-year
period.'' \36\ The 6-year period applies to covered products
individually, and ECPA does not provide exceptions to the review
requirements when related products or components have overlapping
review timeframes. Furthermore, DOE notes that 42 U.S.C. 6295(m)
applies to energy conservation standards, not test

[[Page 87517]]

procedures. Under this provision, DOE is directed to amend energy
conservation standards for a covered product if such standards would be
technologically feasible, economically justified, and result in
significant conservation of energy. (42 U.S.C. 6295(m)(1)(B); 42 U.S.C.
6295(o)) As such, DOE does not agree with the Marley Companies'
contention that this statutory provision applies more broadly to test
procedure changes, and the Department has concluded that the Marley
Companies have advanced an incorrect reading of 42 U.S.C. 6295(r) to
support their point. That provision of EPCA simply acknowledges that
most energy conservation standards (i.e., performance-based ones) will
require an accompanying test procedure and may necessitate additional
ancillary requirements to facilitate compliance. Further, 42 U.S.C.
6295(r) specifically refers to test procedures prescribed in accordance
with 42 U.S.C. 6293. As such, there simply is no statutory basis for
applying the 6-year timeframe, which applies to standards prescribed
under 42 U.S.C. 6295(m), to test procedures prescribed under 42 U.S.C.
6293.\37\
---------------------------------------------------------------------------

\36\ DOE notes that EPCA set a deadline of December 31, 2013,
for the Department to prescribe an energy conservation standard or
energy use standard for electricity used for purposes of circulating
air through ductwork (colloquially referred to as ``furnace fans'').
(42 U.S.C. 6295(f)(4)(D)) EPCA likewise set deadlines for the
Department to set standards for certain motors, including a five-
years lead time for compliance. (42 U.S.C. 6313(b)(4)(B)) These
deadlines are independent of the standard-setting provisions for
consumer furnaces at 42 U.S.C. 6295(f) and the six-year-lookback
provisions at 42 U.S.C. 6295(m).
\37\ For example, DOE previously published in the Federal
Register a direct final rule establishing new energy conservation
standards for consumer furnaces on June 27, 2011 (76 FR 37408), and
then published in the Federal Register a final rule amending the
test procedure for consumer furnaces on January 15, 2016 (81 FR
2628). DOE previously published in the Federal Register a final rule
amending the test procedure for furnace fans on January 3, 2014 (79
FR 500), and then published in the Federal Register a final rule
establishing new energy conservation standards for furnace fans on
July 3, 2014 (79 FR 38130).
---------------------------------------------------------------------------

NPGA stated that DOE has failed to provide a fair and transparent
rulemaking process. (NPGA, No. 395 at p. 3) NPGA and AGA both commented
that they believe the proposal to be unlawful because DOE is not
authorized to create design standards for furnaces, but NPGA and AGA
suggested that is what the proposed rule effectively does. (NPGA, No.
395 at p. 9; AGA, No. 405 at pp. 50-51) NPGA stated that the proposal
sets a de facto standard for building design by requiring the
alteration of building venting systems. (NPGA, No. 395 at p. 22)
Additionally, NPGA and AGA stated that the necessity to include
condensing technology, as well as other associated design elements,
including new venting, electric fans, and a condensate drainage system,
is effectively enforcing a design requirement. (NPGA, No. 395 at pp. 9-
10; AGA, No. 405 at pp. 50-51) AGA further commented that Congress's
decision to exclude furnaces from the list of products for which DOE
can include design requirements, as outlined in 42 U.S.C. 6291(6)(B),
demonstrates that DOE may not develop design requirements for furnaces.
(AGA, No. 405 at pp. 50-52)
In response, DOE is not creating a prescriptive design requirement
for consumer furnaces in this final rule. In its definition of ``energy
conservation standard'' at 42 U.S.C. 6291(6), EPCA provides that a
performance standard is one which prescribes a minimum level of energy
efficiency or a maximum quantity of energy use for a covered product,
determined in accordance with test procedures developed under 42 U.S.C.
6293. (42 U.S.C. 6291(6)(A)) In this case, the standards adopted in
this final rule are set in terms of AFUE, which is a performance metric
and is determined through testing consumer furnaces under the
applicable DOE test procedure, as discussed in section III.C of this
document. DOE does not mandate any specific design for achieving
compliance with the amended standard, as would constitute a design
requirement under 42 U.S.C. 6291(6)(B). Thus, the final rule complies
with the statutory requirements for setting a performance standard
under EPCA. The possibility that some technologies may not be
sufficient to achieve compliance is true for any performance standard,
and does not transform a performance standard into a de facto design
requirement. DOE acknowledges that the NWGFs and MHGFs that currently
achieve 95-percent AFUE do employ condensing technology. However, the
performance-based standards adopted in this final rule do not preclude
new or alternative heat exchanger designs, venting systems, or
materials from being used in future furnace product designs, which may
provide additional avenues (alone or in combination) for increasing
furnace AFUE. In addition, this final rule provides a five-year lead
time before compliance with the amended standards is required, so
further innovation may be possible during that time. DOE's approach has
been explained at length and in detail in both the July 2022 NOPR and
this final rule, as well as the TSDs accompanying those documents.
2. Comments Opposing the July 2022 Proposal
This section summarizes comments opposing the July 2022 proposal.
Several commenters stated that DOE should withdraw the proposed
rule. (Georgia Gas Authority, No. 367 at p. 1; MHI, No. 365 at p. 1;
DCA, No. 372 at p. 2; The Heartland Institute, No. 376 at p. 1; HARDI,
No. 384 at p. 2; Nortek, No. 406 at pp. 5-6) Plastics Pipe Institute
commented that it opposes the proposed rule due to negative impacts on
consumers (including senior and low-income households), small
businesses, the overall gas furnace market, and the gas industry.
(Plastics Pipe Institute, No. 404 at p. 1) Spire commented that the
proposed standards place undue burden on consumers because many homes
are not set up so as to be compatible with condensing gas furnaces.
(Spire, No. 413 at pp. 20-21) The Heartland Institute commented that
this rule is unnecessary. (The Heartland Institute, No. 376 at pp. 1-2)
HARDI stated disagreement with the methodology and conclusions used to
support the proposed standards. (HARDI, No. 384 at p. 2) A number of
individuals urged DOE to reject the proposed rule on gas-burning
residential furnaces because of considerations such as individual
preferences, higher upfront costs, and higher maintenance costs.
(Veiga, No. 326 at p. 1; Willis, No, 327 at p. 1; Anonymous 1, No. 329
at p. 1) PHCC commented that it does not support the proposed standards
for NWGFs and MHGFs, as there are parts of the NOPR that are overly
optimistic, do not reflect current market conditions, make inaccurate
assumptions, minimize installation issues for condensing-type products,
and would generally create negative impacts for manufacturers and
consumers. (PHCC, No. 403 at p. 1) Strauch recommended that both
condensing and non-condensing furnaces remain available on the market.
(Strauch, No. 366 at p. 2) Spencer and Dayaratna stated that the
standards proposed in the July 2022 NOPR are unnecessary because
condensing furnaces are readily available in the marketplace and have
already achieved significant market penetration. (Spencer and
Dayaratna, No. 390 at p. 10)
The Heartland Institute expressed concern that the proposed
standard would negatively impact energy consumption, emissions, and the
economy. (The Heartland Institute, No. 376 at p. 1) The Heartland
Institute further stated that there is a lack of economic
justification. (Id. at p. 2) Additionally, the Heartland Institute
argued that, while the highest-efficiency products may produce long-run
savings for consumers under ideal laboratory settings, these gains from
an increased efficiency are often not replicated in the real world.
(Id. at p. 1) Atmos Energy similarly commented that the technical
analyses do not reasonably consider economic impacts, particularly
those on affordability and the potential disruption to highly-effective
energy

[[Page 87518]]

conservation programs. (Atmos Energy, No. 415 at p. 2)
As discussed in section II.A of this document, EPCA provides DOE
with the authority to regulate the energy efficiency of a number of
consumer products, including NWGFs and MHGFs, which are a subset of
consumer furnaces. (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) and 42 U.S.C.
6295(m)(1)). Any such new standards for NWGFs and MHGFs must, under 42
U.S.C. 6295(o)(2)(A), be designed to achieve the maximum improvement in
energy efficiency that is technologically feasible and economically
justified. DOE's analyses supporting its conclusion that it has met
these criteria for the standards adopted in this final rule are
presented in section IV and section V of this document, respectively.
Atmos Energy disagreed that the proposed standards would
``represent the maximum improvement in energy efficiency that is
technologically feasible and economically justified,'' alleging that
DOE's underlying technical analyses do not reasonably consider relevant
economic impacts. (Atmos Energy, No. 415 at p. 2) Atmos Energy also
disagreed with the July 2022 NOPR's tentative conclusion that the
benefits of the proposed standards greatly exceed the burdens. (Id.)
Atmos Energy commented that DOE should improve the accuracy of its
analysis by tailoring its consideration of consumer behavior, life-
cycle evaluations, and costs. (Id. at p. 5) Atmos Energy further
commented that the proposed rule uses unsupported and broad assumptions
that are not reflective of actual consumer behavior and information.
(Id.) Similarly, the Coalition commented that DOE has failed to
adequately consider the cost impacts of the proposed standards and has
failed to properly assess the balancing of benefits and burdens. (The
Coalition, No. 378 at p. 5) Spencer and Dayaratna stated that the
standards proposed in the July 2022 NOPR do not meet the ``economically
justified'' criteria for prescribing new or amended standards. (Spencer
and Dayaratna, No. 390 at pp. 1-2) Specifically, Spencer and Dayaratna
stated that the analysis in the July 2022 NOPR is questionable
regarding all seven of the factors set by EPCA. (Id.) Spencer and
Dayaratna suggested that DOE did not present sufficient rationale for
factors 5 (i.e., the effect of any lessening of competition, as
determined in writing by the Attorney General, that is likely to result
from the standard) and 6 (i.e., the need for national energy and water
conservation). (Id.) AGA commented that the NOPR suffers from many
evidentiary shortcomings that fail to meet the statutory requirement
that energy conservation standards must be ``supported by substantial
evidence'' on the record. (AGA, No. 405 at pp. 29-30) AGA commented
that the NOPR's conclusion that the proposed standards would be
economically justified and technically feasible relies on unexplained
assumptions and conclusions. (Id.) AGA asserted that the NOPR
fundamentally fails to adhere to the Process Rule,\38\ and specifically
found fault with DOE's LCC model and the lack of sufficient time for
public comment. (Id. at pp. 21-23) AGA commented that particularly in
the LCC model, the qualitative and quantitative analytical methods are
not fully documented for the public and do not produce results that can
be explained and reproduced. (Id.) AGA commented that these issues
prevent stakeholders from evaluating compliance with other aspects of
EPCA's and the Process Rule's requirements, and the commenter
encouraged DOE to correct these deficiencies. (Id.) Trampe commented
that he does not support the proposed 95-percent AFUE standard, and
that the standard should be maintained at 80-percent AFUE. (Trampe, No.
361 at p. 1)
---------------------------------------------------------------------------

\38\ The ``Process Rule'' refers to 10 CFR part 430, subpart C,
appendix A, ``Procedures, Interpretations, and Policies for
Consideration of New or Revised Energy Conservation Standards and
Test Procedures for Consumer Products and Certain Commercial/
Industrial Equipment''.
---------------------------------------------------------------------------

Lennox suggested that DOE should reconsider whether a 92-percent
AFUE standard is an appropriate minimum efficiency level for NWGFs.
(Lennox, No. 389 at p. 2) Lennox also commented that, based on DOE's
analysis, AFUE levels above 95 percent are not economically justified
and have significant negative consumer impacts. (Id.)
In regard to the proposed MHGF standards, Nortek and JCI commented
that they do not support the proposed 95-percent AFUE standard for
MHGFs. (Nortek, No. 406 at p. 2; JCI, No. 411 at p. 1) Nortek commented
that DOE should maintain the 80-percent AFUE requirement for MHGFs.
(Nortek, No. 406 at pp. 5-6) JCI added that the 95-percent AFUE
standard for MHGFs would impose costs on consumers with, on average,
lower household incomes. (JCI, No. 411 at p. 1) JCI recommended that
DOE should exclude MHGFs from this rulemaking and gather additional
data on that product class, particularly in replacement applications.
(Id.) AHRI also stated that DOE should reconsider active mode energy
conservation standards for MHGFs. (AHRI, No. 414-2 at p. 2) Mortex
commented that it too does not believe that DOE's proposed 95-percent
AFUE standard is economically justified for MHGFs, and that DOE should
retain the current standard for MHGFs. (Mortex, No. 410 at p. 1) In
support of its recommendation, Mortex pointed to the two-tiered
standards that Canada has developed for furnaces, with a 95-percent
AFUE level for most residential gas furnaces and 80-percent AFUE level
for gas furnaces in relocatable buildings and replacements in
manufactured housing. (Mortex, No. 410 at p. 4) Mortex recommended this
structure as a model for DOE to utilize. (Id.) MHI commented that the
current MHGF AFUE standards strike a balance between energy savings and
affordability, and the commenter urged DOE to withdraw the NOPR or
replace the proposed 95-percent AFUE level for MHGF with a standard at
80-percent AFUE for gas furnaces used in manufactured homes. (MHI, No.
365 at pp. 2-3)
As discussed in section II.A of this document, EPCA provides
specific statutory criteria for amending energy conservation standards.
EPCA generally requires a public notice-and-comment process (see 42
U.S.C. 6295(p)), which affords members of the public the opportunity to
comment on the rulemaking, and DOE makes all relevant documents
publicly available at <a href="http://www.regulations.gov">www.regulations.gov</a>. As part of the process for
this rulemaking, DOE convened two public meetings, including one aimed
at helping stakeholders understand its analytical models, to ensure the
transparency of its process. Additionally, DOE carefully considers the
benefits and burdens of amended standards to determine whether the
amended standards are the maximum standard levels that are
technologically feasible and economically justified, and would conserve
a significant amount of energy, as required by EPCA (see 42 U.S.C.
6295(o)(2)-(3)). Section IV of this document outlines DOE's approach to
analyzing various potential amended standard levels, and section V of
this document provides the results of those analyses, as well as a
detailed explanation of DOE's weighing of the benefits and burdens and
the rationale for the amended standards adopted by this final rule. As
detailed in those sections, DOE has determined that its rulemaking
process for the subject

[[Page 87519]]

furnaces has satisfied the applicable requirements of EPCA and the
Process Rule and that the adopted standards are supported by
substantial evidence in the record. Further, DOE notes that the webinar
held on September 6, 2022, provided further opportunity for
clarification regarding the LCC model and extended the comment period
to provide sufficient time to provide written comments.
Plastics Pipe Institute expressed concern with the precedent that
would accompany this rule change, adding that it would open the door
for future restrictions on natural gas. (Plastics Pipe Institute, No.
404 at p. 3) In response, DOE notes that the amended energy
conservation standards for NWGFs and MHGFs do not prohibit the sale and
use of gas-fired furnaces, nor do they restrict the use of natural gas,
but instead, they improve the energy efficiency of those gas-burning
products.
3. Comments Expressing Support for the July 2022 Proposal
This section summarizes comments expressing support for the July
2022 proposal.
DOE received comments from the OPAE, NCEL, State of Washington,
NEEA, the Joint Utilities, the National Grid, Climate Smart Missoula et
al., Evergreen Action, the CA IOUs, the PSEA, the NCLC et al., and the
NRDC expressing support for the proposed energy conservation standards
for NWGFs and MHGFs. (OPAE, No. 347 at p. 1; NCEL, No. 359 at p. 1;
State of Washington, No. 409 at pp. 1-2; NEEA, No. 368 at pp. 1-2; the
Joint Utilities, No. 402 at p. 1; National Grid, No. 407 at p. 1;
Climate Smart Missoula et al., No. 393 at pp. 1-2; Evergreen Action,
No. 364 at p. 1; The CA IOUs, No. 400 at p. 1; PSEA, Public Meeting
Webinar Transcript, No. 363 at p. 37; NCLC et al., No. 383 at p. 9;
NRDC, Public Meeting Webinar Transcript, No. 363 at p. 30;) GHHI, the
Attorneys General, and Sierra Club et al. further encouraged DOE to
adopt the proposed efficiency standards for consumer gas furnaces.
(GHHI, No. 371 at p. 1; Attorneys General, No. 408 at pp. 1-2; Sierra
Club et al., No. 401 at p. 1) The Joint Efficiency Commenters added
that they strongly support DOE's proposed standards for minimum
efficiency of NWGFs and MHGFs and standby mode and off mode power
consumption. (Joint Efficiency Commenters, No. 381 at p. 1) The CA IOUs
further explained that the proposed rule would allow consumers to have
greater access to energy-efficient products that are technologically
feasible and economically justified. (The CA IOUs, No. 400 at p. 1)
Daikin stated that despite some concerns regarding the accuracy of some
portions of the TSD concerning costs due to the confidential nature of
some manufacturer cost data, the company generally finds that DOE's
analysis is reasonable in most areas based on the data that is publicly
available. (Daikin, No. 416 at p. 3) The Joint Utilities stated that
they support common-sense, cost-saving improvements to existing
efficiency standards coupled with programs to provide the financial
resources to enable customers to make the transition to higher-
efficiency furnace products and minimize the impact of upfront costs.
(The Joint Utilities, No. 402 at p. 1) National Grid stated that
Federal energy conservation standards ensure that the benefits of
efficiency gains can reach all customer segments, including renters who
often do not make decisions about appliances. (National Grid, No. 407
at p. 1) The State of Washington added that it understands the cost
savings and emissions benefits that more efficient standards can
provide. (State of Washington, No. 409 at pp. 1-2)
DOE also received over 3,000 submissions of a form letter
encouraging DOE to enact strong efficiency standards for furnaces that
phase out the least-efficient furnace models. (Individual Commenters,
No. 348 at pp. 1-3552) The commenters stated that heating homes should
not produce pollution, and they stated that outdated and inefficient
gas furnaces are emitting millions of tons of avoidable climate
emissions and other harmful pollutants. (Id.) A number of other
individual commenters expressed similar views. (Neumann, No. 328 at p.
1; Guarin, No. 332 at p. 1; Haag, No. 334 at p. 1; Cantu, No. 335 at p.
1; Marcellini, No. 336 at p. 1; Liset, No. 338 at p. 1; Snyder, No. 349
at p. 1; Lish, No. 358 at p. 1) In addition to expressing support for
the standards via the form letter, Guarin, Haag, Cantu, Marcellini,
NCEL, and Liset all commented that by requiring furnaces to use about
15-percent less energy, the proposed standard would cut 373 million
metric tons of carbon emissions and 833 thousand tons of NO<INF>X</INF>
over 30 years of sales, as outlined in the July 2022 NOPR. (Guarin, No.
332 at p. 1; Haag, No. 334 at p. 1; Cantu, No. 335 at p. 1; Marcellini,
No. 336 at p. 1; NCEL, No. 359 at p. 1; Liset, No. 338 at p. 1) These
commenters added that the proposed standard would help with breathing
since it would reduce needless greenhouse gas emissions. (Guarin, No.
332 at p. 1; Haag, No. 334 at p. 1; Cantu, No. 335 at p. 1; Marcellini,
No. 336 at p. 1; Liset, No. 338 at p. 1) The CA IOUs similarly stated
that this standard will significantly improve ambient and indoor air
quality in the United States. (The CA IOUs, No. 400 at p. 2)
Other commenters similarly discussed the beneficial impacts that
the proposed standards would have on health and the environment. Arnold
asked DOE to help work toward a cleaner and more sustainable future by
increasing the efficiency standards for furnaces. (Arnold, No. 333 at
p. 1) Shippee-Rice urged DOE to enact these ``long overdue'' standards,
stating that doing so will decrease pollutants that threaten human,
animal, and plant health. Shippee-Rice also noted that this proposed
standard will help to decrease the harmful effects of current climate
change dangers. (Shippee-Rice, No. 339 at p. 1) Daikin agreed with
DOE's initiatives to address emission reductions and set higher
standards with climate change, decarbonization, and electrification in
mind. (Daikin, No. 416 at pp. 2-3) Lee's Air, Plumbing & Heating
commented that a higher standard would eliminate pollution and wasted
energy. (Lee's Air, Plumbing & Heating, No. 342 at p. 1) The Physicians
for Social Responsibility commented that pollutants from gas furnaces
may be back-drafted into homes when indoor air pressure is reduced.
Alternatively, they stated that pollutants can be vented out into the
surrounding community. The commenter added that those pollutants from
gas appliances can lead to the development of childhood asthma,
increase susceptibility to other respiratory infections, decrease
general cognitive and neurological functioning, and exacerbate
cardiovascular disease. The commenter also stated that these pollutants
can cause community-wide harm, particularly among low-income
communities and communities of color. (The Physicians for Social
Responsibility, Public Meeting Webinar Transcript, No. 363 at pp. 5-6)
The commenter further argued that the proposed standards can help lower
utility bills, which on its own can positively impact consumers'
health. The commenter concluded that higher efficiency standards will
reduce the health effects from air pollution and limit the impacts of
climate change such as extreme heat, population displacement, and
injuries and fatalities due to natural disasters. (Id. at p. 7)
Evergreen Action noted that residential heating is the biggest utility
in most U.S. households. Evergreen Action stated that gas heating
appliances account for two-thirds of on-site household greenhouse gas
emissions, and that gas

[[Page 87520]]

furnaces are a significant source of NO<INF>X.</INF> (Evergreen Action,
No. 364 at p. 1) Climate Smart Missoula et al. also stated that
furnaces have lifespans of 20 years or more and suggested that adopting
updated standards will lead to benefits for consumers' pocketbooks, as
well as the planet, through emission reduction. (Climate Smart Missoula
et al., No. 393 at p. 2) Environment America commented that the
proposed standards would reduce pollution that causes climate change
and negatively impacts health. (Environment America, Public Meeting
Webinar Transcript, No. 363 at pp. 18-19) Environment America suggested
that, based on the reduced energy use and emissions, along with reduced
annual home heating bills, DOE should finalize the proposed standards.
(Id.) The National Caucus of Environmental Legislators recommended that
DOE not to give in to industry-delaying tactics because action has been
delayed and stymied numerous times in the past 30 years. They further
commented in support of the proposal to increase the efficiency level
of gas furnaces to 95-percent AFUE. (National Caucus of Environmental
Legislators, No. 359 at p. 1)
NEEA supported DOE's finding in the July 2022 NOPR that
implementing a 95-percent AFUE standard for NWGFs and MHGFs would lead
to significant, cost-effective energy savings. (NEEA, No. 368 at pp. 1-
2) NEEA stated that the consumer furnace market is ready for a furnace
standard set at a condensing level, as evidenced by the market maturity
and the lack of insurmountable barriers. (Id. at pp. 2-3) NEEA noted
that condensing furnaces make up the majority of sales in the Northwest
and their market share is growing. (Id.) NEEA stated that a study
commissioned by NEEA and other stakeholders demonstrated the lack of
barriers as would prevent a condensing furnace installation. (Id.)
Additionally, NEEA commented that a 5-year transition time would allow
sufficient time for manufacturers to convert their production and close
the remaining sales gap. (Id.)
Daikin commented that it believes the results of DOE's analysis
would not substantially change even if DOE were provided additional
data, and, therefore, it expressed support for the proposed 95-percent
standard for NWGFs. (Daikin, No. 416 at p. 3) Carrier and Trane also
expressed support for the 95-percent AFUE standard for NWGF, and Trane
added that this level will provide significant CO<INF>2</INF> savings.
(Carrier, No. 377 at p. 1; Trane, No. 412 at p. 1) AHRI stated that DOE
has conducted sufficient analysis to amend active mode energy
conservation standards for NWGFs and recommended that DOE finalize this
rulemaking to bring resolution to the process and to bring certainty to
the marketplace. (AHRI, No. 414-1 at p. 1) The CEC commented that it
supports DOE's proposed standard for consumer furnaces at 95-percent
AFUE and 8.5 W, and that DOE should finalize these standards. (CEC, No.
382 at pp. 1-2) AHRI and Rheem agreed with DOE's conclusion that a 98-
percent AFUE standard would be unreasonable and not economically
justified for NWGFs. (AHRI, No. 414-1 at pp. 1-2; Rheem, No. 394 at p.
2)
The State Agencies supported the proposed TSL 8 standard and
methodology and encouraged DOE to adopt the rule. (State Agencies, No.
375 at pp. 1-2) The State Agencies further commented that the proposed
TSL 8 standard is technologically achievable, beneficial to American
consumers' physical and financial health, and is an important step in
reducing emissions. (Id. at p. 1) NYSERDA supported DOE's proposal to
adopt TSL 8 for MHGFs and NWGFs and recommended that DOE consider an
even more stringent standard at 96-percent AFUE for NWGF. (NYSERDA, No.
379 at pp. 1-2) NYSERDA further commented that TSL 8 leads to
significant energy and economic savings over the lifetime of the
equipment. (Id.) The NCLC et al. and the Joint Efficiency Commenters
also stated that the proposed TSL 8 efficiency levels promise
substantial financial benefits to consumers and added that these
financial benefits are especially promising for low-income consumers.
(NCLC et al., No. 383 at p. 4; Joint Efficiency Commenters, No. 381 at
p. 2) The NCLC commented that low-income rental properties are more
likely to have less-efficient furnaces and to pass the associated
larger energy bills on to tenants. (NCLC, Public Meeting Webinar
Transcript, No. 363 at pp. 8-10) NCLC noted that this could amount to
$2,000 to $3,000 in incremental costs for tenants over the life of the
furnace. (Id. at p. 9) The commenter also stated that low-income
consumers have the fewest resources to address the harms of rising
temperatures and would be further adversely impacted. The NCLC
commented that this presents an equity issue and accordingly concluded
that DOE should adopt a strong furnace efficiency standard. (Id. at p.
10)
The Philadelphia Solar Energy Association commented in support of
the proposed standards, stating that high-efficiency furnaces help low-
income consumers in Philadelphia reduce their energy costs, as well as
indoor air pollution from atmospheric furnaces. (Philadelphia Solar
Energy Association, Public Meeting Webinar Transcript, No. 363 at p.
37)
The Joint Efficiency Commenters stated that DOE should not adopt
TSL 7 as an alternative to TSL 8, adding that the percentage of low-
income consumers benefitting from the potential standards is
significantly greater at TSL 8 compared to TSL 7. (Joint Efficiency
Commenters, No. 381 at p. 2)
In response to the July 2022 NOPR, The NCLC et al. commented that
if the standard is set too high, many consumers will be saddled with
purchasing expensive products where energy savings do not outweigh
initial costs. However, the NCLC et al. commented that, if the standard
is set too low, then the percentage of customers who end up with higher
LCC will increase. (NCLC et al., No. 383 at p. 6) Therefore, the NCLC
et al. commented that DOE should not reject a standard because some
consumers will experience net costs over the life of the product. (Id.)
NCLC et al. noted that, at TSL 8, the average net benefits are more
significant than the average net costs for NWGFs. (Id.)
As discussed in section II.A of this document, DOE is directed by
EPCA to conduct periodic rulemakings to determine whether to amend the
standards for various products, including consumer furnaces. (42 U.S.C.
6295(f)(4) and 42 U.S.C. 6295(m)(1)) The standards adopted by this
final rule, which include the same AFUE levels as those proposed in the
July 2022 NOPR, adhere to the requirements of EPCA in that they are
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) and 42 U.S.C. 6295(o)(3)(B)) The analytical
results showing both the benefits and burdens of the standards, along
with DOE's rationale for adopting these amended standards, are
discussed in section V of this document.
4. Regional Standards
Nortek, AHRI, and MHI encouraged DOE to consider regional standards
that align with the U.S. Department of Housing and Urban Development
(``HUD'') zones. (Nortek, No. 406 at p. 6; AHRI, No. 414-2 at pp. 3-4;
MHI, No. 365 at pp. 1-2) MHI commented that the HUD code for
manufactured homes prescribes energy efficiency features that are
specific to the region where the home will be sited. (MHI, No. 365 at
pp. 1-2) MHI suggested that consulting with

[[Page 87521]]

HUD will assist DOE in understanding how furnace standards impact
consumer access to affordable housing, including manufactured housing.
(Id.) PHCC commented that DOE's early efforts for this consumer furnace
rulemaking considered creating regional standards to establish a
pathway for higher-efficiency products that could not be justified on a
national scale due to differences in usage and energy consumption of
different climate zones. (PHCC, No. 403 at pp. 1-2) Trampe commented
that the entire United States should not have to follow the same
standard and added that what applies in Minnesota may not apply in
Kansas, Tennessee, Texas, or other States. (Trampe, No. 361 at p. 1)
Nortek pointed to NRCan's standards, which were set at 95-percent AFUE
for NWGFs and 80-percent AFUE for MHGFs in 2019. Nortek noted that the
climate in Canada has more severe winters than many parts of the United
States. Nortek also stated that setting standards at a condensing level
disproportionately impacts southern homeowners because most
manufactured homes are in the South where mild winters allow furnaces
to run for only 3 months a year. (Nortek, No. 406 at pp. 3-4) Like
Nortek, the Heartland Institute also discussed regional differences,
stating that in Northern States, such as Minnesota or Wisconsin, most
residential natural gas furnaces already meet 95-percent AFUE. In
Southern States, such as Texas, Georgia, and Florida, a smaller
percentage of homeowners have adopted higher-efficiency furnace models.
The Heartland Institute further offered that condensing models are
already installed in regions where furnaces are heavily used, which
mitigates the need for this mandate. (The Heartland Institute, No. 376
at p. 2) JCI commented that it believes a regional standard with a
condensing level for the Northern region and a non-condensing level for
the Southern region would be more economically justified and would
align with the existing central air conditioning/heat pump standards.
JCI commented that, in southern installations, the additional
installation cost would result in a negative LCC using the amended
values JCI supplied for manufacturer production costs (``MPCs''). (JCI,
No. 411 at p. 2)
Conversely, Daikin commented that there are logistical and
operational challenges associated with regional standards; therefore,
Daikin supported a national energy conservation standard, stating that
it does not support TSL 4. (Daikin, No. 416 at p. 2) Similarly, Rheem
commented that DOE should maintain a single, nationwide and capacity-
wide standard for NWGFs to avoid costly supply and inventory planning
problems for manufacturers, distributors, and contractors. (Rheem, No.
394 at p. 3) The CFA commented that DOE should consider a uniform
standard, arguing that certain furnaces no longer need to be exempted
from the standard. (CFA, Public Meeting Webinar Transcript, No. 363 at
p. 22)
In response, DOE's analyses of each considered efficiency level
accounts for regional differences (e.g., in terms of climate data,
shipments) when appropriate, as discussed throughout this document. For
the July 2022 NOPR and for this final rule, in addition to considering
uniform national standard, DOE included consideration of a potential
regional standard (i.e., TSL 4; see section V.A of this document)
consisting of efficiency levels at 95-percent AFUE for the Northern
region and 80-percent AFUE for the rest of the country, for both NWGFs
and MHGFs. However, as discussed in section V of this document, DOE
conducts a walk-down analysis to determine the TSL that represents the
maximum improvement in energy efficiency that is technologically
feasible and economically justified, as required under EPCA. In this
final rule, DOE has found that a national standard for both NWGFs and
MHGFs corresponding to 95-percent AFUE (i.e., TSL 8) meets those
statutory criteria, and, therefore, DOE is adopting a national standard
rather than regional standards.
5. Recommendations for Analytical Changes
Atmos Energy commented that DOE should supplement its technical
analysis in accordance with consumer welfare recommendations identified
by the National Academy of Science peer review report before proceeding
with a final rule, arguing that this would increase the accuracy of the
technical analysis and have a material impact on the final standards.
(Atmos Energy, No. 415 at p. 5) AGA commented that DOE should follow,
or at a minimum respond to, the National Academies of Sciences,
Engineering, and Medicine's (NAS) Recommendations (the NAS Report) on
its process. (AGA, No. 405 at pp. 25-27) AGA stated that DOE should
revisit the proposed rule to address NAS's recommendations and allow
stakeholders an opportunity to comment on the revisions. (Id.) APGA
stated that many months after the NAS Report, DOE does not reflect the
NAS findings in the NOPR but merely states that DOE ``is in the process
of evaluating the resulting report.'' (APGA, No. 387 at p. 56) APGA
pointed out that the residential furnace rulemaking was one of the
three rulemakings studied in depth by the NAS committee. (Id.) APGA
noted that NAS came to conclusions about consumer behavior that are
extremely critical to the NOPR. APGA cited the NAS Report's
recommendation that ``[f]or some commercial goods in particular, there
should be a presumption that the market actors behave rationally unless
DOE can provide evidence or argument to the contrary.'' (Id.)
In response, DOE notes that the rulemaking process for energy
conservation standards for covered products and equipment are outlined
in appendix A to subpart C of 10 CFR part 430, and DOE periodically
examines and revises these provisions in separate rulemaking
proceedings. DOE notes that discussion of the recommendations of the
NAS report, which pertain to the processes by which DOE analyzes energy
conservation standards, will be addressed as part of a separate notice-
and-comment process.
Rheem commented that DOE should consider a simplified analysis and
reproducible model for future rulemakings. (Rheem, No. 394 at p. 2)
Specifically, Rheem encouraged DOE to adopt a consistent and
predictable approach to quantifying energy savings to ensure the
recommendations will result in the estimated savings. (Id.) GAS argued
that ``Uncertainties . . . include numerous variables contained within
DOE's overly complex `determination' apparatus,'' and that DOE has
failed to ``use transparent and robust analytical methods.'' (GAS, No.
385 at pp. 4-5) AHRI suggested that, for future rulemakings, DOE should
modify the way that it analyzes consumer economic impact to look at the
probability that individual consumers will benefit from standards
rather than whether the aggregate benefit is positive and stated that
these changes would be best accomplished in an open review process.
(AHRI, No. 414-1 at p. 2)
Although DOE understands the desire for simplicity, the Department
notes that its analysis is informed by the Process Rule and includes a
number of modifications in response to comments from interested parties
on prior notices, which recommended that DOE consider a variety of
additional factors when evaluating the impacts of potential standards.
These additional considerations, while adding complexity to the
analysis, are responsive to commenters and increase the granularity of
results. A simplified analysis would run counter to those

[[Page 87522]]

recommendations,\39\ which have proven to have merit. In response to
AHRI's comment that consumer impacts should be assessed individually,
DOE notes that as discussed in section IV.F of this document, the LCC
includes a Monte Carlo analysis that allows DOE to assess impacts on a
wide range of installations. DOE uses this information to assess and
consider how consumers would likely be impacted by potential standards.
DOE also conducts a consumer subgroup analysis (described in section
IV.I of this document) that evaluates the economic impacts of standards
on specific groups. DOE further notes that its analysis is designed to
be reproducible to interested parties, and DOE provides a range of
statistics, including the percentage of consumers that will be
negatively and positively impacted by an amended energy conservation
standard. Therefore, for this final rule, DOE continued to conduct the
energy savings and economic rulemakings using largely the same
methodologies used in the July 2022 NOPR of this rulemaking, which are
generally consistent with those used for prior rulemakings.
---------------------------------------------------------------------------

\39\ For example, sections 12 through 16 of the Process Rule
outlines factors to be considered in the process for developing
energy conservation standards, including delineating several factors
relating to identification of candidate standard levels and other
factors to be considered in the selection of proposed standards, as
well as the subsequent selection of a final standard. These
analyses, along with the accompanying sensitivity analyses, are
necessary to ensure the robustness of the Energy Conservation
Standards amendment process.
---------------------------------------------------------------------------

ACCA suggested that DOE should focus its attention on efficiency
improvements, such as installing heating, ventilation, and air-
conditioning (HVAC) systems according to the industry's recommended
standards (including proper equipment sizing, duct re-design and
sealing, and appropriate refrigerant charge levels), that would reduce
peak electricity demand without requiring revised installation or
design standards. (ACCA, No. 398 at p. 2)
As discussed in section IV.F.4 of this document, DOE's analysis
accounts for the electricity consumption of NWGFs and MHGFs. Although
reducing peak electricity demand can be a benefit of energy
conservation standards, as discussed in section II.A of this document,
EPCA provides specific factors that DOE must consider when establishing
or amending energy conservation standards. One of these factors is the
total projected energy savings that would result from the standard (see
42 U.S.C. 6295(o)(2)(B)(i)(III)), and DOE includes impacts on
electricity consumption when evaluating the projected energy savings.
DOE follows the statutory obligations laid out in EPCA when evaluating
the potential for energy savings, technological feasibility, and
economic justification.
6. Opportunity for Public Input
MTNGUD, Watertown Municipal Utilities, and LANGD recommended that
DOE hold a workshop to further discuss this rulemaking. (MTNGUD, No.
350 at pp. 1-2; WMU, No. 351 at p. 1; LANGD, No. 355 at p. 2) MTNGUD
and LANGD specifically noted that at the workshop, DOE should further
discuss its LCC analysis with stakeholders in order to achieve a common
understanding, and these parties added that the LCC is a central part
of the proposed standard. (MTNGUD, No. 350 at p. 1; WMU, No. 351 at p.
2; Consumer Energy Alliance, No. 354 at p. 1, LANGD, No. 355 at p. 2)
MTNGUD, Watertown Municipal Utilities, and Joint Requesters stated that
holding a workshop and extending the associated comment period would be
in accordance with the objectives of the Process Rule. (MTNGUD, No. 350
at pp. 1-2; WMU, No. 351 at pp. 1-2; Joint Requesters, No. 356 at pp.
1-4) Joint Requesters requested another webinar to cover comments and
questions related to DOE's LCC model that were not addressed during the
webinar held on September 6, 2022. (Joint Requesters, No. 362 at p. 2)
Additionally, the Consumer Energy Alliance urged that an extension of
the comment period by DOE and hosting the requested workshop would
allow for sufficient time for all stakeholders to analyze the NOPR so
as to develop meaningful comments. (Consumer Energy Alliance, No. 354
at pp. 1-2)
MTNGUD, Watertown Municipal Utilities, Consumer Energy Alliance,
and LANGD also encouraged DOE to extend the comment period at least 45
days after the workshop to give commenters additional time to
effectively comment on the July 2022 NOPR. (MTNGUD, No. 350 at p. 2;
WMU, No. 351 at p. 2; Consumer Energy Alliance, No. 354 at 2; LANGD,
No. 355 at p. 2) LANGD and Watertown Municipal Utilities stated that
more time is needed to evaluate the impacts on low-income households,
seniors, and energy insecure consumers. (LANGD, No. 355 at p. 1; WMU,
No. 351 at p. 1) Consumer Energy Alliance commented that the proposal
and supporting documents are highly technical and voluminous, so it
will take additional time to sufficiently analyze everything DOE has
issued, adding that DOE's proposal will impact millions of consumers
while also raising complex legal, regulatory, economic, and technical
issues. (Consumer Energy Alliance, No. 354 at p. 1) Consumer Energy
Alliance further commented that stakeholders should have a sufficient
opportunity to evaluate the various issues raised in the NOPR,
including how such issues may impact the stakeholders' members/
customers. (Id.) Consumer Energy Alliance requested that an extension
of the comment period be granted by DOE, and the commenter argued that
hosting the requested workshop would allow for sufficient time for all
stakeholders to analyze the NOPR and develop meaningful comments. (Id.
at p. 2)
Several parties requested an extension of at least 60 days to
sufficiently analyze the NOPR and the related documents. (Joint
Commenters, No. 330 at p. 1; NGSA, No. 343, at p. 1; MHI, No. 344, at
p. 1). They stated that DOE did not follow the Process Rule, and that
the 60-day comment period made meaningful comment impossible. (Joint
Commenters, No. 330 at p. 1; NPGA, No. 395 at pp. 26-27) Similarly,
LANGD and the Consumer Energy Alliance commented that the 60-day
comment period does not allow for a meaningful opportunity to verify
DOE's analysis and provide substantive comments to aid in a productive
rulemaking process. (LANGD, No. 355 at p. 1; Consumer Energy Alliance,
No. 354 at p. 1) APGA and AGA noted that the Administrative Procedure
Act (APA) requires that agencies provide a ``meaningful'' opportunity
for comment. (APGA, No. 387 at p. 65; AGA, No. 405 at p. 24) APGA
commented that DOE has violated the APA due to the deviation from past
public comment periods and the complexities of the models in this
rulemaking. (APGA, No. 387 at p. 65) APGA stated that DOE's
justifications for fewer days to comment are unavailing, and that it
appears DOE is rushing to judgment by denying APGA and other
stakeholders a reasonable process to comment. (APGA, No. 387 at p. 67)
AGA also commented that stakeholders have been denied a meaningful
opportunity to evaluate the NOPR. (AGA, No. 405 at pp. 24-25)
Conversely, AHRI stated that by holding the webinar focused on the
LCC model on September 6, 2022 and extending the comment period for the
July 2022 NOPR, DOE provided all commenters with sufficient opportunity
to review its models and make thoughtful comments. (AHRI, No. 414-1 at
p. 1) Sierra Club et al. commented that the deviations from the Process
Rule are justified in light of the long

[[Page 87523]]

delay on these standards, which is in violation of the statutory
deadline for this action and the schedule to which DOE agreed as part
of a settlement agreement. (Sierra Club et al., No. 401 at p. 1)
In response, DOE conducts all appliance standards rulemakings in
accordance with its authority under EPCA, which involves making its
analyses publicly available and providing the public an opportunity to
comment on the rulemaking. (42 U.S.C. 6295(m)(2)) As explained in the
July 2022 NOPR, DOE initially found it necessary and appropriate to
provide a 60-day comment period given the overdue statutory deadline
and because the analytical methods used for the NOPR were similar to
those used in previous rulemaking notices regarding the subject
furnaces. 87 FR 40590, 40607 (July 7, 2022). DOE held a public meeting
webinar to discuss the July 2022 NOPR on August 3, 2022. Subsequently,
as stakeholders requested, DOE held a second public meeting webinar on
September 6, 2022 focused on helping stakeholders understand and
operate the Department's analytical models. DOE also extended the
comment period by 30 days, which totaled 90 days for stakeholders to
provide input. 87 FR 52861 (August 30, 2022). As mentioned, interested
parties such as AHRI and Sierra Club, et al. attested to the adequacy
of the comment opportunity which DOE provided. (AHRI, No. 414-1, at p.
1; Sierra Club et al., No. 401, at p. 1) As a result, DOE concludes
that stakeholders have had ample time and opportunity to provide input
on the rulemaking analyses and process related to the amended energy
conservation standards for NWGFs and MHGFs.
7. Federal Financial Assistance
The Attorneys General commented that with new Federal funding
available under the Infrastructure Investment and Jobs Act and the
Inflation Reduction Act, the transition to more-efficient space heating
will be cost-effective and affordable. (Attorneys General, No. 408 at
p. 2) The Attorneys General added that the multibillion-dollar
Congressional investment in weatherization, energy efficiency, and
beneficial electrification programs will help alleviate equipment cost
concerns for low- to moderate-income households and small businesses.
(Id.) Similarly, Trane commented that aid should be provided through
the Inflation Reduction Act to homeowners to offset any costs incurred
from this standard due to increased purchase and installation costs.
(Trane, No. 412 at pp. 1-2) Trane further stated that this assistance
could help with the necessary advancements in venting technology that
will accompany the standard. (Id.)
The Joint Utilities commented that they believe DOE can help
Americans achieve meaningful cost savings while benefitting the
environment by establishing rebates and incentive programs that could
be used to support State-regulated efficiency and rebate programs.
Furthermore, the Joint Utilities stated that this would assist electric
and natural gas customers by reducing the upfront costs of achieving
greater home heating efficiency. (The Joint Utilities, No. 402 at p. 1)
DOE agrees that Federal funding, specifically funding available
through the Inflation Reduction Act, may be able to assist in the
transition to more-efficient space heating. However, DOE also notes
that such funding is separate from this rulemaking process and has yet
to be fully implemented. Consequently, while DOE agrees that the costs
of more-efficient furnaces could be reduced for certain consumers, DOE
did not include impacts of any Federal funding in its reference case
analysis. However, as discussed in section IV.F.10 of this document,
DOE performed a sensitivity analysis in which tax credits significantly
reduce the cost of a heat pump system as an alternative space-heating
option, thereby incentivizing some consumers to switch from gas
furnaces to heat pumps. The results of this sensitivity analysis are
available in appendices 8J and 10E of the final rule TSD. Additionally,
any potential incentives for more-efficient gas furnaces would only
improve the consumer benefits as determined in the final rule analysis.
Therefore, as discussed in section V of this document, DOE concludes
that the amended standards are justified, and this decision is not
dependent on whether additional Federal subsidies or investments are
available.
8. Standby Mode and Off Mode Power Consumption Standards
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))
``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 Consumer Furnaces
Other Than Boilers,'' 10 CFR part 430, subpart B, appendix N). In that
test procedure, DOE defines ``standby mode'' as any mode in which the
furnace 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, and/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. ``Off mode'' for consumer furnaces is defined as a mode in which the
furnace 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. An ``off
switch'' is defined as the switch on the furnace 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. As discussed previously, DOE does not currently prescribe standby
mode or off mode standards for NWGFs and MHGFs.
In the July 2022 NOPR, DOE analyzed new standby mode and off mode
power standards for NWGFs and MHGFs and proposed that the maximum
allowable standby mode and off mode power consumption should be 8.5 W
for NWGFs and MHGFs. 87 FR 40590, 40592 (July 7, 2022). Table IV.5 of
the July 2022 NOPR shows the standby mode and off mode efficiency
levels that DOE analyzed, along with a description of the design
options anticipated to be used to achieve each efficiency level above
baseline. The baseline efficiency level was determined to be 11 W, and
it corresponds to the use of a linear power supply and a 40VA linear
transformer (LTX). Other technology options that were analyzed to
achieve efficiency levels above baseline include a low-loss LTX (``LL-
LTX'') and two types of switching mode power supply (SMPS). 87 FR
40590, 40619 (July 7, 2022).
In response to DOE's proposed technology options and watt levels
associated with each efficiency level for standby mode and off mode
standards, Carrier commented that it agreed with DOE's statement that
most furnaces use 40VA transformers, and further described that 40VA
transformers provide power to sensors and components in the furnace, as
well as a

[[Page 87524]]

variety of external devices. (Carrier, No. 377 at p. 2) Carrier also
commented that it does not believe the use of an SMPS will lower the
transformer size without limiting the external devices and sensors that
can be powered by the furnace, which would impact consumer experience
and product performance. The commenter stated that DOE only considered
thermostats, but noted that there are other devices that could be
powered by the transformer. (Carrier, No. 377 at pp. 2-3) Carrier
encouraged DOE to defer the standby mode and off mode power standards,
asserting that the 8.5W level has the potential to reduce the utility
of consumer furnaces, and therefore would not meet the requirements of
42 U.S.C. 6295(o)(2)(B)(iv). (Carrier, No. 377 at pp. 1-2) Carrier
asserted that its analysis found that a maximum standby watt limit of
8.5 is achievable in only their furnaces with the lowest AFUE
efficiency and least features. (Carriers, No. 377 at p. 2) Carrier
argued that products that incorporate a 20VA transformer do not meet
DOE's screening criteria of product utility or availability, nor will
they have the ability to support the safety sensors that will or could
be required in the future such as those that may be needed due to the
Consumer Protection Safety Commission's stated intention to establish a
requirement for carbon monoxide sensors on furnaces. (Carrier, No. 377
at p. 3) Carrier explained that efficiency level (EL) 1 is the only
feasible technology option to support the safety sensors that will be
required in the future. (Carrier, No. 377 at pp. 3-4) Carrier explained
that potential requirements for new safety sensors would mean that a
standard lower than 11 W could create an adverse impact on product
utility. (Carrier, No. 377 at pp. 3-4) Carrier asserted that
contractors would need to install larger transformers to maintain
utility, which defeats the purpose of having a standby power limit and
adds additional installation complexity. (Carrier, No. 377 at pp. 2-3)
Therefore, Carrier commented that it opposed DOE's proposed 8.5W
standby mode and off mode power standard for NWGFs. (Carrier, No. 377
at pp. 1-2) Carrier explained that it conducted an analysis of standby
mode and off mode power on their furnaces and found that the limit of
8.5W is achievable for their lower-efficiency furnaces, but not for
their mid-tier and deluxe furnaces without lessening the utility.
(Carrier, No. 377 at p. 2) Overall, Carrier recommended that DOE defer
standby mode and off mode power standards until further testing and
analysis is conducted. (Carrier, No. 377 at pp. 3-4)
Trane also commented that DOE's assumption that furnaces would
transition to a 20VA transformer at standby mode and off mode ELs 2 and
3 is inaccurate, because the transformer supplies power not only to the
furnace but also to the attached air conditioner or heat pump, as well
as the thermostat and other accessories. (Trane, No. 412 at p. 2) Trane
commented that setting the standard at 8.5W would result in
manufacturers adding transformers to supply power to the needed
features; therefore, Trane recommended maintaining a standard of 11W.
(Id.)
Lennox stated that 40VA transformers are utilized to provide
adequate low voltage power for components and accessory items. (Lennox,
No. 389 at pp. 4-5) Lennox commented that it offers transformers
ranging up to 70VA to accommodate situations where several accessories
are included in the HVAC system. (Lennox, No. 389 at p. 4) Lennox
argued that DOE's assumption of a unit with SMPS having a transformer
sized at 20VA is incorrect, since a 20VA transformer often does not
provide sufficient power capability to drive the internal components
necessary for all furnace/air conditioner/heat pump functions and a
thermostat. (Lennox, No. 389 at p. 4) Lennox explained that SMPS are
currently used in Lennox products controls, and the company is not
aware of ways to further reduce standby mode and off mode power
consumption. (Id.) Lennox also stated that the proposed standby mode
and off mode standard level would inhibit implementation of additional
safety features. (Lennox, No. 389 at pp. 3-4)
Lennox commented that the 8.5W limit for consumer furnaces will
prevent advances in communicating controls, installation and diagnostic
features, and zoning. (Lennox, No. 389 at p. 4) Lennox further stated
that programs, including ENERGY STAR, are considering measures that
would require these monitoring, diagnostic, and prognostic features
that would require additional standby power, but would save more energy
overall. (Id.) The commenter argued that future innovations and safety
requirements (e.g., thermostats, WiFi controls, extra power supplies)
may force the power usage to rise above the 11W limit. (Lennox, No. 389
at p. 6) Lennox commented that DOE should not mandate standby mode and
off mode power levels with de minimis energy savings that prevent the
integration of controls and other features that enable significantly
larger energy savings at the furnace and HVAC systems level. (Lennox,
No. 389 at pp. 4-5) Lennox commented that DOE should not only
reconsider the proposed standby mode and off mode standard of 8.5W but
should also consider whether an 11W baseline would be sufficient.
(Lennox, No. 389 at p. 6) Lennox further commented that the analysis
for DOE's proposed standard for standby mode and off mode also does not
consider system level impacts. (Lennox, No. 389 at p. 5)
Nortek commented that DOE should not implement a standby mode and
off mode standard lower than 11W. (Nortek, No. 406 at pp. 1-2) Nortek
commented that they do not support DOE's proposed standard of 8.5 W for
standby mode and off mode, as it would limit necessary innovation in
furnace controls, programming and usage displays, thermostats, and
other devices. (Nortek, No. 406 at p. 1)
Rheem commented that DOE should adjust its proposed standby mode
and off mode energy standards for NWGF. Rheem asserted that 8.5W may be
overly limiting due to the previously mentioned shift toward smart
products, and the shift to low global warming potential (GWP)
refrigerants that require additional power for supporting communication
and safety controls. The commenter warned that reductions in standby
wattage limits potential diagnostic and installation functionality,
advancements which could also result in energy savings. (Rheem, No. 394
at p. 1) Rheem commented that DOE should maintain a baseline standby
mode and off mode power level of 11W, as would allow future
improvements such as safety and communicating controls to be
incorporated into future furnace designs. (Rheem, No. 394 at p. 2)
Daikin commented that it does not support DOE's proposed 8.5W
standard for standby mode and off mode. (Daikin, No. 416 at p. 1)
Daikin also stated that DOE has significantly underestimated the
incremental MPCs for each of the standby mode and off mode efficiency
levels, and that the cost increase for a Low-Loss Linear Transformer is
more likely to be five to ten times higher than DOE's estimate. (Id. at
p. 4) Daikin noted that many manufacturers offer a 70VA transformer as
an accessory or service part to provide adequate low voltage power to
all system components, and that manufacturers would likely need to
limit accessory items to meet the proposed standby mode/off mode
standards. (Id. at p. 5) Daikin recommended that DOE establish a
standby mode and off mode criteria of 15W for condensing NWGFs with

[[Page 87525]]

communicating features, multiple heating stages, ultra-low
NO<INF>X,</INF> an electrically commutated (ECM) motor, and controls
associated with alternate refrigerants. (Daikin, No. 416 at p. 6)
AHRI explained that a maximum level of 8.5W of standby power would
limit necessary innovation in furnaces and related connected devices
powered through the furnace and could possibly prohibit significant
energy-saving features. (AHRI, No. 414-1 at p. 2) AHRI stated that DOE
should reconsider the standby mode and off mode energy standards
proposed for NWGFs, as well as the max-tech level based upon the use of
a 20VA low-loss linear transformer (``LL-LTX'') and SMPS. (AHRI, No.
414-1 at p. 3)
AHRI also noted that the NAS Peer Review Report \40\ mentions the
need to not stifle innovation, particularly regarding connected
products. (AHRI, No. 414-1 at p. 2) AHRI stated that if the standby
mode and off mode standards for furnaces are set too low, then
connected products such as thermostats and Wi-Fi controls will use add-
on power supplies, mentioning that such auxiliary power supplies are
already available on the market. (AHRI, No. 414-1 at p. 3) AHRI
expressed concern that the current baseline value of 11W may need to be
adjusted in the future to remove the effects of safety and other
control measures. (AHRI, No. 414-1 at p. 3)
---------------------------------------------------------------------------

\40\ National Academies of Sciences, Engineering, and Medicine,
Review of Methods Used by the U.S. Department of Energy in Setting
Appliance and Equipment Standards. (2021) Washington, DC: The
National Academies Press. pp. 2-3; 111-113. <a href="http://doi.org/10.17226/25992">doi.org/10.17226/25992</a>.
---------------------------------------------------------------------------

AHRI likewise stated that DOE should reconsider the standby mode
and off mode energy standards proposed for MHGFs, referencing the
comments it submitted for NWGFs. Specifically, AHRI stated that the
proposed maximum of 8.5 watts would stifle innovation and could reduce
energy savings from connected products, and is inadequate to power
safety and communication controls necessary for consumer utility.
(AHRI, No. 414-2 at p. 3) Mortex commented that DOE's proposed 8.5W
limit for standby mode and off mode would not be adequate to power
safety and communicating controls necessary for consumer utility and
that 11W should be retained. (Mortex, No. 410 at p. 4)
JCI commented that the 8.5W limit for standby mode and off mode
power of NWGFs and MHGFs is too restrictive due to the additional
requirements associated with the new A2L refrigerant requirement and
other future communication and monitoring advancements. (JCI, No. 411
at p. 3)
Several commenters argued that furnaces will need to incorporate
safety sensors for controlling components such as carbon monoxide,
carbon dioxide, refrigerant leak detectors and/or low GWP along with
other changes in the future, and they noted that such functionalities
must be accounted for in meeting the currently proposed limit for
standby mode and off mode power. (Lennox, No. 389 at pp. 4-5; Rheem,
No. 394 at pp. 1-2; Carrier, No. 377 at pp. 3-4; Daikin, No. 416 at pp.
5-6; AHRI, No. 414-1 at pp. 2-3)
Daikin, Lennox, Trane and AHRI listed numerous components that are
powered by transformers in consumer furnaces. The combined list of
components includes: integrated furnace control board, indoor and
outdoor air conditioning/heat pump (AC/HP) fan motors, gas valves,
combustion air inducers, thermostats, ultraviolet (UV) germicidal
lights, humidifiers, AC/HP outdoor control board, AC/HP defrost
controls, AC/HP heat pump reversing valve, indoor air circulating
blowers, indoor and outdoor electronic expansion valves, condensate
pumps, communicating controls that aid in proper commissioning, AC/HP
IoT devices, system performance monitoring and reporting,
identification of faults, zoning systems consumer interface,
temperature sensors, air pressure sensors, refrigerant pressure
sensors, gas pressure sensors, proprietary diagnostic sensors,
refrigerant leak detection systems for A2L refrigerants, carbon
monoxide (CO) sensors, CO<INF>2</INF> sensors, and dual fuel HPs that
require more power. (Daikin, No. 416 at p. 6; Lennox, No. 389 at pp. 4-
5; Trane, No. 412 at p. 2; AHRI, No. 414-1 at pp. 2-3) AHRI stated that
it is impossible at this time to determine the power draw from these
components that may be added to furnaces in the future and suggested
that DOE reevaluate these proposed standards for NWGFs in the next
round of standards. (AHRI, No. 414-1 at p. 3) Trane argued that a 20VA
transformer is inadequate to power all these items. (Trane, No. 412 at
p. 2) Daikin recommended taking these future requirements into account,
as these standards will not come into effect until after the new A2L
refrigerant is required. (Daikin, No. 416 at pp. 5-6)
The CA IOUs commented that they analyzed the dataset of ten
consumer furnaces shared by AHRI in which they found that 50 percent of
the furnaces with AFUEs of 97 or higher would not meet the proposed
standby mode and off mode requirement. They further stated that 70
percent would meet a standard of 9 W and that 100 percent would meet a
standard of 10 W. (The CA IOUs, No. 400 at p. 3)
The CA IOUs requested that DOE confirm that the proposed standby
mode and off mode energy conservation standard would not significantly
reduce the market availability of the most efficient consumer furnaces
and would preserve design flexibility for future products. The CA IOUs
suggested that these design flexibilities could include diagnostic
features to verify installation and monitor ongoing performance or
additional safety features or reduce consumer costs through higher
operational energy savings. The CA IOUs suggested that DOE should
consider a separate standby mode and off mode adder for furnaces with
higher energy efficiency than baseline furnaces. (The CA IOUs, No. 400
at p. 3)
The CA IOUs commented in support of a standby mode and off mode
energy conservation standard; however, they stated that, in their
experience, products with higher operational efficiencies sometimes
have higher standby mode and off mode energy requirements. (The CA
IOUs, No. 400 at pp. 2-3) They commented that, as an example, furnace
fans with ECMs have higher standby mode energy consumption compared
with furnaces fans outfitted with lower efficiency motors. (Id.)
CEC commented that consumer products in the marketplace already
meet the proposed DOE standard of 8.5W in standby mode. The commenter
conducted an analysis on AHRI's condensing data set, which showed 74
percent of condensing furnaces as using an ECM motor, and only 8
percent of those furnaces were shown to have a standby energy
consumption greater than 8.5W. CEC stated that the average of this data
was 6.1W and that the median was 5.7W for condensing furnaces with ECM
motors. Therefore, CEC claimed that the 8.5W limit is both realistic
and leaves room for additional functionality to be added. (CEC, No. 382
at p. 3)
NYSERDA expressed support for DOE's proposed standards for standby
mode and off mode power consumption and agreed with DOE's findings that
more-efficient transformers are realistic and attainable. (NYSERDA, No.
379 at pp. 7-8) NYSERDA also noted that the sample of condensing
furnaces from the data set provided by AHRI to DOE in 2018 \41\
supports DOE's proposed standby mode and off mode power

[[Page 87526]]

standards. (NYSERDA, No. 379 at p. 8) According to NYSERDA, the
majority of models tested at the time had standby mode and off mode
power efficiencies at or below the proposed standard levels, thereby
demonstrating the proposed standards to be technologically feasible and
readily available. (Id.)
---------------------------------------------------------------------------

\41\ The comment submitted by AHRI was in response to a separate
proceeding, and can be found at: <a href="http://www.regulations.gov/document/EERE-2018-BT-PET-0017-0002">www.regulations.gov/document/EERE-2018-BT-PET-0017-0002</a>.
---------------------------------------------------------------------------

After considering this feedback, DOE understands that typical and
baseline levels of power consumption of NWGFs and MHGFs in standby mode
or off mode are likely to increase in the future as manufacturers
continue to build increasingly complex controls into consumer furnaces,
and that many of the likely changes are related to features such as
safety sensors or to other improvements in functionality that would
provide utility for the consumer. In addition, DOE understands that
manufacturers may be introducing more sophisticated controls for
furnaces that are intended to get paired with central heat pumps in the
field, whose operation can be optimized for efficient performance. DOE
takes Carrier's point that such innovations could contribute to the
overall utility or performance of the covered product, an important
consideration when assessing the economic justification of a potential
standard (see 42 U.S.C. 6295(o)(2)(B)(i)(IV)). However, DOE further
notes that this one EPCA factor in isolation is not dispositive of a
potential standard's economic justification or lack thereof, but
instead, the Department must weigh all seven factors under 42 U.S.C.
6295(o)(2)(B)(i) before setting any standby mode and off mode power
standards.
Based on the totality of these comments, DOE has found that there
is some degree of uncertainty that exists with respect to the
appropriateness of the standby mode/off mode efficiency levels analyzed
in the July 2022 NOPR--particularly for products that are in
development but also possibly in some products already on the market.
Consequently, DOE has determined that it lacks the necessary
information to set appropriate standby mode and off mode standards
pursuant to 42 U.S.C. 6295(gg)(3) at this time. Particularly since some
of the functionalities at issue could have significant safety or
energy-savings benefits, DOE does not wish to stymie such developments
through well-intentioned but ultimately counterproductive standby mode/
off mode standards. Instead, DOE needs to have a better understanding
of the legitimate power consumption needs of the subject furnaces when
operating in these modes. The Department has concluded that it does not
currently have the requisite evidence to support standby mode and off
mode standards under the applicable statutory criteria in 42 U.S.C.
6295(o)(2)(B)(i). Therefore, DOE is not adopting the standby mode/off
mode power standards for NWGFs/MHGFs proposed in the July 2022 NOPR at
this time, but instead, the Department will continue to investigate
these issues and may consider such standards in a future rulemaking. In
summary, based on the stakeholder feedback received, DOE concludes that
more data is necessary to determine the appropriate baseline level for
standby mode and off mode energy usage to allow for safety features,
features that reduce active mode energy use, or other features that
would provide additional functionality for consumers.
In response to the July 2022 NOPR, Daikin commented that it does
not support DOE's proposed standby mode and off mode standard because
the consumer life-cycle savings are negligible, the energy savings
potential is extremely small, the burden on manufacturers is high, and
there is a need to address low-voltage power supply for components in
the future. (Daikin, No. 416 at p. 4) Similarly, PHCC commented that
standby mode and off mode energy use cannot be considered in comparison
to the overall energy consumption of the equipment because those
potential savings are de minimis. (PHCC, No. 403 at p. 2)
Daikin disagreed with DOE's statement that current mounting
brackets are sufficient to support the slight increase in size and
weight of an LL-LTX. The commenter asserted that, according to ASTM
D4728 (Standard Test Method for Random Vibration Testing of Shipping
Containers and Systems), even small increases in mass can cause breaks,
cracks, and deformation that mandate strengthening supports and
brackets. Finally, Daikin stated that such modifications would lead to
significant cost increases. (Daikin, No. 416 at p. 4)
As discussed previously in this section, DOE is not finalizing its
previous proposal to set new standby mode and off mode power standards
for NWGFs and MHGFs in this final rule. However, DOE will continue to
monitor the standby mode and off mode power consumption of the subject
consumer furnaces and may address such standards in a future
rulemaking. The Department may consider these comments further at that
time, as appropriate.

B. Product Classes and Scope of Coverage

When evaluating and establishing energy conservation standards for
a type (or class) of covered products, DOE divides covered products
into product classes by the type of energy used, or by capacity or
other performance-related features which other products within such
type (or class) do not have and 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 rule, DOE is only analyzing a subset of consumer furnace
classes. DOE agreed to the partial vacatur and remand of the June 2011
direct final rule (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 rule, DOE is only
amending the energy conservation standards for NWGFs and for MHGFs. See
section IV.A.1 of this document for a more detailed discussion of the
product classes analyzed in this final rule.

C. Test Procedure

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

[[Page 87527]]

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 (TP) for
consumer furnaces (January 2016 TP Final Rule). 81 FR 2628. The
revisions included:
1. Clarification of the electrical power term ``PE'';
2. Adoption of a smoke stick test for determining use of minimum
default draft factors;
3. Allowance for the measurement of condensate under steady-state
conditions;
4. Reference to manufacturer's installation and operation manual
and clarifications for when that manual does not specify test set-up;
5. Specification of duct-work requirements for units that are
installed without a return duct; and
6. 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.
Daikin commented that the test procedure should add clarity for the
terms ``electrical auxiliaries'' and ``single auxiliary.'' (Daikin, No.
416 at p. 6) In response, DOE notes that amendments to the test
procedure, including associated terminology, are not in scope for this
analysis of amended energy conservation standards. However, DOE may
consider this issue further in its next review of the consumer furnaces
test procedure, which would occur in a separate test procedure
rulemaking proceeding.

D. 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 NWGFs and MHGFs, particularly the designs DOE considered, those it
screened out, and those that are the basis for the standards considered
in this rulemaking. For further details on the screening analysis for
this rulemaking, see chapter 4 of the final rule 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
of this final rule and in chapter 5 of the final rule TSD.

E. 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
amended standards (2029-2058).\42\ 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 energy
conservation standards.
---------------------------------------------------------------------------

\42\ 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 standards
for NWGFs and MHGFs. The NIA spreadsheet model (described in section
IV.H of this document) 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 AEO2023. DOE also
calculates NES in terms of FFC energy savings. The FFC metric includes
the energy consumed in extracting, processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum), and, thus, presents a more
complete picture of the impacts of energy conservation standards.\43\
DOE's approach is based on the calculation of an FFC multiplier for
each of the energy types used by covered products or equipment. For
more information on FFC energy savings, see section IV.H.2 of this
document.
---------------------------------------------------------------------------

\43\ 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. For example,
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

[[Page 87528]]

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, 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.
The standard levels adopted in this final rule are projected to
result in national energy savings of 4.77 quad (FFC) over 30 years of
shipments, with GHG emissions savings equivalent to the energy use of
42 million homes in one year.\44\ Based on the amount of FFC savings,
the corresponding reduction in emissions, and need to confront the
global climate crisis, DOE has determined (based on the methodology
described in section IV.E of this document and the analytical results
presented in section V.B.3.a of this document) that there is
substantial evidence that the energy savings from the standard levels
adopted in this final rule are ``significant'' within the meaning of 42
U.S.C. 6295(o)(3)(B).
---------------------------------------------------------------------------

\44\ Equivalencies based on: <a href="http://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator">www.epa.gov/energy/greenhouse-gas-equivalencies-calculator</a> (last accessed Sept. 15, 2023).
---------------------------------------------------------------------------

APGA commented that the purpose of EPCA is to reduce energy
consumption. APGA stated that the energy savings for the proposed TSL 8
(of 5.48 quad) was significantly higher than all other TSLs except TSL
9. APGA stated that the analysis is extremely complex, but even with
that complexity, the estimated savings represents just 3.5 percent
relative to the energy use of these products in the no-new-standards
case. APGA also added that DOE's estimates of energy savings are
tainted based on flawed modeling in the LCC analysis. (APGA, No. 387 at
p. 28)

[…truncated; see source link]

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on December 18, 2023.

This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.