Energy Conservation Program: Energy Conservation Standards for Consumer Furnaces

Federal RegisterDec 18, 2023

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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:

Final rule.

SUMMARY:

The Energy Policy and Conservation Act, as amended (“EPCA”), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including consumer furnaces. EPCA also requires the U.S. Department of Energy (“DOE” or “the Department”) to determine periodically whether more stringent standards would be technologically feasible and economically justified, and would result in significant energy savings. In this final rule, DOE is adopting amended energy conservation standards for consumer furnaces, specifically non-weatherized gas furnaces and mobile home gas furnaces. The Department has determined that the amended energy conservation standards for the subject products would result in significant conservation of energy, and are technologically feasible and economically justified.

DATES:

Effective date:

The effective date of this rule is February 16, 2024.

Compliance date:

Compliance with the amended standards established for the subject consumer furnaces in this final rule is required on and after December 18, 2028.

ADDRESSES:

The docket for this rulemaking, which includes

Federal Register

notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at

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/EERE-2014-BT-STD-0031.

The docket web page contains instructions on how to access all documents, including public comments, in the docket.

FOR FURTHER INFORMATION CONTACT:

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

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 review the docket, 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 Final Rule

A. Benefits and Costs to Consumers

B. Impact on Manufacturers

C. National Benefits and Costs

D. Conclusion

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for Consumer Furnaces

3. Current Standards in Canada

III. General Discussion

A. General Comments

1. Comments Regarding Authority

2. Comments Opposing the July 2022 Proposal

3. Comments Expressing Support for the July 2022 Proposal

4. Regional Standards

5. Recommendations for Analytical Changes

6. Opportunity for Public Input

7. Federal Financial Assistance

8. Standby Mode and Off Mode Power Consumption Standards

B. Product Classes and Scope of Coverage

C. Test Procedure

D. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

E. Energy Savings

1. Determination of Savings

2. Significance of Savings

F. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Consumers

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

c. Energy Savings

d. Lessening of Utility or Performance of Products

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

2. Rebuttable Presumption

G. Compliance Date

H. Impact From Other Rulemakings

IV. Methodology and Discussion of Related Comments

A. Market and Technology Assessment

1. Scope of Coverage and Product Classes

a. General Approach

b. Through-the-Wall Units

c. Condensing and Non-Condensing Furnaces

d. Mobile Home Gas Furnaces

2. Technology Options

B. Screening Analysis

1. Screened-Out Technologies

2. Remaining Technologies

C. Engineering Analysis

1. Efficiency Analysis

a. Baseline Efficiency Level and Product Characteristics

b. Higher Efficiency Levels

2. Cost Analysis

a. Teardown Analysis

b. Cost Estimation Method

c. Manufacturing Production Costs

d. Cost-Efficiency Relationship

e. Manufacturer Markup

f. Manufacturer Interviews

g. Electric Furnaces

D. Markups Analysis

E. Energy Use Analysis

1. Building Sample

2. Furnace Sizing

3. Furnace Active Mode Energy Use

a. Adjustments to Energy Use Estimates

4. Furnace Electricity Use

F. Life-Cycle Cost and Payback Period Analysis

1. Product Cost

2. Installation Cost

a. Basic Installation Costs

b. Additional Installation Costs for Non-Weatherized Gas Furnaces

c. Additional Installation Costs for Mobile Home Gas Furnaces

d. Contractor Survey and DOE's Sources

e. Summary of Installation Costs

3. Annual Energy Consumption

4. Energy Prices

5. Maintenance and Repair Costs

6. Product Lifetime

7. Discount Rates

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

a. Condensing Furnace Market Share in Compliance Year

b. Market Shares of Different Condensing Furnace Efficiency Levels

c. Assignment of Furnace Efficiency to Sampled Households

9. Alternative Size Thresholds for Small Consumer Gas Furnaces

a. Accounting for Impacts of Downsized Equipment

10. Accounting for Product Switching Under Potential Standards

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

b. Product Switching Resulting From Amended Standards for Mobile Home Gas Furnaces

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

12. Payback Period Analysis

G. Shipments Analysis

1. Shipments Model and Inputs

a. Historical Shipments Data

b. Shipment Projections in No-New-Standards Case

2. Impact of Potential Standards on Shipments

a. Impact of Equipment Switching

b. Impact of Repair vs. Replace

H. National Impact Analysis

1. Product Efficiency Trends

2. National Energy Savings

3. Net Present Value Analysis

I. Consumer Subgroup Analysis

1. Low-Income Households

J. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model and Key Inputs

a. Manufacturer Production Costs

b. Shipments Projections

c. Capital and Product Conversion Costs

d. Manufacturer Markup Scenarios

K. Emissions Analysis

1. Air Quality Regulations Incorporated in DOE's Analysis

L. Monetizing Emissions Impacts

1. Monetization of Greenhouse Gas Emissions

a. Social Cost of Carbon

b. Social Cost of Methane and Nitrous Oxide

2. Monetization of Other Emissions Impacts

M. Utility Impact Analysis

N. Employment Impact Analysis

V. Analytical Results and Conclusions

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers

a. Life-Cycle Cost and Payback Period

b. Consumer Subgroup Analysis

c. Rebuttable Presumption Payback

2. Economic Impacts on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Direct Impacts on Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Subgroups of Manufacturers

e. Cumulative Regulatory Burden

3. National Impact Analysis

a. Significance of Energy Savings

b. Net Present Value of Consumer Costs and Benefits

c. Indirect Impacts on Employment

4. Impact on Utility or Performance of Products

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Other Factors

8. Summary of National Economic Impacts

C. Conclusion

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

2. Annualized Benefits and Costs of the Adopted Standards

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866, 13563, and 14094

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

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

I. Review Under Executive Order 12630

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

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

M. Congressional Notification

VII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

The Energy Policy and Conservation Act, Public Law 94-163, (42 U.S.C. 6291-6317, as codified) as amended (“EPCA”),

authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. Title III, Part B

of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. (42 U.S.C. 6291-6309) These products include non-weatherized gas furnaces (NWGFs) and mobile home gas furnaces (MHGFs), the subject of this rulemaking. (42 U.S.C. 6292(a)(5))

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

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

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

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

i.e.,

NWGFs and MHGFs). The adopted standards, which are expressed in terms of minimum annual fuel utilization efficiency (“AFUE”), are shown in Table I.1. These standards apply to all products listed in Table I.1 and manufactured in, or imported into, the United States starting on December 18, 2028. For the reasons discussed in section III.A of this document, DOE is not adopting standby mode or off mode power consumption standards for NWGFs and MHGFs in this final rule.

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

[Compliance Starting December 18, 2028]

Product class

AFUE (%)

Non-Weatherized Gas Furnaces

95.0

Mobile Home Gas Furnaces

95.0

A. Benefits and Costs to Consumers

Table I.2 summarizes DOE's evaluation of the economic impacts of the adopted standards on consumers of NWGFs and MHGFs, as measured by the average life-cycle cost (“LCC”) savings and the simple payback period (“PBP”).

The average LCC savings are positive for all product classes, and the PBP is less than the average lifetime of both NWGFs and MHGFs, which is estimated to be 21.5 years (

see

section IV.F of this document).

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

see

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

see

section IV.F of this document).

Table I.2—Impacts of Adopted Energy Conservation Standards on Consumers of Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces

Furnace class

Average LCC savings

(2022$)

Simple payback period

(

years

)

Non-Weatherized Gas Furnaces

350

7.6

Mobile Home Gas Furnaces

616

3.2

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

B. Impact on Manufacturers

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

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

DOE's analysis of the impacts of the adopted energy conservation standards on manufacturers is described in sections IV.J and V.B.2 of this document.

C. National Benefits and Costs

DOE's analyses indicate that the adopted AFUE energy conservation standards for NWGFs and MHGFs would save a significant amount of energy. Relative to the case without amended standards, the lifetime energy savings for NWGFs and MHGFs purchased in the 30-year period that begins in the anticipated year of compliance with the amended standards (2029-2058), are estimated to amount to 4.77 quadrillion British thermal units (“Btu”), or quads.

This represents a savings of 3.2 percent relative to the energy use of these products in the case without amended standards (referred to as the “no-new-standards case”).

The quantity refers to full-fuel-cycle (FFC) energy savings. FFC energy savings include the energy consumed in extracting, processing, and transporting primary fuels (

i.e.,

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

The cumulative net present value (“NPV”) of total consumer benefits of the amended standards for NWGFs and MHGFs ranges from $4.8 billion (at a 7-percent discount rate) to $16.3 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product and installation costs for NWGFs and MHGFs purchased in years 2029 through 2058.

In addition, the adopted standards for NWGFs and MHGFs are projected to yield significant environmental benefits. DOE estimates that the amended standards will result in cumulative emission reductions (over the same period as for energy savings) of 332 million metric tons (Mt)

of carbon dioxide (CO

), 4.3 million tons of methane (CH

), 0.38 thousand tons of nitrous oxide (N

O), and 0.9 million tons of nitrogen oxides (NO

). The amended standards will result in cumulative emission increases of 10.0 thousand tons of sulfur dioxide (SO

) and 0.08 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 2023

(

AEO2023

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

See

section IV.K of this document for further discussion of

AEO2023

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

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

(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 GHG (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.1 of this document. For presentational purposes, the climate benefits associated with the average SC-GHG at a 3-percent discount rate are estimated to be $17.3 billion. DOE does not have a single central SC-GHG point estimate, and it emphasizes the importance and value of considering the benefits calculated using all four sets of SC-GHG estimates.

To monetize the benefits of reducing GHG emissions this analysis uses the interim estimates presented in the

Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990

published in February 2021 by the IWG. (February 2021 SC-GHG TSD) (Available at:

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

) (Last accessed August 1, 2023).

DOE estimated the monetized net health benefits of NO

and SO

emissions changes, using benefit per ton estimates from the scientific literature, as discussed in section IV.L of this document.

DOE estimated the present value of the health benefits would be $8.7 billion using a 7-percent discount rate, and $26.6 billion using a 3-percent discount rate.

DOE is currently only monetizing (for SO

and NO

) particulate matter (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 did not monetize mercury emissions because the quantity is very small.

DOE estimates the economic value of these emissions reductions resulting from the considered TSLs for the purpose of complying with the requirements of Executive Order 12866.

Table I.3 summarizes the monetized benefits and costs expected to result from the amended standards for NWGFs and MHGFs. There are other important unquantified effects, including certain unquantified climate benefits, unquantified public health benefits from the reduction of toxic air pollutants and other emissions, unquantified energy security benefits, and distributional effects, among others.

Table I.3—Summary of Monetized Benefits and Costs of Adopted AFUE Energy Conservation Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces

[Trial Standard Level (TSL) 8]

Billion 2022$

3% discount rate

Consumer Operating Cost Savings

24.8

Climate Benefits *

17.3

Net Health Benefits **

26.6

Total Monetized Benefits †

68.7

Consumer Incremental Product Costs ‡

8.5

Net Monetized Benefits

60.2

Change in Producer Cashflow (INPV ‡‡)

(0.37)—(0.03)

7% discount rate

Consumer Operating Cost Savings

9.3

Climate Benefits * (3% discount rate)

17.3

Net Health Benefits **

8.7

Total Monetized Benefits †

35.3

Consumer Incremental Product Costs ‡

4.5

Net Monetized Benefits

30.8

Change in Producer Cashflow (INPV ‡‡)

(0.37)—(0.03)

Note:

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

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

see

section IV.L of this document). Together these represent the global SC-GHG. For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3-percent discount rate are shown; however, DOE emphasizes the importance and value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG emissions, this analysis uses the interim estimates presented in the

Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990

published in February 2021 by the IWG.

** Health benefits are calculated using benefit-per-ton values for 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 quantified and monetized. For presentation purposes, total and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate.

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

‡‡ Operating Cost Savings are calculated based on the LCC analysis and national impact analysis as discussed in detail below.

See

sections IV.F and IV.H of this document. DOE's national impact analysis includes all impacts (both costs and benefits) along the distribution chain beginning with the increased costs to the manufacturer to manufacture the product and ending with the increase in price experienced by the consumer. DOE also separately conducts a detailed analysis on the impacts on manufacturers (the MIA).

See

section IV.J of this document. In the detailed MIA, DOE models manufacturers' pricing decisions based on assumptions regarding investments, conversion costs, cashflow, and margins. The MIA produces a range of impacts, which is the rule's expected impact on the INPV. The change in INPV is the present value of all changes in industry cash flow, including changes in production costs, capital expenditures, and manufacturer profit margins. Change in INPV is calculated using the industry weighted average cost of capital value of 6.4 percent that is estimated in the MIA (

see

chapter 12 of the final rule technical support document (“TSD”) for a complete description of the industry weighted average cost of capital). For NWGFs and MHGFs, those values are −$367 million to −$34 million. DOE accounts for that range of likely impacts in analyzing whether a TSL is economically justified.

See

section V.C of this document. DOE is presenting the range of impacts to the INPV under two manufacturer markup scenarios: the Preservation of Gross Margin scenario, which is the manufacturer markup scenario used in the calculation of Consumer Operating Cost Savings in this table, and the Tiered scenario, which models a reduction of manufacturer markups due to reduced product differentiation as a result of amended standards. DOE includes the range of estimated INPV in the above table, drawing on the MIA explained further in section IV.J of this document, to provide additional context for assessing the estimated impacts of this final rule to society, including potential changes in production and consumption, which is consistent with the Office of Management and Budget's (OMB) Circular A-4 and E.O. 12866. If DOE were to include the INPV into the net benefit calculation for this final rule, the net benefits would range from $59.83 billion to $60.17 billion at 3-percent discount rate and would range from $30.43 billion to $30.77 billion at 7-percent discount rate. Parentheses ( ) indicate negative values.

The benefits and costs of the adopted standards can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are: (1) the reduced consumer operating costs, minus (2) the increase in product purchase prices and installation costs, plus (3) the value of climate and health benefits of emission reductions, all annualized.

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

e.g.,

2030), and then discounted the present value from each year to 2029. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year, that yields the same present value.

The national operating cost savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing the covered products and are measured for the lifetime of NWGFs and MHGFs shipped in 2029-2058. The health benefits associated with reduced emissions achieved as a result of the adopted standards are also calculated based on the lifetime of NWGFs and MHGFs shipped in 2029-2058. Total benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs with 3-percent discount rate.

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

As discussed in section IV.L.1 of this document, DOE agrees with the IWG that using consumption-based discount rates (

e.g.,

3 percent) is appropriate when discounting the value of climate impacts. Combining climate effects discounted at an appropriate consumption-based discount rate with other costs and benefits discounted at a capital-based rate (

i.e.,

7 percent) is reasonable because of the different nature of the types of benefits being measured.

Table I.4 presents the total estimated monetized benefits and costs associated with the adopted standard, expressed in terms of annualized values. The results under the primary estimate are as follows.

Using a 7-percent discount rate for consumer benefits and costs and health effects from changes in NO

and SO

emissions, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated cost of the standards adopted in this rule is $511 million per year in increased equipment costs, while the estimated annual benefits are $1,054 million in reduced equipment operating costs, $1,021 million in climate benefits, and $987 million in net health benefits. In this case, the net benefit amounts to $2,551 million per year.

Using a 3-percent discount rate for all benefits and costs, the estimated cost of the adopted standards is $500 million per year in increased equipment costs, while the estimated annual benefits are $1,467 million in reduced operating costs, $1,021 million in climate benefits, and $1,574 million in net health benefits. In this case, the net benefit amounts to $3,561 million per year.

Table I.4—Annualized Monetized Benefits and Costs of Adopted Standards for Non-Weatherized Gas Furnaces and Mobile Home Gas Furnaces

[TSL 8]

Million 2022$/year

Primary

estimate

Low-net-

benefits

estimate

High-net-

benefits

estimate

3% discount rate

Consumer Operating Cost Savings

1,467

1,528

1,440

Climate Benefits *

1,021

1,003

1,028

Net Health Benefits **

1,574

1,546

1,585

Total Monetized Benefits †

4,061

4,077

4,053

Consumer Incremental Product Costs ‡

500

520

489

Net Monetized Benefits

3,561

3,557

3,564

Change in Producer Cashflow (INPV ‡‡)

(27)-(2)

7% discount rate

Consumer Operating Cost Savings

1,054

1,094

1,051

Climate Benefits * (3% discount rate)

1,021

1,003

1,028

Health Benefits **

987

972

994

Total Monetized Benefits †

3,062

3,069

3,073

Consumer Incremental Product Costs ‡

511

528

501

Net Monetized Benefits

2,551

2,541

2,572

Change in Producer Cashflow (INPV ‡‡)

(27)-(2)

Note:

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

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

see

section IV.L of this document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3-percent discount rate are shown; however, DOE emphasizes the importance and value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG emissions, this analysis uses the interim estimates presented in the

Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990

published in February 2021 by the IWG.

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

and SO

. DOE is currently only monetizing (for SO

and NO

) PM

2.5

precursor health benefits and disbenefits 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.

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

‡‡ Operating Cost Savings are calculated based on the LCC analysis and national impact analysis as discussed in detail below.

See

section IV.J of this document. In the detailed MIA, DOE models manufacturers' pricing decisions based on assumptions regarding investments, conversion costs, cashflow, and margins. The MIA produces a range of impacts, which is the rule's expected impact on the INPV. The change in INPV is the present value of all changes in industry cash flow, including changes in production costs, capital expenditures, and manufacturer profit margins. The annualized change in INPV is calculated using the industry weighted average cost of capital value of 6.4 percent that is estimated in the manufacturer impact analysis (

see

chapter 12 of the final rule TSD for a complete description of the industry weighted average cost of capital). For NWGFs and MHGFs, those values are −$27 million to −$2 million. DOE accounts for that range of likely impacts in analyzing whether a TSL is economically justified.

See

section V.C of this document. DOE is presenting the range of impacts to the INPV under two manufacturer markup scenarios: the Preservation of Gross Margin scenario, which is the manufacturer markup scenario used in the calculation of Consumer Operating Cost Savings in this table, and the Tiered scenario, where DOE assumed amended standards would result in a reduction of product differentiation and a compression of the markup tiers. DOE includes the range of estimated annualized change in INPV in the above table, drawing on the MIA explained further in section IV.J of this document, to provide additional context for assessing the estimated impacts of this final rule to society, including potential changes in production and consumption, which is consistent with OMB's Circular A-4 and E.O. 12866. If DOE were to include the INPV into the annualized net benefit calculation for this final rule, the annualized net benefits would range from $3,534 million to $3,559 million at 3-percent discount rate and would range from $2,524 million to $2,549 million at 7-percent discount rate. Parentheses ( ) indicate negative values.

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

D. Conclusion

DOE concludes that the standards adopted in this final rule represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy. Specifically, with regards to technological feasibility, products achieving these standard levels are already commercially available for all product classes covered by this final rule. As for economic justification, DOE's analysis shows that the benefits of the standards exceed, to a great extent, the burdens of the standards.

Using a 7-percent discount rate for consumer benefits and costs and NO

and SO

emissions reduction benefits, and a 3-percent discount rate case for GHG social costs, the estimated cost of the standards for NWGFs and MHGFs is $511 million per year in increased product costs, while the estimated annual benefits are $1,054 million in reduced product operating costs, $1,021 million in climate benefits, and $987 million in health benefits. The net benefit amounts to $2,551 million per year. DOE notes that the net benefits are substantial even in the absence of the climate benefits,

and DOE would adopt the same standards in the absence of such benefits.

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

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

For example, some covered products and equipment have most of their energy consumption occur during periods of peak energy demand. The impacts of these products on the energy infrastructure can be more pronounced than products with relatively constant demand. Accordingly, DOE evaluates the significance of energy savings on a case-by-case basis.

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

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

II. Introduction

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

A. Authority

EPCA authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. Title III, Part B of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. (42 U.S.C. 6291-6309) These products include the consumer furnaces that are the subject of this document. (42 U.S.C. 6292(a)(5)) EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(f)(1) and (2)), and directs DOE to conduct future rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(f)(4)) EPCA further provides that, not later than six years after the issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1))

The energy conservation program under EPCA consists essentially of four parts: (1) testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of the EPCA specifically include definitions (42 U.S.C. 6291), coverage (42 U.S.C. 6292), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy conservation standards (42 U.S.C. 6295), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).

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

Subject to certain statutory criteria and conditions, DOE is required to develop test procedures that are reasonably designed to produce test results that measure the energy efficiency, energy use, or estimated annual operating cost of each covered product during a representative average use cycle and that are not unduly burdensome to conduct. (42 U.S.C. 6293(b)(3), 6295(o)(3)(A), and 6295(r)) Manufacturers of covered products must use the prescribed Federal test procedure as the basis for: (1) certifying to DOE that their products comply with

the applicable energy conservation standards adopted pursuant to EPCA and (2) making representations regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with the relevant energy conservation standards promulgated under EPCA. (42 U.S.C. 6295(s)) The DOE test procedures for consumer furnaces appear at title 10 of the Code of Federal Regulations (CFR), part 430, subpart B, appendix N.

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

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

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

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

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

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

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

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

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

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

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

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

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

Id.

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

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

i.e.,

an entire State cannot simultaneously be placed in two regions, nor can it be divided between two regions).

(42 U.S.C. 6295(o)(6)(C)) Further, DOE can establish the additional regional standard for furnaces only: (1) where doing so would produce significant energy savings in comparison to a single national standard; (2) if the regional standard is economically justified; and (3) after considering the impact of such standard on consumers, manufacturers, and other market participants, including product distributors, dealers, contractors, and installers. (42 U.S.C. 6295(o)(6)(D))

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

Finally, pursuant to the amendments contained in EISA 2007, any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product if doing so would be consistent with section 6295(o). (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's current test procedures for consumer furnaces address standby mode and off mode

energy use for all covered consumer furnaces. DOE's energy conservation standards address standby mode and off mode energy use only for non-weatherized oil-fired and electric furnaces. 10 CFR 430.32(e)(1)(iii). In the NOPR published in the

Federal Register

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

B. Background

1. Current Standards

The most recent energy conservation standards for NWGFs and MHGFs were adopted in a final rule published in the

Federal Register

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

72 FR 65136, 65169. Based on market assessment and the standard levels under consideration (and that were ultimately adopted), the November 2007 Final Rule established standards without regard to the certified input capacity of a furnace.

Id.

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

Following a series of publications described in section II.B.2 of this document and discussed in further detail in the July 2022 NOPR (

see

87 FR 40590, 40601-40602 (July 7, 2022)), required compliance with the standards established in the November 2007 Final Rule for these products began on November 19, 2015. The standards currently applicable to all consumer furnaces, including the two product classes for which DOE is amending standards in this final rule, are set forth in DOE's regulations at 10 CFR 430.32(e)(1)(ii). Table II.1 presents the currently applicable standards for NWGFs and MHGFs and the date on which compliance with that standard was required.

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

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”), Public Law 100-12, established EPCA's original energy conservation standards for furnaces, consisting of the minimum AFUE levels for mobile home furnaces

and for all other furnaces except “small” gas furnaces. (42 U.S.C. 6295(f)(1)-(2)) The original standards established a minimum AFUE of 75 percent for mobile home furnaces and 78 percent for all other furnaces. Pursuant to 42 U.S.C. 6295(f)(1)(B), in a final rule published in the

Federal Register

on November 17, 1989 (“the November 1989 Final Rule”), DOE adopted a mandatory minimum AFUE level for “small” furnaces. 54 FR 47916. The standards established by NAECA and the November 1989 Final Rule for “small” gas furnaces are still in effect for mobile home oil-fired furnaces, weatherized oil-fired furnaces, and electric furnaces.

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

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

i.e.,

mobile home oil-fired furnaces and weatherized oil-fired furnaces).

The standards amended in the November 2007 Final Rule were to apply to furnaces manufactured or imported on and after November 19, 2015; this compliance date was consistent with the 8-year statutory lead time provided under 42 U.S.C. 6295(f)(4)(B). 72 FR 65136 (Nov. 19, 2007). The energy conservation standards in the November 2007 Final Rule consist of a minimum AFUE level for each of the six classes of furnaces.

Id.

at 72 FR 65169. As previously noted, based on the market analysis for the November 2007 Final Rule and the standards established under that rule, the November 2007 Final Rule

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.

The November 2007 Final Rule adopted amended standards for “oil-fired furnaces” generally. However, on July 28, 2008, DOE published a final rule technical amendment in the

Federal Register

that clarified that the amended standards adopted in the November 2007 Final Rule for oil-fired furnaces did not apply to mobile home oil-fired furnaces and weatherized oil-fired furnaces; rather they were only applicable for non-weatherized oil-fired furnaces. 73 FR 43611, 43613.

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

Federal Register

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

State of New York, et al.

Department of Energy, et al.

76 FR 37408 (June 27, 2011). In the June 2011 DFR, DOE considered the amendment of the same six product classes considered in the November 2007 Final Rule analysis plus electric furnaces.

Id. at

76 FR 37445. The June 2011 DFR amended the existing AFUE energy conservation standards for NWGFs, MHGFs, and non-weatherized oil furnaces, and amended the compliance date (but left the existing standards in place) for weatherized gas furnaces.

Id.

at 76 FR 37410. The existing AFUE standards were left in place for three classes of consumer furnaces (

i.e.,

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

Federal Register

on October 31, 2011. 76 FR 67037.

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

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

Following DOE's adoption of the June 2011 DFR, the American Public Gas Association (“APGA”) filed a petition for review with the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) to invalidate the DOE rule as it pertained to NWGFs. Petition for Review,

American Public Gas Ass'n, et al.

U.S. Dep't 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 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.

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

As part of the settlement, DOE agreed to use best efforts to issue a notice of proposed rulemaking within one year of the remand, and to issue a final rule within the later of two years of the issuance of remand, or one year of the issuance of the proposed rule, including at least a 90-day public comment period. Due to the extensive and recent rulemaking history for residential furnaces, as well as the associated opportunities for notice and comment described previously, DOE forwent the typical earlier rulemaking stages (

e.g.,

framework document, preliminary analysis) and instead published a NOPR in the

Federal Register

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

i.e.,

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

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

Federal Register

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

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

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

Federal Register

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

i.e.,

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

Id.

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

Id.

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

Id.

at 80 FR 55038, 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

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

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

Id.

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

Id.

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

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

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

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

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

in the

Federal Register

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

Federal Register

a notification withdrawing the March 2015 NOPR and the September 2016 SNOPR for NWGFs and MHGFs, because DOE determined that those rulemaking documents were inconsistent with its revised interpretation. 86 FR 3873 (Jan. 15, 2021).

DOE published the Gas Industry Petition in the

Federal Register

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

DOE published a proposed interpretive rule (“July 2019 Proposed Interpretive Rule”) in the

Federal Register

for comment on July 11, 2019. 84 FR 22011. DOE also published a supplemental proposed interpretive rule (“September 2020 Supplemental Proposed Interpretive Rule”) in the

Federal Register

for comment on September 24, 2020. 85 FR 60090.

The interpretation adopted by the January 2021 Final Interpretive Rule reflected a significant departure from DOE's previous and long-standing interpretation (reflected in practice through decades of rulemaking and explicitly discussed in the December 2021 Final Interpretive Rule, with examples) that the type of technology (

e.g.,

non-condensing technology (and associated venting)) used to generate a furnace's heat did not provide a distinct consumer utility as would constitute a performance-related “feature” pursuant to 42 U.S.C. 6295(o)(4) that DOE may not eliminate by way of an energy conservation standard. The January 2021 Final Interpretive Rule justified this change by focusing on: (1) the potential space constraints arising from switching from non-condensing furnaces (and associated venting) to condensing furnaces (and associated venting) in replacement applications, including certain situations where such changes may not be possible; (2) the potential need for significant and unwelcome physical modifications to a home or business (

e.g.,

by adding new venting into the living/commercial space or decreasing closet or other storage/retail space), thereby impacting consumer utility, and (3) a policy decision to remain neutral regarding competing energy sources in the marketplace and maintaining a broader range of consumer choice for the relevant appliances across fuel types. 86 FR 4776, 4816 (Jan. 15, 2021). (See the January 2021 Final Interpretive Rule for a more complete discussion of DOE's rationale for its changed interpretation.) The anticipated result of DOE's change in interpretation was that the Department would set separate product classes and standards for condensing and non-condensing furnaces in its ongoing furnaces energy conservation standards rulemaking.

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

Id.

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

Id.

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

Id.

In light of the requirements under the EPCA, and in a manner consistent with E.O. 13990, DOE undertook a re-evaluation of the final interpretation and withdrawal of proposed rulemakings published in the

Federal Register

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

Federal Register

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

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

Federal Register

on December 29, 2021 (“December 2021 Final Interpretive Rule”),

that returns to DOE's previous and long-standing interpretation (in effect prior to the January 2021 Final Interpretive Rule).

86 FR 73947. Residential furnaces were one of the two primary focuses of the December 2021 Final Interpretive Rule (along with commercial water heaters), and in that document, DOE offered an extensive explanation for why it does not view non-condensing technology and associated venting to be a performance-related feature warranting

a separate product class for such furnaces. As noted previously, in the December 2021 Final Interpretive Rule, DOE also included examples in other rules that are consistent with DOE's previous and long-standing interpretation. As DOE explained, non-condensing technology is not a performance-related feature because it does not affect the consumer utility of the product (

i.e.,

providing heat, irrespective of venting type). DOE noted the availability of technological alternatives for difficult installation situations and explained that it would properly account for the costs of such installations when considering a standard's economic justification. DOE has considered concerns regarding specific installation circumstances in the context of this product-specific rulemaking.

See

86 FR 73947 (Dec. 29, 2021).

DOE published a proposed interpretive rule (“August 2021 Proposed Interpretive Rule”) in the

Federal Register

for comment on August 27, 2021. 86 FR 48049.

Prior to the January 2021 Final Interpretive Rule, DOE had not had a formal interpretation of EPCA's “features” provision at 42 U.S.C. 6295(o)(4), but instead, it had examined the consumer utility of potential appliance features in the context of individual energy conservation standards rulemakings. These rulemakings, which outline relevant DOE precedent prior to the January 2021 Final Interpretive Rule, are presented in some detail in the December 2021 Final Interpretive Rule (

see

86 FR 73947, 73952-73958 (Dec. 29, 2021)).

In conducting its review of the January 2021 Final Interpretive Rule under the requirements of EPCA and in a manner consistent with E.O. 13990, DOE ultimately arrived at a different determination in the December 2021 Final Interpretive Rule, based on a policy that emphasizes furtherance of the congressional purpose of improving the energy efficiency of covered products and equipment. DOE reasoned that maintaining less-efficient technologies which do not provide distinct consumer utility is contrary to the purposes of EPCA “to conserve energy supplies through energy conservation programs, and, where necessary, the regulation of certain energy uses” (42 U.S.C. 6201(4)) and “to provide for improved energy efficiency of . . . major appliances, and certain other consumer products” (42 U.S.C. 6201(5)). Such purposes are further reflected in the specific provisions of EPCA granting DOE authority to prescribe energy conservation standards designed to achieve the maximum improvement in energy efficiency, which are technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)). As discussed more fully in the December 2021 Final Interpretive Rule, DOE concluded that the concerns motivating its changed interpretation reflected in the January 2021 Final Interpretive Rule (

i.e.,

space constraints/difficult installation situations, the potential for unwanted physical modifications, and maintaining consumer choice of appliances across fuel types) could be addressed by other means. DOE found that these issues could be resolved through available technological solutions or by switching to an appliance using alternative technologies (

e.g.,

a heat pump). 86 FR 73947, 73960 (Dec. 29, 2021). DOE further concluded that the potential for fuel switching is likely to be limited and that there will continue to be a range of product availability across fuel types.

Id.

at 86 FR 73964.

Given the binary nature of the question at hand—whether non-condensing technology (and associated venting) is or is not a “feature” under 42 U.S.C. 6295(o)(4)—DOE did not identify any other policy alternatives on this matter. DOE further notes that it does not anticipate any strong reliance interests associated with the rescinded January 2021 Final Interpretive Rule, given that it was rescinded less than a year after its issuance and the fact that it was never applied in the context of any energy conservation standards rulemaking for a specific appliance.

A number of States and municipalities filed a legal challenge to the January 2021 Final Interpretive Rule in the U.S. Circuit Court of Appeals for the Second Circuit on March 16, 2021.

State of New York, et al.

U.S. Dep't of Energy,

No. 21-602 (2d Cir. filed March 16, 2021).

On July 7, 2022, DOE published the July 2022 NOPR in the

Federal Register

. 87 FR 40590. Consistent with the December 2021 Final Interpretive Rule, in conducting the analysis for the July 2022 NOPR, DOE did not consider identifying separate product classes based on condensing technologies and associated venting systems when analyzing potential energy conservation standards. Based on the results of the NOPR analysis, DOE proposed amended AFUE standards at 95-percent AFUE for both NWGFs and MHGFs, as well as an 8.5 W energy use standard for standby mode and off mode energy consumption. 87 FR 40590, 40706 (July 7, 2022). Additionally, on August 30, 2022, DOE published in the

Federal Register

a Notice of Data Availability (NODA) (August 2022 NODA) announcing an extension of the comment period, making available a revised version of the LCC spreadsheet supporting the July 2022 NOPR, and announcing a public meeting webinar on September 6, 2022, to assist stakeholders with operation of the LCC spreadsheet. 87 FR 52861.

DOE received 3,636 comments in response to the July 2022 NOPR and August 2022 NODA from the interested parties listed in Table II.2. (Note that of these total comments, 3,552 comments were “form letter” email submissions contained in docket entry EERE-2014-BT-STD-0031-0348. Additionally, several commenters submitted more than one comment to the docket.)

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

Table II.2—July 2022 NOPR Comments

Commenter(s)

Abbreviation

Comment number in the Docket

Commenter type

Eduardo Veiga

Veiga

326

Individual.

Scott Willis

Willis

327

Individual.

Johanna E. Neumann

Neumann

328

Individual.

Anonymous 1

329

Individual.

American Public Gas Association; American Gas Association; Spire Inc.; Spire Missouri Inc.; Spire Alabama Inc.; National Propane Gas Association

Joint Gas Commenters

330

Utilities and Utility Trade Associations.

A. Kessler Consulting, LLC

A. Kessler Consulting

331

Industry Representative.

Natalie Guarin

Guarin

332

Individual.

Hayes Arnold

Arnold

333

Individual.

Christina Haag

Haag

334

Individual.

Adelita G. Cantu

Cantu

335

Individual.

Kim Marcellini

Marcellini

336

Individual.

Kaitlynn Liset

Liset

338

Individual.

Raelene Shippee-Rice

Shippee-Rice

339

Individual.

Lee's Air, Plumbing, & Heating

342

Industry Representative.

Natural Gas Supply Association

NGSA

343

Utility Trade Association.

Manufactured Housing Institute

MHI

344; 363; 365

Trade Association.

American Public Gas Association; American Gas Association; Spire Inc.; Spire Missouri Inc.; Spire Alabama Inc.; National Propane Gas Association; Atmos Energy

Joint Requesters

345; 356; 362

Utilities and Utility Trade Associations.

Anonymous 2

346

Individual.

Ohio Partners for Affordable Energy

OPAE

347

Efficiency Advocate.

Individual Commenters

348

Individual.

Todd Snyder

Snyder

349

Individual.

Middle Tennessee Natural Gas Utility District

MTNGUD

350

Utility.

Watertown Municipal Utilities

WMU

351

Utility.

Southwest Gas Corporation

353

Utility.

Consumer Energy Alliance

354

Efficiency Advocate.

Lake Apopka Natural Gas District

LANGD

355

Utility.

Christopher Lish

Lish

358

Individual.

National Caucus of Environmental Legislators

359

State/Local Government Officials.

Theodore Trampe

Trampe

361

Individual.

Consumer Federation of America

CFA

363

Consumer Advocate.

Edison Electric Institute

363; 4099

Trade Association.

Environment America

363

Efficiency/Environmental Advocate.

National Consumer Law Center

NCLC

363

Consumer Advocate.

Natural Resources Defense Council

NRDC

363

Efficiency/Environmental Advocate.

Philadelphia Solar Energy Association

PSEA

363

Efficiency/Environmental Advocate.

Physicians for Social Responsibility

363

Consumer Advocate.

Evergreen Action

364

Environmental Advocate.

Mark Strauch

366

Individual.

Municipal Gas Authority of Georgia

Georgia Gas Authority

367

Utility.

Northwest Energy Efficiency Alliance

NEEA

368

Efficiency/Environmental Advocates.

Competitive Enterprise Institute, Consumers' Research, Center for the American Experiment,

JunkScience.com,

Project 21, Caesar Rodney Institute, Rio Grande Foundation, Committee for a Constructive Tomorrow, FreedomWorks Foundation, Heartland Institute, Thomas Jefferson Institute, Independent Women's Forum, Independent Women's Voice, and Institute for Energy Research

Joint Market and Consumer Organizations

369, 373

Other Stakeholders.

National Comfort Products

NCP

370

Manufacturer.

Green & Healthy Homes Initiative

GHHI

363; 371

Efficiency/Environmental Advocates.

Distribution Contractors Association

DCA

372

Trade Association.

Napoleon (aka Wolf Steel Limited)

Napoleon

374

Manufacturer.

Pennsylvania Department of Environmental Protection; State of Nevada; New Jersey Board of Public Utilities; New York State Energy Research and Development Authority; Washington State Department of Commerce; Colorado Energy Office; New Mexico Energy, Minerals, and Natural Resources Department; California Energy Commission; Vermont Department of Public Service; Hawai'i State Energy Office

State Agencies

375

State Agencies.

The Heartland Institute

376

Other Stakeholder.

Carrier Global Corporation

Carrier

377

Manufacturer.

The Manufactured Housing Institute; National Apartment Association; National Association of Home Builders; National Leased Housing Association; National Multifamily Housing Council

The Coalition

378

Trade Associations.

New York State Energy Research and Development Authority

NYSERDA

379

State Agency.

The Natural Gas Association of Georgia

NGA of Georgia

380

Utility Trade Association.

The Appliance Standards Awareness Project; American Council for Energy-Efficient Economy, CLASP, Consumer Federation of America, Government of the District of Columbia—Department of Energy & Environment, National Consumer Law Center; Natural Resources Defense Council; Northeast Energy Efficiency Partnerships; Southwest Energy Efficiency Project

Joint Efficiency Commenters

381

Efficiency/Environmental Advocates.

California Energy Commission

CEC

382

State Agency.

The National Consumer Law Center on behalf of its low-income clients: Alliance for Affordable Energy; Pennsylvania Utility Law Project; Consumer Federation of America; Southface; Massachusetts Energy Directors' Association; Green Energy Consumers Alliance; Georgia Watch; North Carolina Justice Center; Texas Legal Services Center; Consumers Council of Missouri; Wildfire; Renew Missouri; Virginia Citizens Consumer Council

NCLC

et al.

383

Consumer Advocates.

Heating, Air-conditioning & Refrigeration Distributors International

HARDI

384

Trade Association.

Gas Analytic & Advocacy Services

GAS

385

Other Stakeholder.

Weil-McLain; Williamson-Thermoflo; Marley Engineered Products, LLC; Patterson-Kelley, LLC

The Marley Companies

386

Manufacturers.

American Public Gas Association

APGA

387

Utility Trade Association.

Center for Climate and Energy Solutions; Institute for Policy Integrity, New York University School of Law; Montana Environmental Information Center; Natural Resources Defense Council; Sierra Club; Union of Concerned Scientists

Climate Commenters

388

Efficiency/Environmental Advocates.

Lennox International Inc.

Lennox

389

Manufacturer.

Jack Spencer and Kevin Dayaratna, Ph.D.

Spencer and Dayaratna

390

Other Stakeholder.

American Gas Association American; Pipeline Contractors Association; American Public Gas Association; American Society of Gas Engineers; American Supply Association; Arkansas Gas Association; Consumer Energy Alliance; Distribution Contractors Association; Hearth, Patio & Barbecue Association; Hispanics in Energy; Louisiana Gas Association; Manufactured Housing Institute; National Apartment Association; National Association of Home Builders; National Leased Housing Association; National Multifamily Housing Council; National Propane Gas Association; National Utility Contractors Association; Natural Gas Supply Association; Northeast Gas Association; Plastics Pipe Institute; Plumbing-Heating-Cooling Contractors Association; Rinnai America Corporation; Thermo Products LLC; U.S. Chamber of Commerce; Utility Workers Union of America, AFL-CIO; Williams Furnace Co. dba Williams Comfort Products or Williams

AGA

et al.

391

Manufacturers, Trade Associations, and Other Stakeholders.

American Coke and Coal Chemicals Institute; American Gas Association; American Public Gas Association; Independent Petroleum Association of America; National Mining Association; Plumbing-Heating-Cooling Contractors—National Association; U.S. Chamber of Commerce

The Associations

392

Trade Associations.

Climate Smart Missoula; Environmental Defense Fund; Elevate Energy; Energy Efficiency Alliance of New Jersey; Campaign for 100% Renewable Energy; Evergreen Action; Green Energy Consumers Alliance; Green & Healthy Homes Initiative; Keystone Energy Efficiency Alliance; Montana Environmental Info Center; New Buildings Institute; New York Geothermal Energy Organization; Climate & Clean Energy Program; Rewiring America; RMI; Sealed; Sierra Club; Union of Concerned Scientists; Urban Green Council; Utah Clean Energy

Climate Smart Missoula

et al.

393

Efficiency/Environmental Advocates.

Rheem Manufacturing Company

Rheem

394

Manufacturer.

National Propane Gas Association

NPGA

395

Utility Trade Association.

ACTION-Housing Inc.; Audubon Mid-Atlantic; Clean Air Council; Community Action Association of Pennsylvania; Conservation Voters of Pennsylvania; Energy Coordinating Agency; Environmental Justice Center of Chestnut Hill United Church; Evangelical Environmental Network; Green Building United; Green & Healthy Homes Initiative; Housing Alliance of Pennsylvania; Keystone Energy Efficiency Alliance; National Housing Trust; PA Jewish Earth Alliance; PennEnvironment; Pennsylvania Council of Churches; Pennsylvania Interfaith Power and Light; Pennsylvania Utility Law Project; Performance Systems Development; Philadelphia Energy Authority; Philadelphia Solar Energy Association; Physicians for Social Responsibility Pennsylvania; Schuylkill Community Action; Vote Solar; Working for Justice Ministry

ACTION-Housing Inc.

et al.

396

Other Stakeholders.

Black Hills Energy

397

Utility.

Air Condition Contractors of America

ACCA

398

Trade Association.

Allergy & Asthma Network; Alliance of Nurses for Healthy Environments; American Geophysical Union; American Lung Association; American Public Health Association; American Thoracic Society; Asthma and Allergy Foundation of America; Children's Environmental Health Network; Climate for Health/ecoAmerica; National Carbon Monoxide Awareness Association; Oregon Physicians for Social Responsibility; Physicians for Social Responsibility; Physicians for Social Responsibility Florida; Physicians for Social Responsibility Pennsylvania; Texas Physicians for Social Responsibility; Washington Physicians for Social Responsibility

Climate and Health Coalition

399

Efficiency/Environmental Advocates.

Pacific Gas and Electric Company, San Diego Gas and Electric, and Southern California Edison; collectively referred to as “the California Investor-Owned Utilities”

The CA IOUs

400

Utilities.

Sierra Club and Earthjustice

Sierra Club

et al.

401

Efficiency/Environmental Advocates.

Avangrid; Consolidated Edison; Eversource; Exelon; Liberty Utilities; National Grid; Unitil; PG&E Corporation; Xcel

The Joint Utilities

402

Utilities.

Plumbing-Heating-Cooling Contractors—National Association

PHCC

403

Trade Association.

Plastics Pipe Institute

PPI

404

Trade Association.

American Gas Association

AGA

405

Utility Trade Association.

Nortek Global HVAC, LLC

Nortek

406

Manufacturer.

National Grid

407

Utility.

Offices of the Attorney General for the States of Illinois, Maine, Maryland, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Vermont, Washington, The Commonwealth of Massachusetts, the District of Columbia, and the City of New York

Attorneys General

408

State/Local Government Agencies.

State of Washington, Department of Commerce

State of Washington

409

State Agency.

Mortex Products, Inc.

Mortex

410

Manufacturer.

Johnson Controls

JCI

411

Manufacturer.

Trane Technologies

Trane

412

Manufacturer.

Spire Inc.; Spire Alabama Inc.; Spire Missouri Inc.

Spire

413; 4099

Utilities.

Air-Conditioning, Heating, & Refrigeration Institute

AHRI

414

Trade Association.

Atmos Energy Corporation

Atmos Energy

415

Utility.

Daikin Comfort Technologies Manufacturing, L.P.

Daikin

416

Manufacturer

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

To the extent that interested parties have provided written comments that are substantively consistent with any oral comments provided during the public meetings held on August 3, 2022,

or September 6, 2022,

DOE cites the written comments throughout this final rule.

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

www.regulations.gov

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

The transcript for the August 3, 2022, public meeting can be found at Docket No. EERE-2014-BT-STD-0031-0363, which is maintained at

www.regulations.gov

The transcript for the September 6, 2022, public meeting can be found at Docket No. EERE-2014-BT-STD-0031-4099, which is maintained at

www.regulations.gov

3. Current Standards in Canada

Although climate and fuel prices differ between the United States and Canada and will yield different results

in terms of costs and benefits of the standard, there are similarities in the equipment and venting materials used in both the United States and Canada with respect to NWGFs. Because the stock of buildings using NWGFs in Canada has many similarities to the stock using NWGFs in northern parts of the United States, the Canadian experience in terms of installation of condensing furnaces has relevance to the United States. As such, multiple stakeholders discussed the Canadian standards in their comments on the July 2022 NOPR, and DOE references these standards several times later in this document. Further, as discussed in section V.C.1 of this document, the standard levels adopted for NWGFs by this final rule align with the Canadian regulations.

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

Canada Gazette, Part II

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

The revised regulation, required on or after December 31, 2009, sets a minimum efficiency of 90-percent AFUE for gas furnaces. This standard is applicable to gas furnaces, other than those with an integrated cooling component that are outdoor or through-the-wall gas furnaces, that have an input rate no greater than 65.92 kilowatts (“kW”) (225,000 Btu/h), and that use single-phase electric current.

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.

In addition to the definition of “gas furnaces,” Natural Resources Canada added a separate definition for “gas furnaces for relocatable buildings” (

e.g.,

MHGFs). The revised regulation, which applies to covered gas furnaces (excluding gas furnaces for relocatable building, replacement gas furnaces, outdoor furnaces with an integrated cooling component, and through-the wall furnaces with an integrated cooling component) manufactured for sale or import into the Canadian market on or after July 3, 2019, sets a minimum efficiency of 95-percent AFUE. Furthermore, the revised regulation also sets a minimum efficiency of 80-percent AFUE for gas furnaces for relocatable buildings.

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.

III. General Discussion

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

A. General Comments

This section summarizes general comments received from interested parties regarding rulemaking timing and process.

1. Comments Regarding Authority

The Marley Companies commented that the regulation of multiple levels of components (

e.g.,

motors and furnace fans, which are themselves covered products under EPCA) internal to an appliance limits the utility of the appliance, because the specifications for such components (necessary for compliance with DOE energy conservation standards for those components as covered products) place constraints on the covered product's design and operation. (The Marley Companies, No. 386 at pp. 7-9) The Marley Companies argued that changes to the efficiency of a component, prescriptive requirements, and test procedures are all cumulatively subject to the 6-year window between standards provided to manufacturers per 42 U.S.C. 6295(m)(4)(B), so according to the commenter, any change to the standard for a covered product, to the standard for an internal component of that product, or to the test procedure should preclude further regulation of that product for six years pursuant to 42 U.S.C. 6295(m)(4)(B). (

Id.

at p. 7) Further, Marley asserted that the cumulative impact of multiple component efficiency regulations within a regulated appliance is that the operating range of the entire product is reduced. (

Id.

) The Marley Companies commented that the definition of “energy conservation standard” includes a reference to 42 U.S.C. 6295(r), which discusses the inclusion in standards of test procedures and other requirements, and, therefore, the term “standard” includes test procedures used to determine the efficiency of covered products. (

Id.

at p. 9) The Marley Companies commented that 42 U.S.C. 6293(e)(4) conveys that Congress realized and stated in EPCA that test procedures should not be altered at the same time as appliance level efficiencies, and, therefore, the Marley Companies asserted that Congress established that any change in an efficiency of any component, combination of components, or the entire covered product, as well as any required construction change through prescriptive requirements and any change in the test procedure used to determine efficiency, would reset the 6-year timeframe established by 42 U.S.C. 6295(m)(4)(B). (

Id.

at p. 9) In contrast, Sierra Club

et al.

commented that DOE correctly interprets furnaces and furnaces fan as two separate products for the purposes of the “6-year lock-out” provision at 42 U.S.C. 6295(m)(4)(B). (Sierra Club

et al.,

No. 401 at p. 3)

There are two products that can be found as a component of a consumer furnace and which are separately regulated by DOE: consumer furnace fans and certain types of electric motors. In response to comments from Marley Companies and the Sierra Club, DOE notes that consumer furnaces, consumer furnace fans, and electric motors are all separately covered products under EPCA. (42 U.S.C. 6292(a)(5); 42 U.S.C. 6295(f)(4)(D); 42 U.S.C. 6311(1)(A)) As such, DOE considers their timelines separately in the context of the requirement established by 42 U.S.C. 6295(m)(4)(B) that a manufacturer “shall not be required to apply new standards to a product with respect to which other new standards have been required during the prior 6-year period.”

The 6-year period applies to covered products individually, and ECPA does not provide exceptions to the review requirements when related products or components have overlapping review timeframes. Furthermore, DOE notes that 42 U.S.C. 6295(m) applies to energy conservation standards, not test

procedures. Under this provision, DOE is directed to amend energy conservation standards for a covered product if such standards would be technologically feasible, economically justified, and result in significant conservation of energy. (42 U.S.C. 6295(m)(1)(B); 42 U.S.C. 6295(o)) As such, DOE does not agree with the Marley Companies' contention that this statutory provision applies more broadly to test procedure changes, and the Department has concluded that the Marley Companies have advanced an incorrect reading of 42 U.S.C. 6295(r) to support their point. That provision of EPCA simply acknowledges that most energy conservation standards (

i.e.,

performance-based ones) will require an accompanying test procedure and may necessitate additional ancillary requirements to facilitate compliance. Further, 42 U.S.C. 6295(r) specifically refers to test procedures prescribed in accordance with 42 U.S.C. 6293. As such, there simply is no statutory basis for applying the 6-year timeframe, which applies to standards prescribed under 42 U.S.C. 6295(m), to test procedures prescribed under 42 U.S.C. 6293.

DOE notes that EPCA set a deadline of December 31, 2013, for the Department to prescribe an energy conservation standard or energy use standard for electricity used for purposes of circulating air through ductwork (colloquially referred to as “furnace fans”). (42 U.S.C. 6295(f)(4)(D)) EPCA likewise set deadlines for the Department to set standards for certain motors, including a five-years lead time for compliance. (42 U.S.C. 6313(b)(4)(B)) These deadlines are independent of the standard-setting provisions for consumer furnaces at 42 U.S.C. 6295(f) and the six-year-lookback provisions at 42 U.S.C. 6295(m).

For example, DOE previously published in the

Federal Register

a direct final rule establishing new energy conservation standards for consumer furnaces on June 27, 2011 (76 FR 37408), and then published in the

Federal Register

a final rule amending the test procedure for consumer furnaces on January 15, 2016 (81 FR 2628). DOE previously published in the

Federal Register

a final rule amending the test procedure for furnace fans on January 3, 2014 (79 FR 500), and then published in the

Federal Register

a final rule establishing new energy conservation standards for furnace fans on July 3, 2014 (79 FR 38130).

NPGA stated that DOE has failed to provide a fair and transparent rulemaking process. (NPGA, No. 395 at p. 3) NPGA and AGA both commented that they believe the proposal to be unlawful because DOE is not authorized to create design standards for furnaces, but NPGA and AGA suggested that is what the proposed rule effectively does. (NPGA, No. 395 at p. 9; AGA, No. 405 at pp. 50-51) NPGA stated that the proposal sets a

de facto

standard for building design by requiring the alteration of building venting systems. (NPGA, No. 395 at p. 22) Additionally, NPGA and AGA stated that the necessity to include condensing technology, as well as other associated design elements, including new venting, electric fans, and a condensate drainage system, is effectively enforcing a design requirement. (NPGA, No. 395 at pp. 9-10; AGA, No. 405 at pp. 50-51) AGA further commented that Congress's decision to exclude furnaces from the list of products for which DOE can include design requirements, as outlined in 42 U.S.C. 6291(6)(B), demonstrates that DOE may not develop design requirements for furnaces. (AGA, No. 405 at pp. 50-52)

In response, DOE is not creating a prescriptive design requirement for consumer furnaces in this final rule. In its definition of “energy conservation standard” at 42 U.S.C. 6291(6), EPCA provides that a performance standard is one which prescribes a minimum level of energy efficiency or a maximum quantity of energy use for a covered product, determined in accordance with test procedures developed under 42 U.S.C. 6293. (42 U.S.C. 6291(6)(A)) In this case, the standards adopted in this final rule are set in terms of AFUE, which is a performance metric and is determined through testing consumer furnaces under the applicable DOE test procedure, as discussed in section III.C of this document. DOE does not mandate any specific design for achieving compliance with the amended standard, as would constitute a design requirement under 42 U.S.C. 6291(6)(B). Thus, the final rule complies with the statutory requirements for setting a performance standard under EPCA. The possibility that some technologies may not be sufficient to achieve compliance is true for any performance standard, and does not transform a performance standard into a

de facto

design requirement. DOE acknowledges that the NWGFs and MHGFs that currently achieve 95-percent AFUE do employ condensing technology. However, the performance-based standards adopted in this final rule do not preclude new or alternative heat exchanger designs, venting systems, or materials from being used in future furnace product designs, which may provide additional avenues (alone or in combination) for increasing furnace AFUE. In addition, this final rule provides a five-year lead time before compliance with the amended standards is required, so further innovation may be possible during that time. DOE's approach has been explained at length and in detail in both the July 2022 NOPR and this final rule, as well as the TSDs accompanying those documents.

2. Comments Opposing the July 2022 Proposal

This section summarizes comments opposing the July 2022 proposal.

Several commenters stated that DOE should withdraw the proposed rule. (Georgia Gas Authority, No. 367 at p. 1; MHI, No. 365 at p. 1; DCA, No. 372 at p. 2; The Heartland Institute, No. 376 at p. 1; HARDI, No. 384 at p. 2; Nortek, No. 406 at pp. 5-6) Plastics Pipe Institute commented that it opposes the proposed rule due to negative impacts on consumers (including senior and low-income households), small businesses, the overall gas furnace market, and the gas industry. (Plastics Pipe Institute, No. 404 at p. 1) Spire commented that the proposed standards place undue burden on consumers because many homes are not set up so as to be compatible with condensing gas furnaces. (Spire, No. 413 at pp. 20-21) The Heartland Institute commented that this rule is unnecessary. (The Heartland Institute, No. 376 at pp. 1-2) HARDI stated disagreement with the methodology and conclusions used to support the proposed standards. (HARDI, No. 384 at p. 2) A number of individuals urged DOE to reject the proposed rule on gas-burning residential furnaces because of considerations such as individual preferences, higher upfront costs, and higher maintenance costs. (Veiga, No. 326 at p. 1; Willis, No, 327 at p. 1; Anonymous 1, No. 329 at p. 1) PHCC commented that it does not support the proposed standards for NWGFs and MHGFs, as there are parts of the NOPR that are overly optimistic, do not reflect current market conditions, make inaccurate assumptions, minimize installation issues for condensing-type products, and would generally create negative impacts for manufacturers and consumers. (PHCC, No. 403 at p. 1) Strauch recommended that both condensing and non-condensing furnaces remain available on the market. (Strauch, No. 366 at p. 2) Spencer and Dayaratna stated that the standards proposed in the July 2022 NOPR are unnecessary because condensing furnaces are readily available in the marketplace and have already achieved significant market penetration. (Spencer and Dayaratna, No. 390 at p. 10)

The Heartland Institute expressed concern that the proposed standard would negatively impact energy consumption, emissions, and the economy. (The Heartland Institute, No. 376 at p. 1) The Heartland Institute further stated that there is a lack of economic justification. (

Id.

at p. 2) Additionally, the Heartland Institute argued that, while the highest-efficiency products may produce long-run savings for consumers under ideal laboratory settings, these gains from an increased efficiency are often not replicated in the real world. (

Id.

at p. 1) Atmos Energy similarly commented that the technical analyses do not reasonably consider economic impacts, particularly those on affordability and the potential disruption to highly-effective energy

conservation programs. (Atmos Energy, No. 415 at p. 2)

As discussed in section II.A of this document, EPCA provides DOE with the authority to regulate the energy efficiency of a number of consumer products, including NWGFs and MHGFs, which are a subset of consumer furnaces. (42 U.S.C. 6292(a)(5)) EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(f)(1) and (2)) and directs DOE to conduct future rulemakings to determine whether to amend these standards (42 U.S.C. 6295(f)(4) and 42 U.S.C. 6295(m)(1)). Any such new standards for NWGFs and MHGFs must, under 42 U.S.C. 6295(o)(2)(A), be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. DOE's analyses supporting its conclusion that it has met these criteria for the standards adopted in this final rule are presented in section IV and section V of this document, respectively.

Atmos Energy disagreed that the proposed standards would “represent the maximum improvement in energy efficiency that is technologically feasible and economically justified,” alleging that DOE's underlying technical analyses do not reasonably consider relevant economic impacts. (Atmos Energy, No. 415 at p. 2) Atmos Energy also disagreed with the July 2022 NOPR's tentative conclusion that the benefits of the proposed standards greatly exceed the burdens. (

Id.

) Atmos Energy commented that DOE should improve the accuracy of its analysis by tailoring its consideration of consumer behavior, life-cycle evaluations, and costs. (

Id.

at p. 5) Atmos Energy further commented that the proposed rule uses unsupported and broad assumptions that are not reflective of actual consumer behavior and information. (

Id.

) Similarly, the Coalition commented that DOE has failed to adequately consider the cost impacts of the proposed standards and has failed to properly assess the balancing of benefits and burdens. (The Coalition, No. 378 at p. 5) Spencer and Dayaratna stated that the standards proposed in the July 2022 NOPR do not meet the “economically justified” criteria for prescribing new or amended standards. (Spencer and Dayaratna, No. 390 at pp. 1-2) Specifically, Spencer and Dayaratna stated that the analysis in the July 2022 NOPR is questionable regarding all seven of the factors set by EPCA. (

Id.

) Spencer and Dayaratna suggested that DOE did not present sufficient rationale for factors 5 (

i.e.,

the effect of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard) and 6 (

i.e.,

the need for national energy and water conservation). (

Id.

) AGA commented that the NOPR suffers from many evidentiary shortcomings that fail to meet the statutory requirement that energy conservation standards must be “supported by substantial evidence” on the record. (AGA, No. 405 at pp. 29-30) AGA commented that the NOPR's conclusion that the proposed standards would be economically justified and technically feasible relies on unexplained assumptions and conclusions. (

Id.

) AGA asserted that the NOPR fundamentally fails to adhere to the Process Rule,

and specifically found fault with DOE's LCC model and the lack of sufficient time for public comment. (

Id.

at pp. 21-23) AGA commented that particularly in the LCC model, the qualitative and quantitative analytical methods are not fully documented for the public and do not produce results that can be explained and reproduced. (

Id.

) AGA commented that these issues prevent stakeholders from evaluating compliance with other aspects of EPCA's and the Process Rule's requirements, and the commenter encouraged DOE to correct these deficiencies. (

Id.

) Trampe commented that he does not support the proposed 95-percent AFUE standard, and that the standard should be maintained at 80-percent AFUE. (Trampe, No. 361 at p. 1)

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

Lennox suggested that DOE should reconsider whether a 92-percent AFUE standard is an appropriate minimum efficiency level for NWGFs. (Lennox, No. 389 at p. 2) Lennox also commented that, based on DOE's analysis, AFUE levels above 95 percent are not economically justified and have significant negative consumer impacts. (

Id.

)

In regard to the proposed MHGF standards, Nortek and JCI commented that they do not support the proposed 95-percent AFUE standard for MHGFs. (Nortek, No. 406 at p. 2; JCI, No. 411 at p. 1) Nortek commented that DOE should maintain the 80-percent AFUE requirement for MHGFs. (Nortek, No. 406 at pp. 5-6) JCI added that the 95-percent AFUE standard for MHGFs would impose costs on consumers with, on average, lower household incomes. (JCI, No. 411 at p. 1) JCI recommended that DOE should exclude MHGFs from this rulemaking and gather additional data on that product class, particularly in replacement applications. (

Id.

) AHRI also stated that DOE should reconsider active mode energy conservation standards for MHGFs. (AHRI, No. 414-2 at p. 2) Mortex commented that it too does not believe that DOE's proposed 95-percent AFUE standard is economically justified for MHGFs, and that DOE should retain the current standard for MHGFs. (Mortex, No. 410 at p. 1) In support of its recommendation, Mortex pointed to the two-tiered standards that Canada has developed for furnaces, with a 95-percent AFUE level for most residential gas furnaces and 80-percent AFUE level for gas furnaces in relocatable buildings and replacements in manufactured housing. (Mortex, No. 410 at p. 4) Mortex recommended this structure as a model for DOE to utilize. (

Id.

) MHI commented that the current MHGF AFUE standards strike a balance between energy savings and affordability, and the commenter urged DOE to withdraw the NOPR or replace the proposed 95-percent AFUE level for MHGF with a standard at 80-percent AFUE for gas furnaces used in manufactured homes. (MHI, No. 365 at pp. 2-3)

As discussed in section II.A of this document, EPCA provides specific statutory criteria for amending energy conservation standards. EPCA generally requires a public notice-and-comment process (

see

42 U.S.C. 6295(p)), which affords members of the public the opportunity to comment on the rulemaking, and DOE makes all relevant documents publicly available at

www.regulations.gov.

As part of the process for this rulemaking, DOE convened two public meetings, including one aimed at helping stakeholders understand its analytical models, to ensure the transparency of its process. Additionally, DOE carefully considers the benefits and burdens of amended standards to determine whether the amended standards are the maximum standard levels that are technologically feasible and economically justified, and would conserve a significant amount of energy, as required by EPCA (see 42 U.S.C. 6295(o)(2)-(3)). Section IV of this document outlines DOE's approach to analyzing various potential amended standard levels, and section V of this document provides the results of those analyses, as well as a detailed explanation of DOE's weighing of the benefits and burdens and the rationale for the amended standards adopted by this final rule. As detailed in those sections, DOE has determined that its rulemaking process for the subject

furnaces has satisfied the applicable requirements of EPCA and the Process Rule and that the adopted standards are supported by substantial evidence in the record. Further, DOE notes that the webinar held on September 6, 2022, provided further opportunity for clarification regarding the LCC model and extended the comment period to provide sufficient time to provide written comments.

Plastics Pipe Institute expressed concern with the precedent that would accompany this rule change, adding that it would open the door for future restrictions on natural gas. (Plastics Pipe Institute, No. 404 at p. 3) In response, DOE notes that the amended energy conservation standards for NWGFs and MHGFs do not prohibit the sale and use of gas-fired furnaces, nor do they restrict the use of natural gas, but instead, they improve the energy efficiency of those gas-burning products.

3. Comments Expressing Support for the July 2022 Proposal

This section summarizes comments expressing support for the July 2022 proposal.

DOE received comments from the OPAE, NCEL, State of Washington, NEEA, the Joint Utilities, the National Grid, Climate Smart Missoula

et al.,

Evergreen Action, the CA IOUs, the PSEA, the NCLC

et al.,

and the NRDC expressing support for the proposed energy conservation standards for NWGFs and MHGFs. (OPAE, No. 347 at p. 1; NCEL, No. 359 at p. 1; State of Washington, No. 409 at pp. 1-2; NEEA, No. 368 at pp. 1-2; the Joint Utilities, No. 402 at p. 1; National Grid, No. 407 at p. 1; Climate Smart Missoula

et al.,

No. 393 at pp. 1-2; Evergreen Action, No. 364 at p. 1; The CA IOUs, No. 400 at p. 1; PSEA, Public Meeting Webinar Transcript, No. 363 at p. 37; NCLC

et al.,

No. 383 at p. 9; NRDC, Public Meeting Webinar Transcript, No. 363 at p. 30;) GHHI, the Attorneys General, and Sierra Club

et al.

further encouraged DOE to adopt the proposed efficiency standards for consumer gas furnaces. (GHHI, No. 371 at p. 1; Attorneys General, No. 408 at pp. 1-2; Sierra Club

et al.,

No. 401 at p. 1) The Joint Efficiency Commenters added that they strongly support DOE's proposed standards for minimum efficiency of NWGFs and MHGFs and standby mode and off mode power consumption. (Joint Efficiency Commenters, No. 381 at p. 1) The CA IOUs further explained that the proposed rule would allow consumers to have greater access to energy-efficient products that are technologically feasible and economically justified. (The CA IOUs, No. 400 at p. 1) Daikin stated that despite some concerns regarding the accuracy of some portions of the TSD concerning costs due to the confidential nature of some manufacturer cost data, the company generally finds that DOE's analysis is reasonable in most areas based on the data that is publicly available. (Daikin, No. 416 at p. 3) The Joint Utilities stated that they support common-sense, cost-saving improvements to existing efficiency standards coupled with programs to provide the financial resources to enable customers to make the transition to higher-efficiency furnace products and minimize the impact of upfront costs. (The Joint Utilities, No. 402 at p. 1) National Grid stated that Federal energy conservation standards ensure that the benefits of efficiency gains can reach all customer segments, including renters who often do not make decisions about appliances. (National Grid, No. 407 at p. 1) The State of Washington added that it understands the cost savings and emissions benefits that more efficient standards can provide. (State of Washington, No. 409 at pp. 1-2)

DOE also received over 3,000 submissions of a form letter encouraging DOE to enact strong efficiency standards for furnaces that phase out the least-efficient furnace models. (Individual Commenters, No. 348 at pp. 1-3552) The commenters stated that heating homes should not produce pollution, and they stated that outdated and inefficient gas furnaces are emitting millions of tons of avoidable climate emissions and other harmful pollutants. (

Id.

) A number of other individual commenters expressed similar views. (Neumann, No. 328 at p. 1; Guarin, No. 332 at p. 1; Haag, No. 334 at p. 1; Cantu, No. 335 at p. 1; Marcellini, No. 336 at p. 1; Liset, No. 338 at p. 1; Snyder, No. 349 at p. 1; Lish, No. 358 at p. 1) In addition to expressing support for the standards via the form letter, Guarin, Haag, Cantu, Marcellini, NCEL, and Liset all commented that by requiring furnaces to use about 15-percent less energy, the proposed standard would cut 373 million metric tons of carbon emissions and 833 thousand tons of NO

over 30 years of sales, as outlined in the July 2022 NOPR. (Guarin, No. 332 at p. 1; Haag, No. 334 at p. 1; Cantu, No. 335 at p. 1; Marcellini, No. 336 at p. 1; NCEL, No. 359 at p. 1; Liset, No. 338 at p. 1) These commenters added that the proposed standard would help with breathing since it would reduce needless greenhouse gas emissions. (Guarin, No. 332 at p. 1; Haag, No. 334 at p. 1; Cantu, No. 335 at p. 1; Marcellini, No. 336 at p. 1; Liset, No. 338 at p. 1) The CA IOUs similarly stated that this standard will significantly improve ambient and indoor air quality in the United States. (The CA IOUs, No. 400 at p. 2)

Other commenters similarly discussed the beneficial impacts that the proposed standards would have on health and the environment. Arnold asked DOE to help work toward a cleaner and more sustainable future by increasing the efficiency standards for furnaces. (Arnold, No. 333 at p. 1) Shippee-Rice urged DOE to enact these “long overdue” standards, stating that doing so will decrease pollutants that threaten human, animal, and plant health. Shippee-Rice also noted that this proposed standard will help to decrease the harmful effects of current climate change dangers. (Shippee-Rice, No. 339 at p. 1) Daikin agreed with DOE's initiatives to address emission reductions and set higher standards with climate change, decarbonization, and electrification in mind. (Daikin, No. 416 at pp. 2-3) Lee's Air, Plumbing & Heating commented that a higher standard would eliminate pollution and wasted energy. (Lee's Air, Plumbing & Heating, No. 342 at p. 1) The Physicians for Social Responsibility commented that pollutants from gas furnaces may be back-drafted into homes when indoor air pressure is reduced. Alternatively, they stated that pollutants can be vented out into the surrounding community. The commenter added that those pollutants from gas appliances can lead to the development of childhood asthma, increase susceptibility to other respiratory infections, decrease general cognitive and neurological functioning, and exacerbate cardiovascular disease. The commenter also stated that these pollutants can cause community-wide harm, particularly among low-income communities and communities of color. (The Physicians for Social Responsibility, Public Meeting Webinar Transcript, No. 363 at pp. 5-6) The commenter further argued that the proposed standards can help lower utility bills, which on its own can positively impact consumers' health. The commenter concluded that higher efficiency standards will reduce the health effects from air pollution and limit the impacts of climate change such as extreme heat, population displacement, and injuries and fatalities due to natural disasters. (

Id.

at p. 7) Evergreen Action noted that residential heating is the biggest utility in most U.S. households. Evergreen Action stated that gas heating appliances account for two-thirds of on-site household greenhouse gas emissions, and that gas

furnaces are a significant source of NO

(Evergreen Action, No. 364 at p. 1) Climate Smart Missoula

et al.

also stated that furnaces have lifespans of 20 years or more and suggested that adopting updated standards will lead to benefits for consumers' pocketbooks, as well as the planet, through emission reduction. (Climate Smart Missoula

et al.,

No. 393 at p. 2) Environment America commented that the proposed standards would reduce pollution that causes climate change and negatively impacts health. (Environment America, Public Meeting Webinar Transcript, No. 363 at pp. 18-19) Environment America suggested that, based on the reduced energy use and emissions, along with reduced annual home heating bills, DOE should finalize the proposed standards. (

Id.

) The National Caucus of Environmental Legislators recommended that DOE not to give in to industry-delaying tactics because action has been delayed and stymied numerous times in the past 30 years. They further commented in support of the proposal to increase the efficiency level of gas furnaces to 95-percent AFUE. (National Caucus of Environmental Legislators, No. 359 at p. 1)

NEEA supported DOE's finding in the July 2022 NOPR that implementing a 95-percent AFUE standard for NWGFs and MHGFs would lead to significant, cost-effective energy savings. (NEEA, No. 368 at pp. 1-2) NEEA stated that the consumer furnace market is ready for a furnace standard set at a condensing level, as evidenced by the market maturity and the lack of insurmountable barriers. (

Id.

at pp. 2-3) NEEA noted that condensing furnaces make up the majority of sales in the Northwest and their market share is growing. (

Id.

) NEEA stated that a study commissioned by NEEA and other stakeholders demonstrated the lack of barriers as would prevent a condensing furnace installation. (

Id.

) Additionally, NEEA commented that a 5-year transition time would allow sufficient time for manufacturers to convert their production and close the remaining sales gap. (

Id.

)

Daikin commented that it believes the results of DOE's analysis would not substantially change even if DOE were provided additional data, and, therefore, it expressed support for the proposed 95-percent standard for NWGFs. (Daikin, No. 416 at p. 3) Carrier and Trane also expressed support for the 95-percent AFUE standard for NWGF, and Trane added that this level will provide significant CO

savings. (Carrier, No. 377 at p. 1; Trane, No. 412 at p. 1) AHRI stated that DOE has conducted sufficient analysis to amend active mode energy conservation standards for NWGFs and recommended that DOE finalize this rulemaking to bring resolution to the process and to bring certainty to the marketplace. (AHRI, No. 414-1 at p. 1) The CEC commented that it supports DOE's proposed standard for consumer furnaces at 95-percent AFUE and 8.5 W, and that DOE should finalize these standards. (CEC, No. 382 at pp. 1-2) AHRI and Rheem agreed with DOE's conclusion that a 98-percent AFUE standard would be unreasonable and not economically justified for NWGFs. (AHRI, No. 414-1 at pp. 1-2; Rheem, No. 394 at p. 2)

The State Agencies supported the proposed TSL 8 standard and methodology and encouraged DOE to adopt the rule. (State Agencies, No. 375 at pp. 1-2) The State Agencies further commented that the proposed TSL 8 standard is technologically achievable, beneficial to American consumers' physical and financial health, and is an important step in reducing emissions. (

Id.

at p. 1) NYSERDA supported DOE's proposal to adopt TSL 8 for MHGFs and NWGFs and recommended that DOE consider an even more stringent standard at 96-percent AFUE for NWGF. (NYSERDA, No. 379 at pp. 1-2) NYSERDA further commented that TSL 8 leads to significant energy and economic savings over the lifetime of the equipment. (

Id.

) The NCLC

et al.

and the Joint Efficiency Commenters also stated that the proposed TSL 8 efficiency levels promise substantial financial benefits to consumers and added that these financial benefits are especially promising for low-income consumers. (NCLC

et al.,

No. 383 at p. 4; Joint Efficiency Commenters, No. 381 at p. 2) The NCLC commented that low-income rental properties are more likely to have less-efficient furnaces and to pass the associated larger energy bills on to tenants. (NCLC, Public Meeting Webinar Transcript, No. 363 at pp. 8-10) NCLC noted that this could amount to $2,000 to $3,000 in incremental costs for tenants over the life of the furnace. (

Id.

at p. 9) The commenter also stated that low-income consumers have the fewest resources to address the harms of rising temperatures and would be further adversely impacted. The NCLC commented that this presents an equity issue and accordingly concluded that DOE should adopt a strong furnace efficiency standard. (

Id.

at p. 10)

The Philadelphia Solar Energy Association commented in support of the proposed standards, stating that high-efficiency furnaces help low-income consumers in Philadelphia reduce their energy costs, as well as indoor air pollution from atmospheric furnaces. (Philadelphia Solar Energy Association, Public Meeting Webinar Transcript, No. 363 at p. 37)

The Joint Efficiency Commenters stated that DOE should not adopt TSL 7 as an alternative to TSL 8, adding that the percentage of low-income consumers benefitting from the potential standards is significantly greater at TSL 8 compared to TSL 7. (Joint Efficiency Commenters, No. 381 at p. 2)

In response to the July 2022 NOPR, The NCLC

et al.

commented that if the standard is set too high, many consumers will be saddled with purchasing expensive products where energy savings do not outweigh initial costs. However, the NCLC

et al.

commented that, if the standard is set too low, then the percentage of customers who end up with higher LCC will increase. (NCLC

et al.,

No. 383 at p. 6) Therefore, the NCLC

et al.

commented that DOE should not reject a standard because some consumers will experience net costs over the life of the product. (

Id.

) NCLC

et al.

noted that, at TSL 8, the average net benefits are more significant than the average net costs for NWGFs. (

Id.

)

As discussed in section II.A of this document, DOE is directed by EPCA to conduct periodic rulemakings to determine whether to amend the standards for various products, including consumer furnaces. (42 U.S.C. 6295(f)(4) and 42 U.S.C. 6295(m)(1)) The standards adopted by this final rule, which include the same AFUE levels as those proposed in the July 2022 NOPR, adhere to the requirements of EPCA in that they are designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B)) The analytical results showing both the benefits and burdens of the standards, along with DOE's rationale for adopting these amended standards, are discussed in section V of this document.

4. Regional Standards

Nortek, AHRI, and MHI encouraged DOE to consider regional standards that align with the U.S. Department of Housing and Urban Development (“HUD”) zones. (Nortek, No. 406 at p. 6; AHRI, No. 414-2 at pp. 3-4; MHI, No. 365 at pp. 1-2) MHI commented that the HUD code for manufactured homes prescribes energy efficiency features that are specific to the region where the home will be sited. (MHI, No. 365 at pp. 1-2) MHI suggested that consulting with

HUD will assist DOE in understanding how furnace standards impact consumer access to affordable housing, including manufactured housing. (

Id.

) PHCC commented that DOE's early efforts for this consumer furnace rulemaking considered creating regional standards to establish a pathway for higher-efficiency products that could not be justified on a national scale due to differences in usage and energy consumption of different climate zones. (PHCC, No. 403 at pp. 1-2) Trampe commented that the entire United States should not have to follow the same standard and added that what applies in Minnesota may not apply in Kansas, Tennessee, Texas, or other States. (Trampe, No. 361 at p. 1) Nortek pointed to NRCan's standards, which were set at 95-percent AFUE for NWGFs and 80-percent AFUE for MHGFs in 2019. Nortek noted that the climate in Canada has more severe winters than many parts of the United States. Nortek also stated that setting standards at a condensing level disproportionately impacts southern homeowners because most manufactured homes are in the South where mild winters allow furnaces to run for only 3 months a year. (Nortek, No. 406 at pp. 3-4) Like Nortek, the Heartland Institute also discussed regional differences, stating that in Northern States, such as Minnesota or Wisconsin, most residential natural gas furnaces already meet 95-percent AFUE. In Southern States, such as Texas, Georgia, and Florida, a smaller percentage of homeowners have adopted higher-efficiency furnace models. The Heartland Institute further offered that condensing models are already installed in regions where furnaces are heavily used, which mitigates the need for this mandate. (The Heartland Institute, No. 376 at p. 2) JCI commented that it believes a regional standard with a condensing level for the Northern region and a non-condensing level for the Southern region would be more economically justified and would align with the existing central air conditioning/heat pump standards. JCI commented that, in southern installations, the additional installation cost would result in a negative LCC using the amended values JCI supplied for manufacturer production costs (“MPCs”). (JCI, No. 411 at p. 2)

Conversely, Daikin commented that there are logistical and operational challenges associated with regional standards; therefore, Daikin supported a national energy conservation standard, stating that it does not support TSL 4. (Daikin, No. 416 at p. 2) Similarly, Rheem commented that DOE should maintain a single, nationwide and capacity-wide standard for NWGFs to avoid costly supply and inventory planning problems for manufacturers, distributors, and contractors. (Rheem, No. 394 at p. 3) The CFA commented that DOE should consider a uniform standard, arguing that certain furnaces no longer need to be exempted from the standard. (CFA, Public Meeting Webinar Transcript, No. 363 at p. 22)

In response, DOE's analyses of each considered efficiency level accounts for regional differences (

e.g.,

in terms of climate data, shipments) when appropriate, as discussed throughout this document. For the July 2022 NOPR and for this final rule, in addition to considering uniform national standard, DOE included consideration of a potential regional standard (

i.e.,

TSL 4; see section V.A of this document) consisting of efficiency levels at 95-percent AFUE for the Northern region and 80-percent AFUE for the rest of the country, for both NWGFs and MHGFs. However, as discussed in section V of this document, DOE conducts a walk-down analysis to determine the TSL that represents the maximum improvement in energy efficiency that is technologically feasible and economically justified, as required under EPCA. In this final rule, DOE has found that a national standard for both NWGFs and MHGFs corresponding to 95-percent AFUE (

i.e.,

TSL 8) meets those statutory criteria, and, therefore, DOE is adopting a national standard rather than regional standards.

5. Recommendations for Analytical Changes

Atmos Energy commented that DOE should supplement its technical analysis in accordance with consumer welfare recommendations identified by the National Academy of Science peer review report before proceeding with a final rule, arguing that this would increase the accuracy of the technical analysis and have a material impact on the final standards. (Atmos Energy, No. 415 at p. 5) AGA commented that DOE should follow, or at a minimum respond to, the National Academies of Sciences, Engineering, and Medicine's (NAS) Recommendations (the NAS Report) on its process. (AGA, No. 405 at pp. 25-27) AGA stated that DOE should revisit the proposed rule to address NAS's recommendations and allow stakeholders an opportunity to comment on the revisions. (

Id.

) APGA stated that many months after the NAS Report, DOE does not reflect the NAS findings in the NOPR but merely states that DOE “is in the process of evaluating the resulting report.” (APGA, No. 387 at p. 56) APGA pointed out that the residential furnace rulemaking was one of the three rulemakings studied in depth by the NAS committee. (

Id.

) APGA noted that NAS came to conclusions about consumer behavior that are extremely critical to the NOPR. APGA cited the NAS Report's recommendation that “[f]or some commercial goods in particular, there should be a presumption that the market actors behave rationally unless DOE can provide evidence or argument to the contrary.” (

Id.

)

In response, DOE notes that the rulemaking process for energy conservation standards for covered products and equipment are outlined in appendix A to subpart C of 10 CFR part 430, and DOE periodically examines and revises these provisions in separate rulemaking proceedings. DOE notes that discussion of the recommendations of the NAS report, which pertain to the processes by which DOE analyzes energy conservation standards, will be addressed as part of a separate notice-and-comment process.

Rheem commented that DOE should consider a simplified analysis and reproducible model for future rulemakings. (Rheem, No. 394 at p. 2) Specifically, Rheem encouraged DOE to adopt a consistent and predictable approach to quantifying energy savings to ensure the recommendations will result in the estimated savings. (

Id.

) GAS argued that “Uncertainties . . . include numerous variables contained within DOE's overly complex `determination' apparatus,” and that DOE has failed to “use transparent and robust analytical methods.” (GAS, No. 385 at pp. 4-5) AHRI suggested that, for future rulemakings, DOE should modify the way that it analyzes consumer economic impact to look at the probability that individual consumers will benefit from standards rather than whether the aggregate benefit is positive and stated that these changes would be best accomplished in an open review process. (AHRI, No. 414-1 at p. 2)

Although DOE understands the desire for simplicity, the Department notes that its analysis is informed by the Process Rule and includes a number of modifications in response to comments from interested parties on prior notices, which recommended that DOE consider a variety of additional factors when evaluating the impacts of potential standards. These additional considerations, while adding complexity to the analysis, are responsive to commenters and increase the granularity of results. A simplified analysis would run counter to those

recommendations,

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

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

ACCA suggested that DOE should focus its attention on efficiency improvements, such as installing heating, ventilation, and air-conditioning (HVAC) systems according to the industry's recommended standards (including proper equipment sizing, duct re-design and sealing, and appropriate refrigerant charge levels), that would reduce peak electricity demand without requiring revised installation or design standards. (ACCA, No. 398 at p. 2)

As discussed in section IV.F.4 of this document, DOE's analysis accounts for the electricity consumption of NWGFs and MHGFs. Although reducing peak electricity demand can be a benefit of energy conservation standards, as discussed in section II.A of this document, EPCA provides specific factors that DOE must consider when establishing or amending energy conservation standards. One of these factors is the total projected energy savings that would result from the standard (

see

42 U.S.C. 6295(o)(2)(B)(i)(III)), and DOE includes impacts on electricity consumption when evaluating the projected energy savings. DOE follows the statutory obligations laid out in EPCA when evaluating the potential for energy savings, technological feasibility, and economic justification.

6. Opportunity for Public Input

MTNGUD, Watertown Municipal Utilities, and LANGD recommended that DOE hold a workshop to further discuss this rulemaking. (MTNGUD, No. 350 at pp. 1-2; WMU, No. 351 at p. 1; LANGD, No. 355 at p. 2) MTNGUD and LANGD specifically noted that at the workshop, DOE should further discuss its LCC analysis with stakeholders in order to achieve a common understanding, and these parties added that the LCC is a central part of the proposed standard. (MTNGUD, No. 350 at p. 1; WMU, No. 351 at p. 2; Consumer Energy Alliance, No. 354 at p. 1, LANGD, No. 355 at p. 2) MTNGUD, Watertown Municipal Utilities, and Joint Requesters stated that holding a workshop and extending the associated comment period would be in accordance with the objectives of the Process Rule. (MTNGUD, No. 350 at pp. 1-2; WMU, No. 351 at pp. 1-2; Joint Requesters, No. 356 at pp. 1-4) Joint Requesters requested another webinar to cover comments and questions related to DOE's LCC model that were not addressed during the webinar held on September 6, 2022. (Joint Requesters, No. 362 at p. 2) Additionally, the Consumer Energy Alliance urged that an extension of the comment period by DOE and hosting the requested workshop would allow for sufficient time for all stakeholders to analyze the NOPR so as to develop meaningful comments. (Consumer Energy Alliance, No. 354 at pp. 1-2)

MTNGUD, Watertown Municipal Utilities, Consumer Energy Alliance, and LANGD also encouraged DOE to extend the comment period at least 45 days after the workshop to give commenters additional time to effectively comment on the July 2022 NOPR. (MTNGUD, No. 350 at p. 2; WMU, No. 351 at p. 2; Consumer Energy Alliance, No. 354 at 2; LANGD, No. 355 at p. 2) LANGD and Watertown Municipal Utilities stated that more time is needed to evaluate the impacts on low-income households, seniors, and energy insecure consumers. (LANGD, No. 355 at p. 1; WMU, No. 351 at p. 1) Consumer Energy Alliance commented that the proposal and supporting documents are highly technical and voluminous, so it will take additional time to sufficiently analyze everything DOE has issued, adding that DOE's proposal will impact millions of consumers while also raising complex legal, regulatory, economic, and technical issues. (Consumer Energy Alliance, No. 354 at p. 1) Consumer Energy Alliance further commented that stakeholders should have a sufficient opportunity to evaluate the various issues raised in the NOPR, including how such issues may impact the stakeholders' members/customers. (

Id.

) Consumer Energy Alliance requested that an extension of the comment period be granted by DOE, and the commenter argued that hosting the requested workshop would allow for sufficient time for all stakeholders to analyze the NOPR and develop meaningful comments. (

Id.

at p. 2)

Several parties requested an extension of at least 60 days to sufficiently analyze the NOPR and the related documents. (Joint Commenters, No. 330 at p. 1; NGSA, No. 343, at p. 1; MHI, No. 344, at p. 1). They stated that DOE did not follow the Process Rule, and that the 60-day comment period made meaningful comment impossible. (Joint Commenters, No. 330 at p. 1; NPGA, No. 395 at pp. 26-27) Similarly, LANGD and the Consumer Energy Alliance commented that the 60-day comment period does not allow for a meaningful opportunity to verify DOE's analysis and provide substantive comments to aid in a productive rulemaking process. (LANGD, No. 355 at p. 1; Consumer Energy Alliance, No. 354 at p. 1) APGA and AGA noted that the Administrative Procedure Act (APA) requires that agencies provide a “meaningful” opportunity for comment. (APGA, No. 387 at p. 65; AGA, No. 405 at p. 24) APGA commented that DOE has violated the APA due to the deviation from past public comment periods and the complexities of the models in this rulemaking. (APGA, No. 387 at p. 65) APGA stated that DOE's justifications for fewer days to comment are unavailing, and that it appears DOE is rushing to judgment by denying APGA and other stakeholders a reasonable process to comment. (APGA, No. 387 at p. 67) AGA also commented that stakeholders have been denied a meaningful opportunity to evaluate the NOPR. (AGA, No. 405 at pp. 24-25)

Conversely, AHRI stated that by holding the webinar focused on the LCC model on September 6, 2022 and extending the comment period for the July 2022 NOPR, DOE provided all commenters with sufficient opportunity to review its models and make thoughtful comments. (AHRI, No. 414-1 at p. 1) Sierra Club

et al.

commented that the deviations from the Process Rule are justified in light of the long

delay on these standards, which is in violation of the statutory deadline for this action and the schedule to which DOE agreed as part of a settlement agreement. (Sierra Club

et al.,

No. 401 at p. 1)

In response, DOE conducts all appliance standards rulemakings in accordance with its authority under EPCA, which involves making its analyses publicly available and providing the public an opportunity to comment on the rulemaking. (42 U.S.C. 6295(m)(2)) As explained in the July 2022 NOPR, DOE initially found it necessary and appropriate to provide a 60-day comment period given the overdue statutory deadline and because the analytical methods used for the NOPR were similar to those used in previous rulemaking notices regarding the subject furnaces. 87 FR 40590, 40607 (July 7, 2022). DOE held a public meeting webinar to discuss the July 2022 NOPR on August 3, 2022. Subsequently, as stakeholders requested, DOE held a second public meeting webinar on September 6, 2022 focused on helping stakeholders understand and operate the Department's analytical models. DOE also extended the comment period by 30 days, which totaled 90 days for stakeholders to provide input. 87 FR 52861 (August 30, 2022). As mentioned, interested parties such as AHRI and Sierra Club,

et al.

attested to the adequacy of the comment opportunity which DOE provided. (AHRI, No. 414-1, at p. 1; Sierra Club

et al.,

No. 401, at p. 1) As a result, DOE concludes that stakeholders have had ample time and opportunity to provide input on the rulemaking analyses and process related to the amended energy conservation standards for NWGFs and MHGFs.

7. Federal Financial Assistance

The Attorneys General commented that with new Federal funding available under the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, the transition to more-efficient space heating will be cost-effective and affordable. (Attorneys General, No. 408 at p. 2) The Attorneys General added that the multibillion-dollar Congressional investment in weatherization, energy efficiency, and beneficial electrification programs will help alleviate equipment cost concerns for low- to moderate-income households and small businesses. (

Id.

) Similarly, Trane commented that aid should be provided through the Inflation Reduction Act to homeowners to offset any costs incurred from this standard due to increased purchase and installation costs. (Trane, No. 412 at pp. 1-2) Trane further stated that this assistance could help with the necessary advancements in venting technology that will accompany the standard. (

Id.

)

The Joint Utilities commented that they believe DOE can help Americans achieve meaningful cost savings while benefitting the environment by establishing rebates and incentive programs that could be used to support State-regulated efficiency and rebate programs. Furthermore, the Joint Utilities stated that this would assist electric and natural gas customers by reducing the upfront costs of achieving greater home heating efficiency. (The Joint Utilities, No. 402 at p. 1)

DOE agrees that Federal funding, specifically funding available through the Inflation Reduction Act, may be able to assist in the transition to more-efficient space heating. However, DOE also notes that such funding is separate from this rulemaking process and has yet to be fully implemented. Consequently, while DOE agrees that the costs of more-efficient furnaces could be reduced for certain consumers, DOE did not include impacts of any Federal funding in its reference case analysis. However, as discussed in section IV.F.10 of this document, DOE performed a sensitivity analysis in which tax credits significantly reduce the cost of a heat pump system as an alternative space-heating option, thereby incentivizing some consumers to switch from gas furnaces to heat pumps. The results of this sensitivity analysis are available in appendices 8J and 10E of the final rule TSD. Additionally, any potential incentives for more-efficient gas furnaces would only improve the consumer benefits as determined in the final rule analysis. Therefore, as discussed in section V of this document, DOE concludes that the amended standards are justified, and this decision is not dependent on whether additional Federal subsidies or investments are available.

8. Standby Mode and Off Mode Power Consumption Standards

As discussed in section II.A of this document, EPCA requires any final rule for new or amended energy conservation standards promulgated after July 1, 2010, to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3))

“Standby mode” and “off mode” energy use are defined in the DOE test procedure for residential furnaces and boilers (

i.e.,

“Uniform Test Method for Measuring the Energy Consumption of Consumer Furnaces Other Than Boilers,” 10 CFR part 430, subpart B, appendix N). In that test procedure, DOE defines “standby mode” as any mode in which the furnace is connected to a mains power source and offers one or more of the following space heating functions that may persist: (a) To facilitate the activation of other modes (including activation or deactivation of active mode) by remote switch (including thermostat or remote control), internal or external sensors, and/or timer; and (b) Continuous functions, including information or status displays or sensor based functions. 10 CFR part 430, subpart B, appendix N, section 2. “Off mode” for consumer furnaces is defined as a mode in which the furnace is connected to a mains power source and is not providing any active mode or standby mode function, and where the mode may persist for an indefinite time. The existence of an off switch in off position (a disconnected circuit) is included within the classification of off mode. 10 CFR part 430, subpart B, appendix N, section 2. An “off switch” is defined as the switch on the furnace that, when activated, results in a measurable change in energy consumption between the standby and off modes. 10 CFR part 430, subpart B, appendix N, section 2. As discussed previously, DOE does not currently prescribe standby mode or off mode standards for NWGFs and MHGFs.

In the July 2022 NOPR, DOE analyzed new standby mode and off mode power standards for NWGFs and MHGFs and proposed that the maximum allowable standby mode and off mode power consumption should be 8.5 W for NWGFs and MHGFs. 87 FR 40590, 40592 (July 7, 2022). Table IV.5 of the July 2022 NOPR shows the standby mode and off mode efficiency levels that DOE analyzed, along with a description of the design options anticipated to be used to achieve each efficiency level above baseline. The baseline efficiency level was determined to be 11 W, and it corresponds to the use of a linear power supply and a 40VA linear transformer (LTX). Other technology options that were analyzed to achieve efficiency levels above baseline include a low-loss LTX (“LL-LTX”) and two types of switching mode power supply (SMPS). 87 FR 40590, 40619 (July 7, 2022).

In response to DOE's proposed technology options and watt levels associated with each efficiency level for standby mode and off mode standards, Carrier commented that it agreed with DOE's statement that most furnaces use 40VA transformers, and further described that 40VA transformers provide power to sensors and components in the furnace, as well as a

variety of external devices. (Carrier, No. 377 at p. 2) Carrier also commented that it does not believe the use of an SMPS will lower the transformer size without limiting the external devices and sensors that can be powered by the furnace, which would impact consumer experience and product performance. The commenter stated that DOE only considered thermostats, but noted that there are other devices that could be powered by the transformer. (Carrier, No. 377 at pp. 2-3) Carrier encouraged DOE to defer the standby mode and off mode power standards, asserting that the 8.5W level has the potential to reduce the utility of consumer furnaces, and therefore would not meet the requirements of 42 U.S.C. 6295(o)(2)(B)(iv). (Carrier, No. 377 at pp. 1-2) Carrier asserted that its analysis found that a maximum standby watt limit of 8.5 is achievable in only their furnaces with the lowest AFUE efficiency and least features. (Carriers, No. 377 at p. 2) Carrier argued that products that incorporate a 20VA transformer do not meet DOE's screening criteria of product utility or availability, nor will they have the ability to support the safety sensors that will or could be required in the future such as those that may be needed due to the Consumer Protection Safety Commission's stated intention to establish a requirement for carbon monoxide sensors on furnaces. (Carrier, No. 377 at p. 3) Carrier explained that efficiency level (EL) 1 is the only feasible technology option to support the safety sensors that will be required in the future. (Carrier, No. 377 at pp. 3-4) Carrier explained that potential requirements for new safety sensors would mean that a standard lower than 11 W could create an adverse impact on product utility. (Carrier, No. 377 at pp. 3-4) Carrier asserted that contractors would need to install larger transformers to maintain utility, which defeats the purpose of having a standby power limit and adds additional installation complexity. (Carrier, No. 377 at pp. 2-3) Therefore, Carrier commented that it opposed DOE's proposed 8.5W standby mode and off mode power standard for NWGFs. (Carrier, No. 377 at pp. 1-2) Carrier explained that it conducted an analysis of standby mode and off mode power on their furnaces and found that the limit of 8.5W is achievable for their lower-efficiency furnaces, but not for their mid-tier and deluxe furnaces without lessening the utility. (Carrier, No. 377 at p. 2) Overall, Carrier recommended that DOE defer standby mode and off mode power standards until further testing and analysis is conducted. (Carrier, No. 377 at pp. 3-4)

Trane also commented that DOE's assumption that furnaces would transition to a 20VA transformer at standby mode and off mode ELs 2 and 3 is inaccurate, because the transformer supplies power not only to the furnace but also to the attached air conditioner or heat pump, as well as the thermostat and other accessories. (Trane, No. 412 at p. 2) Trane commented that setting the standard at 8.5W would result in manufacturers adding transformers to supply power to the needed features; therefore, Trane recommended maintaining a standard of 11W. (

Id.

)

Lennox stated that 40VA transformers are utilized to provide adequate low voltage power for components and accessory items. (Lennox, No. 389 at pp. 4-5) Lennox commented that it offers transformers ranging up to 70VA to accommodate situations where several accessories are included in the HVAC system. (Lennox, No. 389 at p. 4) Lennox argued that DOE's assumption of a unit with SMPS having a transformer sized at 20VA is incorrect, since a 20VA transformer often does not provide sufficient power capability to drive the internal components necessary for all furnace/air conditioner/heat pump functions and a thermostat. (Lennox, No. 389 at p. 4) Lennox explained that SMPS are currently used in Lennox products controls, and the company is not aware of ways to further reduce standby mode and off mode power consumption. (

Id.

) Lennox also stated that the proposed standby mode and off mode standard level would inhibit implementation of additional safety features. (Lennox, No. 389 at pp. 3-4)

Lennox commented that the 8.5W limit for consumer furnaces will prevent advances in communicating controls, installation and diagnostic features, and zoning. (Lennox, No. 389 at p. 4) Lennox further stated that programs, including ENERGY STAR, are considering measures that would require these monitoring, diagnostic, and prognostic features that would require additional standby power, but would save more energy overall. (

Id.

) The commenter argued that future innovations and safety requirements (

e.g.,

thermostats, WiFi controls, extra power supplies) may force the power usage to rise above the 11W limit. (Lennox, No. 389 at p. 6) Lennox commented that DOE should not mandate standby mode and off mode power levels with

de minimis

energy savings that prevent the integration of controls and other features that enable significantly larger energy savings at the furnace and HVAC systems level. (Lennox, No. 389 at pp. 4-5) Lennox commented that DOE should not only reconsider the proposed standby mode and off mode standard of 8.5W but should also consider whether an 11W baseline would be sufficient. (Lennox, No. 389 at p. 6) Lennox further commented that the analysis for DOE's proposed standard for standby mode and off mode also does not consider system level impacts. (Lennox, No. 389 at p. 5)

Nortek commented that DOE should not implement a standby mode and off mode standard lower than 11W. (Nortek, No. 406 at pp. 1-2) Nortek commented that they do not support DOE's proposed standard of 8.5 W for standby mode and off mode, as it would limit necessary innovation in furnace controls, programming and usage displays, thermostats, and other devices. (Nortek, No. 406 at p. 1)

Rheem commented that DOE should adjust its proposed standby mode and off mode energy standards for NWGF. Rheem asserted that 8.5W may be overly limiting due to the previously mentioned shift toward smart products, and the shift to low global warming potential (GWP) refrigerants that require additional power for supporting communication and safety controls. The commenter warned that reductions in standby wattage limits potential diagnostic and installation functionality, advancements which could also result in energy savings. (Rheem, No. 394 at p. 1) Rheem commented that DOE should maintain a baseline standby mode and off mode power level of 11W, as would allow future improvements such as safety and communicating controls to be incorporated into future furnace designs. (Rheem, No. 394 at p. 2)

Daikin commented that it does not support DOE's proposed 8.5W standard for standby mode and off mode. (Daikin, No. 416 at p. 1) Daikin also stated that DOE has significantly underestimated the incremental MPCs for each of the standby mode and off mode efficiency levels, and that the cost increase for a Low-Loss Linear Transformer is more likely to be five to ten times higher than DOE's estimate. (

Id.

at p. 4) Daikin noted that many manufacturers offer a 70VA transformer as an accessory or service part to provide adequate low voltage power to all system components, and that manufacturers would likely need to limit accessory items to meet the proposed standby mode/off mode standards. (

Id.

at p. 5) Daikin recommended that DOE establish a standby mode and off mode criteria of 15W for condensing NWGFs with

communicating features, multiple heating stages, ultra-low NO

an electrically commutated (ECM) motor, and controls associated with alternate refrigerants. (Daikin, No. 416 at p. 6)

AHRI explained that a maximum level of 8.5W of standby power would limit necessary innovation in furnaces and related connected devices powered through the furnace and could possibly prohibit significant energy-saving features. (AHRI, No. 414-1 at p. 2) AHRI stated that DOE should reconsider the standby mode and off mode energy standards proposed for NWGFs, as well as the max-tech level based upon the use of a 20VA low-loss linear transformer (“LL-LTX”) and SMPS. (AHRI, No. 414-1 at p. 3)

AHRI also noted that the NAS Peer Review Report

mentions the need to not stifle innovation, particularly regarding connected products. (AHRI, No. 414-1 at p. 2) AHRI stated that if the standby mode and off mode standards for furnaces are set too low, then connected products such as thermostats and Wi-Fi controls will use add-on power supplies, mentioning that such auxiliary power supplies are already available on the market. (AHRI, No. 414-1 at p. 3) AHRI expressed concern that the current baseline value of 11W may need to be adjusted in the future to remove the effects of safety and other control measures. (AHRI, No. 414-1 at p. 3)

National Academies of Sciences, Engineering, and Medicine, Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. (2021) Washington, DC: The National Academies Press. pp. 2-3; 111-113.

doi.org/10.17226/25992.

AHRI likewise stated that DOE should reconsider the standby mode and off mode energy standards proposed for MHGFs, referencing the comments it submitted for NWGFs. Specifically, AHRI stated that the proposed maximum of 8.5 watts would stifle innovation and could reduce energy savings from connected products, and is inadequate to power safety and communication controls necessary for consumer utility. (AHRI, No. 414-2 at p. 3) Mortex commented that DOE's proposed 8.5W limit for standby mode and off mode would not be adequate to power safety and communicating controls necessary for consumer utility and that 11W should be retained. (Mortex, No. 410 at p. 4)

JCI commented that the 8.5W limit for standby mode and off mode power of NWGFs and MHGFs is too restrictive due to the additional requirements associated with the new A2L refrigerant requirement and other future communication and monitoring advancements. (JCI, No. 411 at p. 3)

Several commenters argued that furnaces will need to incorporate safety sensors for controlling components such as carbon monoxide, carbon dioxide, refrigerant leak detectors and/or low GWP along with other changes in the future, and they noted that such functionalities must be accounted for in meeting the currently proposed limit for standby mode and off mode power. (Lennox, No. 389 at pp. 4-5; Rheem, No. 394 at pp. 1-2; Carrier, No. 377 at pp. 3-4; Daikin, No. 416 at pp. 5-6; AHRI, No. 414-1 at pp. 2-3)

Daikin, Lennox, Trane and AHRI listed numerous components that are powered by transformers in consumer furnaces. The combined list of components includes: integrated furnace control board, indoor and outdoor air conditioning/heat pump (AC/HP) fan motors, gas valves, combustion air inducers, thermostats, ultraviolet (UV) germicidal lights, humidifiers, AC/HP outdoor control board, AC/HP defrost controls, AC/HP heat pump reversing va

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