# Energy Conservation Program for Consumer Products: Energy Conservation Standards for Residential Furnaces > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2015-03275 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** March 12, 2015 - **Citation:** 80 FR 13120 ## Text DEPARTMENT OF ENERGY 10 CFR Part 430 [Docket Number EERE-2014-BT-STD-0031] RIN 1904-AD20 Energy Conservation Program for Consumer Products: Energy Conservation Standards for Residential Furnaces AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Notice of proposed rulemaking and announcement of public meeting. SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including residential furnaces. EPCA also requires the U.S. Department of Energy (DOE) to periodically determine whether more-stringent, amended standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this document, DOE proposes amended energy conservation standards for residential non-weatherized gas furnaces and mobile home furnaces, in partial fulfillment of a court-ordered remand of DOE's 2011 rulemaking for these products. The proposed rule also announces a public meeting to receive comment on these proposed standards and associated analyses and results. DATES: Meeting: DOE will hold a public meeting on Friday, March 27, from 9:00 a.m. to 4:00 p.m., in Washington, DC. The meeting will also be broadcast as a webinar. See section VII, “Public Participation,” for webinar registration information, participant instructions, and information about the capabilities available to webinar participants. Comments: DOE will accept comments, data, and information regarding this notice of proposed rulemaking (NOPR) before and after the public meeting, but no later than June 10, 2015. See section VII, “Public Participation,” for details. ADDRESSES: The public meeting will be held at the U.S. Department of Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at (202) 586-2945. Please note that foreign nationals visiting DOE Headquarters are subject to advance security screening procedures. Any foreign national wishing to participate in the meeting should advise DOE as soon as possible by contacting Ms. Edwards at the phone number above to initiate the necessary procedures. Please also note that any person wishing to bring a laptop computer or tablet into the Forrestal Building will be required to obtain a property pass. Visitors should avoid bringing laptops, or allow an extra 45 minutes. Persons may also attend the public meeting via webinar. For more information, refer to section VII, “Public Participation,” near the end of this NOPR. Instructions: Any comments submitted must identify the NOPR for Energy Conservation Standards for Residential Furnaces, and provide docket number EERE-2014-BT-STD-0031 and/or regulatory information number (RIN) number 1904-AD20. Comments may be submitted using any of the following methods: 1. Federal eRulemaking Portal: www.regulations.gov. Follow the instructions for submitting comments. 2. Email: ResFurnaces2014STD0031@ee.doe.gov. Include the docket number and/or RIN in the subject line of the message. Submit electronic comments in Word Perfect, Microsoft Word, PDF, or ASCII file format, and avoid the use of special characters or any form on encryption. 3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. If possible, please submit all items on a compact disc (CD), in which case it is not necessary to include printed copies. 4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Office, 950 L'Enfant Plaza SW., Suite 600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, please submit all items on a CD, in which case it is not necessary to include printed copies. Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to Office of Energy Efficiency and Renewable Energy through the methods listed above and by email to Chad_S_Whiteman@omb.eop.gov. No telefacsimilies (faxes) will be accepted. For detailed instructions on submitting comments and additional information on the rulemaking process, see section VII of this document (Public Participation). Docket: The docket, which includes Federal Register notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at www.regulations.gov. All documents in the docket are listed in the www.regulations.gov index. However, some documents listed in the index may not be publically available, such as those containing information that is exempt from public disclosure. A link to the docket Web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2014-BT-STD-0031. This Web page contains a link to the docket for this notice on the www.regulations.gov site. The www.regulations.gov Web page contains simple instructions on how to access all documents, including public comments, in the docket. See section VII, “Public Participation,” for further information on how to submit comments through www.regulations.gov. For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting, contact Ms. Brenda Edwards at (202) 586-2945 or by email: Brenda.Edwards@ee.doe.gov. FOR FURTHER INFORMATION CONTACT: Mr. John Cymbalsky, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 287-1692. Email: residential_furnaces_and_boilers@ee.doe.gov. Mr. Eric Stas or Ms. Johanna Hariharan, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-9507 or (202) 287-6307. Email: Eric.Stas@hq.doe.gov or Johanna.Hariharan@hq.doe.gov. For information on how to submit or review public comments, contact Ms. Brenda Edwards at (202) 586-2945 or by email: Brenda.Edwards@ee.doe.gov. SUPPLEMENTARY INFORMATION: Table of Contents I. Summary of the Proposed Rule A. Benefits and Costs to Consumers B. Impact on Manufacturers C. National Benefits II. Introduction A. Authority B. Background 1. Current Standards 2. History of Standards Rulemaking for Residential Furnaces III. General Discussion A. Product Classes and Scope of Coverage B. Test Procedure C. Technological Feasibility 1. General 2. Maximum Technologically Feasible Levels D. Energy Savings 1. Determination of Savings 2. Significance of Savings E. Economic Justification 1. Specific Criteria a. Economic Impact on Manufacturers and Consumers b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP) c. Energy Savings d. Lessening of Utility or Performance of Products e. Impact of Any Lessening of Competition f. Need for National Energy Conservation g. Other Factors 2. Rebuttable Presumption F. Regional Standards G. Compliance Date H. Standby Mode and Off Mode IV. Methodology A. Market and Technology Assessment 1. Definition and Scope of Coverage 2. Product Classes 3. Technology Options B. Screening Analysis 1. Screened-Out Technologies 2. Remaining Technologies C. Engineering Analysis 1. Efficiency Levels a. Baseline Efficiency Level and Product Characteristics b. Other Energy Efficiency Levels 2. Cost-Assessment Methodology a. Teardown Analysis b. Cost Model c. Manufacturing Production Costs d. Cost-Efficiency Relationship e. Manufacturer Markup f. Manufacturer Interviews D. Markups Analysis E. Energy Use Analysis 1. Active Mode 2. Standby Mode and Off Mode F. Life-Cycle Cost and Payback Period Analysis 1. Inputs to Installed Cost 2. Installation Cost 3. Inputs to Operating Costs a. Energy Consumption b. Energy Prices c. Maintenance and Repair Costs d. Product Lifetime e. Discount Rates f. Base-Case Efficiency 4. Accounting for Product Switching Under Potential Standards 5. Inputs to Payback Period Analysis G. Shipments Analysis 1. Overview 2. Impact of Potential Standards on Shipments: Accounting for Product Switching H. National Impact Analysis 1. Efficiency in the Base Case and Standards Cases 2. Product Cost Trend 3. Product Switching 4. National Energy Savings 5. Net Present Value of Consumer Benefit I. Consumer Subgroup Analysis J. Manufacturer Impact Analysis 1. Overview 2. Government Regulatory Impact Model a. Government Regulatory Impact Model Key Inputs b. Government Regulatory Impact Model Scenarios 3. Manufacturer Interviews K. Emissions Analysis L. Monetizing Carbon Dioxide and Other Emissions Impacts 1. Social Cost of Carbon 2. Valuation of Other Emissions Reductions M. Utility Impact Analysis N. Employment Impact Analysis V. Analytical Results and Conclusions A. Trial Standard Levels 1. TSLs for AFUE 2. TSLs for Standby Mode and Off Mode Power 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 Period 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 Product Utility or Performance 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. Proposed Standards 1. Benefits and Burdens of TSLs Considered for NWGFs and MHGFs AFUE Standards 2. Benefits and Burdens of TSLs Considered for NWGFs and MHGFs Standby Mode and Off Mode Standards 3. Summary of Benefits and Costs (Annualized) of the Proposed Standards VI. Procedural Issues and Regulatory Review A. Review Under Executive Orders 12866 and 13563 B. Review Under the Regulatory Flexibility Act 1. Description and Estimated Number of Small Entities Regulated 2. Description and Estimate of Compliance Requirements 3. Duplication, Overlap, and Conflict With Other Rules and Regulations 4. Significant Alternatives to the Rule C. Review Under the Paperwork Reduction Act of 1995 D. Review Under the National Environmental Policy Act of 1969 E. Review Under Executive Order 13132 F. Review Under Executive Order 12988 G. Review Under the Unfunded Mandates Reform Act of 1995 H. Review Under the Treasury and General Government Appropriations Act, 1999 I. Review Under Executive Order 12630 J. Review Under the Treasury and General Government Appropriations Act, 2001 K. Review Under Executive Order 13211 L. Review Under the Information Quality Bulletin for Peer Review VII. Public Participation A. Attendance at the Public Meeting B. Procedure for Submitting Requests To Speak and Prepared General Statements for Distribution C. Conduct of the Public Meeting D. Submission of Comments E. Issues on Which DOE Seeks Comment VIII. Approval of the Office of the Secretary I. Summary of the Proposed Rule Title III, Part B 1 of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles. 2 These products include non-weatherized gas furnaces (NWGFs) and mobile home gas furnaces (MHGFs), the subject of this notice. 1 For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A. 2 All references to EPCA in this document refer to the statute as amended through the American Energy Manufacturing Technical Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012). Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in a significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) EPCA specifically provides that DOE must conduct a second round of energy conservation standards rulemaking for NWGFs and MHGFs. (42 U.S.C. 6295(f)(4)(C)) The statute also provides that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation standards. (42 U.S.C. 6295(m)(1)) Once complete, this rulemaking will satisfy both statutory provisions. In accordance with these and other statutory provisions discussed in this document, DOE proposes amended energy conservation standards for NWGFs and MHGFs. The proposed standards, which are expressed as minimum annual fuel utilization efficiencies (AFUE), are shown in Table I.1. Table I.2 shows the proposed standards for standby mode and off mode. These proposed standards, if adopted, would apply to all products listed in Table I.1 and Table I.2 and manufactured in, or imported into, the United States on or after the date 5 years after the publication of the final rule for this rulemaking. Table I.1—Proposed AFUE Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 3) Product class Proposed standard: AFUE (%) Non-Weatherized Gas-Fired Furnaces 92 Mobile Home Gas-Fired Furnaces 92 Table I.2—Proposed Standby Mode and Off Mode Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces Electrical Energy Consumption (TSL 3) Product class Proposed standby mode standard: P W,SB (watts) Proposed off mode standard: P W,OFF (watts) Non-Weatherized Gas-Fired Furnaces 8.5 8.5 Mobile Home Gas-Fired Furnaces 8.5 8.5 A. Benefits and Costs to Consumers Table I.3 and Table I.4 present DOE's evaluation of the economic impacts of the proposed AFUE and standby and off mode standards on consumers of NWGFs and MHGFs, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP). 3 In both cases, the average LCC savings are positive for all product classes. The PBP for each product class falls well below the average furnace lifetime, which is approximately 22 years. 4 3 The average LCC savings are measured relative to the base-case efficiency distribution, which depicts the furnace market in the compliance year (see section IV.F.3.f). The simple PBP, which is designed to compare specific furnace AFUE and standby and off mode efficiency levels, is measured relative to the baseline furnace AFUE and standby and off mode (see section IV.C.1.a). The AFUE standard results include the projected fuel switching as described in chapter 8 of the NOPR TSD. 4 See appendix 8G of the NOPR TSD for details of the derivation of the average furnace lifetime. Table I.3—Impacts of Proposed AFUE Energy Conservation Standards on Consumers of Residential Furnaces (TSL 3) Product class Average LCC savings (2013$) Simple payback period (years) Non-Weatherized Gas-Fired Furnaces $305 7.2 Mobile Home Gas-Fired Furnaces 691 2.2 Table I.4—Impacts of Proposed Standby Mode and Off Mode Electrical Energy Consumption Energy Conservation Standards on Consumers of Residential Furnaces (TSL 3) Product class Average LCC savings (2013$) Median payback period (years) Non-Weatherized Gas Furnace $13 6.6 Mobile Home Gas Furnace 1 5.9 B. Impact on Manufacturers The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year of the MIA analysis through the end of the analysis period (2014 to 2050). Using a real discount rate of 6.4 percent, DOE estimates that the INPV for manufacturers of NWGF and MHGF is $1055.13 million in 2013$. DOE analyzed the impacts of AFUE energy conservation standards and standby/off mode electrical energy consumption energy conservation standards on manufacturers independently. Under the proposed AFUE standards, DOE expects the change in INPV to range from −7.93 percent to 0.62 percent. Under the proposed standby mode and off mode standards, DOE expects the change in INPV will range from −1.1 to 0.2 percent. Industry total conversion costs are expected to total $55 million as a result of the proposed standard. A key consideration in DOE's selection of the proposed standard was the cumulative regulatory burden associated with the residential furnace fan final rule, 79 FR 38130 (July 3, 2014). Today's proposed standard and the furnace fans standard impact the same products ( i.e., residential furnaces), affect the same group of manufacturers, and go into effect in a similar timeframe. Based on currently available information, DOE assumes the regulatory impact of these two rules to be largely additive with limited opportunity for cost savings to be achieved through coordinating the expenditures of the two rules. Thus, when considering the total conversion costs of the furnace fans final rule ($40.6 million), manufacturers could incur a combined total of $95.6 million conversion costs in the years leading up to the 2019 furnace fans and the projected 2021 residential furnaces effective dates. DOE selected the proposed standard levels in today's proposal in such a way as to reduce the cumulative burden on manufacturers that result from the additive effects of the two rules, although higher standard levels for residential furnaces may have been justified based solely on the analytical results presented in this NOPR. See Sections V.B.2.e and V.C.1 for a more detail discussion of cumulative regulatory burden. C. National Benefits 5 5 Energy savings in this section refer to full-fuel-cycle savings (see section IV.H for discussion). DOE's analyses indicate that the proposed AFUE energy conservation standards for NWGFs and MHGFs would save a significant amount of energy. The lifetime energy savings for NWGFs and MHGFs purchased in the 30-year period that begins in the first full year of compliance with amended standards (2021-2050) amount to 2.78 quads 6 of full-fuel-cycle energy. This is a savings of 1.1 percent relative to the energy use of these products in the base case without amended standards. 6 A quad is equal to 10 15 British thermal units (Btu). The cumulative net present value (NPV) of total consumer costs and savings for the proposed NWGF and MHGF AFUE standards ranges from $3.1 billion to $16.1 billion at 7-percent and 3-percent discount rates, respectively. This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased installed product costs for NWGFs and MHGFs purchased in 2021-2050. In addition, the proposed NWGF and MHGF AFUE standards would have significant environmental benefits. The proposed standards would result in cumulative emission reductions of 137 million metric tons (Mt) 7 of carbon dioxide (CO 2 ), 3,424 thousand tons of methane (CH 4 ), and 816 thousand tons of nitrogen oxides (NO X ). 8 Projected emissions show an increase of 203 thousand tons of sulfur dioxide (SO 2 ), 2.61 thousand tons of nitrous oxide (N 2 O), and 0.629 tons of mercury (Hg). The increase is due to projected switching from NWGFs to electric heat pumps and electric furnaces under the proposed standards. The cumulative reduction in CO 2 emissions through 2030 amounts to 4.2 Mt, which is a savings of 0.2 percent relative to the CO 2 emissions in the base case without amended standards. 7 A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO 2 are presented in short tons. 8 DOE calculated emissions reductions relative to the Annual Energy Outlook 2014 ( AEO 2014 ) Reference case, which generally represents current legislation and environmental regulations, including recent government actions for which implementing regulations were available as of October 31, 2013. The value of the CO 2 reductions is calculated using a range of values per metric ton of CO 2 (otherwise known as the Social Cost of Carbon, or SCC) developed by a recent Federal interagency process. 9 The derivation of the SCC values is discussed in section IV.L. Using discount rates appropriate for each set of SCC values, DOE estimates the present monetary value of the CO 2 emissions reduction is between $0.7 billion and $11.7 billion. Additionally, DOE estimates the present monetary value of the NO X emissions reduction to be $0.32 billion to $0.88 billion at 7-percent and 3-percent discount rates, respectively. 10 9 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; revised November 2013) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf. ) 10 DOE is investigating valuation of avoided Hg and SO 2 emissions. Table I.5 summarizes the national economic benefits and costs expected to result from the proposed AFUE standards for NWGFs and MHGFs. Table I.5—Summary of National Economic Benefits and Costs of Proposed AFUE Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 3) * Category Present value (billion 2013$) Discount rate (%) Benefits Consumer Operating Cost Savings 8.9 7 27.7 3 CO 2 Reduction Monetized Value ($12.0/t case) ** 0.7 5 CO 2 Reduction Monetized Value ($40.5/t case) ** 3.8 3 CO 2 Reduction Monetized Value ($62.4/t case) ** 6.1 2.5 CO 2 Reduction Monetized Value ($119/t case) ** 11.7 3 NO X Reduction Monetized Value (at $2,684/ton) ** 0.9 3 Total Benefits † 13.0 7 32.4 3 Costs Consumer Incremental Installed Costs 5.8 7 11.6 3 Total Net Benefits Including Emissions Reduction Monetized Value † 7.2 7 20.8 3 * This table presents the costs and benefits associated with NWGFs and MHGFs shipped in 2021-2050. These results include benefits to consumers which accrue after 2050 from the products purchased in 2021-2050. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. ** The CO 2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NO X is the average of high and low values found in the literature. † Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with a 3-percent discount rate ($40.5/t in 2015). For the proposed standby mode and off mode standards, the lifetime energy savings for NWGFs and MHGFs purchased in the 30-year period that begins in the first full year of compliance with amended standards (2021-2050) amount to 0.28 quads of energy. This is a savings of 15.9 percent relative to the standby energy use of these products in the base case without amended standards. The cumulative net present value (NPV) of total consumer costs and savings for the proposed NWGF and MHGF standby mode and off mode standards ranges from $1.0 billion to $3.3 billion at 7-percent and 3-percent discount rates, respectively. This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for NWGFs and MHGFs purchased in 2021-2050. In addition, the proposed standby mode and off mode standards would have significant environmental benefits. The energy savings would result in cumulative emission reductions of 15.6 Mt of CO 2 , 75 thousand tons of CH 4 , 0.22 thousand tons of N 2 O, 13.0 thousand tons of SO 2 , 24.3 thousand tons of NO X , and 0.04 tons of Hg. The cumulative reduction in CO 2 emissions through 2030 amounts to 1.5 Mt. As noted above, the value of the CO 2 reductions is calculated using a range of SCC values developed by a recent Federal interagency process. Using discount rates appropriate for each set of SCC values, DOE estimates the present monetary value of the CO 2 emissions reduction is between $0.09 billion and $1.37 billion. Additionally, DOE estimates the present monetary value of the NO X emissions reduction to be $0.01 billion to $0.03 billion at 7-percent and 3-percent discount rates, respectively. Table I.6 summarizes the national economic benefits and costs expected to result from the proposed standby mode and off mode standards for NWGFs and MHGFs. Table I.6—Summary of National Economic Benefits and Costs of Proposed Standby Mode and Off Mode Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 3) * Category Present value (billion 2013$) Discount rate (%) Benefits Consumer Operating Cost Savings 1.4 7 3.9 3 CO 2 Reduction Monetized Value ($12.0/t case) ** 0.1 5 CO 2 Reduction Monetized Value ($40.5/t case) ** 0.4 3 CO 2 Reduction Monetized Value ($62.4/t case) ** 0.7 2.5 CO 2 Reduction Monetized Value ($119/t case) ** 1.4 3 NO X Reduction Monetized Value (at $2,684/ton) ** 0.01 7 0.03 3 Total Benefits † 1.8 7 4.4 3 Costs Consumer Incremental Installed Costs 0.33 7 0.67 3 Total Net Benefits Including Emissions Reduction Monetized Value † 1.5 7 3.7 3 * This table presents the costs and benefits associated with NWGFs and MHGFs shipped in 2021-2050. These results include benefits to consumers which accrue after 2050 from the products purchased in 2021-2050. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. ** The CO 2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NO X is the average of high and low values found in the literature. † Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with a 3-percent discount rate ($40.5/t in 2015). The benefits and costs of the proposed energy conservation standards, for NWGFs and MHGFs products sold in 2021-2050, can also be expressed in terms of annualized values. Benefits and costs for the AFUE standards are considered separately from benefits and costs for the standby mode and off mode electrical consumption standards, because it was not feasible to develop a single, integrated standard. As discussed in the October 20, 2010 test procedure final rule, DOE concluded that due to the magnitude of the active mode energy consumption as compared to the standby mode and off mode electrical consumption, an integrated metric would not be feasible because the standby and off mode electrical consumption would be a de minimis portion of the overall energy consumption. 75 FR 64621, 64627. Thus, an integrated metric could not be used to effectively regulate the standby mode and off mode energy consumption. The annualized monetary values are the sum of: (1) The annualized national economic value of the benefits from consumer operation of products that meet the proposed new or amended standards (consisting primarily of operating cost savings from using less energy, minus increases in product purchase and installation costs, which is another way of representing consumer NPV), and (2) the annualized monetary value of the benefits of emission reductions, including CO 2 emission reductions. 11 11 To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2014, 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., 2020 or 2030), and then discounted the present value from each year to 2014. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO 2 reductions, for which DOE used case-specific discount rates, as shown in Table I.7. 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. Although combining the values of operating savings and CO 2 emission reductions provides a useful perspective, two issues should be considered. First, the national operating savings are domestic U.S. consumer monetary savings that occur as a result of market transactions, whereas the value of CO 2 reductions is based on a global value. Second, the assessments of operating cost savings and CO 2 savings are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of NWGFs and MHGFs shipped in 2021-2050. The SCC values, on the other hand, reflect the present value of some future climate-related impacts resulting from the emission of one ton of carbon dioxide in each year. These impacts continue well beyond 2100. Estimates of annualized benefits and costs of the proposed AFUE standards are shown in Table I.7. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO 2 reduction, for which DOE used a 3-percent discount rate along with the average SCC series that uses a 3-percent discount rate ($40.5/t in 2015), the cost of the NWGFs and MHGFs standards proposed in this rule is $701 million per year in increased equipment costs, while the estimated benefits are $1,074 million per year in reduced equipment operating costs, $231 million per year in CO 2 reductions, and $39 million per year in reduced NO X emissions. In this case, the net benefit would amount to $642 million per year. Using a 3-percent discount rate for all benefits and costs and the average SCC series that uses a 3-percent discount rate ($40.5/t in 2015), the estimated cost of the NWGFs and MHGFs standards proposed in this rule is $709 million per year in increased equipment costs, while the estimated benefits are $1,690 million per year in reduced equipment operating costs, $231 million per year in CO 2 reductions, and $54 million per year in reduced NO X emissions. In this case, the net benefit would amount to $1,264 million per year. Table I.7—Annualized Benefits and Costs of Proposed AFUE Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 3) Discount rate (%) (Million 2013$/year) Primary estimate * Low net benefits estimate * High net benefits estimate * Benefits Consumer Operating Cost Savings 7 1,074 903 1,174. 3 1,690 1,383 1,887. CO 2 Reduction Monetized Value ($12.0/t case) ** 5 64 59 72. CO 2 Reduction Monetized Value ($40.5/t case) ** 3 231 211 260. CO 2 Reduction Monetized Value ($62.4/t case) ** 2.5 340 311 384. CO 2 Reduction Monetized Value ($119/t case) ** 3 715 654 805. NO X Reduction Monetized Value (at $2,684/ton) ** 7 38.50 35.68 42.48. 3 53.52 49.26 59.53. Total Benefits † 7 plus CO 2 range 1,177 to 1,828 998 to 1,593 1,288 to 2,022. 7 1,343 1,150 1,476. 3 plus CO 2 range 1,807 to 2,458 1,491 to 2,087 2,018 to 2,751. 3 1,974 1,643 2,206. Costs Consumer Incremental Installed Costs 7 701 750 683. 3 709 766 689. Net Benefits Total † 7 plus CO 2 range 476 to 1,127 248 to 843 605 to 1,339. 7 642 400 793. 3 plus CO 2 range 1,098 to 1,749 725 to 1,320 1,329 to 2,062. 3 1,264 877 1,517. * This table presents the annualized costs and benefits associated with NWGFs and MHGFs shipped in 2021-2050. These results include benefits to consumers which accrue after 2050 from the products purchased in 2021-2050. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO 2014 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a modest decline rate for projected product price trends in the Primary Estimate, a constant rate in the Low Benefits Estimate, and a higher decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.1. ** The CO 2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NO X is the average of high and low values found in the literature. † Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate ($40.5/t in 2015). In the rows labeled “7% plus CO 2 range” and “3% plus CO 2 range,” the operating cost and NO X benefits are calculated using the labeled discount rate, and those values are added to the full range of CO 2 values. Estimates of annualized benefits and costs of the proposed standby mode and off mode standards are shown in Table I.8. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO 2 reduction, for which DOE used a 3-percent discount rate along with the average SCC series that uses a 3-percent discount rate ($40.5/t in 2015), the estimated cost of the NWGFs and MHGFs standby mode and off mode standards proposed in this rule is $40.4 million per year in increased equipment costs, while the estimated benefits are $165.4 million per year in reduced equipment operating costs, $26.9 million per year in CO 2 reductions, and $1.1 million per year in reduced NO X emissions. In this case, the net benefit would amount to $153.0 million per year. Using a 3-percent discount rate for all benefits and costs and the average SCC series that uses a 3-percent discount rate ($40.5/t in 2015), the estimated cost of the NWGFs and MHGFs standby mode and off mode standards proposed in this rule is $41.0 million per year in increased equipment costs, while the estimated benefits are $240.2 million per year in reduced equipment operating costs, $26.9 million per year in CO 2 reductions, and $1.6 million per year in reduced NO X emissions. In this case, the net benefit would amount to $227.6 million per year. Table I.8—Annualized Benefits and Costs of Proposed Standby Mode and Off Mode Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 3) Discount rate (%) (Million 2013$/year) Primary estimate * Low net benefits estimate * High net benefits estimate * Benefits Consumer Operating Cost Savings 7 165.4 149.7 190.8 3 240.2 214.9 281.5 CO 2 Reduction Monetized Value ($12.0/t case) ** 5 7.65 6.94 8.60 CO 2 Reduction Monetized Value ($40.5/t case) ** 3 26.87 24.31 30.28 CO 2 Reduction Monetized Value ($62.4/t case) ** 2.5 39.46 35.68 44.50 CO 2 Reduction Monetized Value ($119/t case) ** 3 83.18 75.26 93.76 NO X Reduction Monetized Value (at $2,684/ton) ** 7 1.14 1.04 1.27 3 1.59 1.44 1.78 Total Benefits † 7 plus CO 2 range 174 to 250 158 to 226 201 to 286 7 193.4 175.0 222.4 3 plus CO 2 range 249 to 325 223 to 292 292 to 377 3 268.6 240.7 313.5 Costs Consumer Incremental Installed Costs 7 40.35 45.01 36.86 3 41.02 46.13 37.19 Net Benefits Total † 7 plus CO 2 range 134 to 209 113 to 181 164 to 249 7 153.0 130.0 185.5 3 plus CO 2 range 208 to 284 177 to 246 255 to 340 3 227.6 194.6 276.3 * This table presents the annualized costs and benefits associated with NWGFs and MHGFs shipped in 2021-2050. These results include benefits to consumers which accrue after 2050 from the products purchased in 2021-2050. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO 2014 Reference case, Low Estimate, and High Estimate, respectively. ** The CO 2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NO X is the average of high and low values found in the literature. † Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate ($40.5/t in 2015). In the rows labeled “7% plus CO 2 range” and “3% plus CO 2 range,” the operating cost and NO X benefits are calculated using the labeled discount rate, and those values are added to the full range of CO 2 values. Estimates of the combined annualized benefits and costs of the proposed AFUE and standby mode and off mode standards are shown in Table I.9. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO 2 reduction, for which DOE used a 3-percent discount rate along with the average SCC series that uses a 3-percent discount rate ($40.5/t in 2015), the estimated cost of the NWGFs and MHGFs AFUE and standby mode and off mode standards proposed in this rule is $741.2 million per year in increased equipment costs, while the estimated benefits are $1,240 million per year in reduced equipment operating costs, $257.4 million per year in CO 2 reductions, and $39.6 million per year in reduced NO X emissions. In this case, the net benefit would amount to $795.5 million per year. Using a 3-percent discount rate for all benefits and costs and the average SCC series that uses a 3-percent discount rate ($40.5/t in 2015), the estimated cost of the NWGFs and MHGFs AFUE and standby mode and off mode standards proposed in this rule is $750.5 million per year in increased equipment costs, while the estimated benefits are $1,930 million per year in reduced equipment operating costs, $257.4 million per year in CO 2 reductions, and $55.1 million per year in reduced NO X emissions. In this case, the net benefit would amount to $1,492 million per year. Table I.9—Annualized Benefits and Costs of Proposed AFUE and Standby Mode and Off Mode Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 3) Discount rate (%) (Million 2013$/year) Primary estimate * Low net benefits estimate * High net benefits estimate * Benefits Consumer Operating Cost Savings 7 1,240 1,053 1,365. 3 1,930 1,598 2,168. CO 2 Reduction Monetized Value ($12.0/t case) ** 5 71.49 65.60 80.15. CO 2 Reduction Monetized Value ($40.5/t case) ** 3 257.4 235.2 290.0. CO 2 Reduction Monetized Value ($62.4/t case) ** 2.5 379.6 346.6 428.0. CO 2 Reduction Monetized Value ($119/t case) ** 3 798.1 729.2 898.9. NO X Reduction Monetized Value (at $2,684/ton) ** 7 39.64 36.72 43.75. 3 55.11 50.70 61.31. Total Benefits † 7 plus CO 2 range 1,351 to 2,077 1,155 to 1,819 1,489 to 2,308. 7 1,537 1,325 1,699. 3 plus CO 2 range 2,057 to 2,783 1,715 to 2,378 2,310 to 3,128. 3 2,243 1,884 2,519. Costs Consumer Incremental Installed Costs 7 741.2 795.0 719.9. 3 750.5 812.4 726.3. Net Benefits Total † 7 plus CO 2 range 609.6 to 1,336 360.3 to 1,024 768.9 to 1,588. 7 795.5 529.8 978.7. 3 plus CO 2 range 1,306 to 2,033 0,902 to 1,566 1,583 to 2,402. 3 1,492 1,072 1,793. * This table presents the annualized costs and benefits associated with NWGFs and MHGFs shipped in 2021-2050. These results include benefits to consumers which accrue after 2050 from the products purchased in 2021-2050. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO 2014 Reference case, Low Estimate, and High Estimate, respectively. ** The CO 2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NO X is the average of high and low values found in the literature. † Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate ($40.5/t in 2015). In the rows labeled “7% plus CO 2 range” and “3% plus CO 2 range,” the operating cost and NO X benefits are calculated using the labeled discount rate, and those values are added to the full range of CO 2 values. DOE has tentatively concluded that the proposed standards (for AFUE as well as standby mode and off mode) represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy. DOE further notes that products achieving these standard levels are already commercially available for all product classes covered by this proposal. Based on the analyses described above, DOE has tentatively concluded that the benefits of the proposed standards to the Nation (energy savings, positive NPV of consumer benefits, consumer LCC savings, and emission reductions) would outweigh the burdens (loss of INPV for manufacturers and LCC increases for some consumers). DOE also considered more-stringent energy efficiency levels as trial standard levels, and is still considering them in this rulemaking. However, DOE has tentatively concluded that the potential burdens of the more-stringent energy efficiency levels would outweigh the projected benefits. Based on consideration of the public comments DOE receives in response to this NOPR and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy efficiency levels presented in this NOPR that are either higher or lower than the proposed standards, or some combination of level(s) that incorporate the proposed standards in part. II. Introduction The following section briefly discusses the statutory authority underlying today's proposal, as well as some of the relevant historical background related to the establishment of amended standards for residential non-weatherized gas furnaces and mobile home gas furnaces. A. Authority Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified) established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program covering most major household appliances (collectively referred to as “covered products”). These products include the residential furnaces that are the subject of this rulemaking. (42 U.S.C. 6292(a)(5)) EPCA, as amended, prescribed energy conservation standards for these products (42 U.S.C. 6295(f)(1) and (2)), and directed DOE to conduct further rulemakings to determine whether to amend these standards (42 U.S.C. 6295(f)(4)). Under 42 U.S.C. 6295(m), the agency must periodically review established energy conservation standards for a covered product; under this requirement, such review must be conducted no later than 6 years from the issuance of any final rule establishing or amending a standard for a covered product. Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing; (2) labeling; (3) establishing Federal energy conservation standards; and (4) certification and enforcement procedures. The Federal Trade Commission (FTC) is primarily responsible for labeling, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to conduct a second round of rulemaking under 42 U.S.C. 6295(f)(4)(C) to consider amended energy conservation standards for residential furnaces, and DOE is also required to consider amended standards under 42 U.S.C. 6295(m)(1) by June 27, 2017 ( i.e., with either: (1) A NOPR with proposed standards, or (2) a notice of determination not to amend the standards within six years of issuance of the last final rule for residential furnaces). DOE is further required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product prior to the adoption of a new or amended energy conservation standard. (42 U.S.C. 6295(o)(3)(A) and (r)) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public 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 standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedures for residential furnaces appear at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix N. In 2012, DOE initiated a rulemaking to review the residential furnace and boiler test procedure. Details on this rulemaking are discussed in section III.B. DOE must follow specific statutory criteria for prescribing amended standards for covered products, including residential furnaces. As indicated above, any amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain products, including residential furnaces, if no test procedure has been established for the product, or (2) if DOE determines by rule that the proposed 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, after receiving comments on the proposed standard, 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 by, to the greatest extent practicable, considering the following seven factors: (1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard; (2) The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the standard; (3) The total projected amount of energy (or as applicable, water) savings likely to result directly from the standard; (4) Any lessening of the utility or the performance of the covered products likely to result from the standard; (5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard; (6) The need for national energy and water conservation; and (7) Other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) EPCA, as codified, 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 interested persons have established by a preponderance of evidence that the standard is likely to result in the unavailability in the United States of any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4)) Further, EPCA, as codified, 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)) Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories. DOE must specify a different standard level for a type or class of covered product 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 that 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 the 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)) Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d). 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 regional energy conservation standards for furnaces (except boilers). (42 U.S.C. 6295(o)(6)(B)) Specifically, in addition to a base national standard for a product, DOE may establish for furnaces a single more-restrictive regional standard. (42 U.S.C. 6295(o)(6)(B)) The regions must include only contiguous States (with the exception of Alaska and Hawaii, which may be included in regions with which they are not contiguous), and each State may be placed in only one region ( i.e., an entire State cannot simultaneously be placed in two regions, nor can it be divided between two regions). (42 U.S.C. 6295(o)(6)(C)) Further, DOE can establish the additional regional standards only: (1) Where doing so would produce significant energy savings in comparison to a single national standard; (2) if the regional standards are economically justified; and (3) after considering the impact of these standards on consumers, manufacturers, and other market participants, including product distributors, dealers, contractors, and installers. (42 U.S.C. 6295(o)(6)(D)) Finally, pursuant to other amendments contained in EISA 2007, any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's current test procedures for residential furnaces address standby mode and off mode energy use. In this rulemaking, DOE intends to adopt separate energy conservation standards to address standby mode and off mode energy use. B. Background 1. Current Standards EPCA established the energy conservation standards that apply to most residential furnaces currently being manufactured. The original standards, which are still in place for a number of product classes (including all product classes except for non-weatherized oil-fired furnaces), consisted of a minimum AFUE of 75 percent for mobile home furnaces and a minimum AFUE of 78 percent for all other furnaces, except “small” gas furnaces (those having an input rate of less than 45,000 Btu per hour), for which DOE was directed to prescribe a separate standard. (42 U.S.C. 6295(f)(1)-(2); 10 CFR 430.32(e)(1)(i)) The standard for mobile home furnaces has applied to products manufactured for sale in the United States, or imported into the United States, since September 1, 1990, and the standard for most other furnaces has applied to products manufactured or imported since January 1, 1992. Id. On November 17, 1989, DOE published a final rule in the Federal Register adopting the current standard for “small” gas furnaces, which consists of a minimum AFUE of 78 percent that has applied to products manufactured or imported since January 1, 1992. 54 FR 47916. EPCA also required DOE to conduct two rounds of rulemaking to consider amended standards for residential furnaces (42 U.S.C. 6295(f)(4)(B)-(C)), a requirement subsequently expanded to encompass a six-year look back review of all covered products (42 U.S.C. 6295(m)(1)). In a final rule published on November 19, 2007 (November 2007 final rule), DOE prescribed amended energy conservation standards for residential furnaces manufactured on or after November 19, 2015. 72 FR 65136. The November 2007 final rule revised the energy conservation standards for non-weatherized gas furnaces to 80 percent AFUE, weatherized gas furnaces to 81 percent AFUE, mobile home gas furnaces to 80 percent AFUE, and non-weatherized oil-fired furnaces to 82 percent AFUE. Id. at 65169. Subsequently, on October 31, 2011, DOE published a notice of effective date and compliance dates (76 FR 67037) to confirm amended energy conservation standards and compliance dates contained in a June 27, 2011 direct final rule (76 FR 37408) for residential central air conditioners and residential furnaces. These two rulemakings represented the first and the second, respectively, of the two rulemakings required under 42 U.S.C. 6295(f)(4)(B)-(C) to consider amending the standards for furnaces. The June 2011 direct final rule and October 2011 notice of effective date and compliance dates amended, in relevant part, the energy conservation standards and compliance dates for three product classes of residential furnaces ( i.e., non-weatherized gas furnaces, mobile home gas furnaces, and non-weatherized oil furnaces) The existing standards were left in place for three classes of residential furnaces ( i.e., weatherized oil-fired furnaces, mobile home oil-fired furnaces, and electric furnaces). For one class of residential furnaces (weatherized gas furnaces), the existing standard was left in place, but the compliance date was amended. Electrical standby mode and off mode energy consumption standards were established for non-weatherized gas and oil-fired furnaces (including mobile home furnaces) and electric furnaces. Compliance with the energy conservation standards promulgated in the June 2011 direct final rule was to be required on May 1, 2013 for non-weatherized furnaces and on January 1, 2015 for weatherized furnaces. 76 FR 37408, 37547-48 (June 27, 2011); 76 FR 67037, 67051 (Oct. 31, 2011). The amended energy conservation standards and compliance dates in the June 2011 direct final rule would have superseded those standards and compliance dates promulgated by the November 2007 final rule for non-weatherized gas furnaces, mobile home gas furnaces, non-weatherized oil furnaces. Similarly, the amended compliance date for weatherized gas furnaces in the June 2011 direct final rule supersedes the compliance date in the November 2007 final rule. After publication of the October 2011 notice, the American Public Gas Association (APGA) sued DOE 12 in the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to invalidate the rule as it pertained to non-weatherized gas furnaces (as discussed further in section II.B.2). Petition for Review, American Public Gas Association, et al. v. Department of Energy, et al., No. 11-1485 (D.C. Cir. filed Dec. 23, 2011). The parties to the litigation engaged in settlement negotiations which ultimately led to filing of an unopposed motion on March 11, 2014, seeking to vacate DOE's rule in part and to remand to the agency for further rulemaking. On April 24, 2014, the Court granted the motion and ordered that the standards established for non-weatherized gas furnaces and mobile home gas furnaces be vacated and remanded to DOE for further rulemaking. As a result, only the standards for non-weatherized oil-fired furnaces and weatherized gas furnaces established in the June 2011 direct final rule will go into effect as stated in that final rule. The standards established by the June 2011 direct final rule for the non-weatherized gas furnaces and mobile home gas furnaces will not go into effect, and thus, the standards established for these products in the November 2007 final rule will require compliance beginning on November 19, 2015. As stated previously, the standards for weatherized oil-fired furnaces, mobile home oil-fired furnaces, and electric furnaces were unchanged, and as such, the original standards for those product classes will remain in effect. The standards for all residential furnaces, including the two product classes being analyzed in this NOPR, are set forth in DOE's regulations at 10 CFR 430.32(e)(1)(ii). Table II.1 below shows the upcoming standards for product classes that have been previously amended (either by the November 2007 final rule or June 2011 direct final rule) and the existing standards for the product classes where there AFUE standard has not been amended. 12 After APGA filed its petition for review on December 23, 2011, various entities subsequently intervened. Table II.1—Federal Energy Conservation Standards for Residential Furnaces Product class Minimum annual fuel utilization efficiency (%) Compliance date Non-weatherized Gas-Fired * 80 11/19/2015 Mobile Home Gas-Fired * 80 11/19/2015 Weatherized Gas-Fired 81 1/1/2015 Non-weatherized Oil-Fired 83 5/1/2013 Mobile Home Oil-Fired 75 9/1/1990 Weatherized Oil-Fired 78 1/1/1992 Electric 78 1/1/1992 * Only non-weatherized gas-fired and mobile home gas-fired furnaces are being analyzed for this current rulemaking. 2. History of Standards Rulemaking for Residential Furnaces Given the somewhat complicated interplay of recent DOE rulemakings and statutory provisions related to residential furnaces, DOE provides the following regulatory history as background leading to the present rulemaking. Amendments to EPCA in the National Appliance Energy Conservation Act of 1987 (NAECA; Pub. L. 100-12) established EPCA's original energy conservation standards for furnaces, consisting of the minimum AFUE levels described above for mobile home furnaces and for all other furnaces except “small” gas furnaces. (42 U.S.C. 6295(f)(1)-(2)) Pursuant to 42 U.S.C. 6295(f)(1)(B), in November 1989, DOE adopted a mandatory minimum AFUE level for “small” furnaces. 54 FR 47916 (Nov. 17, 1989). The standards established by NAECA and the November 1989 final rule for “small” gas furnaces are still in effect for all residential product classes except for non-weatherized oil-fired furnaces, for which the standards adopted in the June 2011 direct final rule are in effect. Pursuant to EPCA, DOE was required to conduct two rounds of rulemaking to consider amended energy conservation standards for furnaces. (42 U.S.C. 6295(f)(4)(B) and (C)) In satisfaction of this first round of amended standards rulemaking under 42 U.S.C. 6295(f)(4)(B), as noted above, DOE published a final rule in the Federal Register on November 19, 2007 (the November 2007 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; there standards were to apply to furnaces manufactured or imported on and after November 19, 2015). 72 FR 65136. 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 65169. Following DOE's adoption of the November 2007 final rule, several parties jointly sued DOE in the United States Court of Appeals for the Second Circuit (Second Circuit) to invalidate the rule. Petition for Review, State of New York, et al. v. Department of Energy, et al., Nos. 08-0311-ag(L); 08-0312-ag(con) (2d Cir. filed Jan. 17, 2008). The petitioners asserted that the standards for residential furnaces promulgated in the November 2007 Rule did not reflect the “maximum improvement in energy efficiency” that “is technologically feasible and economically justified,” as required under 42 U.S.C. 6295(o)(2)(A). On April 16, 2009, DOE filed with the Court a motion for voluntary remand that the petitioners did not oppose. The motion did not state that the November 2007 rule would be vacated, but indicated that DOE would revisit its initial conclusions outlined in the November 2007 Rule in a subsequent rulemaking action. DOE also agreed that the final rule would address both regional standards for furnaces, as well as the effects of alternate standards on natural gas prices. The Second Circuit granted DOE's motion on April 21, 2009. On June 27, 2011 DOE published a direct final rule (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. In the June 2011 DFR, DOE considered the amendment of the same six product classes considered in the November 2007 final rule analysis plus electric furnaces. As discussed in section II.B.1, the June 2011 DFR amended the existing energy conservation standards for non-weatherized gas furnaces, mobile home gas furnaces, and non-weatherized oil furnaces, and amended the compliance date (but left the existing standards in place) for weatherized gas furnaces. The June 2011 DFR also established electrical standby mode and off mode standards for non-weatherized gas furnaces, non-weatherized oil furnaces, and electric furnaces. DOE confirmed the standards and compliance dates promulgated in the June 2011 final rule in a notice of effective date and compliance dates published on October 31, 2011. 76 FR 67037. As noted earlier, following DOE's adoption of the June 2011 DFR, APGA filed a petition for review with the United States Court of Appeals for the District of Columbia Circuit to invalidate the DOE rule as it pertained to non-weatherized natural gas furnaces. Petition for Review, American Public Gas Association, et al. v. Department of Energy, et al., No. 11-1485 (D.C. Cir. filed Dec. 23, 2011). On April 24, 2014, the Court granted a motion that approved a settlement agreement that was reached between DOE, APGA, and the various interveners in the case, in which DOE agreed to a remand of the non-weatherized gas furnace and mobile home gas furnace portions of the June 2011 direct final rule 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 non-weatherized gas furnaces and mobile home gas furnaces) and remanded to the agency for further rulemaking. As part of the settlement, DOE has agreed to issue a notice of public rulemaking within one year of the remand, and to issue a final rule within the later of two years of the issuance of remand or one year of the issuance of the proposed rule, including at least a ninety-day public comment period. Due to the extensive and recent rulemaking history for residential furnaces, as well as the associated opportunities for notice and comment described above, DOE is foregoing the typical earlier rulemaking stages ( e.g., framework document, preliminary analysis) and has instead developed this NOPR. DOE has tentatively concluded that there has been a sufficient recent exchange of information between interested parties and DOE regarding the energy conservation standards for residential furnaces such as to allow for this proceeding to move directly to the NOPR stage. Moreover, DOE notes that under 42 U.S.C. 6295(p), DOE is only required to publish a notice of proposed rule and accept public comments before amending energy conservation standards in a final rule ( i.e., DOE is not required to conduct the earlier rulemaking stages). DOE has initiated this rulemaking in partial fulfillment of the remand in American Public Gas Association, et al. v. Department of Energy, et al. and pursuant to its authority under 42 U.S.C. 42 U.S.C. 6295(f)(4)(C), which requires DOE to conduct a second round of amended standards rulemaking for residential non-weatherized gas furnaces and mobile home gas furnaces. EPCA, as amended by EISA 2007, also requires that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of the determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including proposed energy conservation standards. (42 U.S.C. 6295(m)(1)) This rulemaking will satisfy both statutory provisions. Furthermore, EISA 2007 amended EPCA to require that any new or amended energy conservation standard adopted after July 1, 2010, shall address standby mode and off mode energy consumption pursuant to 42 U.S.C. 6295(o). (42 U.S.C. 6295(gg)(3)) If feasible, the statute directs DOE to incorporate standby mode and off mode energy consumption into a single standard with the product's active mode energy use. If a single standard is not feasible, DOE may consider establishing a separate standard to regulate standby mode and off mode energy consumption. Consequently, DOE will consider standby mode and off mode energy use as part of this rulemaking for residential furnaces. III. General Discussion A. Product Classes and Scope of Coverage When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used or by capacity or other performance-related features that justify a different standard. 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 deems appropriate. (42 U.S.C. 6295(q)). As previously noted in section II.B.2, DOE agreed to the partial vacatur of the June 2011 final rule as it relates to energy conservation standards for non-weatherized gas-fired furnaces and mobile home gas-fired furnaces in the settlement agreement to resolve the litigation in American Public Gas Association, et al. v. Department of Energy, et al. Therefore, for this rulemaking, DOE has only considered amending the energy conservation standards for these two product classes of residential furnaces ( i.e., non-weatherized gas-fired furnaces and mobile home gas-fired furnaces). This rulemaking considers energy conservation standards for electrical power consumption in standby mode and off mode, as well as the annual fuel utilization efficiency standards for both product classes. More information relating to the scope of coverage is described in section IV.A of this proposed rule. B. Test Procedure DOE's current energy conservation standards for residential furnaces are expressed in terms of annual fuel utilization efficiency for fossil fuel consumption ( see 10 CFR 430.32(e)(1)). AFUE is an annualized fuel efficiency metric that fully accounts for fuel consumption in active, standby, and off modes. The existing DOE test procedure for determining the AFUE of residential furnaces is located at 10 CFR part 430, subpart B, appendix N. The current DOE test procedure for residential 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. On October 20, 2010, DOE updated its test procedures for residential furnaces in a final rule published in the Federal Register (October 2010 test procedure rule). 75 FR 64621. This rule amended DOE's test procedure for residential furnaces and boilers to establish a method for measuring the electrical energy use in standby mode and off mode for gas-fired, oil-fired, and electric furnaces pursuant to requirements established by EISA 2007. These test procedure amendments were primarily based on and incorporate by reference provisions of the International Electrotechnical Commission (IEC) Standard 62301 (First Edition), “Household electrical appliances—Measurement of standby power.” On December 31, 2012, DOE published a final rule in the Federal Register which updated the incorporation by reference of the standby mode and off mode test procedure provisions to refer to the latest edition of IEC Standard 62301 (Second Edition). 77 FR 76831. On July 10, 2013, DOE published a final rule in the Federal Register (July 2013 final rule) that modified the existing testing procedures for residential furnaces and boilers. 78 FR 41265. The modification addressed the omission of equations needed to calculate AFUE for two-stage and modulating condensing furnaces and boilers that are tested using an optional procedure provided by section 9.10 of ASHRAE 103-1993 (incorporated by reference into DOE's test procedure), which allows the test engineer to omit the heat-up and cool-down tests if certain conditions are met. Specifically, the DOE test procedure allows condensing boilers and furnaces to omit the heat-up and cool-down tests provided that the units have no measurable airflow through the combustion chamber and heat exchanger during the burner off period and have post-purge period(s) of less than 5 seconds. For two-stage and modulating condensing furnaces and boilers, ASHRAE 103-1993 (and by extension the DOE test procedure) does not contain the necessary equations to calculate the heating seasonal efficiency (which contributes to the ultimate calculation of AFUE) when the option in section 9.10 is selected. The July 2013 final rule adopted two new equations needed to account for the use of section 9.10 for two-stage and modulating condensing furnaces and boilers. Id. EPCA, as amended by EISA 2007, requires that DOE must review test procedures for all covered products at least once every 7 years. (42 U.S.C. 6293(b)(1)(A)). Accordingly, DOE must complete the residential furnaces and boiler test procedure rulemaking no later than December 19, 2014 ( i.e. , 7 years after the enactment of EISA 2007), which is before the expected completion of this energy conservation standards rulemaking. In February 2015, DOE issued a notice of proposed rulemaking for the test procedure (February 2015 Test Procedure NOPR), a necessary step toward fulfillment of the requirement under 42 U.S.C. 6293(b)(1)(A) for residential furnaces and boilers. DOE must base the analysis of amended energy conservation standards on the most recent version of its test procedures, and accordingly, DOE will use any amended test procedure when considering product efficiencies, energy use, and efficiency improvements in its analyses. Major changes proposed in the February 2015 Test Procedure NOPR that relate to residential furnaces included proposals to: • Adopt ANSI/ASHRAE 103-2007 by reference in place of the existing reference to ANSI/ASHRAE 103-1993; • Modify the requirements for the measurement of condensate under steady-state conditions; • Update references to installation manuals; • Update the auxiliary electrical consumption calculation to include additional measurements of electrical consumption; • Adopt a method for qualifying the use of the minimum draft factor. C. Technological Feasibility 1. General In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology 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. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i). 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; and (3) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)-(iv). Additionally, it is DOE policy not to include in its analysis any proprietary technology that is a unique pathway to achieving a certain efficiency level. Section IV.B of this NOPR discusses the results of the screening analysis for residential furnaces, particularly the designs DOE considered, those it screened out, and those that are the basis for the trial standard levels (TSLs) in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the NOPR technical support document (TSD). 2. Maximum Technologically Feasible Levels When DOE proposes to adopt an amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)). Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (max-tech) improvements in energy efficiency for NWGFs and MHGFs, using the design parameters for the most-efficient products available on the market or in working prototypes. The max-tech levels that DOE determined for this rulemaking are described in section IV.C of this proposed rule and in chapter 5 of the NOPR TSD. D. Energy Savings 1. Determination of Savings For each TSL, DOE projected energy savings from the products that are the subject of this rulemaking purchased in the 30-year period that begins in the year of compliance with amended standards (2021-2050). 13 The savings are measured over the entire lifetime of products purchased in the 30-year analysis period. 14 DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the base case. The base case represents a projection of energy consumption in the absence of amended energy conservation standards, and it considers market forces and policies that affect demand for more-efficient products. 13 DOE also presents a sensitivity analysis that considers impacts for products shipped in a 9-year period. 14 In the past, DOE presented energy savings results for only the 30-year period that begins in the year of compliance. In the calculation of economic impacts, however, DOE considered operating cost savings measured over the entire lifetime of products purchased in the 30-year period. DOE has chosen to modify its presentation of national energy savings to be consistent with the approach used for its national economic analysis. DOE used its national impact analysis (NIA) spreadsheet model to estimate energy savings from potential amended standards for the products that are the subject of this rulemaking. The NIA spreadsheet model (described in section IV.H of this NOPR) calculates energy savings in site energy, which is the energy directly consumed by products at the locations where they are used. For electricity, DOE reports national energy savings on an annual basis in terms of primary (source) energy savings, which is the savings in the energy that is used to generate and transmit the site electricity. To calculate the primary energy savings, DOE derives annual conversion factors from the model used to prepare the Energy Information Administration's (EIA) most recent Annual Energy Outlook (AEO) . DOE has begun to also estimate full-fuel-cycle energy savings, as 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). The full-fuel-cycle (FFC) metric includes the energy consumed in extracting, processing, and transporting primary fuels ( i.e., coal, natural gas, petroleum fuels), and, thus, presents a more complete picture of the impacts of energy efficiency standards. DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered equipment. For more information on FFC energy savings, see section IV.H.3. 2. Significance of Savings To adopt more-stringent 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)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals for the District of Columbia Circuit, in Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), opined that Congress intended “significant” energy savings in the context of EPCA to be savings that were not “genuinely trivial.” The energy savings for all of the trial standard levels considered in this rulemaking, including the proposed standards (presented in section V.B.3), are nontrivial, and, therefore, DOE considers them “significant” within the meaning of section 325 of EPCA. E. Economic Justification 1. Specific Criteria EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking. a. Economic Impact on Manufacturers and Consumers In determining the impacts of a potential amended standard on manufacturers, DOE conducts a manufacturer impact analysis (MIA), as discussed in section IV.J. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year period. The industry-wide impacts analyzed include: (1) Industry net present value (INPV), which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers. For individual consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the economic impacts applicable to a particular rulemaking. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a national standard. b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP) EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered product that are likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analyses. The LCC is the sum of the purchase price of a product (including its installation) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and consumer discount rates. To account for uncertainty and variability in specific inputs, such as product lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value. For its analysis, DOE assumes that consumers will purchase the covered products in the first year of compliance with amended standards. The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect. The LCC savings for the considered efficiency levels are calculated relative to a base case that reflects projected market trends in the absence of amended standards. DOE identifies the percentage of consumers estimated to receive LCC savings or experience an LCC increase, in addition to the average LCC savings associated with a particular standard level. In contrast, the PBP is measured relative to the baseline product. DOE's LCC and PBP analyses are discussed in further detail in section IV.F. c. Energy Savings Although significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section IV.H, DOE uses the NIA spreadsheet to project national energy savings. d. Lessening of Utility or Performance of Products In establishing product classes and in evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards proposed in this document would not reduce the utility or performance of the products under consideration in this rulemaking. e. Impact of Any Lessening of Competition EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from a proposed standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy of this proposed rule to the Attorney General with a request that the Department of Justice (DOJ) provide its determination on this issue. DOE will publish and respond to the Attorney General's determination in the final rule. f. Need for National Energy Conservation DOE also considers the need for national energy conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from new or amended standards are likely to provide improvements to the security and reliability of the nation's energy system. Reductions in the demand for electricity also may result in reduced costs for maintaining the reliability of the nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the nation's needed power generation capacity, as discussed in section IV.M. New or amended standards also are likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with energy production. DOE conducts an emissions analysis to estimate how standards may affect these emissions, as discussed in section IV.K. DOE reports the emissions impacts from the proposed standards, and from each TSL it considered, in section V.B.6 of this NOPR. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L. g. Other Factors EPCA allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent interested parties submit any relevant information regarding economic justification that does not fit into the other categories described above, DOE could consider such information under “other factors.” 2. Rebuttable Presumption As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effects that proposed energy conservation standards would have on the payback period for consumers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section V.B.1 of this proposed rule. F. Regional Standards As discussed in section II.A, EISA 2007 amended EPCA to allow for the establishment of a single more-restrictive regional standard in addition to the base national standard for furnaces. (42 U.S.C. 6295(o)(6)(B)) The regions must include only contiguous States (with the exception of Alaska and Hawaii, which can be included in regions with which they are not contiguous), and each State may be placed in only one region ( i.e., a State cannot be divided among or otherwise included in two regions). (42 U.S.C. 6295(o)(6)(C)) Further, EPCA mandates that a regional standard must produce significant energy savings in comparison to a single national standard, and provides that DOE must determine that the additional standards are economically justified and consider the impact of the additional regional standards on consumers, manufacturers, and other market participants, including product distributors, dealers, contractors, and installers. (42 U.S.C. 6295(o)(6)(D)) For this rulemaking, DOE has considered the above-delineated impacts of regional standards in addition to national standards. Where appropriate, DOE has addressed the potential impacts from considered regional standards in the relevant analyses, including the mark-ups to determine product price, the LCC and payback period analysis, the national impact analysis (NIA), and the manufacturer impact analysis (MIA). DOE's approach for addressing regional standards is included in the methodology section corresponding to each individual analysis (see section IV of this notice), and in the NOPR TSD, specifically Chapter 8 (LCC and PBP Analysis) and Chapter 10 (National Impact Analysis). For certain phases of the analysis, additional regional analysis is not required. For example, technologies for improving product efficiency generally do not vary by region, and thus, DOE did not perform any additional regional analysis for the technology assessment and screening analysis. Similarly, DOE did not examine the impacts of having two regions in the engineering analysis, since the technologies and manufacturer processes are the same under both a national and regional standard. To evaluate regional standards for residential furnaces, DOE maintained the same regions analyzed in the June 2011 direct final rule, which are shown in Table III.1 and Figure III.1. The allocation of individual States to the regions was largely based on whether a State's annual heating degree day (HDD) 15 average is above or below 5,000, which offers a rough threshold point at which space heating demands are significant enough to require longer operation of heating systems, thereby providing a basis for utilization of higher-efficiency systems. 15 DOE used the population weighted state HDD as determined by the National Oceanic and Atmospheric Administration (NOAA) in its 1971-2000 United States Climate Normals report, available at http://hurricane.ncdc.noaa.gov/climatenormals/hcs/HCS_51.pdf (last accessed July 28, 2014). Table III.1—National Standard and Regional Standard (by State) for Analysis of Furnace Standards National standard * Northern region standard Alabama Alaska Arizona Colorado Arkansas Connecticut California Idaho Delaware Illinois District of Columbia Indiana Florida Iowa Georgia Kansas Hawaii Maine Kentucky Massachusetts Louisiana Michigan Maryland Minnesota Mississippi Missouri Nevada Montana New Mexico Nebraska North Carolina New Hampshire Oklahoma New Jersey South Carolina New York Tennessee North Dakota Texas Ohio Virginia Oregon Pennsylvania Rhode Island South Dakota Utah Vermont Washington West Virginia Wisconsin Wyoming * DOE analyzes an approach whereby the agency would set a base National standard, as well as a more-stringent standard in the Northern region. Because compliance with the regional standard would also meet the National standard, Table III.1 categorizes States in terms of the most stringent standard applicable to that State. EP12MR15.000 G. Compliance Date EPCA establishes a lead time between the publication of amended energy conservation standards and the date by which manufacturers must comply with the amended standards for residential furnaces. Specifically, EPCA dictated an eight-year period between the rulemaking publication date and compliance date for the first round of amended residential furnace standards, and a five-year period for the second round of amended residential furnace standards. (42 U.S.C. 6295(f)(4)(B)-(C)) DOE notes that the first remand agreement for residential furnaces (resulting from the Petition for Review, State of New York, et al. v. Department of Energy, et al., Nos. 08-0311-ag(L); 08-0312-ag(con) (2d Cir. filed Jan. 17, 2008)) did not vacate the November 2007 Rule for furnaces and boilers. Therefore, DOE has concluded that the November 2007 final rule completed the first round of rulemaking for amended energy conservation standards for furnaces, thereby satisfying the requirements of 42 U.S.C. 6295(f)(4)(B). The June 2011 direct final rule satisfied the second round of rulemaking for amended energy conservation standards for furnaces; however, the settlement resulting from the APGA lawsuit (Petition for Review, American Public Gas Association, et al. v. Department of Energy, et al., No. 11-1485 (D.C. Cir. filed Dec. 23, 2011) vacated the standards for non-weatherized gas furnaces and mobile home gas furnaces. As a result, the June 2011 direct final rule completed the second round of rulemaking for the furnace product classes for which it was not vacated, and the current rulemaking constitutes the second round of rulemaking for amended energy conservation standards for non-weatherized gas and mobile home gas furnaces, as required under 42 U.S.C. 6295(f)(4)(C). This provision prescribes a five-year period between the standard's publication date and compliance date. Accordingly, in its analysis of amended energy conservation standards for NWGFs and MHGFs, DOE used a 5-year lead time between the publication of the final rule and the compliance date for the standard. H. Standby Mode and Off Mode As discussed in section II.A of this NOPR, any final rule for amended or new energy conservation standards that is published on or after July 1, 2010 must address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) As a result, DOE has analyzed and is proposing new energy conservation standards for the standby mode and off mode electrical energy consumption for residential non-weatherized gas furnaces and mobile home gas furnaces. AFUE, the statutory metric for residential furnaces, does not incorporate standby mode or off mode use of electricity, although it already fully addresses the fossil fuel use of gas-fired furnaces when operating in standby mode and off mode. In the October 2010 test procedure final rule for residential furnaces and boilers, DOE determined that incorporating standby mode and off mode electricity consumption into a single standard for residential furnaces and boilers is not technically feasible. 75 FR 64621, 64626-64627 (Oct. 20, 2010). DOE concluded that a metric that integrates standby mode and off mode electricity consumption into AFUE is not technically feasible, because the standby mode and off mode energy usage, when measured, is essentially lost in practical terms due to rounding conventions for certifying furnace compliance with Federal energy conservation standards. Id. Therefore, in this document, DOE is adopting amended furnace standards that are AFUE levels, which exclude standby mode and off mode electricity use, and DOE is also adopting separate standards that are maximum wattage (W) levels to address the standby mode (P W,SB ) and off mode (P W,OFF ) electrical energy use of furnaces. DOE also presents corresponding trial standard levels (TSLs) for energy consumption in standby mode and off mode. DOE has decided to use a maximum wattage requirement to regulate standby mode and off mode for furnaces. DOE believes using an annualized metric could add unnecessary complexities, such as trying to estimate an assumed number of hours that a furnace typically spends in standby mode. Instead, DOE believes that a maximum wattage standard is the most straightforward metric for regulating standby mode and off mode energy consumption of furnaces and will result in the least amount of industry and consumer confusion. DOE is using the metrics just described—AFUE, P W,SB , and P W,OFF —in the amended energy conservation standards it is proposing in this rulemaking for furnaces. This approach satisfies the mandate of 42 U.S.C. 6295(gg)(3) that amended standards address standby mode and off mode energy use. The various analyses performed by DOE to evaluate minimum standards for standby mode and off mode electrical energy consumption for furnaces are discussed further in section IV.E.2 of this NOPR. IV. Methodology This section addresses the analyses DOE has performed for this rulemaking with regard to residential furnaces. Separate subsections will address each component of DOE's analyses. DOE used three spreadsheet tools to estimate the impact of today's proposed standards. The first spreadsheet calculates LCCs and payback periods of potential standards. The second provides shipments forecasts, and then calculates national energy savings and net present value impacts of potential standards. Finally, DOE assessed manufacturer impacts, largely through use of the Government Regulatory Impact Model (GRIM). 16 16 All three spreadsheet tools are available online at the rulemaking portion of DOE's Web site at the following address: http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/72. Additionally, DOE estimated the impacts on utilities and the environment that would be likely to result from potential standards for residential furnaces. DOE used published output from the AEO 2014 version of Energy Information Administration's (EIA) National Energy Modeling System (NEMS) for both the utility and the environmental analyses. NEMS projects the production, imports, conversion, consumption, and prices of energy, subject to assumptions on macroeconomic and financial factors, world energy markets, resource availability and costs, behavioral and technological choice criteria, cost and performance characteristics of energy technologies, and demographics. 17 EIA uses NEMS to prepare its Annual Energy Outlook, a widely-known energy forecast for the United States. NEMS offers a sophisticated picture of the effect of standards because it accounts for the interactions between the various energy supply and demand sectors and their impact on the economy as a whole. 17 For more information on NEMS, refer to the U.S. Department of Energy, Energy Information Administration documentation. See, e.g. , Energy Info. Admin., The National Energy Modeling System: An Overview DOE/EIA-0581(2009), available at http://www.eia.gov/oiaf/aeo/overview/. A. Market and Technology Assessment In conducting a market and technology assessment, DOE develops information that provides an overall picture of the market for the products concerned, including the purpose of the products, the industry structure, manufacturers, market characteristics, and technologies used in the products. These activities include both quantitative and qualitative assessments, based primarily on publicly-available information. The issues covered in the market and technology assessment for this residential furnaces rulemaking include: (1) A determination of the scope of the rulemaking and product classes; (2) manufacturers and industry structure; (3) quantities and types of products sold and offered for sale; (4) retail market trends; (5) regulatory and non-regulatory programs; and (6) technologies or design options that could improve the energy efficiency of the product(s) under examination. The key findings of DOE's market assessment are summarized below. 18 18 See chapter 3 of the NOPR TSD for further discussion of the market and technology assessment. 1. Definition and Scope of Coverage EPCA defines a “furnace” as “a product which utilizes only single-phase electric current, or single-phase electric current or DC current in conjunction with natural gas, propane, or home heating oil, and which: (1) Is designed to be the principal heating source for the living space of a residence; (2) Is not contained within the same cabinet with a central air conditioner whose rated cooling capacity is above 65,000 Btu per hour; (3) Is an electric central furnace, electric boiler, forced-air central furnace, gravity central furnace, or low pressure steam or hot water boiler; and (4) Has a heat input rate of less than 300,000 Btu per hour for electric boilers and low pressure steam or hot water boilers and less than 225,000 Btu per hour for forced-air central furnaces, gravity central furnaces, and electric central furnaces.” (42 U.S.C. 6291(23)) DOE has incorporated this definition into its regulations in the Code of Federal Regulations (CFR) at 10 CFR 430.2. EPCA's definition of a “furnace” covers the following types of products: (1) Gas furnaces (non-weatherized and weatherized); (2) oil-fired furnaces (non-weatherized and weatherized); (3) mobile home furnaces (gas and oil-fired); (4) electric resistance furnaces; (5) hot water boilers (gas and oil-fired); (6) steam boilers (gas and oil-fired); and (7) combination space/water heating appliances (water-heater/fancoil combination units and boiler/tankless coil combination units). In accordance with the April 24th, 2014 court order in the American Public Gas Association, et al. v. Department of Energy, et al., case, which granted the unopposed joint motion for a voluntary remand (see section II.B), DOE only analyzed potential amended energy conservation standards for non-weatherized gas-fired and mobile home gas-fired furnace product classes of furnaces in this rulemaking. 2. Product Classes When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used, by capacity, or by other performance-related features that justify a different standard. In making a determination whether a performance-related feature justifies a different standard, DOE must consider factors such as the utility to the consumer of the feature and other factors DOE determines are appropriate. (42 U.S.C. 6295(q)) DOE has viewed utility as an aspect of the product that is accessible to the layperson and is based on user operation, rather than performing a theoretical function. This interpretation has been implemented consistently in DOE's previously determining utility through the value the item brings to the consumer, rather than through analyzing more complicated design features, or costs that anyone, including the consumer, manufacturer, installer, or utility companies may bear. This approach is consistent with EPCA requiring a separate and extensive analysis of economic justification for the adoption of any new or amended energy conservation standard (see 42 U.S.C. 6295(o)(2)(A)-(B) and (3)). Under EPCA, DOE has typically addressed consumer utility by establishing separate product classes or otherwise taken action when a consumer may value a product feature based on the consumer's everyday needs. For instance, DOE has determined that it would be impermissible under 42 U.S.C. 6295(o)(4) to include elimination of oven door windows as a technology option to improve the energy efficiency of cooking products. 19 DOE reached this conclusion based upon how consumers typically use the product: Peering through the oven window to judge if an item is finished cooking, as opposed to checking the timer and/or indicator light or simply opening the oven door to see if the item is finished cooking. DOE has also determined that consumers may value other qualities such as ability to self-clean, 20 size, 21 and configuration. 22 This determination, however, can change depending on the technology and the consumer, and it is conceivable that certain products may disappear from the market entirely due to shifting consumer demand. DOE determines such value on a case-by-case basis through its own research as well as public comments received, the same approach that DOE employs in all other parts of its energy conservation standards rulemaking. 19 63 FR 48038, 48041 (Sept. 8, 1998). 20 73 FR 62034, 62048 (Oct. 17, 2008) (separating standard ovens and self-cleaning ovens into different product classes). 21 77 FR 32307, 32319 (May 31, 2012) (creating a separate product class for compact front-loading residential clothes washers). 22 75 FR 59469, 59487 (Sept. 27, 2010) (creating a separate product class for refrigerators with bottom-mounted freezers). As a cautionary note, disparate products may have very different consumer utilities, thereby making direct comparisons difficult and potentially misleading. For instance, in a 2011 rulemaking, DOE created separate product classes for vented and ventless residential clothes dryers based on DOE's recognition of the “unique utility” that ventless clothes dryers offer to consumers. 76 FR 22454, 22485 (April 21, 2011). This utility could be characterized as the ability to have a clothes dryer in a living area where vents are impossible to install ( i.e., an apartment in a high-rise building). As explained in that April 2011 direct final rule technical support document, ventless dryers can be installed in locations where venting dryers would be precluded due to venting restrictions. But in another rulemaking, DOE found that water heaters that utilize heat pump technology did not need to be put in a separate product class from conventional types of hot water heaters that utilize electric resistance technology, even though water heaters utilizing heat pumps require the additional installation of a condensate drain that a hot water heater utilizing electric resistance technology does not require. 74 FR 65852, 65871 (Dec. 11, 2009). DOE found that regardless of these installation factors, the heat pump water heater and the conventional water heater still had the same utility to the consumer: Providing hot water. Id. In both cases, DOE made its finding based on consumer type and utility type, rather than product design criteria that impact product efficiency. These distinctions in both the consumer type and the utility type are important because, as DOE has previously pointed out, taken to the extreme, each design differential could be designated a different “product class” and, therefore, require different energy conservation standards. Tying the concept of “feature” to a specific technology would effectively lock-in the currently existing technology as the ceiling for product efficiency and eliminate DOE's ability to address technological advances that could yield significant consumer benefits in the form of lower energy costs while providing the same functionality for the consumer. DOE is very concerned that determining features solely on product technology could undermine the Department's Appliance Standards Program. If DOE is required to maintain separate product classes to preserve less-efficient technologies, future advancements in the energy efficiency of covered products would become largely voluntary, an outcome which seems inimical to Congress's purposes and goals in enacting EPCA. Turning to the product at issue in this rulemaking, residential furnaces are currently divided into several product classes. For example, furnaces are separated into product classes based on their fuel source (gas, oil, or electricity), which is required by statute. As discussed in section IV.A.1, for this rulemaking, DOE is analyzing only two product classes for residential furnaces: (1) Non-weatherized gas-fired furnaces (NWGFs) and (2) mobile home gas-fired furnaces (MHGFs). DOE does not additionally separate NWGFs and MHGFs into condensing and non-condensing product classes because they provide the same utility to the consumer ( i.e., both are vented appliances that provide heat to a consumer). DOE has tentatively concluded that the methods by which a furnace is vented do not provide any separate performance-related impacts, and, therefore, DOE has no statutory basis for defining a separate class based on venting and drainage characteristics. NWGF and MHGF venting methods do not provide unique utility to consumers beyond the basic function of providing heat, which all furnaces perform. The possibility that installing a non-condensing furnace may be less costly than a condensing furnace due to the difference in venting methods does not justify separating the two types of NWGFs into different product classes. Unlike the consumers of ventless dryers, which DOE has determined to be a performance-related feature based on the impossibility of venting in certain circumstances ( e.g., high-rise apartments), consumers of condensing NWGFs are homeowners that may either use their existing venting or have a feasible alternative to obtain heat, which is the furnace's singular utility to the consumer. In other words, homeowners will still be able to obtain heat regardless of the venting. In contrast, a resident of a high-rise apartment or condominium building that is not architecturally designed to accommodate vented clothes dryers would have no option in terms of installing and enjoying the utility of a dryer in their home unless he uses a ventless dryer. As explained above, the utility of a furnace involves providing heat to a consumer. Such utility is provided by any type of furnace, but to the extent that a consumer has a preference for a particular fuel type ( e.g., gas), improvements in venting technology may soon allow a consumer to obtain the efficiency of a condensing furnace using the existing venting in a residence by sharing venting space with water heaters. This update in technology significantly reduces the cost burden associated with installing condensing furnaces and reduces potential instances of “orphaned” water heaters, where the furnace and water heater can no longer share the same venting (due to one unit being condensing and the other noncondensing). In other words, this technology allows consumers to switch from a non-condensing furnace to a condensing furnace in a greater variety of applications, such as urban row houses. For more information, see appendix 8L of the NOPR TSD. 3. Technology Options DOE identified 12 technology options that would be expected to improve the AFUE of residential furnaces, as measured by the DOE test procedure: (1) Using a condensing secondary heat exchanger; (2) increasing the heat exchanger area; (3) heat exchanger baffles; (4) heat exchanger surface feature improvements; (5) two-stage modulating combustion; (6) step-modulating combustion; (7) pulse combustion; (8) low NO X premix burners; (9) burner de-rating; (10) insulation improvements; (11) off-cycle dampers; and (12) direct venting. In addition, DOE identified three technologies that would reduce the standby mode and off mode energy consumption of residential furnaces: (1) Low-loss transformer (LLTX); (2) switching mode power supply; and (3) control relay for models with brushless permanent magnet (BPM) motors. After identifying potential technology options for improving the efficiency of residential furnaces, DOE performed the screening analysis (see section IV.B of this NOPR or chapter 4 of the TSD) on these technologies to determine which could be considered further in the analysis and which should be eliminated. B. Screening Analysis DOE uses the following four screening criteria to determine which technology options are suitable for further consideration in an energy conservation standards rulemaking: 1. Technological feasibility. Technologies that are not incorporated in commercial products or in working prototypes will not be considered further. 2. Practicability to manufacture, install, and service. If DOE determines that mass production, reliable installation, and servicing of a technology in commercial products could not be achieved on the scale necessary to serve the relevant market at the time of the compliance date of the standard, then that technology will not be considered further. 3. Impacts on product utility or product availability. If it is determined that a technology would have significant adverse impact on the utility of the product to significant subgroups of consumers or would result in the unavailability of any covered product type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as products generally available in the United States at the time, it will not be considered further. 4. Adverse impacts on health or safety. If it is determined that a technology would have significant adverse impacts on health or safety, it will not be considered further. (10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b)) In sum, if DOE determines that a technology, or a combination of technologies, fails to meet one or more of the above four criteria, it will be excluded from further consideration in the engineering analysis. The reasons for eliminating certain technologies are discussed below. 1. Screened-Out Technologies DOE decided to screen the use of pulse combustion from further analysis. Based on manufacturer feedback received during the analysis for the June 2011 direct final rulemaking, pulse combustion furnaces have had reliability and safety issues in the past, and therefore, manufacturers do not consider their use a viable option to improve efficiency. In addition, manufacturers can attain similar or greater efficiencies through the use of other technologies. For these reasons, DOE is not including pulse combustion as a technology option, as its reliability and safety issues could reduce consumer utility. DOE also decided to screen out burner de-rating. Burner de-rating reduces the burner firing rate while maintaining the same heat exchanger geometry/surface area and fuel-air ratio, which increases the ratio of heat transfer surface area to the energy input, which increases efficiency. However, the lower energy input means that less heat is provided to the user than is provided using conventional burner firing rates. As a result of the decreased heat output of furnaces with de-rated burners, DOE has screened out burner de-rating as a technology option, as it could reduce consumer utility. In addition, DOE is screening low-NO X premix burners from further analysis. Premix burners eliminate the need for secondary air in the combustion process by completely mixing heating fuel with primary air prior to ignition. This raises the overall flame temperature, which improves heat transfer and AFUE. In-shot burners that are commonly used in residential furnaces, on the other hand, cannot entrain sufficient primary air to completely premix the air and gas. As a result, premix burner design incorporates a fan to ensure sufficient and complete mixing of the air and fuel prior to combustion and does so by delivering the air to the fuel at positive pressure. To the extent of DOE's knowledge, and based on manufacturer feedback during the manufacturer interviews, low-NO X premix burners have not yet been successfully incorporated into a residential furnace design that is widely available on the market. DOE is aware that low-NO X premix burners have been incorporated into boilers, but boilers have significantly different heat exchangers and burners, allowing for the integration of premix burner technology in those products. Incorporating this technology into furnaces on a large scale will require further research and development due to the technical constraints imposed by current furnace burner and heat exchanger design. Among the standby and off mode technologies, DOE decided to screen out using a control relay to depower BPM motors due to feedback received during the manufacturer interviews conducted for both this NOPR and the residential furnace June 2011 direct final rule, which indicated that using a control relay to depower brushless permanent magnet motors could reduce the lifetime of the motors (the reason for this reduction in product lifetime is further explained in Chapter 4 of the TSD). DOE believes that this reduction in lifetime would lead to a reduction in utility of the product. For this reason, DOE is not including control relays for models with brushless permanent magnet motors as a technology option, as it could reduce consumer utility. 2. Remaining Technologies Through a review of each technology, DOE found that all of the other identified technologies met all four screening criteria and consequently, are suitable for further examination in DOE's analysis. In summary, DOE did not screen out the following technology options to improve AFUE: (1) Condensing secondary heat exchanger; (2) increased heat exchanger face area; (3) heat exchanger baffles; (4) heat exchanger surface feature improvements; (5) two-stage modulating combustion; (6) step-modulating combustion; (7) insulation improvements; (8) off-cycle dampers; and (9) direct venting. DOE also maintained the following technology options to improve standby mode and off mode energy consumption: (1) Low-loss transformer; and (2) switching mode power supply. All of these technology options are technologically feasible, given that the evaluated technologies are being used (or have been used) in commercially-available products or working prototypes. Therefore, all of the trial standard levels evaluated in this notice are technologically feasible. DOE also found that all of the remaining technology options also meet the other screening criteria ( i.e., practicable to manufacture, install, and service, and do not result in adverse impacts on consumer utility, product availability, health, or safety). For additional details, please see chapter 4 of the NOPR TSD. C. Engineering Analysis In the engineering analysis (corresponding to chapter 5 of the NOPR TSD), DOE establishes the relationship between the manufacturer selling price (MSP) and improved residential furnace efficiency. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the Nation. DOE typically structures the engineering analysis using one of three approaches: (1) Design-option; (2) efficiency-level; or (3) reverse-engineering (or cost-assessment). The design-option approach involves adding the estimated cost and efficiency of various efficiency-improving design changes to the baseline to model different levels of efficiency. The efficiency-level approach uses estimates of cost and efficiency at distinct levels of efficiency from publicly-available information, as well [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2015-03275. Public record. Not legal advice.