Energy Conservation Program: Energy Conservation Standards for Consumer Furnaces

Federal RegisterJul 7, 2022

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DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2014-BT-STD-0031]

RIN 1904-AD20

Energy Conservation Program: Energy Conservation Standards for Consumer Furnaces

AGENCY:

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

ACTION:

Notice of proposed rulemaking and request for comment.

SUMMARY:

The Energy Policy and Conservation Act, as amended (“EPCA”), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including consumer furnaces. EPCA also requires the Department of Energy (“DOE” or “the Department”) to periodically determine whether more-stringent, amended standards would be technologically feasible and economically justified, and would result in significant energy savings. In this notice of proposed rulemaking (“NOPR”), DOE proposes amended energy conservation standards for non-weatherized gas furnaces and mobile home gas furnaces, and also announces a public meeting webinar to receive comment on these proposed standards and associated analyses and results.

DATES:

Comments:

DOE will accept comments, data, and information regarding this NOPR no later than September 6, 2022. See section VII, “Public Participation,” of this document for details.

Comments regarding the likely competitive impact of the proposed standard should be sent to the Department of Justice contact listed in the

ADDRESSES

section on or before August 22, 2022. DOE notes that the Department of Justice is required to transmit its determination regarding the competitive impact of the proposed standard to DOE no later than September 6, 2022. The determination and analysis by the Department of Justice will be published by DOE in the

Federal Register

. Commenters who want to have their comments considered by DOE as part of any future rulemaking resulting from this NOPR also should submit such comments to DOE in accordance with the procedures detailed in this proposed rulemaking.

Meeting:

DOE will hold a public meeting via webinar on Wednesday, August 3, 2022, from 12:30 p.m. to 5:00 p.m. See section VII, “Public Participation,” for webinar registration information, participant instructions, and information about the capabilities available to webinar participants.

ADDRESSES:

Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at

www.regulations.gov.

Follow the instructions for submitting comments. Alternatively, interested persons may submit comments, identified by docket number EERE-2014-BT-STD-0031 and/or regulatory information number (“RIN”) 1904-AD20, by any of the following methods:

(1)

Federal eRulemaking Portal: www.regulations.gov.

Follow the instructions for submitting comments.

(2)

Email: ResFurnaces2014STD0031@ee.doe.gov.

Include the docket number EERE-2014-BT-STD-0031 in the subject line of the message.

No telefacsimilies (“faxes”) will be accepted. For detailed instructions on submitting comments and additional information on the rulemaking process, see section VII of this document (Public Participation).

Although DOE has routinely accepted public comment submissions through a variety of mechanisms, including postal mail and hand delivery/courier, the Department has found it necessary to make temporary modifications to the comment submission process in light of the ongoing coronavirus (“COVID-19”) pandemic. DOE is currently suspending receipt of public comments via postal mail and hand delivery/courier. If a commenter finds that this change poses an undue hardship, please contact Appliance Standards Program staff at (202) 586-1445 to discuss the need for alternative arrangements. Once the COVID-19 pandemic health emergency is resolved, DOE anticipates resuming all of its regular options for public comment submission, including postal mail and hand delivery/courier.

Docket:

The docket for this activity, which includes

Federal Register

notices, comments, and other supporting documents/materials, is available for review at

www.regulations.gov.

All documents in the docket are listed in the

www.regulations.gov

index. However, not all documents listed in the index may be publicly available, such as information that is exempt from public disclosure.

The docket web page can be found at

www.regulations.gov/docket?D=EERE-2014-BT-STD-0031.

The docket web page contains instructions on how to access all documents, including public comments, in the docket. See section VII (Public Participation) for information on how to submit comments through

www.regulations.gov.

Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to Office of Energy Efficiency and Renewable Energy following the instructions at

www.RegInfo.gov.

EPCA requires the U.S. Attorney General to provide DOE a written determination of whether the proposed standard is likely to lessen competition. The U.S. Department of Justice (“DOJ”) Antitrust Division invites input from market participants and other interested persons with views on the likely competitive impact of the proposed standard. Interested persons may contact the Antitrust Division at

energy.standards@usdoj.gov

in advance of the date specified in the

DATES

section. Please indicate in the “Subject” line of your email the title and Docket Number of this rulemaking.

FOR FURTHER INFORMATION CONTACT:

Ms. Julia Hegarty, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (240) 597-6737. Email:

ApplianceStandardsQuestions@ee.doe.gov.

Mr. Eric Stas, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-5827. Email:

Eric.Stas@hq.doe.gov.

For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting webinar, contact the Appliance and Equipment Standards Program staff at (202) 287-1445 or by email:

ApplianceStandardsQuestions@ee.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Notice of Proposed Rulemaking

A. Benefits and Costs to Consumers

B. Impact on Manufacturers

C. National Benefits and Costs

1. AFUE Standards

2. Standby Mode and Off Mode Standards

3. Combined Results for Proposed AFUE Standards and Standby Mode and Off Mode Standards

D. Conclusion

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for Consumer Furnaces

3. Current Standards in Canada

C. Deviation From Appendix A

III. General Discussion

A. Product Classes and Scope of Coverage

B. Test Procedure

C. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

D. Energy Savings

1. Determination of Savings

2. Significance of Savings

E. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Consumers

b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP)

c. Energy Savings

d. Lessening of Utility or Performance of Products

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

2. Rebuttable Presumption

F. Other Issues

1. Furnace Sizing Requirements Based on ACCA Manual J and Manual S

2. Compliance Date

IV. Methodology and Discussion of Related Comments

A. Market and Technology Assessment

1. Scope of Coverage and Product Classes

a. General Approach

b. Condensing and Non-Condensing Furnaces

c. Mobile Home Gas Furnaces

d. Standby Mode and Off Mode

2. Technology Options

B. Screening Analysis

1. Screened-Out Technologies

2. Remaining Technologies

C. Engineering Analysis

1. Efficiency Analysis

a. Baseline Efficiency Level and Product Characteristics

b. Higher Energy Efficiency Levels

2. Cost Analysis

a. Teardown Analysis

b. Cost Estimation Method

c. Manufacturing Production Costs

d. Cost-Efficiency Relationship

e. Manufacturer Mark-Up

f. Manufacturer Interviews

3. Electric Furnaces

D. Mark-Ups Analysis

E. Energy Use Analysis

1. Building Sample

2. Furnace Sizing

3. Furnace Active Mode Energy Use

a. Adjustments to Energy Use Estimates

4. Furnace Electricity Use

5. Standby Mode and Off Mode

F. Life-Cycle Cost and Payback Period Analyses

1. General Method

2. Consumer Product Cost

3. Installation Cost

a. Basic Installation Costs

b. Additional Installation Costs for Non-Weatherized Gas Furnaces

c. Additional Installation Costs for Mobile Home Gas Furnaces

d. Contractor Survey and DOE's Sources

e. Summary of Installation Costs

4. Annual Energy Consumption

5. Energy Prices

6. Maintenance and Repair Costs

7. Product Lifetime

8. Discount Rates

9. Energy Efficiency Distribution in the No-New-Standards Case

a. Condensing Furnace Market Share in Compliance Year

b. Market Shares of Different Condensing Furnace Efficiency Levels

c. Assignment of Furnace Efficiency to Sampled Households

10. Alternative Size Thresholds for Small Consumer Gas Furnaces

a. Accounting for Impacts of Downsized Equipment

11. Accounting for Product Switching Under Potential Standards

a. Product Switching Resulting From Standards for Non-Weatherized Gas Furnaces

b. Switching Resulting From Standards for Mobile Home Gas Furnaces

12. Accounting for Furnace Repair as an Alternative to Replacement Under Potential Standards

13. Payback Period Analysis

G. Shipments Analysis

1. Shipments Model and Inputs

a. Historical Shipments Data

b. Shipment Projections in No-New Standards Case

2. Impact of Potential Standards on Shipments

a. Impact of Equipment Switching

b. Impact of Repair vs. Replace

H. National Impact Analysis

1. Product Efficiency Trends

2. National Energy Savings

3. Net Present Value Analysis

I. Consumer Subgroup Analysis

1. Low-Income Households

J. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model and Key Inputs

a. Manufacturer Production Costs

b. Shipments Projections

c. Capital and Product Conversion Costs

d. Manufacturer Mark-up Scenarios

3. Manufacturer Interviews

a. Product Switching

b. High Installation Costs for Some Consumers

c. Negative Impacts on Industry Profitability

K. Emissions Analysis

1. Air Quality Regulations Incorporated in DOE's Analysis

L. Monetizing Emissions Impacts

1. Monetization of Greenhouse Gas Emissions

a. Social Cost of Carbon

b. Social Cost of Methane and Nitrous Oxide

2. Monetization of Other Air Pollutants

M. Utility Impact Analysis

N. Employment Impact Analysis

V. Analytical Results and Conclusions

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers

a. Life-Cycle Cost and Payback Period

b. Consumer Subgroup Analysis

c. Rebuttable Presumption Payback

2. Economic Impacts on Manufacturers

a. Industry Cash Flow Analysis Results

b. Direct Impacts on Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Subgroups of Manufacturers

e. Cumulative Regulatory Burden

3. National Impact Analysis

a. Significance of Energy Savings

b. Net Present Value of Consumer Costs and Benefits

c. Indirect Impacts on Employment

4. Impact on Utility or Performance of Products

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Other Factors

8. Summary of National Economic Impacts

C. Conclusion

1. Benefits and Burdens of TSLs Considered for Non-Weatherized Gas Furnace and Mobile Home Gas Furnace AFUE Standards

2. Benefits and Burdens of TSLs Considered for Non-Weatherized Gas Furnace and Mobile Home Gas Furnace Standby Mode and Off Mode Standards

3. Benefits and Costs of the Proposed Standards

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

B. Review Under the Regulatory Flexibility Act

1. Description of Reasons Why Action Is Being Considered

2. Objectives of, and Legal Basis for, Rule

3. Description of Estimated Number of Small Entities Regulated

4. Description and Estimate of Compliance Requirements Including Differences in Cost, if Any, for Different Groups of Small Entities

a. AFUE Standards

b. Standby Mode and Off Mode Standards

5. Duplication, Overlap, and Conflict With Other Rules and Regulations

6. Significant Alternatives to the Rule

C. Review Under the Paperwork Reduction Act of 1995

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

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

I. Review Under Executive Order 12630

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

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

VII. Public Participation

A. Participation in the Public Meeting Webinar

B. Procedure for Submitting Prepared General Statements for Distribution

C. Conduct of the Public Meeting Webinar

D. Submission of Comments

E. Issues on Which DOE Seeks Comment

VIII. Approval of the Office of the Secretary

I. Synopsis of the Notice of Proposed Rulemaking

Title III, Part B

of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles.

(42 U.S.C. 6291-6309) These products include non-weatherized gas furnaces (“NWGF”) and mobile home gas furnaces (“MHGF”), the subjects of this rulemaking. (42 U.S.C. 6292(a)(5))

For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.

All references to EPCA in this document refer to the statute as amended through the Energy Act of 2020, Public Law 116-260 (Dec. 27, 2020), which reflects the last statutory amendments that impact Parts A and A-1 of EPCA.

Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) EPCA specifically provides that DOE must conduct two rounds of energy conservation standard rulemakings for NWGFs and MHGFs. (42 U.S.C. 6295(f)(4)(B) and (C)) The statute also requires that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a notice of proposed rulemaking (“NOPR”) including new proposed energy conservation standards. (42 U.S.C. 6295(m)(1)) This rulemaking is being undertaken pursuant to the statutorily-required second round of rulemaking for NWGFs and MHGFs, and once completed, it will also satisfy the statutorily-required 6-year-lookback review.

In accordance with these and other relevant statutory provisions discussed in this document, DOE is proposing amended and new energy conservation standards for the subject consumer furnaces (

i.e.,

NWGFs and MHGFs). In this document, DOE is proposing amended active mode energy conservation standards for NWGFs and MHGFs, which are expressed in terms of minimum annual fuel utilization efficiency (“AFUE”), and are shown in Table I.1 of this document. DOE is also proposing new standby mode and off mode energy standards for NWGFs and MHGFs, which are expressed in terms of watts, and are shown in Table I.2 of this document. These proposed standards would apply to all NWGFs and MHGFs manufactured in, or imported into, the United States starting on the date 5 years after the publication of the final rule for this rulemaking.

Table I.1—Proposed AFUE Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces

Product class

AFUE

(%)

Non-Weatherized Gas Furnaces

Mobile Home Gas Furnaces

Table I.2—Proposed Standby Mode and Off Mode Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces

Product class

Standby mode standard: P

W,SB

(watts)

Off mode standard: P

W,OFF

(watts)

Non-Weatherized Gas Furnaces

8.5

Mobile Home Gas Furnaces

8.5

A. Benefits and Costs to Consumers

Table I.3 and Table I.4 summarize DOE's evaluation of the economic impacts of the proposed AFUE standards and standby mode/off mode standards, respectively, on consumers of NWGFs and MHGFs, as measured by the average life-cycle cost (“LCC”) savings and the simple payback period (“PBP”).

The average LCC savings are positive for all product classes, and the PBP is less than the average lifetime of both NWGFs and MHGFs, which is estimated to be 21.4 years (see section IV.F of this document).

The average LCC savings refer to consumers that are affected by a standard and are measured relative to the efficiency distribution in the no-new-standards case, which depicts the market in the compliance year in the absence of new or amended standards (

see

section IV.F.10 of this NOPR). The simple PBP, which is designed to compare specific efficiency levels, is measured relative to the baseline product (

see

section IV.C of this NOPR).

Table I.3—Impacts of Proposed AFUE Energy Conservation Standards on Consumers of Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces

Product class

Average LCC savings

(2020$)

Simple

payback

period

(years)

Non-Weatherized Gas Furnaces

464

7.2

Mobile Home Gas Furnaces

526

7.5

Table I.4—Impacts of Proposed Standby Mode and Off Mode Energy Conservation Standards on Consumers of Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces

Product class

Average LCC savings

(2020$)

Simple

payback

period

(years)

Non-Weatherized Gas Furnaces

2.0

Mobile Home Gas Furnaces

1.7

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

B. Impact on Manufacturers

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

C. National Benefits and Costs

All monetary values in this document are expressed in 2020 dollars (2020$).

Benefits and costs for the proposed AFUE standards are presented and considered separately from benefits and costs for the proposed standby mode and off mode standards because it was not feasible to develop a single, integrated standard. As discussed in the October 20, 2010, test procedure final rule for consumer furnaces and boilers, DOE concluded that due to the magnitude of the active mode energy consumption as compared to the standby mode and off mode electrical consumption, an integrated metric would not be feasible because the standby mode and off mode electrical consumption would be a

de minimis

portion of the overall energy consumption. 75 FR 64621, 64627. Thus, an integrated metric could not be used to effectively regulate the standby mode and off mode energy consumption.

1. AFUE Standards

DOE's analyses indicate that the proposed energy conservation standards for NWGFs and MHGFs would save a significant amount of energy. Relative to the case without amended AFUE standards, the lifetime energy savings for NWGFs and MHGFs purchased in the 30-year period that begins in the anticipated year of compliance with the amended AFUE standards (2029-2058), are estimated to be amount to 5.48 quadrillion British thermal units (“Btu”), or “quads.”

This represents a savings of 3.5 percent relative to the energy use of these products in the case without amended or new standards (referred to as the “no-new-standards case”).

This quantity refers to full-fuel-cycle (“FFC”) energy savings. FFC energy savings includes the energy consumed in extracting, processing, and transporting primary fuels (

i.e.,

coal, natural gas, petroleum fuels), and, thus, presents a more complete picture of the impacts of energy efficiency standards. For more information on the FFC metric, see section IV.H.2 of this NOPR.

The cumulative net present value (“NPV”) of total consumer benefits of the proposed standards for NWGFs and MHGFs ranges from $6.2 billion (at a 7-percent discount rate) to $21.6 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product and installation costs for NWGFs and MHGFs purchased in 2029-2058.

In addition, the proposed AFUE standards for NWGFs and MHGFs are projected to yield significant environmental benefits. DOE estimates that the proposed standards would result in cumulative emission reductions (over the same period as for energy savings) of 363 million metric tons (“Mt”)

of carbon dioxide (“CO

”), 0.8 million tons of nitrogen oxides (“NO

”), and 5.1 million tons of methane (“CH

”). The proposed standards would result in cumulative emission increases of 52 thousand tons of sulfur dioxide (“SO

”), 0.3 thousand tons of nitrous oxide (“N

O”), and 0.3 tons of mercury (“Hg”).

A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO

are presented in short tons.

DOE calculated emissions reductions relative to the no-new-standards-case, which reflects key assumptions in the

Annual Energy Outlook 2021

(“

AEO2021”

AEO2021

represents current Federal and State legislation and final implementation of regulations as of the time of its preparation.

See

section IV.K for further discussion of

AEO2021

assumptions that effect air pollutant emissions. The increase in emissions of some pollutants is due to an increase in electricity consumption.

DOE estimates the value of climate benefits from a reduction in greenhouse gases using four different estimates of the social cost of CO

(“SC-CO

”), the social cost of methane (“SC-CH

”), and the social cost of nitrous oxide (“SC-N

O”). Together these represent the social cost of greenhouse gases (SC-GHG). DOE used interim SC-GHG values developed by an Interagency Working Group on the Social Cost of Greenhouse Gases (IWG).

The derivation of these values is discussed in section IV.L of this document. For

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

See

Interagency Working Group on Social Cost of Greenhouse Gases, Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide. Interim Estimates Under Executive Order 13990, Washington, DC (February 2021) (Available at:

www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf

) (Last accessed March 17, 2022).

On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in

Louisiana

Biden,

No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary injunction is no longer in effect, pending resolution of the Federal government's appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in that case from “adopting, employing, treating as binding, or relying upon” the interim estimates of the social cost of greenhouse gases—which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021—to monetize the benefits of reducing greenhouse gas emissions. In the absence of further intervening court orders, DOE will revert to its approach prior to the injunction and present monetized benefits where appropriate and permissible under law.

DOE also estimates health benefits from SO

and NO

emissions reductions. DOE estimates the present value of the health benefits would be $5.9 billion using a 7-percent discount rate, and $19.3 billion using a 3-percent discount rate. DOE is currently only monetizing (for SO

and NO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions.

Table I.5 summarizes the monetized benefits and costs expected to result from the proposed AFUE standards for NWGFs and MHGFs. There are other important unquantified effects, including certain unquantified climate benefits, unquantified public health benefits from the reduction of toxic air pollutants and other emissions, unquantified energy security benefits, and distributional effects, among others.

Table I.5—Summary of Monetized Benefits and Costs of Proposed AFUE Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 8)

Billion 2020$

3% discount rate

Consumer Operating Cost Savings

29.7

Climate Benefits *

16.2

Net Health Benefits **

19.3

Total Benefits †

65.2

Consumer Incremental Product Costs ‡

8.2

Net Benefits

57.1

7% discount rate

Consumer Operating Cost Savings

10.2

Climate Benefits *

16.2

Net Health Benefits **

5.9

Total Benefits †

32.2

Consumer Incremental Product Costs ‡

4.0

Net Benefits

28.2

Note:

This table presents the costs and benefits associated with consumer furnaces shipped in 2029-2058. These results include benefits to consumers which accrue after 2058 from the products shipped in 2029-2058.

* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO

), methane (SC-CH

), and nitrous oxide (SC-N

O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate), as shown in Table V.36, Table V.38, and Table V.40. Together these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point estimate.

See

section. IV.L of this document for more details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in

Louisiana

Biden,

** Health benefits are calculated using benefit-per-ton values for NO

and SO

. DOE is currently only monetizing (for SO

and NO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions. See section IV.L of this document for more details.

† Total and net benefits include those consumer, climate, and health benefits that can be monetized. For presentation purposes, total and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table V.46 for net benefits using all four SC-GHG estimates.

‡ Costs include incremental equipment costs, as well as installation costs.

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

To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2029, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur (

e.g.,

2030), and then discounted the present value from each year to 2029. The calculation uses discount rates of 3 and 7 percent for all costs and benefits, as shown in Table I.6 of this document. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year that yields the same present value.

The national operating cost savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing the covered products and are measured for the lifetime of NWGFs and MHGFs shipped in 2029-2058. The health benefits associated with reduced emissions achieved as a result of the proposed standards are also calculated based on the lifetime of NWGFs and MHGFs shipped in 2029-2058. Total benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs with 3-percent discount rate. Estimates of SC-GHG values are presented for all four discount rates in section V.B.8 of this document. Table I.6 presents the total estimated monetized benefits and costs associated with the proposed AFUE standard, expressed in terms of annualized values. The results under the primary estimate are as follows.

Using a 7-percent discount rate for consumer benefits and costs and health benefits from SO

and NO

emission changes, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated cost of the AFUE standards proposed in this rule is $524 million per year in increased equipment costs, while the estimated annual benefits would be

$1,320 million in reduced equipment operating costs, $1,015 million in climate benefits, and $760 million in health benefits (accounting for reduced NO

emissions and increased SO

emissions). In this case, the net benefit amounts to $2,571 million per year.

Using a 3-percent discount rate for all benefits and costs, the estimated cost of the proposed AFUE standards for NWGFs and MHGFs is $511 million per year in increased equipment costs, while the estimated annual benefits would be $1,865 million in reduced operating costs, $1,015 million in climate benefits, and $1,213 million in health benefits (accounting for reduced NO

emissions and increased SO

emissions). In this case, the net benefit would amount to $3,581 million per year.

Table I.6—Annualized Monetized Benefits and Costs of Proposed AFUE Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 8)

Million 2020$/year

Primary

estimate

Low-net-

benefits

estimate

High-net-

benefits

estimate

3% discount rate

Consumer Operating Cost Savings

1,865

1,891

1,937

Climate Benefits *

1,015

1,000

1,042

Health Benefits **

1,213

1,197

1,251

Total Benefits †

4,093

4,088

4,230

Consumer Incremental Product Costs ‡

511

508

461

Net Benefits

3,581

3,580

3,769

7% discount rate

Consumer Operating Cost Savings

1,320

1,338

1,352

Climate Benefits *

1,015

1,000

1,042

Health Benefits **

760

751

780

Total Benefits †

3,095

3,089

3,173

Consumer Incremental Product Costs ‡

524

516

471

Net Benefits

2,571

2,573

2,702

Note:

* Climate benefits are calculated using four different estimates of the global SC-GHG (

see

section IV.L of this document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in

Louisiana

Biden,

No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in that case from “adopting, employing, treating as binding, or relying upon” the interim estimates of the social cost of greenhouse gases—which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021—to monetize the benefits of reducing greenhouse gas emissions. In the absence of further intervening court orders, DOE will revert to its approach prior to the injunction and presents monetized benefits where appropriate and permissible under law.

** Health benefits are calculated using benefit-per-ton values for NO

and SO

. DOE is currently only monetizing (for SO

and NO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions.

See

section IV.L of this document for more details.

† Total benefits infor both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates.

‡ Costs include incremental equipment costs, as well as installation costs.

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

2. Standby Mode and Off Mode Standards

For standby mode and off mode standards, relative to the case without new standards, the lifetime energy savings for NWGFs and MHGFs purchased in the 30-year period that begins in the anticipated year of compliance with the new standby mode and off mode standards (2029-2058), are estimated to be amount to 0.28 quads.

This represents a savings of 16 percent relative to the energy use of these products in the no-new-standards case.

This quantity refers to FFC energy savings. FFC energy savings includes the energy consumed in extracting, processing, and transporting primary fuels (

i.e.,

The cumulative NPV of total consumer benefits of the proposed standby mode and off mode standards for NWGFs and MHGFs ranges from $1.1 billion (at a 7-percent discount rate) to $3.4 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for NWGFs and MHGFs purchased in 2029-2058.

In addition, the proposed standby mode and off mode standards for NWGFs and MHGFs are projected to yield significant environmental benefits. DOE estimates that the proposed standards would result in cumulative emission reductions (over the same period as for energy savings) of 9.6 Mt of CO

, 4.5 thousand tons of SO

, 13.5 thousand tons of NO

, 65.9 thousand tons of CH

, 0.1 thousand tons of N

O, and 0.03 tons of mercury Hg.

DOE estimates the value of climate benefits from a reduction in greenhouse gases using four different estimates of the SC-CO

, the SC-CH

, and the SC-N

O. Together these represent the SC-

GHG. DOE used interim SC-GHG values developed by an IWG on the Social Cost of Greenhouse Gases.

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

See

www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf

(last accessed March 17, 2022).

Louisiana

Biden,

DOE also estimates health benefits from SO

and NO

emissions reductions.

DOE estimates the present value of the health benefits would be $0.2 billion using a 7-percent discount rate, and $0.6 billion using a 3-percent discount rate. DOE is currently only monetizing (for SO

and NO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions.

DOE estimated the monetized value of SO

and NO

emissions reductions associated with site and electricity savings using benefit-per-ton estimates from the scientific literature.

See

section IV.L.2 of this document for further discussion.

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

Table I.7—Summary of Monetized Benefits and Costs of Proposed Standby Mode and Off Mode Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 3)

Billion 2020$

3% discount rate

Consumer Operating Cost Savings

3.6

Climate Benefits *

0.4

Health Benefits **

0.6

Total Benefits †

4.6

Consumer Incremental Product Costs ‡

0.2

Net Benefits

4.4

7% discount rate

Consumer Operating Cost Savings

1.2

Climate Benefits *

0.4

Health Benefits **

0.2

Total Benefits †

1.8

Consumer Incremental Product Costs ‡

0.1

Net Benefits

1.7

Note:

* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO

), methane (SC-CH

), and nitrous oxide (SC-N

O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate), as shown in Table V.37, Table V.39, Table V.41. Together these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in

Louisiana

Biden,

** Health benefits are calculated using benefit-per-ton values for NO

and SO

. DOE is currently only monetizing (for SO

and NO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions.

See

section IV.L of this document for more details.

† Total and net benefits include those consumer, climate, and health benefits that can be monetized. For presentation purposes, total and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table V.47 for net benefits using all four SC-GHG estimates.

‡ Costs include incremental equipment costs, as well as installation costs.

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

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

e.g.,

2030), and then discounted the present value from each year to 2029. The calculation uses discount rates of 3 and 7 percent for all costs and benefits, as shown in Table I.8 of this document. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year that yields the same present value.

The national operating cost savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing the covered products and are measured for the lifetime of NWGFs and MHGFs shipped in 2029-2058. The health benefits associated with reduced emissions achieved as a result of the proposed standards are also calculated based on the lifetime of NWGFs and MHGFs shipped in 2029-2058. Total benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs with 3-percent discount rate. Estimates of SC-GHG values are presented for all four discount rates in section V.B.8 of this document. Table I.8 presents the total estimated monetized benefits and costs associated with the proposed standby and off mode standard, expressed in terms of annualized values. The results under the primary estimate are as follows.

Using a 7-percent discount rate for consumer benefits and costs and health benefits from reduced SO

and NO

emissions, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated cost of the proposed standby mode and off mode standards for NWGFs and MHGFs is $12.2 million per year in increased equipment costs, while the estimated annual benefits would be $160 million in reduced equipment operating costs, $23 million in climate benefits, and $25 million in health benefits. In this case, the net benefit would amount to $196 million per year.

Using a 3-percent discount rate for all benefits and costs, the estimated cost of the proposed standby mode and off mode standards for NWGFs and MHGFs is $12.4 million per year in increased equipment costs, while the estimated annual benefits would be $224 million in reduced operating costs, $23 million in climate benefits, and $40 million in health benefits. In this case, the net benefit would amount to $275 million per year.

Table I.8—Annualized Monetized Benefits and Costs of Proposed Standby Mode and Off Mode Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 3)

Million 2020$/year

Primary

estimate

Low-net-

benefits

estimate

High-net-

benefits

estimate

3% discount rate

Consumer Operating Cost Savings

224

214

251

Climate Benefits *

Health Benefits **

Total Benefits †

287

276

318

Consumer Incremental Product Costs ‡

Net Benefits

275

264

305

7% discount rate

Consumer Operating Cost Savings

160

155

176

Climate Benefits *

Health Benefits **

Total Benefits †

208

203

227

Consumer Incremental Product Costs ‡

Net Benefits

196

190

214

Note:

* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in

Louisiana

Biden,

** Health benefits are calculated using benefit-per-ton values for NO

and SO

. DOE is currently only monetizing (for SO

and NO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions. See section IV.L of this document for more details.

† Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates.

‡ Costs include incremental equipment costs, as well as installation costs.

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

3. Combined Results for Proposed AFUE Standards and Standby Mode and Off Mode Standards

DOE considers and evaluates these standards independently under EPCA and the analytical process outlined in DOE's Process Rule (as amended). However, DOE is also presenting the combined effects of these standards for the benefit of the public and in compliance with E.O. 12866, as shown in Table I.9. and Table I.10 of this document

The results under the primary estimate for Table I.10 are as follows.

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

Using a 7-percent discount rate for consumer benefits and costs and health benefits from SO

and NO

emission changes, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated cost of the proposed standards in this rule is $536 million per year in increased equipment costs, while the estimated annual benefits would be $1,480 million in reduced equipment operating costs, $1,038 million in climate benefits, and $785 million in health benefits (accounting for reduced NO

emissions and increased SO

emissions)., In this case, the net benefit amounts to $2,767 million per year.

Using a 3-percent discount rate for all benefits and costs, the estimated cost of the proposed standards in this rule is $524 million per year in increased equipment costs, while the estimated annual benefits would be $2,089 million in reduced operating costs, $1,038 million in climate benefits, and $1,253 million in health benefits (accounting for reduced NO

emissions and increased SO

emissions). In this case, the net benefit would amount to $3,856 million per year.

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

Power Sector Emissions

(

million metric tons

)

327

(

thousand tons

)

(48)

(

thousand tons

)

137

Hg (

tons

)

(0.3)

(

thousand tons

)

0.6

O (

thousand tons

)

(0.3)

Upstream Emissions

(

million metric tons

)

(

thousand tons

)

(0.3)

(

thousand tons

)

696

Hg (

tons

)

0.0

(

thousand tons

)

5,133

O (

thousand tons

)

(0.05)

Total FFC Emissions

(

million metric tons

)

373

(

thousand tons

)

(47)

(

thousand tons

)

833

Hg (

tons

)

(0.3)

(

thousand tons

)

5,134

O (

thousand tons

)

(0.2)

Table I.10—Monetized Benefits and Costs of Proposed AFUE (TSL 8) and Standby Mode and Off Mode (TSL 3) Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces

Annualized

(million 2020$/yr)

Total

present value

(billion 2020$)

Consumer Operating Cost Savings

2,089

33.3

Climate Benefits *

1,038

16.5

Health Benefits **

1,253

20.0

Total Benefits †

4,380

69.8

Consumer Incremental Product Costs ‡

524

8.3

Net Benefits

3,856

61.5

Consumer Operating Cost Savings

1,480

11.4

Climate Benefits *

1,038

16.5

Health Benefits **

785

6.1

Total Benefits †

3,303

34.0

Consumer Incremental Product Costs ‡

536

4.1

Net Benefits

2,767

29.9

Note:

* Climate benefits are calculated using four different estimates of the global SC-GHG (

see

Louisiana

Biden,

** Health benefits are calculated using benefit-per-ton values for NO

and SO

. DOE is currently only monetizing (for SO

and NO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions. See section IV.L of this document for more details.

‡ Costs include incremental equipment costs, as well as installation costs.

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

D. Conclusion

DOE has tentatively concluded that the proposed AFUE standards and standby mode and off mode standards represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in significant conservation of energy. Specifically, with regards to technological feasibility, products achieving these standard levels are already commercially available for the product classes covered by the proposed standards. As for economic justification, DOE's analysis shows that the benefits of the proposed standards exceed, to a great extent, the burdens of the proposed standards. Using a 7-percent discount rate for consumer benefits and costs and health benefits from SO

and NO

emission changes, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated cost of the proposed standards in this rule is $536 million per year in increased equipment costs, while the estimated annual benefits are $1,480 million in reduced equipment operating costs, $1,038 million in climate benefits, and $785 million in health benefits (accounting for reduced NO

emissions and increased SO

emissions). The net benefit amounts to $2,767 million per year.

The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking.

For example, the United States rejoined the Paris Agreement on February 19, 2021. As part of that agreement, the United States has committed to reducing greenhouse (“GHG”) emissions in order to limit the rise in mean global temperature. As such, energy savings that reduce GHG emissions have taken on greater importance. Additionally, some covered products and equipment have substantial energy consumption occur during periods of peak energy demand. The impacts of these products on the energy infrastructure can be more pronounced than products with relatively constant demand. Accordingly, DOE evaluates the significance of energy savings on a case-by-case basis.

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

As previously mentioned, the standards are projected to result in estimated national energy savings of 5.76 quads and an estimated cumulative emissions reduction of 373 Mt of CO

. The consumer benefit to the Nation (

i.e.,

cumulative net present value of total consumer savings less costs) is estimated to be between $7.3 billion and $25.0 billion (discounted at 7 percent and 3 percent, respectively) in 2020$. DOE has initially determined the energy savings from the proposed standard levels are “significant” within the meaning of 42 U.S.C. 6295(o)(3)(B). A more detailed discussion of the basis for these tentative conclusions is contained in the remainder of this document and the accompanying TSD.

DOE also considered more-stringent energy efficiency levels as potential standards, and the Department is still considering them in this rulemaking. However, DOE has tentatively concluded that the potential burdens of the more-stringent energy efficiency levels would outweigh the projected benefits.

Based on consideration of the public comments DOE receives in response to this document and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy efficiency levels presented in this document that are either higher or lower than the proposed standards, or some combination of level(s) that incorporate the proposed standards in part.

II. Introduction

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

A. Authority

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

established the Energy Conservation Program for Consumer Products Other Than Automobiles. These products include the consumer furnaces that are the subject of this document. (42 U.S.C. 6292 (a)(5)) EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(f)(1) and (2)), and directs DOE to conduct future rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(f)(4)) EPCA further provides that, not later than six years after the issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1))

The energy conservation program under EPCA consists essentially of four parts: (1) testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of EPCA specifically include definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy conservation standards (42 U.S.C. 6295), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).

Federal energy efficiency requirements for covered products established under EPCA generally supersede State laws and regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal preemption in limited instances for particular State laws or regulations, in accordance with the procedures and other provisions set forth under EPCA. 42 U.S.C. 6297(d).

Subject to certain statutory criteria and conditions, DOE is required to develop test procedures that are reasonably designed to produce test results which measure the energy efficiency, energy use, or estimated annual operating cost of each covered product during a representative average use cycle and that are not unduly burdensome to conduct. (42 U.S.C. 6293(b)(3)) Manufacturers of covered products must use the prescribed Federal test procedure as the basis for: (1) certifying to DOE that their products comply with the applicable energy conservation standards adopted pursuant to EPCA and (2) making representations about the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 42 U.S.C. 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with the relevant energy conservation standards promulgated under EPCA. (42 U.S.C. 6295(s)) The DOE test procedures for residential furnaces appear at title 10 of the Code of Federal Regulations (“CFR”) part 430, subpart B, appendix N.

DOE must follow specific statutory criteria for prescribing new or amended energy conservation standards for covered products. Any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary of Energy determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3))

Moreover, DOE may not prescribe a standard: (1) for certain products, including residential furnaces, if no test procedure has been established for the product, or (2) if DOE determines by rule that the standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving views and comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven factors:

(1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;

(2) The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the standard;

(3) The total projected amount of energy (or as applicable, water) savings likely to result directly from the standard;

(4) Any lessening of the utility or the performance of the covered products likely to result from the standard;

(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;

(6) The need for national energy and water conservation; and

(7) Other factors the Secretary of Energy (“Secretary”) considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

Further, EPCA establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))

EPCA also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if the Secretary finds (and publishes such finding) that interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

Additionally, EPCA specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories that warrant separate product classes and energy conservation standards with a level of energy efficiency or energy use either higher or lower than that which would apply for such group of covered products which have the same function or intended use. DOE must specify a different standard level for a type or class of products that has the same function or intended use if DOE determines that products within such group: (A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In determining whether capacity or another performance-related feature justifies a different standard for a group of products, DOE must consider such factors as the utility to the consumer of such a feature and other factors DOE deems appropriate.

Id.

Any rule prescribing such a standard must include an explanation of the basis on which such higher or lower level was established. (42 U.S.C. 6295(q)(2))

Pursuant to amendments contained in the Energy Independence and Security

Act of 2007 (EISA 2007), Public Law 110-140, DOE may consider the establishment of regional energy conservation standards for furnaces (except boilers). (42 U.S.C. 6295(o)(6)) Specifically, in addition to a base national standard for a product, DOE may establish for furnaces a single more-restrictive regional standard. (42 U.S.C. 6295(o)(6)(B)) The regions must include only contiguous States (with the exception of Alaska and Hawaii, which may be included in regions with which they are not contiguous), and each State may be placed in only one region (

i.e.,

an entire State cannot simultaneously be placed in two regions, nor can it be divided between two regions). (42 U.S.C. 6295(o)(6)(C)) Further, DOE can establish the additional regional standards only: (1) where doing so would produce significant energy savings in comparison to a single national standard; (2) if the regional standards are economically justified; and (3) after considering the impact of these standards on consumers, manufacturers, and other market participants, including product distributors, dealers, contractors, and installers. (42 U.S.C. 6295(o)(6)(D))

Finally, pursuant to the amendments contained in EISA 2007, any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's current test procedures for residential furnaces address standby mode and off mode energy use for all covered residential furnaces. DOE's energy conservation standards address standby mode and off mode energy use only for non-weatherized oil-fired and electric furnaces. 10 CFR 430.32(e)(1)(iii). In this NOPR, DOE is proposing to develop separate energy conservation standards that would address the standby mode and off mode energy use of NWGFs and MHGFs.

B. Background

1. Current Standards

EPCA established the energy conservation standards that apply to most consumer furnaces currently being manufactured. The original standards established a minimum AFUE of 75 percent for mobile home furnaces. For all other furnaces, the original standards generally established a minimum AFUE of 78 percent. However, Congress recognized the potential need for a separate standard based on the capacity of a furnace and directed DOE to undertake a rulemaking to establish a standard for “small” gas furnaces (

i.e.,

those having an input of less than 45,000 Btu per hour). (42 U.S.C. 6295(f)(1)-(2)) Through a final rule published in the

Federal Register

on November 17, 1989, DOE initially established standards for small furnaces at the same level as furnaces generally (

i.e.,

a minimum AFUE of 78 percent). 54 FR 47916, 47944.

EPCA also required DOE to conduct two rounds of rulemaking to consider amended standards for consumer furnaces. (42 U.S.C. 6295(f)(4)(B)-(C)). In addition, EPCA requires a six-year-lookback review of energy conservation standards for all covered products. (42 U.S.C. 6295(m)(1)) In a final rule published in the

Federal Register

on November 19, 2007 (November 2007 final rule), DOE prescribed amended energy conservation standards for consumer furnaces manufactured on or after November 19, 2015. 72 FR 65136. The November 2007 final rule revised the energy conservation standards to 80-percent AFUE for NWGFs, to 81-percent AFUE for weatherized gas furnaces, to 80-percent AFUE for MHGFs, and to 82-percent AFUE for non-weatherized oil-fired furnaces.

72 FR 65136, 65169. Based on market assessment and the standard levels at issue, the November 2007 final rule established standards without regard to the certified input capacity of a furnace.

Id.

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

Following DOE's adoption of the November 2007 final rule, several parties jointly sued DOE in the United States Court of Appeals for the Second Circuit (“Second Circuit”) to invalidate the rule. Petition for Review,

State of New York, et al.

Department of Energy, et al.,

Nos. 08-0311-ag(L); 08-0312-ag(con) (2d Cir. filed Jan. 17, 2008). The petitioners asserted that the standards for furnaces promulgated in the November 2007 final rule did not reflect the “maximum improvement in energy efficiency” that “is technologically feasible and economically justified” under 42 U.S.C. 6295(o)(2)(A). On April 16, 2009, DOE filed with the Court a motion for voluntary remand that the petitioners did not oppose. The motion did not state that the November 2007 final rule would be vacated, but indicated that DOE would revisit its initial conclusions outlined in the November 2007 final rule in a subsequent rulemaking action. DOE also agreed that the final rule in that subsequent rulemaking action would address both regional standards for furnaces, as well as the effects of alternate standards on natural gas prices. The Second Circuit granted DOE's motion on April 21, 2009. DOE notes that the Second Circuit's order did not vacate the energy conservation standards set forth in the November 2007 final rule, and during the remand, they went into effect as originally scheduled.

On June 27, 2011, DOE published a direct final rule (“DFR”) in the

Federal Register

(“June 2011 DFR”) amending the energy conservation standards for residential central air conditioners and consumer furnaces. (76 FR 37408) Subsequently, on October 31, 2011, DOE published a notice of effective date and compliance dates in the

Federal Register

(“October 2011 notice”) to confirm amended energy conservation standards and compliance dates contained in the June 2011 DFR. 76 FR 67037. The November 2007 final rule and the June 2011 DFR represented the first and the second rounds, respectively, of the two rulemakings required under 42 U.S.C. 6295(f)(4)(B)-(C) to consider amending the energy conservation standards for consumer furnaces.

The June 2011 DFR and October 2011 notice of effective date and compliance dates amended, in relevant part, the energy conservation standards and compliance dates for three product classes of consumer furnaces (

i.e.,

NWGFs, MHGFs, and non-weatherized oil furnaces).

The existing standards were left in place for three classes of consumer furnaces (

i.e.,

weatherized oil-fired furnaces, mobile home oil-fired furnaces, and electric furnaces). For one class of consumer furnaces (weatherized gas furnaces), the existing standard was left in place, but the compliance date was amended. Electrical standby mode and off mode energy consumption

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

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

After publication of the October 2011 notice, the American Public Gas Association (“APGA”) sued DOE

in the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) to invalidate that rule as it pertained to NWGFs (as discussed further in section II.B.2 of this document). Petition for Review,

American Public Gas Association, et al.

Department of Energy, et al.,

No. 11-1485 (D.C. Cir. filed Dec. 23, 2011). The parties to the litigation engaged in settlement negotiations which ultimately led to filing of an unopposed motion on March 11, 2014, seeking to vacate DOE's rule in part and to remand to the agency for further rulemaking. On April 24, 2014, the Court granted the motion and ordered that the standards established for NWGFs and MHGFs be vacated and remanded to DOE for further rulemaking. As a result, the standards established by the June 2011 DFR for NWGFs and MHGFs did not go into effect, and thus, required compliance with the standards established in the November 2007 final rule for these products began on November 19, 2015. As stated previously, the AFUE standards for weatherized oil-fired furnaces, mobile home oil-fired furnaces, and electric furnaces were unchanged, and as such, the original standards for those product classes remain in effect. Further, the amended standard for non-weatherized oil furnaces were not subject to the Court order, and went into effect as specified in the June 2011 DFR.

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

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

Table II.1—Current Federal Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces

Product class

Minimum

annual fuel

utilization

efficiency

(%)

Compliance

date

Non-weatherized Gas

11/19/2015

Mobile Home Gas

11/19/2015

2. History of Standards Rulemaking for Consumer Furnaces

Given the somewhat complicated interplay of recent DOE rulemakings and statutory provisions related to consumer furnaces, DOE provides the following regulatory history as background leading to this document. Amendments to EPCA in the National Appliance Energy Conservation Act of 1987 (NAECA; Pub. L. 100-12) established EPCA's original energy conservation standards for furnaces, consisting of the minimum AFUE levels described above for mobile home furnaces and for all other furnaces except “small” gas furnaces. (42 U.S.C. 6295(f)(1)-(2)) Pursuant to 42 U.S.C. 6295(f)(1)(B), in November 1989, DOE adopted a mandatory minimum AFUE level for “small” furnaces. 54 FR 47916 (Nov. 17, 1989). The standards established by NAECA and the November 1989 final rule for “small” gas furnaces are still in effect for mobile home oil-fired furnaces, weatherized oil-fired furnaces, and electric furnaces.

Pursuant to EPCA, DOE was required to conduct two rounds of rulemaking to consider amended energy conservation standards for furnaces. (42 U.S.C. 6295(f)(4)(B) and (C)) In satisfaction of this first round of amended standards rulemaking under 42 U.S.C. 6295(f)(4)(B), as noted above, DOE published the November 2007 final rule that revised these standards for most furnaces, but left them in place for two product classes (

i.e.,

mobile home oil-fired furnaces and weatherized oil-fired furnaces). The standards amended in the November 2007 final rule were to apply to furnaces manufactured or imported on and after November 19, 2015. 72 FR 65136 (Nov. 19, 2007). The energy conservation standards in the November 2007 final rule consist of a minimum AFUE level for each of the six classes of furnaces.

Id.

at 72 FR 65169. As previously noted, based on the market analysis for the November 2007 final rule and the standards established under that rule, the November 2007 final rule eliminated the distinction between furnaces based on their certified input capacity, (

i.e.,

the standards applicable to “small' furnaces were established at the same level and as part of their appropriate class of furnace generally).

Id.

As described previously in section II.B.1 of this document, on June 27, 2011, DOE published in the

Federal Register

the June 2011 DFR revising the energy conservation standards for residential furnaces pursuant to the voluntary remand in

State of New York, et al.

Department of Energy, et al.

76 FR 37408 (June 27, 2011). In the June 2011 DFR, DOE considered the amendment of the same six product classes considered in the November 2007 final rule analysis plus electric furnaces. As discussed in section II.B.1 of this document, the June 2011 DFR amended the existing AFUE energy conservation standards for NWGFs, MHGFs, and non-weatherized oil furnaces, and amended the compliance

date (but left the existing standards in place) for weatherized gas furnaces. The June 2011 DFR also established electrical standby mode and off mode energy conservation standards for NWGFs, non-weatherized oil furnaces, and electric furnaces. DOE confirmed the standards and compliance dates promulgated in the June 2011 DFR in a notice of effective date and compliance dates published in the

Federal Register

on October 31, 2011. 76 FR 67037.

As noted earlier, following DOE's adoption of the June 2011 DFR, APGA filed a petition for review with the United States Court of Appeals for the District of Columbia Circuit to invalidate the DOE rule as it pertained to NWGFs. Petition for Review,

American Public Gas Association, et al.

Department of Energy, et al.,

No. 11-1485 (D.C. Cir. filed Dec. 23, 2011). On April 24, 2014, the Court granted a motion that approved a settlement agreement that was reached between DOE and APGA, in which DOE agreed to a partial vacatur and remand of the NWGFs and MHGFs portions of the June 2011 DFR in order to conduct further notice-and-comment rulemaking. Accordingly, the Court's order vacated the June 2011 DFR in part (

i.e.,

those portions relating to NWGFs and MHGFs) and remanded to the agency for further rulemaking.

As part of the settlement, DOE agreed to use best efforts to issue a notice of proposed rulemaking within one year of the remand, and to issue a final rule within the later of two years of the issuance of remand, or one year of the issuance of the proposed rule, including at least a ninety-day public comment period. Due to the extensive and recent rulemaking history for residential furnaces, as well as the associated opportunities for notice and comment described previously, DOE forwent the typical earlier rulemaking stages (

e.g.,

Framework Document, preliminary analysis) and instead published a NOPR on March 12, 2015 (March 2015 NOPR). 80 FR 13120. DOE concluded that there was a sufficient recent exchange of information between interested parties and DOE regarding the energy conservation standards for residential furnaces such as to allow for this proceeding to move directly to the NOPR stage. Moreover, DOE notes that under 42 U.S.C. 6295(p) and 5 U.S.C. 553(b) and (c), DOE is only required to publish a notice of proposed rulemaking and accept public comments before amending energy conservation standards in a final rule (

i.e.,

DOE is not required to conduct any earlier rulemaking stages).

This aligns with the direction provided in the final rule published in the

Federal Register

on December 13, 2021, regarding the procedures, interpretations, and policies for consideration in new or revised energy conservation standards and test procedures for consumer products and commercial/industrial equipment (“December 2021 Final Rule”). 86 FR 70892, 70922.

In the March 2015 NOPR, DOE proposed adopting a national standard of 92-percent AFUE for all NWGFs and MHGFs. 80 FR 13120, 13198 (March 12, 2015). In response, while some stakeholders supported the national 92-percent AFUE standard, others opposed the proposed standards and encouraged DOE to withdraw the March 2015 NOPR.

Multiple parties suggested that DOE should create a separate product class for furnaces based on input capacity and set lower standards for “small furnaces” in order to mitigate some of the negative impacts of the proposed standards. Among other reasons, commenters suggested that such an approach would reduce the number of low-income consumers switching to electric heat due to higher installation costs, because those consumers typically have smaller homes in which a furnace with a lower input capacity would be installed and, therefore, would not be impacted if a condensing standard were adopted only for higher-input-capacity furnaces. To explore the potential impacts of such an approach, DOE published a notice of data availability (“NODA”) in the

Federal Register

on September 14, 2015 (September 2015 NODA). 80 FR 55038. The September 2015 NODA contained analysis that considered thresholds for defining the small NWGF product class from 45 kBtu/h to 65 kBtu/h certified input capacity and maintaining a non-condensing 80-percent AFUE standard for that product class, while increasing the standard to a condensing level (

i.e.,

either 90-percent, 92-percent, 95-percent, or 98-percent AFUE) for large NWGFs.

Id.

at 80 FR 55042. The results indicated that life-cycle cost savings increased and the share of consumers with net costs decreased as a result of an 80-percent AFUE standard for a small NWGF product class.

Id.

at 80 FR 55042-55044. It also showed that national energy savings increased because fewer consumers switched to electric heat.

Id.

at 80 FR 55308, 55044.

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

Therefore, DOE published a supplemental notice of proposed rulemaking (“SNOPR”) in the

Federal Register

on September 23, 2016 (September 2016 SNOPR) that proposed separate standards for small and large NWGF.

81 FR 65720. For NWGF with input capacities of 55 kBtu/h or less, DOE proposed to maintain the standard at 80-percent AFUE.

Id.

at 81 FR 65852. For all other NWGF and for all MHGF, DOE proposed a standard of 92-percent AFUE.

Id.

As was the case in the September 2015 NODA, a small NWGF product class was shown to reduce the number of consumers experiencing net costs due to higher installation costs for condensing furnaces or switching to electric heat. In the September 2016 SNOPR, DOE initially determined that the combination of a 55 kBtu/h product class threshold and a 92-percent AFUE standard for all NWGF above that size appropriately balanced the costs and benefits. DOE also noted in that SNOPR that a 60 kBtu/h threshold may also be economically justified based on the analysis, and sought further comment regarding the particular size threshold proposed. 81 FR 65720, 65755 (Sept. 23, 2016).

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

In addition, for the March 2015 NOPR and September 2016 SNOPR, DOE analyzed energy conservation standards for the standby mode and off mode energy use of NWGF and MHGF, as required by EPCA. (42 U.S.C. 6295(gg)(3); 80 FR 13120, 13198; 81 FR 65720, 65759-65760) In both the March 2015 NOPR and the September 2016 SNOPR, DOE proposed a maximum energy use of 8.5 watts in both standby mode and off mode for NWGF and MHGF. 80 FR 13120, 13198 (March 12, 2015) and 81 FR 65720, 65852 (Sept. 23, 2016).

On January 15, 2021, in response to a petition for rulemaking

submitted by the American Public Gas Association, Spire, Inc., the Natural Gas Supply Association, the American Gas Association, and the National Propane Gas Association (the “Gas Industry Petition”), DOE published a final interpretive rule (“the January 2021 final interpretive rule”) in the

Federal Register

determining that, in the context of residential furnaces, commercial water heaters, and similarly-situated products/equipment, use of non-condensing technology (and associated venting) constitutes a performance-related “feature” under EPCA that cannot be eliminated through adoption of an energy conservation standard. 86 FR 4776. Correspondingly,

on the same day, DOE published in the

Federal Register

a notification withdrawing the March 2015 NOPR and the September 2016 SNOPR for NWGFs and MHGFs. 86 FR 3873 (Jan. 15, 2021).

DOE published the Gas Industry Petition in the

Federal Register

for comment on November 1, 2018. 83 FR 54838.

On January 20, 2021, the White House issued Executive Order 13990, “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” 86 FR 7037 (Jan. 25, 2021). Section 1 of that Order lists several policies related to the protection of public health and the environment, including reducing greenhouse gas emissions and bolstering the Nation's resilience to climate change.

Id.

at 86 FR 7037. Section 2 of the Order also instructs all agencies to review “existing regulations, orders, guidance documents, policies, and any other similar agency actions (agency actions) promulgated, issued, or adopted between January 20, 2017, and January 20, 2021, that are or may be inconsistent with, or present obstacles to, [these policies].”

Id.

Agencies are then directed, as appropriate and consistent with applicable law, to consider suspending, revising, or rescinding these agency actions and to immediately commence work to confront the climate crisis.

Id.

In light of E.O. 13990, DOE undertook a re-evaluation of the final interpretation and withdrawal of proposed rulemakings published in the

Federal Register

on January 15, 2021, and the Department published a proposed interpretive rule in the

Federal Register

on August 27, 2021, to once again address this matter. 86 FR 48049.

Following the re-evaluation of the January 2021 final interpretive rule and consideration of public comments, DOE published a final interpretive rule in the

Federal Register

on December 29, 2021 (“December 2021 final interpretive rule”) that returns to the Department's previous and long-standing interpretation (in effect prior to the January 15, 2021 final interpretive rule), under which the technology used to supply heated air or hot water is not a performance-related “feature” that provides a distinct consumer utility under EPCA. 86 FR 73947. Residential furnaces were one of the two primary focuses of the December 2021 final interpretive rule (along with commercial water heaters), and in that document, the Department offered an extensive explanation as to its rationale for why it does not view noncondensing technology and associated venting to be a performance-related feature warranting a separate product class for furnaces. Among these are the consumer utility of the product (

i.e.,

providing heat, irrespective of venting type) and the availability of technological alternatives for difficult installation situations (which are costs concerns properly addressed under consideration of a standard's economic justification). However, DOE has stated that it will consider any particular concerns regarding specific installation circumstances in the context of individual rulemakings, and the Department welcomes such comments in response to this NOPR.

Consistent with the December 2021 final interpretive rule, in conducting the analysis for this NOPR, DOE does not divide product classes based on condensing technologies and associated venting systems when analyzing potential energy conservation standards.

As illustrated by the preceding discussion, the rulemaking for consumer furnaces has been subject to multiple rounds of public comment, including public meetings, and extensive records have been developed in the relevant dockets. (See Docket Number EERE-2011-BT-STD-0011). Consequently, the information obtained through those earlier rounds of public comment, information exchange, and data gathering have been considered in this rulemaking, and DOE is building upon the existing record through further analysis and further notice and comment. DOE has tentatively found that the relevant furnaces market has stayed sufficiently similar since the time of these past rulemakings such that much of the previously-collected feedback and data continue to be relevant. However, as discussed in section IV of this NOPR, DOE has updated analytical inputs in its analyses where appropriate and welcomes further data, information, and comments.

In the withdrawn September 2016 SNOPR, DOE preliminarily addressed the comments received in response to the March 2015 NOPR and September 2015 NODA. In response to the withdrawn September 2016 SNOPR, DOE received a number of written comments from interested parties during the comment period on that document. Table II.2 identifies those commenters. Although DOE withdrew the September 2016 SNOPR, DOE considered these comments, as well as comments from the September 2016 SNOPR public meeting, to the extent relevant in preparing this document.

Table II.2—Interested Parties Providing Written Comment on the Withdrawn September 2016 SNOPR for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces

Name

Acronyms/

abbreviation

Type

A Ware Productions

A Ware

African American Environmentalist Association

AAEA

American Gas Association and American Public Gas Association

AGA and APGA

American Gas Association, American Public Gas Association, and Gas Technology Institute

AGA, APGA, and GTI

AGL Resources

Air Conditioning Contractors of America

ACCA

Air-Conditioning, Heating, and Refrigeration Institute

AHRI

Alliance to Save Energy

ASE

Allied Air

American Association of Blacks in Energy

AABE

American Council for an Energy-Efficient Economy

ACEEE

American Council for an Energy-Efficient Economy, Appliance Standards Awareness Project, and Alliance to Save Energy

ACEEE, ASAP, & ASE

American Council for an Energy-Efficient Economy, Appliance Standards Awareness Project, Alliance to Save Energy, Natural Resource Defense Council, Northeast Energy Efficiency Partnerships, Northwest Energy Efficiency Alliance

Efficiency Advocates

American Energy Alliance

AEA

American Gas Association

AGA

American Public Gas Association

APGA

American Public Power Association

APPA

Anonymous

Appliance Standards Awareness Project

ASAP

Austell Natural Gas System

Austell

Borough of Chambersburg, PA

Chambersburg

California Energy Commission

CEC

Cato Institute

CenterPoint Energy

City of Adairsville, Georgia

Adairsville

City of Cairo, Georgia

Cairo

City of Camilla, Georgia

Camilla

City of Cartersville, Georgia

Cartersville

City of Commerce, Georgia

Commerce

City of Covington, Georgia

Covington

City of Dublin, Georgia

Dublin

City of Lawrenceville, Georgia

Lawrenceville

City of Louisville, Georgia

Louisville

City of Monroe, Georgia

Monroe

City of Moultrie, Georgia

Moultrie

City of Sugar Hill, Georgia

Sugar Hill

City of Sylvania, Georgia

Sylvania

City of Thomasville, Georgia

Thomasville

City of Tifton, Georgia

Tifton

City of Toccoa/Toccoa Natural Gas

Toccoa

G/U

Clearwater Gas System

CGS

Members of the U.S. Congress *

Joint Congress Members

Gregory W. Meeks (Member of Congress)

Meeks

Sanford D. Bishop, Jr. (Member of Congress)

Bishop

Donald M. Payne, Jr. (Member of Congress)

Payne

Consumer Federation of America, National Consumer Law Center, Massachusetts Union of Public Housing Tenants, and Texas Ratepayers' Organization to Save Energy

Joint Consumer Commenters

Contractor Advisors

Arthur Corbin

Corbin

Jim Darling

Darling

DC Jobs or Else

Earthjustice

Edison Electric Institute

EEI

Energy Association of Pennsylvania

Environmental Defense Fund, Institute for Policy Integrity at NYU School of Law, Natural Resources Defense Council, and Union of Concerned Scientists

Joint Advocates

Fitzgerald Utilities

Fitzgerald

Catherine Fletcher

Fletcher

Florida Natural Gas Association

FNGA

Gas Technology Institute

GTI

Goodman Global, Inc

Goodman

Heating, Air-Conditioning & Refrigeration Distributors International

HARDI

Jennifer Hombach

Hombach

Ingersoll Rand

David Johnson

Johnson

Johnson Controls, Inc

JCI

Jointly Owned Natural Gas

Aaron Kelly

Kelly

The Laclede Group, Inc/Spire, Inc. **

Laclede/Spire

Law Offices of Barton Day, PLLC ***

Day

Lennox International Inc

Lennox

Liberty Utilities

Manufactured Housing Institute

MHI

Mark Nayes

Nayes

Mercatus Center at George Mason University

Abdukadirov

et al

Metal-Fab

Metropolitan Utilities District, Omaha, NE

Metropolitan Utilities District

Don Meyers

Meyers

Cameron Moore

Moore

Mortex Products, Inc

Mortex

Municipal Gas Authority of Georgia

Gas Authority

National Association of Home Builders

NAHB

National Energy & Utility Affordability Coalition

NEUAC

National Multifamily Housing Council, National Apartment Association, National Leased Housing Association

NMHC, NAA, NLHA

National Propane Gas Association

NPGA

Natural Gas Association of Georgia

NGA

Natural Resources Defense Council

NRDC

New Jersey Natural Gas

NJNG

NiSource Inc

NiSource

Nortek Global HVAC

Nortek

Northeast Energy Efficiency Partnerships

NEEP

ONE Gas, Inc

ONE Gas

Pacific Gas and Electric Company

PG&E

Pennsylvania Chamber of Business and Industry

Pennsylvania Department of Environmental Protection

PA DEP

Philadelphia Gas Works

PGW

Plumbing-Heating-Cooling Contractors

PHCC

Prime Energy Partners, LLC

Prime Energy Partners

Questar Gas Company

Questar Gas

Rheem Manufacturing Company

Rheem

David Schroeder

Schroeder

Terry Small

Small

Southern California Gas Company

SoCalGas

Southern Company

Southern Gas Association

SGA

Southside Heating and Air Conditioning

State of Indiana

Indiana

Kimberly Swanson

Swanson

Town of Rockford, Alabama

Rockford

Ubuntu Center of Chicago

Ubuntu

United Technologies Building and Industrial Systems—Carrier Corporation

Carrier

United States Joint Representatives †

Joint Representatives

University of Pennsylvania, Kleinman Center for Energy Policy

Kleinman Center

U.S. Chamber of Commerce, the American Chemistry Council, the American Coke and Coal Chemicals Institute, the American Forest & Paper Association, the American Fuel & Petrochemical Manufacturers, the American Petroleum Institute, the Brick Industry Association, the Council of Industrial Boiler Owners, the National Association of Home Builders, the National Association of Manufacturers, the National Mining Association, the National Oilseed Processors Association, and the Portland Cement Association

Associations

Vectren Corporation

Vectren

John von Harz

von Harz

Washington Gas Light Company

Washington Gas

Walter Wood

Wood

C: Mechanical Contractor; CR: Consumer Representative; CS: Component Supplier; EA: Efficiency/Environmental Advocate; EI: Educational Institution; G: Government; I: Individual; M: Manufacturer; PP: Public Policy Research Organization; TA: Trade Association; U: Utility or Utility Trade Association.

* Paul D. Tonka, Raúl M. Grijalva, Michael M. Honda, Scott H. Peters, Alan S. Lowenthal, Jerrold Nadler, Sander M. Levin, Chris Van Hollen, Alan S. Lowenthal, Rep.Ted Lieu, Donald S. Beyer, Jr., Louise M. Slaughter, Rep. Lois Capps, and Donna F. Edwards.

** The Laclede Group, Inc. changed its name to Spire, Inc. during this rulemaking.

*** Representing Spire Inc., a gas utility.

† Mo Brooks, Tom Price, Lou Barletta, Bradley Byrne, Glenn `GT' Thompson, Steve Russell, Joe Heck, Gary Palmer, Kevin Yoder, Jim Bridenstine, Scott Tipton, Robert Pittenger, Chuck Fleischmann, Robert Aderholt, Mimi Walters, Barry Loudermilk, Gregg Harper, Mark Walker, Brian Babin, Candice S. Miller, Chris Stewart, Mike D. Rogers, Jim Renacci, Bob Gibbs, Dave Brat, Jeff Miller, Phil Roe, David Schweikert, Tom Marino, David B. McKinley, Scott DesJarlais, Marc Veasey, Ralph Abraham, Matt Salmon, David Rouzer, Richard Hudson, Cresent Hardy, Buddy Carter, Mike Pompeo, Martha Roby, Glenn Grothman, Tom Emmer, Paul Gosar, Ted S. Yoho, Rick Allen, Dan Benishek, David Young, Randy Weber, Mark Meadows, Kay Granger, Blake Farenthold, Bill Flores, Kevin Cramer, Daniel Webster, Tim Huelskamp, Markwayne Mullin, Chris Collins, Jason Smith, Steve Womack, Diane Black, Keith Rothfus, Sean P. Duffy, Renee Ellmers, Alex X. Mooney, Jim Costa, Brad Wenstrup, Sam Graves, Charles W. Boustany, Jr., Andy Barr, Mike Bost, Doug Collins, Jody Hice, Mike Kelly, Jim Jordan, Lynn Jenkins, Andy Harris, Billy Long, Bill Johnson, Rob Woodall, David W. Jolly, Rodney Davis, Joe Barton, Gus M. Bilirakis, Pete Olson, Randy Forbes, Ed Whitfield, Ken Calvert, John Duncan, Henry Cuellar, Steve King, John Shimkus, Jeb Hensarling, Pete Sessions, Vicky Hartzler, Adrian Smith, Louie Gohmert, Marsha Blackburn, Sam Johnson, Tom McClintock, Walter Jones, Patrick T. McHenry, Steve Chabot, Doug Lamborn, Frank D. Lucas, Sanford D. Bishop, Jr., Lamar Smith, Austin Scott, Mick Mulvaney, Steve Pearce, Brett Guthrie, Trent Franks, Blaine Luetkemeyer, Tom Graves, Mike Coffman, Robert E. Latta, F. James Sensenbrenner, Jr., Stephen Fincher, Tom Cole, Lynn Westmoreland, John Ratcliffe, and John Moolenaar.

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

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

www.regulations.gov

). The references are arranged as follows: (commenter name, comment docket ID number, page of that document).

3. Current Standards in Canada

Consumer furnaces are a regulated product in Canada and are subject to energy efficiency regulations. On December 24, 2008, Natural Resources Canada published regulations in the

Canada Gazette, Part II

amending the energy efficiency regulations for consumer furnaces, among other appliances and equipment.

The revised regulation, required on or after December 31, 2009, sets a minimum

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

See

Canada Gazette, Part II,

Vol. 142, No. 26, pp. 2512-2570. (Available at:

www.gazette.gc.ca/rp-pr/p2/2008/2008-12-24/pdf/g2-14226.pdf

) (Last accessed Feb. 15, 2022).

On June 12, 2019, Natural Resources Canada published regulations in the

Canada Gazette, Part II

amending the energy efficiency regulations for consumer furnaces, among other appliances and equipment.

The definition of gas furnaces was clarified to exclude gas furnaces for relocatable buildings (

e.g.,

MHGFs). The revised regulation, required on or after July 3, 2019, sets a minimum efficiency of 95-percent AFUE for gas furnaces. Furthermore, the revised regulation also sets a minimum efficiency of 80-percent AFUE for gas furnaces for relocatable buildings.

See

Canada Gazette, Part II,

Vol. 153, No. 12, pp. 2423-2517. (Available at:

www.gazette.gc.ca/rp-pr/p2/2019/2019-06-12/pdf/g2-15312.pdf

) (Last accessed Feb. 15, 2022).

“Gas furnace for relocatable buildings” is defined in that regulation as a gas furnace that is intended for use in a temporary modular building that can be relocated from one site to another and is marked for use in relocatable buildings.

C. Deviation From Appendix A

In accordance with section 3(a) of 10 CFR part 430, subpart C, appendix A (“appendix A”), DOE notes that it is deviating from the provision in appendix A regarding the pre-NOPR stages for an energy conservation standards rulemaking. Section 6(a)(2) of appendix A states that if the Department determines it is appropriate to proceed with a rulemaking, the preliminary stages of a rulemaking to issue or amend an energy conservation standard that DOE will undertake will be a framework document and preliminary analysis, or an advance notice of proposed rulemaking. For the reasons that follow, DOE finds it necessary and appropriate to deviate from this step in appendix A and to instead publish this NOPR without once again conducting these preliminary stages. Completion of this furnaces rulemaking is overdue under the relevant statutory deadline, so DOE seeks to complete its statutory obligations as expeditiously as possible. Moreover, DOE finds that there would be little benefit in repeating the preliminary stages of this rulemaking. The earlier stages of a rulemaking are intended to introduce the various analyses DOE conducts during the rulemaking process, present preliminary results, and request initial feedback from interested parties to seek early input. Although the most recent rulemaking notices for NWGFs and MHGFs (the March 2015 NOPR and September 2016 SNOPR) have been withdrawn, as discussed in section II.B.2 of this document, this analysis builds upon the previous rulemaking stages. As DOE is using similar analytical methods in this NOPR (with differences described in the sections that follow), publication of a framework document, preliminary analysis, or ANOPR would be largely redundant of previously published documents. Stakeholders have previously provided numerous rounds of input on these methodologies in the most recent rulemaking. Further, as discussed in section II.A, EPCA provides that DOE must conduct two rounds of energy conservation standard rulemakings for NWGFs and MHGFs. (42 U.S.C. 6295(f)(4)(B) and (C)) The statute also requires that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a NOPR including new proposed energy conservation standards. (42 U.S.C. 6295(m)(1)) The energy conservation standards for NWGF and MHGF were last amended in the November 2007 final rule. Additionally, as discussed in section II.B.2 of this document, in settling the lawsuit filed by APGA following the June 2011 DFR (Petition for Review,

American Public Gas Association, et al.

Department of Energy, et al.,

No. 11-1485 (D.C. Cir. filed Dec. 23, 2011)), DOE agreed to use best efforts to issue a NOPR within one year of the remand (

i.e.,

by April 24, 2015), and to issue a final rule within the later of two years of the issuance of remand, or one year of the issuance of the proposed rule (

i.e.,

by April 24, 2016).

As it has been more than 8 years since the settlement agreement and over 6 years past the original target date for issuance of a final rule, DOE has determined that moving as expeditiously as is reasonably practical is the approach most consistent with the terms of the settlement agreement as well as the requirements of EPCA. As such, DOE is not publishing pre-NOPR documents. DOE has tentatively found that the portions of analysis done for previous rulemakings continue to apply to the current market for the furnaces at issue. However, as discussed in section IV of this NOPR, DOE has updated analytical inputs in its analyses where appropriate and welcomes submission of additional data, information, and comments.

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

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

III. General Discussion

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

A. Product Classes and Scope of Coverage

When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used, or by capacity or other performance-related features that justify differing standards. In making a determination whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility of the feature to the consumer and other factors DOE determines are appropriate. (42 U.S.C. 6295(q))

In this proposed rule, DOE is only analyzing a subset of consumer furnace classes. DOE agreed to the partial vacatur and remand of the June 2011 DFR, specifically as it related to energy conservation standards for NWGFs and MHGFs in the settlement agreement to resolve the litigation in

American Public Gas Ass'n

U.S. Dept. of Energy

(No. 11-1485, D.C. Cir. Filed Dec 23, 2011). 80 FR 13120, 13130-13132 (March 12, 2015). Therefore, in this proposed rule, DOE is only proposing amended standards for NWGFs and for MHGFs. For a detailed discussion of the product classes considered for this NOPR, see section IV.A.1 of this document.

B. Test Procedure

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

procedures. (42 U.S.C. 6293) Manufacturers of covered products must use these test procedures to certify to DOE that their product complies with energy conservation standards and to quantify the efficiency of their product. (42 U.S.C. 6295(s)) DOE's current energy conservation standards for consumer furnaces are expressed in terms of AFUE (

see

10 CFR 430.32(e)(1)). AFUE is an annualized fuel efficiency metric that accounts for fossil fuel consumption in active, standby, and off modes. The existing DOE test procedure for determining the AFUE of consumer furnaces is located at 10 CFR part 430, subpart B, appendix N. The DOE test procedure for consumer furnaces was originally established by a May 12, 1997 final rule, which incorporates by reference the American Society of Heating, Refrigerating and Air-Conditioning Engineers (“ASHRAE”)/American National Standards Institute (“ANSI”) Standard 103-1993,

Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and Boilers

(1993). 62 FR 26140, 26157.

Since the initial adoption of the consumer furnaces test procedure, DOE has undertaken a number of additional rulemakings related to that test procedure, including ones to account for measurement of standby mode and off mode energy use (

see

75 FR 64621 (Oct. 20, 2010); 77 FR 76831 (Dec. 31, 2012)) and to supply necessary equations related to optional heat-up and cool-down tests (

see

78 FR 41265 (July 10, 2013)).

Most recently, DOE published a final rule in the

Federal Register

on January 15, 2016, that further amended the test procedure for consumer furnaces (January 2016 TP final rule). 81 FR 2628. The revisions included:

• Clarification of the electrical power term “PE”;

• Adoption of a smoke stick test for determining use of minimum default draft factors;

• Allowance for the measurement of condensate under steady-state conditions;

• Reference to manufacturer's installation and operation manual and clarifications for when that manual does not specify test set-up;

• Specification of ductwork requirements for units that are installed without a return duct; and

• Revision of the requirements regarding AFUE reporting precision.

81 FR 2628, 2629-2630.

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

C. Technological Feasibility

1. General

In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially-available products or in working prototypes to be technologically feasible.

See

10 CFR part 430, subpart C, appendix A (“Process Rule”), sections 6(b)(3)(i) and 7(b)(1).

After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) practicability to manufacture, install, and service; (2) adverse impacts on product utility or availability; (3) adverse impacts on health or safety; and (4) unique-pathway proprietary technologies. Sections 6(b)(3)(ii)-(v) and 7(b)(2)-(5) of the Process Rule. Section IV.B of this document discusses the results of the screening analysis for NWGF and MHGF, particularly the designs DOE considered, those it screened out, and those that are the basis for the potential standards considered in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the technical support document (“TSD”).

2. Maximum Technologically Feasible Levels

When DOE proposes to adopt an amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for NWGFs and MHGFs, using the design parameters for the most efficient products available on the market or in working prototypes. The max-tech levels that DOE determined for this rulemaking are described in section IV.C.1.b of this NOPR and in chapter 5 of the TSD.

D. Energy Savings

1. Determination of Savings

For each trial standard level (“TSL”), DOE projected energy savings from application of the TSL to NWGFs and MHGFs purchased in the 30-year period that begins in the expected first year of compliance with the proposed amended or new standards (2029-2058).

The savings are measured over the entire lifetime of products purchased in the 30-year analysis period. DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the no-new-standards case. The no-new-standards case represents a projection of energy consumption that reflects how the market for a product would likely evolve in the absence of amended or new energy conservation standards.

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

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

Annual Energy Outlook

(“

AEO”

) currently

AEO 2021.

DOE also calculates NES in terms of full-fuel-cycle (“FFC”) energy savings. The FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (

i.e.,

coal, natural gas, petroleum fuels), and, thus, presents a more complete picture of the impacts of energy conservation standards.

DOE's approach is based on

the calculation of an FFC multiplier for each of the energy types used by covered products or equipment. For more information on FFC energy savings, see section IV.H.2 of this NOPR.

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

2. Significance of Savings

To adopt any new or amended standards for a covered product, DOE must determine that such action would result in significant energy savings. (42 U.S.C. 6295(o)(3)(B))

The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking.

For example, the United States has rejoined the Paris Agreement and will exert leadership in confronting the climate crisis.

Additionally, some covered products and equipment have most of their energy consumption occur during periods of peak energy demand. The impacts of these products on the energy infrastructure can be more pronounced than products with relatively constant demand. In evaluating the significance of energy savings, DOE considers differences in primary energy and FFC effects for different covered products and equipment when determining whether energy savings are significant. Primary energy and FFC effects include the energy consumed in electricity production (depending on load shape), in distribution and transmission, and in extracting, processing, and transporting primary fuels (

i.e.,

coal, natural gas, petroleum fuels), and, thus, present a more complete picture of the impacts of energy conservation standards.

The numeric threshold for determining the significance of energy savings, which was established in a final rule published in the

Federal Register

on February 14, 2020 (85 FR 8626, 8705), was subsequently eliminated in a final rule published in the

Federal Register

on December 13, 2021 (86 FR 70892, 70901-70906).

See

Executive Order 14008, “Tackling the Climate Crisis at Home and Abroad,” 86 FR 7619 (Feb. 1, 2021).

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

E. Economic Justification

1. Specific Criteria

As noted previously, EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.

a. Economic Impact on Manufacturers and Consumers

In determining the impacts of potential amended standards on manufacturers, DOE conducts an MIA, as discussed in section IV.J of this document. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year period. The industry-wide impacts analyzed include (1) INPV, which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other product-specific regulatory requirements on manufacturers.

For individual consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the consumer costs and benefits expected to result from particular standards. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a national standard.

b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP)

EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered product that are likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analyses.

The LCC is the sum of the purchase price of a product (including its installation) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and discount rates appropriate for consumers. To account for uncertainty and variability in specific inputs, such as product lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value.

The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. In general, DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect.

For its LCC and PBP analyses, DOE assumes that consumers will purchase the covered products in the first year of compliance with new or amended standards. The LCC savings for the considered efficiency levels are calculated relative to the case that reflects projected market trends in the absence of new or amended standards. DOE's LCC and PBP analyses is discussed in further detail in section IV.F of this document.

c. Energy Savings

Although significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section IV.H of this document, DOE uses the NIA spreadsheet models to project national energy savings.

d. Lessening of Utility or Performance of Products

In establishing product classes, and in evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards proposed in this document would not reduce the utility or performance of the products under consideration in this rulemaking.

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from a proposed standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy of this proposed rule to the Attorney General with a request that the Department of Justice (“DOJ”) provide its determination on this issue. DOE will publish and respond to the Attorney General's determination in the final rule. DOE invites comment from the public regarding the competitive impacts that are likely to result from this proposed rule. In addition, stakeholders may also provide comments separately to DOJ regarding these potential impacts. See the

ADDRESSES

section for information to send comments to DOJ.

f. Need for National Energy Conservation

DOE also considers the need for national energy and water conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the proposed standards are likely to provide improvements to the security and reliability of the Nation's energy system. Reductions in the demand for electricity also may result in reduced costs for maintaining the reliability of the Nation's electricity system. DOE conducts a utility impact analysis to estimate how potential standards may affect the Nation's needed power generation capacity, as discussed in section IV.M of this document.

DOE maintains that environmental and public health benefits associated with the more efficient use of energy are important to take into account when considering the need for national energy conservation. The proposed standards are likely to result in environmental benefits in the form of reduced emissions of air pollutants and GHGs associated with energy production and use. DOE conducts an emissions analysis to estimate how potential standards may affect these emissions, as discussed in section IV.K of this document; the estimated emissions impacts are reported in section V.B.6 of this document. DOE also estimates the monetized value of health benefits of certain emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this document.

g. Other Factors

In determining whether an energy conservation standard is economically justified, DOE may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent DOE identifies any relevant information regarding economic justification that does not fit into the other categories described above, DOE could consider such information under “other factors.”

2. Rebuttable Presumption

As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first full year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effect potential amended energy conservation standards would have on the payback period for consumers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section IV.F of this proposed rule.

F. Other Issues

1. Furnace Sizing Requirements Based on ACCA Manual J and Manual S

On June 30, 2016, AGA presented information to DOE and the Office of Information and Regulatory Affairs (“OIRA”) that AGA asserted supports a 70 kBtu/h maximum capacity threshold for small furnaces.

Specifically, AGA submitted calculations performed by a consultant, HTR Engineering, that used the ACCA Manual J methodology to determine the heating load for various types of houses in various locations.

For each scenario, AGA submitted Microsoft Excel worksheets and PDF “J1-ALP” forms with the summary inputs, assumptions, and corresponding components of the overall heating load to DOE.

In addition to the Manual J results for each scenario, in its presentation, AGA also provided information on the appropriate furnace size for each scenario based on ACCA Manual S. DOE subsequently presented a slide at the October 2016 public meeting covering the September 2016 SNOPR that summarized the information provided by AGA for further discussion among all interested parties.

DOE noted that Manual S requires that furnaces be sized at between 1.0 and 1.4 times the Manual J calculated load, and the “appropriate furnace size” presented by AGA based on the Manual S requirement did not appear to be within that range, based on the Manual J data provided by AGA.

AGA presented this information in a PowerPoint slide deck titled, “Additional Information for OIRA Staff DOE Furnace SNOPR” (June 30, 2016). This presentation is located at the docket at:

www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0209.

AGA provided results for four building types at two levels of efficiency and in five locations. The four building types were: two-story townhome with basement; two-story townhome without basement; three-story townhome without basement; and small single family detached home. The two efficiency levels were a highly efficient home built to 2015 code and a highly inefficient home built to 1950s era practices and standards. The five locations were Atlanta, Chicago, Minneapolis, Salt Lake City, and Oklahoma City.

See: www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0209.

See: www.regulations.gov/document/EERE-2014-BT-STD-0031-0236.

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

though the analysis was done by a third-party consultant. Second, AGA stated that the numbers DOE presented in the public meeting only included the results from the building envelope efficiency assessment of the HTR study and excluded the load associated with the duct system efficiency assessment and the outdoor air requirements presented in the study, thereby significantly understating the actual building heating loads. Third, AGA asserted that due to the use of what it stated are the incorrect building load numbers, the calculated preferred output and input capacity, as presented by DOE, were also incorrect. Fourth, AGA commented that if DOE had used what AGA deemed to be the correct building load numbers, the “AGA” oversize factors (as presented by DOE) would reflect the 1.4 oversize factor from ACCA Manual S. AGA presented a revised version of the table shown in the public meeting with corrected values. Lastly, AGA asserted that if DOE were to use what AGA understood to be the correct building heating load, a 55,000 Btu/h NWGF would not be able to serve the heating needs of the type of home assessed. (AGA, No. 306-1 at pp. 13, 52-54) PHCC stated that the heating loads submitted by AGA and presented on DOE's slide 30 of the October 17, 2016 Public Meeting are understated. PHCC commented that it appears that infiltration losses and the possibility of unoccupied space may not have been fully accounted for in these calculations. As a result, PHCC stated that this analytical flaw puts in question the calculations used to justify the input capacity limit for exemption from the proposed standard. PHCC presented alternative calculations based on a 1,500 square foot townhouse, which it asserted show that a 1500 square foot townhouse similar to the one analyzed by AGA would not be a candidate for a 55,000 Btu/h furnace on a 25 °F day. (PHCC, No. 298 at p. 2)

In response, DOE notes that in the summary spreadsheets provided by AGA, the output from the Manual J load calculation, as listed on the J1-ALP forms, is used for the Manual S furnace sizing. In other words, Manual S specifies that the appropriate equipment size be based on the load calculation resulting from Manual J. When compared to the information presented by AGA regarding the appropriate furnace size for each scenario (Additional Information for OIRA Staff DOE Furnace SNOPR, June 30, 2016 presented in slide #7), these values imply an oversize factor of approximately 2, which is inconsistent with the Manual S requirement for an oversize factor of 1.0-1.4 for these buildings. In their written comments, AGA provided a table (AGA, No. 306-1 at p. 52) which includes heating load numbers (labeled Heating Load Numbers from HTR Furnace Sizing Study); however, these values were not previously provided as the basis for the furnace sizing requirements for the scenarios by AGA. More specifically, AGA did not provide information to DOE regarding its assumptions or calculations for the load associated with the duct system efficiency assessment or the outdoor air requirements. Therefore, DOE maintains that its characterization of the original data submittal compared to the presented data is appropriate.

However, when considering AGA's “corrected” version of the table, DOE notes that for the ranges presented in the column for “ACCA Manual S preferred input capacity ” show that in most cases (all but one—Minneapolis), a 55,000 Btu/h furnace could meet the required load. While AGA's “corrected” table shows the “Appropriate Furnace Size for a 1,500 s.f. Inefficient Townhouse presented in AGA slide deck to OMB (kBtu/h)” is based on a 1.4 oversize factor, DOE notes that Manual S specifies that the factor can be anywhere from 1.0 to 1.4, and Manual S recommends sizing the furnace as close to 1.0 as possible. Thus, while oversizing a furnace up to 40 percent is acceptable, it is preferred to size it appropriately according to the calculated load in Manual S. Therefore, the “preferred” input capacity would be the low end of the range presented in AGA's table, which for four of the five scenarios presented is below 55,000 Btu/h (and in the fifth case is 62,200 Btu/h). Thus, based on the data submitted by AGA, a threshold of 55,000 Btu/h would alleviate impacts in the majority of situations, except in the most extreme cases (such as Minneapolis). Even in these situations, such as in Minneapolis, a 55,000 Btu/h furnace would likely be able to meet the majority of the heating load, with a small amount of supplemental heating required from other sources. Therefore, DOE maintains its position that 55 kBtu/h is appropriate for consideration as a potential threshold for defining small furnaces, and further discusses its decision with regard to this in sections IV.A.1.a and V.C.1 of this document. Furnaces at or above this threshold would represent approximately 86% of furnace shipments in the no-new-standards case. In response to PHCC, DOE notes that the files submitted by AGA do appear to account for infiltration losses, and some scenarios include unoccupied basement space. However, some of the assumptions used by PHCC in its calculations appear to differ from those made in the data submitted by AGA, including the dimensions of exterior walls and area and type of windows, among other parameters, which may account for the difference in results.

2. Compliance Date

As discussed in the withdrawn September 2016 SNOPR, missed deadlines in the furnace rulemaking history have resulted in ambiguity in terms of the applicable statutory compliance date for any potential amended standards that result from this rulemaking. 81 FR 65720, 65746 (Sept. 23, 2016). DOE explained that, in light of this ambiguity, it is informed by Congress's most recent direction regarding the lead time specific to furnace rulemakings (

i.e.,

5 years) under the 6-year review requirement (42 U.S.C. 6295(m)(4)(A)(ii)). 81 FR 65720, 65747 (Sept. 23, 2016). DOE posited that a lead time for compliance of 5 years after publication of the final rule for amended furnaces standards, consistent with the requirements of both 42 U.S.C. 6295(f)(4)(C) and (m)(4)(A)(ii), would be in alignment with the provision in the 6-year-lookback authority that manufacturers shall not be subject to new standards for a covered product for which other new standards have been required in the past 6 years. (42 U.S.C. 6295(m)(4)(B); the relevant date being November 19, 2015—the compliance date of the last amendments applicable to NWGFs and MHGFs.)

Id.

Further, DOE asserted that the compliance date of the July 2014 Furnace Fan Final Rule

(

i.e.,

July 3, 2019) is not relevant to the minimum 6-year period required under 42 U.S.C. 6295(m)(4)(B), stating that furnace fan standards are to be treated as a separate covered product and are not to be understood as a standard on furnaces.

Id.

DOE continues to adhere to this view and is proposing a five-year lead time for compliance with any amended energy conservation standards for NWGFs and MHGFs, for the reasons that follow.

See

79 FR 38130 (July 3, 2014).

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

“furnace fan” is not expressly defined by EPCA as a “covered product.” However, EPCA, and the relevant amending statutes, provide for the treatment of furnace fans as a product separate from furnaces, and DOE's standards for furnace fans are separate and distinct from the standards for furnaces. DOE is expressly authorized to establish energy conservation standards for electricity used for purpose of circulating air through duct work. (42 U.S.C. 6295(f)(4)(D)) An energy conservation standard is a performance standard “which prescribes a minimum level of energy efficiency or a maximum quantity of energy use . . . for a covered product.” (42 U.S.C. 6291(6)) DOE has interpreted EPCA as providing direction to the Department to establish an energy conservation standard for furnace fans, which are to be treated as a separate consumer product.

Further, the authority to establish such standards was added to EPCA by section 135, of the Energy Policy Act of 2005, which was titled “Energy Conservation Standards for Other Products,” again indicating that the standards are to be treated as standards applicable to a product separate from furnaces. Public Law 109-58, section 135 (August 8, 2005); 119 Stat. 594, 624. The establishment of such standards was made mandatory under section 304 of the Energy Independence and Security Act of 2007 (EISA 2007), which was titled “Furnace Fan Standard Process,” further indicating that furnace fans are to be considered as a covered product separate from furnaces. Public Law 110-140, section 304 (Dec. 19, 2007); 121 Stat. 1492, 1553.

The authority to establish energy conservation standards for “electricity used for purposes of circulating air through duct work” does not expressly reference furnaces. (

See

42 U.S.C. 6295(f)(4)(D)) Where EPCA has required the establishment of standards for furnaces, it has done so expressly. “Furnaces (other than furnaces designed solely for installation in mobile homes) manufactured on or after January 1, 1992, shall have an annual fuel utilization efficiency of not less than 78 percent[.]” (42 U.S.C. 6295(f)(1)); “Furnaces which are designed solely for installation in mobile homes and which are manufactured on or after September 1, 1990, shall have an annual fuel utilization efficiency of not less than 75 percent.” (42 U.S.C. 6295(f)(2)); “The Secretary shall publish a final rule no later than January 1, 1994, to determine whether the standards established by this subsection for furnaces (including mobile home furnaces) should be amended.” (42 U.S.C. 6295(f)(4)(C)) Instead of directing DOE to establish furnace standards for electricity used for the purpose of circulating air, or standards for electricity used by furnaces for the purpose of circulating air through duct work, EPCA directs DOE to establish standards for electricity used for purposes of circulating air through duct work without reference to furnaces in that paragraph. Further, DOE has found that this language could be interpreted as encompassing electrically-powered devices used in any residential heating, ventilation, and air-conditioning (“HVAC”) product to circulate air through duct work, not just furnaces. 79 FR 500, 504 (Jan. 3, 2014).

Consistent with treating the furnace fan standards and the furnace standards as standards on separate products, EPCA established two separate timeframes for the furnace fan and furnace rulemakings. Section 304 of EISA 2007, Furnace Fan Standard Process, amended the provision regarding standards for electricity used for the purpose of circulating air through duct work by requiring DOE to establish such standards by December 31, 2013. EISA 2007, Public Law 110-140, section 304 (Dec. 19, 2007); 121 Stat. 1492, 1553; 42 U.S.C. 6295(f)(4)(D). In the section immediately following the Furnace Fan Standard Process section, EISA 2007 amended EPCA to establish the 6-year-lookback review requirement for energy conservation standards. EISA 2007, Public Law 110-140, section 305 (Dec. 19, 2007); 121 Stat. 1492, 1553; 42 U.S.C. 6295(m). EPCA required DOE to establish an amended final rule for furnaces no later than January 1, 2007, with a compliance date of January 1, 2012. (42 U.S.C. 6295(f)(4)(C)) As a result of the 6-year review provision added under EISA 2007, DOE had to either a publish a determination that no amendment of the furnace standards is needed or issue a notice of proposed rulemaking to amend the furnace standards by January 1, 2013. Instead of aligning the furnace fan rulemaking with the furnace rulemaking schedule, EPCA, as amended by EISA 2007, established a distinct December 1, 2013 deadline, further indicating that furnace fans are to be treated separately from furnaces.

As DOE acknowledged in a 2013 notice of proposed rulemaking for furnace fan energy conservation standards, standards for furnace fans may require manufacturers to redesign the furnaces in which the fans are installed. 78 FR 64068, 64103 (Oct. 25, 2013). However, the compliance date mandated by EPCA for amendments to standards under the 6-year review requirement does not permit DOE to account for standards applicable to other products, even if such standards for other products may impact the product subject to the amendment. (42 U.S.C. 6295(m)(4)) EPCA directs DOE to prescribe a compliance date in consideration of both the publication date of the final rule and the date of the last amended standards with which that product was required to comply. (42 U.S.C. 6295(m)(4)(A)-(B)) Standards with which furnaces are not required to comply are not a consideration under 42 U.S.C. 6295 (m)(4)(A)-(B) even if those standards have an impact on furnaces. As discussed, EPCA treats furnaces and furnace fans as two separate products. As such, DOE has not considered the furnace fan standards when establishing the compliance date of furnace standards under 42 U.S.C. 6295(m)(4)(A)-(B).

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this rulemaking with regard to NWGFs and MHGFs. Separate subsections address each component of DOE's analyses. Comments on the methodology and DOE's responses are presented in each section.

DOE used several analytical tools to estimate the impact of the standards considered in this document. The first tool is a spreadsheet that calculates the LCC savings and PBP of potential amended or new energy conservation standards. The national impacts analysis uses a second spreadsheet set that provides shipments projections and calculates national energy savings and net present value of total consumer costs and savings expected to result from potential energy conservation standards. DOE uses the third spreadsheet tool, the Government Regulatory Impact Model (“GRIM”), to assess manufacturer impacts of potential standards. These three spreadsheet tools are available on the DOE website for this rulemaking:

www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=59&action=viewlive.

Additionally, DOE used output from

AEO 2021

for the emissions and utility impact analyses.

A. Market and Technology Assessment

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

includes both quantitative and qualitative assessments, based primarily on publicly-available information. The subjects addressed in the market and technology assessment for this rulemaking include: (1) a determination of the scope of the rulemaking and product classes; (2) manufacturers and industry structure; (3) existing efficiency programs; (4) shipments information; (5) market and industry trends, and (6) technologies or design options that could improve the energy efficiency of NWGFs and MHGFs. The key findings of DOE's market assessment are summarized below. See chapter 3 of the TSD for further discussion of the market and technology assessment.

1. Scope of Coverage and Product Classes

a. General Approach

EPCA defines a “furnace” as “a product which utilizes only single-phase electric current, or single-phase electric current or DC current in conjunction with natural gas, propane, or home heating oil, and which:

(1) Is designed to be the principal heating source for the living space of a residence;

(2) Is not contained within the same cabinet with a central air conditioner whose rated cooling capacity is above 65,000 Btu per hour;

(3) Is an electric central furnace, electric boiler, forced-air central furnace, gravity central furnace, or low pressure steam or hot water boiler; and

(4) Has a heat input rate of less than 300,000 Btu per hour for electric boilers and low pressure steam or hot water boilers and less than 225,000 Btu per hour for forced-air central furnaces, gravity central furnaces, and electric central furnaces.” (42 U.S.C. 6291(23))

DOE has incorporated this definition into its regulations in the Code of Federal Regulations (“CFR”) at 10 CFR 430.2.

EPCA's definition of a “furnace” covers the following types of products: (1) gas furnaces (non-weatherized and weatherized); (2) oil-fired furnaces (non-weatherized and weatherized); (3) mobile home furnaces (gas and oil-fired); (4) electric resistance furnaces; (5) hot water boilers (gas and oil-fired); (6) steam boilers (gas and oil-fired); and (7) combination space/water heating appliances (water-heater/fancoil combination units and boiler/tankless coil combination units). As discussed in section II.B.1 of this document, DOE agreed to the partial vacatur and remand of the June 2011 DFR, specifically as it related to energy conservation standards for NWGFs and MHGFs in the settlement agreement to resolve the litigation in

American Public Gas Ass'n

U.S. Dept. of Energy

(No. 11-1485, D.C. Cir. Filed Dec. 23, 2011). 80 FR 13120, 13130-13132 (March 12, 2015). Therefore, DOE only considered amending the energy conservation standards for these two product classes of residential furnaces (

i.e.,

NWGFs and MHGFs) for this NOPR.

At various rulemaking stages, interested parties have raised concerns pertaining to potential impacts of a national condensing standard on certain consumers as a result of either increased installation costs (due to the increased cost of the condensing furnace itself and/or related venting modifications) or switching to electric heat (potentially resulting in higher monthly bills). In response to these concerns, DOE first published the September 2015 NODA, which contained analyses examining the potential impacts of a separate product class for furnaces with a lower input capacity, one of the statutory bases for establishing a separate product class. Such an approach was suggested by stakeholders as a potential way to reduce negative impacts on some furnace consumers while maintaining the overall economic and environmental benefits of amended standards for consumer furnaces. 80 FR 55038, 55038-55039 (Sept. 14, 2015). In response to the September 2015 NODA, DOE received further comments from several stakeholders recommending that DOE establish separate product classes based on furnace capacity, in order to preserve the availability of non-condensing NWGF for buildings with lower heating loads, thereby helping to alleviate the negative impacts of the proposed standards. DOE responded to these comments in the withdrawn September 2016 SNOPR, in which the Department tentatively concluded that the establishment of a small furnace class would have merit. Accordingly, after considering energy savings and economic benefits of several potential input capacity thresholds, DOE proposed to establish a separate product class for small NWGF, defined as those furnaces with a certified input capacity of less than or equal to 55 kBtu/h, and the Department proposed to retain a minimum standard of 80-percent AFUE for this class. 81 FR 65720, 65752 and 65837 (Sept. 23, 2016).

For the current NOPR analysis, DOE again considered whether a “small furnace” product class is justified for NWGFs and MHGFs and evaluated several input capacity thresholds, including the 55 kBtu/h threshold that was proposed in the withdrawn 2016 SNOPR, along with several others. DOE analyzed a range of potential input capacity cut-offs and considered the benefits and burdens of each. However, as discussed in section V.C.1 of this document, after considering the benefits and burdens of the various approaches, DOE is not proposing to divide furnace product classes by capacity in this document.

b. Condensing and Non-Condensing Furnaces

DOE has recently considered whether different venting technologies should be considered a necessary feature. On January 15, 2021, in response to a petition for rulemaking

Federal Register

a notification withdrawing the March 2015 NOPR and the September 2015 SNOPR for NWGFs and MHGFs. 86 FR 3873 (Jan. 15, 2021).

DOE published the Gas Industry Petition in the

Federal Register

for comment on November 1, 2018. 83 FR 54883.

However, as explained in section II.B.2 of this document, DOE subsequently published a final interpretive rule in the

Federal Register

that returns to the Department's previous and long-standing interpretation (in effect prior to the January 15, 2021 final interpretive rule), under which the technology used to supply heated air or hot water is not a performance-related “feature” that provides a distinct consumer utility under EPCA. 86 FR 73947 (Dec. 29, 2021). Accordingly, for purposes of the analyses conducted for this NOPR, DOE did not analyze separate equipment classes for non-condensing and condensing furnaces. However, as discussed in section IV.A.1.a of this document, the current analysis does consider various capacity thresholds to establish a separate product class for small NWGFs for which DOE would propose less stringent energy conservation standards. The

consideration of capacity-based product classes for MHGFs is discussed in section IV.A.1.c of this document.

c. Mobile Home Gas Furnaces

In response to the September 2016 SNOPR (subsequently withdrawn), some stakeholders requested that DOE establish a small furnace product class for MHGFs. MHI suggested that DOE should exempt all MHGFs from this rule, but it stated that if MHGFs are included, DOE should adopt a small furnace MHGFs product class with a threshold of 80 kBtu/h. Nortek and MHI commented that tight construction of manufactured homes reduces the struc

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