4776 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

1The Gas Industry Petitioners refer to a notice of 

proposed rulemaking for residential nonweatherized gas furnaces and mobile home furnaces 

published in the Federal Register on March 12, 

2015 (80 FR 13120), as well as a supplemental 

notice of proposed rulemaking published in the 

Federal Register on September 23, 2016 (81 FR 

65720). These DOE proposals may be found in the 

docket at Docket No. EERE–2014–BT–STD–0031– 

0032 and Docket No. EERE–2014–BT–STD–0031– 

0230, respectively. 

2The Gas Industry Petitioners refer to a notice of 

proposed rulemaking for commercial water heating 

equipment published in the Federal Register on 

May 31, 2016 (81 FR 34440). This DOE proposal 

may be found in the docket at Docket No. EERE– 

2014–BT–STD–0042–0018. 

3All references to EPCA in this document refer 

to the statute as amended through America’s Water 

Infrastructure Act of 2018, Public Law 115–270 

(Oct. 23, 2018). 

4Standards for non-weatherized residential 

furnaces were published in a notice of proposed 

rulemaking at 80 FR 13120 (March 12, 2015) 

(Docket No. EERE–2014–BT–STD–0031–0032) and 

in a supplemental notice of proposed rulemaking at 

81 FR 65720 (Sept. 23, 2016) (Docket No. EERE– 

2014–BT–STD–0031–0230). 

5Standards for commercial water heating 

equipment were published in a notice of proposed 

rulemaking at 81 FR 34440 (May 31, 2016) (Docket 

No. EERE–2014–BT–STD–0042). 

DEPARTMENT OF ENERGY 

10 CFR Parts 430 and 431 

RIN 1904–AE39 

Energy Conservation Program for 

Appliance Standards: Energy 

Conservation Standards for 

Residential Furnaces and Commercial 

Water Heaters 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Notification of final interpretive 

rule. 

SUMMARY: In response to a petition for 

rulemaking submitted on October 18, 

2018 (Gas Industry Petition), the 

Department of Energy (DOE or the 

Department) published that petition in 

the Federal Register on November 1, 

2018, for public review and input. DOE 

subsequently published in the Federal 

Register a proposed interpretive rule on 

July 11, 2019, and a supplemental 

notice of proposed interpretive rule on 

September 24, 2020. After carefully 

considering the public comments on its 

proposals, DOE has decided to issue a 

final interpretive rule determining that, 

in the context of residential furnaces, 

commercial water heaters, and 

similarly-situated products/equipment, 

use of non-condensing technology (and 

associated venting) constitute a 

performance-related ‘‘feature’’ under the 

Energy Policy and Conservation Act 

(EPCA) that cannot be eliminated 

through adoption of an energy 

conservation standard. In light of this 

final interpretation, published 

elsewhere in this issue of the Federal 

Register, DOE withdraws its March 12, 

2015 proposed rule and September 23, 

2016 supplemental proposed rule for 

energy conservation standards for nonweatherized gas furnace and mobile 

home gas furnaces, as well as its May 

31, 2016 proposed rule for energy 

conservation standards for commercial 

water heating equipment. 

DATES: This final interpretive rule is 

effective January 15, 2021. 

ADDRESSES: The docket, which includes 

Federal Register notices, public 

comments, and other supporting 

documents/materials, is available for 

review at http://www.regulations.gov. 

All documents in the docket are listed 

in the http://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 

http://www.regulations.gov/ 

docket?D=EERE-2018-BT-STD-0018. 

The docket web page contains 

instructions on how to access all 

documents, including public comments, 

in the docket. 

For further information on how to 

review the docket, contact the 

Appliance and Equipment Standards 

Program staff at (202) 586–6636 or by 

email: ApplianceStandardsQuestions@

ee.doe.gov. 

FOR FURTHER INFORMATION CONTACT: 

Ms. Lysia Bowling, Senior Advisor, 

U.S. Department of Energy, Office of 

Energy Efficiency and Renewable 

Energy, 1000 Independence Avenue 

SW, Washington, DC 20585. Telephone: 

(202) 430–1257. Email: Lysia.Bowling@

ee.doe.gov. 

Mr. Eris Stas, U.S. Department of 

Energy, Office of the General Counsel, 

1000 Independence Avenue SW, 

Washington, DC 20585. Telephone: 

(202) 586–5827. Email: Eric.Stas@

hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Background 

II. Summary Description 

A. Relevant Statutory Provisions 

B. DOE’s Historical Interpretation 

C. The Gas Industry Petition 

D. DOE’s Proposed Interpretive Rule 

E. DOE’s Supplemental Proposed 

Interpretive Rule 

III. Response to Comments 

A. Legal Authority 

1. Legal Authority To Set Separate 

Product/Equipment Classes Based Upon 

Condensing and Non-Condensing 

Technologies 

a. Comments Supporting the Proposed 

Interpretation 

b. Comments Opposing the Proposed 

Interpretation 

i. Support for DOE’s Prior Interpretation 

ii. Violation of Legal Standards 

iii. Aesthetics 

iv. Delay 

v. Regulatory Burden/Litigation/ 

Uncertainty/Preemption 

vi. Other Negative Effects of a Change in 

Interpretation 

1. Legal Authority To Set ‘‘Small’’ Furnace 

Product Classes 

2. Market Trends 

3. Requests for Clarification 

B. Comments Regarding EconomicsRelated Issues 

1. Consumer Impacts 

a. Legal Arguments 

b. Factual Arguments 

2. Fuel Switching 

3. Other Economic Issues 

C. Analytical Issues 

D. Other Issues 

1. AFUE2 

2. Environmental and Climate Policy Issues 

3. Other Requested Relief 

4. Final Agency Action 

IV. DOE’s Final Interpretation 

V. Conclusion 

VI. Approval of the Office of the Secretary 

I. Background 

On October 18, 2018, the Department 

received a petition for rulemaking 

submitted by the American Public Gas 

Association (APGA), Spire, Inc., the 

Natural Gas Supply Association 

(NGSA), the American Gas Association 

(AGA), and the National Propane Gas 

Association (NPGA), collectively 

referred to as the ‘‘Gas Industry 

Petitioners,’’ asking DOE to: (1) Issue an 

interpretive rule stating that DOE’s 

proposed energy conservation standards 

for residential furnaces 1 and 

commercial water heaters 2 would result 

in the unavailability of ‘‘performance 

characteristics’’ within the meaning of 

the Energy Policy and Conservation 

Act 3 (EPCA; 42 U.S.C. 6291 et seq.), as 

amended (i.e., by setting standards 

which can only be met by products/ 

equipment using condensing 

combustion technology and thereby 

precluding the distribution in commerce 

of products/equipment using noncondensing combustion technology) and 

(2) withdraw the proposed energy 

conservation standards for residential 

furnaces 4 and commercial water 

heaters 5 based upon such findings. DOE 

published the petition in the Federal 

Register on November 1, 2018 (83 FR 

54883) and requested public comment, 

with a comment period scheduled to 

close on January 30, 2019. DOE received 

two requests from interested parties 

seeking an extension of the comment 

period in order to develop additional 

data relevant to the petition. DOE 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4777 

6See 42 U.S.C. 6295(o)(4); 42 U.S.C. 

6313(a)(6)(B)(iii)(II)(aa); and as applicable in certain 

cases through 42 U.S.C. 6316(a)). 

granted those requests through 

publication in the Federal Register of a 

notice extending the comment period on 

the notice of petition for rulemaking 

until March 1, 2019. 84 FR 449 (Jan. 29, 

2019). 

The 90-day public comment period, 

including the 30-day extension to 

submit comments, invited public input 

in order to better understand 

stakeholder perspectives and increase 

transparency around a complex issue 

involving DOE’s legal authority. DOE 

received comments from a variety of 

stakeholders, including representatives 

from gas industry associations, 

appliance manufacturers, the 

manufactured housing industry, 

efficiency advocates, consumer 

advocates, State organizations and 

Attorneys General, and individuals 

(mostly form letter comments). In 

general, the gas industry associations 

and the manufactured housing industry 

supported the petition, and the 

advocates and State officials opposed it. 

Furnace and water heater manufacturer 

reactions to the petition were generally 

mixed. 

After carefully considering the 

comments on the petition, DOE 

published a notice of proposed 

interpretive rule in the Federal Register 

on July 11, 2019, to provide the public 

additional information about DOE’s 

tentative interpretation of EPCA’s 

‘‘features’’ provision 6 in the context of 

condensing vs. non-condensing furnaces 

and water heaters, as informed by 

public comments. 84 FR 22011. The 

proposed interpretive rule tentatively 

determined that, in the context of 

residential furnaces, commercial water 

heaters, and similarly-situated products/ 

equipment, use of non-condensing 

technology (and associated venting) may 

constitute a performance-related 

‘‘feature’’ under EPCA that cannot be 

eliminated through adoption of an 

energy conservation standard. If such 

interpretation were to be finalized, DOE 

anticipated that in future rulemakings 

for affected products/equipment, it 

would suffice to consider setting 

product/equipment classes based upon 

the key distinction of the appliance’s 

utilization of condensing or noncondensing technology. (The proposed 

interpretive rule, in which DOE 

responded to comments on the notice of 

petition for rulemaking, is discussed in 

further detail in section II.D of this 

document.) Once again, DOE received 

comments from a variety of 

stakeholders, including representatives 

from gas industry associations, the 

housing industry, appliance 

manufacturers, utilities, environmental 

and efficiency advocates, consumer 

advocates, State organizations and 

Attorneys General, and individuals. 

Consistent with the opinions expressed 

in response to the petition, in general, 

the gas industry associations, the 

housing industry, and most 

manufacturers supported the proposed 

interpretive rule, and the advocates and 

State officials opposed it. Specifically, 

DOE received comments on the 

proposed interpretive rule from: 

TABLE I.1—ENTITIES SUBMITTING WRITTEN COMMENT ON THE PROPOSED INTERPRETIVE RULE

Commenter Affiliation 

Advocates Joint Comment: Energy Efficiency and Consumer Advocates. 

D Appliance Standards Awareness Project (ASAP). 

D Alliance to Save Energy (ASE). 

D American Council for an Energy-Efficient Economy (ACEEE). 

D Consumer Federation of America (CFA). 

D National Consumer Law Center (NCLC). 

Air-Conditioning, Heating & Refrigeration Institute (AHRI). Trade Association. 

A.O. Smith Corporation (A.O. Smith). Industry. 

Attorneys General Joint Comment (AGs Joint Comment): State/Local Governments. 

D State of New York. 

D State of California. 

D State of Colorado. 

D District of Columbia. 

D State of Illinois. 

D State of Maine. 

D State of Maryland. 

D Commonwealth of Massachusetts. 

D State of Minnesota. 

D State of New Jersey. 

D State of Oregon. 

D State of Vermont. 

D State of Washington. 

D Corporation Counsel of the City of New York. 

Bradford White Corporation (BWC). Industry. 

Burnham Holdings, Inc. (BHI). Industry. 

California Energy Commission (CEC). State Government. 

California Investor-Owned Utilities (CA IOUs): Utilities. 

D Pacific Gas and Electric Co. (PG&E). 

D San Diego Gas and Electric (SDG&E. 

D Southern California Edison (SCE). 

Carrier Corporation (Carrier). Industry. 

Ceres BICEP Network (Ceres). Business Coalition. 

Consumer Federation of America and National Consumer Law Center (CFA/NCLC). Consumer Advocates. 

Crown Boiler Company (Crown Boiler). Industry. 

Environmentalists Joint Comment: Environmental Advocates. 

D Natural Resources Defense Council (NRDC). 

D Sierra Club. 

D Earthjustice. 

4778 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

TABLE I.1—ENTITIES SUBMITTING WRITTEN COMMENT ON THE PROPOSED INTERPRETIVE RULE—Continued 

Commenter Affiliation 

Lennox International, Inc. (Lennox). Industry. 

Weil-McLain. Industry. 

Anonymous. Unaffiliated. 

Anonymous. Unaffiliated. 

Sarah G. Unaffiliated. 

Kathy McCardwell. Unaffiliated. 

Elizabeth Reed. Unaffiliated. 

Suzanne Sorkin. Unaffiliated. 

Laura Woods. Unaffiliated. 

In the course of considering the 

public comments on its proposed 

interpretation, comments from U.S. 

Boiler, BHI, and Crown Boiler presented 

DOE with an alternative approach that 

did not focus on ‘‘non-condensing’’ 

technology as the performance-related 

feature. While the commenters 

suggesting this alternative were 

generally supportive of the proposed 

interpretation, they expressed concern 

that unless subsequent DOE 

rulemakings implement the 

interpretation through product/ 

equipment classes focused on venting 

compatibility (particularly preservation 

of Category I venting), many of the same 

problems identified in the Gas Industry 

Petition may still arise. In order to 

gather further information and comment 

on this specific issue, DOE published a 

supplemental notice of proposed 

interpretation in the Federal Register on 

September 24, 2020 (the September 

2020 SNOPIR), which proposed 

alternative approaches to product/ 

equipment class setting in this context. 

85 FR 60090. (The supplemental 

proposed interpretive rule is discussed 

in further detail in section II.E of this 

document.) 

In response to its supplemental 

proposed interpretive rule, DOE 

received comments from: 

TABLE I.2—ENTITIES SUBMITTING WRITTEN COMMENT ON THE SUPPLEMENTAL PROPOSED INTERPRETIVE RULE

Commenter Affiliation 

Advocates Joint Comment II Energy Efficiency and Consumer Advocates. 

D Appliance Standards Awareness 

Project (ASAP) 

D American Council for an EnergyEfficient Economy (ACEEE) 

D Consumer Federation of America 

(CFA) 

D National Consumer Law Center 

(NCLC) 

Air-Conditioning, Heating & Refrigeration 

Institute (AHRI) 

Trade Association. 

A.O. Smith Corporation (A.O. Smith) Industry. 

Attorneys General Joint Comment (AGs 

Joint Comment II) 

State/Local Governments. 

D State of New York 

D State of California 

D State of Colorado 

D District of Columbia 

D State of Illinois 

D State of Maine 

D State of Maryland 

D Commonwealth of Massachusetts 

D State of Minnesota 

D State of Nevada 

D State of Oregon 

D State of Vermont 

D State of Washington 

D Corporation Counsel of the City of 

New York 

Bradford White Corporation (BWC) Industry. 

California Investor-Owned Utilities (CA 

IOUs) 

Utilities. 

D Pacific Gas and Electric Co. 

(PG&E) 

D San Diego Gas and Electric 

(SDG&E) 

D Southern California Edison (SCE) 

Carrier Corporation (Carrier) Industry. 

Crown Boiler Company (Crown Boiler) Industry. 

Electrify Now Energy Efficiency and Environmental Advocates. 

Lennox International, Inc. (Lennox) Industry. 

Mortex Products, Inc. (Mortex) Industry. 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4779 

7 ‘‘ASHRAE’’ refers to the American Society of 

Heating, Refrigerating and Air-Conditioning 

Engineers. 

TABLE I.2—ENTITIES SUBMITTING WRITTEN COMMENT ON THE SUPPLEMENTAL PROPOSED INTERPRETIVE RULE— 

Continued 

Commenter Affiliation 

Natural Resources Defense Council 

(NRDC) 

Environmental Advocate. 

Nortek Global HVAC (Nortek) Industry. 

Northwest Energy Efficiency Alliance 

(NEEA) 

Energy Efficiency Advocates. 

Petitioners et al. Joint Comment II Utilities, Trade Associations. 

D Spire, Inc. 

D Spire Missouri, Inc. 

D American Public Gas Association 

(APGA) 

D American Gas Association (AGA) 

D National Propane Gas Association 

(NPGA) 

D National Gas Supply Association 

(NGSA) 

D National Association of Home 

Builders (NAHB) 

D Plumbing-Heating-Cooling Contractors National Association 

U.S. Boiler Company (USB) Industry. 

Anonymous Unaffiliated. 

Lee Hannah Unaffiliated. 

All comments—on both the proposed 

interpretive rule and the supplemental 

proposed interpretive rule—were 

carefully and fully considered by DOE. 

Informed by these comments and 

reconsideration of the substantial 

evidence in the relevant rulemaking 

dockets, the Department is issuing this 

final interpretive rule to state DOE’s 

interpretation of EPCA’s ‘‘features’’ 

provision in the context of condensing 

vs. non-condensing furnaces, water 

heaters, and similarly-situated covered 

products/equipment (and associated 

venting). The following sections of this 

final interpretive rule set forth the 

relevant legal authority, describe the 

Department’s historical interpretation of 

EPCA’s ‘‘features’’ provision as applied 

to condensing vs. non-condensing 

products/equipment, provide summary 

of and responses to comments received 

on both the proposed interpretive rule 

and supplemental proposed interpretive 

rule, and recite DOE’s revised 

interpretation of the relevant statutory 

provision. 

Through this final interpretive rule, 

DOE is not making any changes to its 

existing regulations in the Code of 

Federal Regulations (CFR) or policies 

regarding individual appliance 

standards rulemakings, and it cannot 

and will not take any enforcement 

action pursuant to its revised 

interpretation until after the effective 

date of a final legislative rule, published 

in the Federal Register, amending the 

applicable product/equipment classes 

and energy conservation standards, as 

necessary. Consequently, this final 

interpretive rule does not change or 

revise any current policies or legal 

requirements with respect to residential 

furnaces, commercial water heaters, or 

similarly-situated covered products/ 

equipment. Decisions about how this 

interpretation will apply to existing 

products/equipment utilizing 

condensing/non-condensing 

technologies will be the subject of 

subsequent actions. 

II. Summary Description 

A. Relevant Statutory Provisions 

In this final interpretive rule, DOE 

explains its historical interpretation 

regarding the evaluation of what 

constitutes a product ‘‘feature’’ which 

cannot be eliminated under EPCA, 

specifically in the context of residential 

furnaces and commercial water heaters. 

For covered consumer products, the key 

statutory provision at issue can be found 

at 42 U.S.C. 6295(o)(4), which provides 

that the Secretary may not prescribe an 

amended or new standard under this 

section 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. 

Where the Secretary finds such 

‘‘performance characteristics (including 

reliability), features, sizes, capacities, 

and volumes’’ (collectively referred to 

hereafter as ‘‘features’’) to exist, the 

statute provides a remedy at 42 U.S.C. 

6295(q)(1), which states that a rule 

prescribing an energy conservation 

standard for a type (or class) of covered 

products shall specify a level of energy 

use or efficiency higher or lower than 

that which applies (or would apply) for 

such type (or class) for any group of 

covered products which have the same 

function or intended use, if the 

Secretary determines that covered 

products within such group—(A) 

consume a different kind of energy from 

that consumed by other covered 

products within such group (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 from that 

which applies (or will apply) to other 

products within such type (or class). In 

making a determination under 42 U.S.C. 

6295(q)(1) concerning whether a 

performance-related feature justifies the 

establishment of a higher or lower 

standard, the Secretary shall consider 

such factors as the utility to the 

consumer of such a feature, and such 

other factors as the Secretary deems 

appropriate. 

These provisions also apply to 

covered non-ASHRAE 7 commercial and 

industrial equipment through the 

crosswalk provision at 42 U.S.C. 

4780 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

8 63 FR 48038, 48041 (Sept. 8, 1998). 

9 73 FR 62034, 62048 (Oct. 17, 2008) (separating 

standard ovens and self-cleaning ovens into 

different product classes). 

10 77 FR 32307, 32319 (May 31, 2012) (creating a 

separate product class for compact front-loading 

residential clothes washers). 

11 75 FR 59469, 59487 (Sept. 27, 2010) (creating 

a separate product class for refrigerators with 

bottom-mounted freezers). 

6316(a). (Under the statute, ‘‘ASHRAE 

equipment’’ refers to small commercial 

package air conditioning and heating 

equipment, large commercial package 

air conditioning and heating equipment, 

very large commercial package air 

conditioning and heating equipment, 

packaged terminal air conditioners 

(PTACs), packaged terminal heat pumps 

(PTHPs), warm-air furnaces, packaged 

boilers, storage water heaters, 

instantaneous water heaters, or unfired 

hot water storage tanks, which are 

addressed by ASHRAE in ASHRAE 

Standard 90.1, Energy Standard for 

Buildings Except Low-Rise Residential 

Buildings.) 

ASHRAE equipment has its own 

separate statutory scheme under EPCA, 

with the default situation being that 

DOE must adopt the level set forth in 

ASHRAE Standard 90.1 unless the 

Department has clear and convincing 

evidence to adopt a more-stringent 

standard (see 42 U.S.C. 6313(a)(6)). 

Under 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa), 

there is a similar ‘‘features’’ provision 

which states, ‘‘The Secretary may not 

prescribe an amended standard under 

this subparagraph if the Secretary finds 

(and publishes the finding) that 

interested persons have established by a 

preponderance of the evidence that a 

standard is likely to result in the 

unavailability in the United States in 

any 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 finding 

of the Secretary.’’ However, it is noted 

that this provision contains the specific 

limitation that it applies to an amended 

standard prescribed under this 

subparagraph (i.e., when DOE is acting 

under its authority to set a morestringent standard). There is no 

companion ‘‘features’’ provision under 

42 U.S.C. 6313(a)(6)(A), which is the 

provision that would apply when DOE 

is adopting the levels set by ASHRAE. 

Congress was clearly aware of the 

features issue, and it chose to act in the 

context of DOE standard setting, but not 

ASHRAE standard setting. There is 

likewise no companion provision to 42 

U.S.C. 6295(q)(1) for ASHRAE 

equipment. 

B. DOE’s Historical Interpretation 

With this statutory background in 

mind, in the March 12, 2015 notice of 

proposed rulemaking (NOPR) for energy 

conservation standards for residential 

furnaces, DOE set forth in detail its 

rationale for why it did not considering 

the venting of non-condensing furnaces 

to constitute a product ‘‘feature’’ under 

42 U.S.C. 6295(o)(4). 80 FR 13120, 

13137–13138. 

As discussed previously, when 

evaluating and establishing energy 

conservation standards, the statute 

requires DOE to divide covered 

products into product classes by the 

type of energy used, by capacity, or by 

other performance-related features that 

justify a different standard. In making a 

determination regarding whether a 

performance-related feature justifies a 

different standard, DOE must consider 

factors such as the utility to the 

consumer of the feature and other 

factors DOE determines are appropriate. 

(42 U.S.C. 6295(q)) Historically, DOE 

has viewed utility as an aspect of the 

product that is accessible to the 

layperson and is based on user 

operation, rather than performing a 

theoretical function. This interpretation 

has been implemented consistently in 

DOE’s previous rulemakings by 

determining utility through the value 

the item brings to the consumer, rather 

than through analyzing more 

complicated design features, or costs 

that anyone, including the consumer, 

manufacturer, installer, or utility 

companies may bear. DOE reasoned that 

this approach is consistent with EPCA’s 

requirement for a separate and extensive 

analysis of economic justification for the 

adoption of any new or amended energy 

conservation standard (see 42 U.S.C. 

6295(o)(2)(A)–(B) and (3)). 

Under EPCA, DOE has typically 

addressed consumer utility by 

establishing separate product classes or 

otherwise taken action when a 

consumer may value a product feature 

based on the consumer’s everyday 

needs. For instance, DOE determined 

that it would be impermissible in light 

of 42 U.S.C. 6295(o)(4) to include 

elimination of oven door windows as a 

technology option to improve the energy 

efficiency of cooking products.8 DOE 

reached this conclusion based upon 

how consumers typically use the 

product: Peering through the oven 

window to judge if an item is finished 

cooking, as opposed to checking the 

timer and/or indicator light or simply 

opening the oven door (which could 

waste more energy) to see if the item is 

finished cooking. DOE has also 

determined that consumers may value 

other qualities such as ability to selfclean,9 size,10 and configuration.11 This 

determination, however, can change 

depending on technological 

developments and shifts in consumer 

behavior/preferences, and it is 

conceivable that certain products may 

disappear from the market entirely due 

to shifting consumer demand. DOE 

stated that it has determined such value 

on a case-by-case basis through its own 

research, as well as public comments 

received. 

DOE offered a cautionary note that 

disparate products may have very 

different consumer utilities, thereby 

making direct comparisons difficult and 

potentially misleading. For instance, in 

a 2011 rulemaking, DOE created 

separate product classes for vented and 

ventless residential clothes dryers based 

on DOE’s recognition of the ‘‘unique 

utility’’ that ventless clothes dryers offer 

to consumers. 76 FR 22454, 22485 

(April 21, 2011). This utility could be 

characterized as the ability to have a 

clothes dryer in a living area where 

vents are impossible to install (e.g., an 

apartment in a high-rise building). As 

explained in that April 2011 direct final 

rule technical support document, 

ventless dryers can be installed in 

locations where venting dryers would 

be precluded due to venting restrictions. 

But in another rulemaking regarding 

water heaters, DOE found that water 

heaters that utilize heat pump 

technology did not need to be put in a 

separate product class from 

conventional types of hot water heaters 

that utilize electric resistance 

technology, even though water heaters 

utilizing heat pumps require the 

additional installation of a condensate 

drain that a hot water heater utilizing 

electric resistance technology does not 

require. 74 FR 65852, 65871 (Dec. 11, 

2009). DOE found that regardless of 

these installation factors, the heat pump 

water heater and the conventional water 

heater still had the same utility to the 

consumer: Providing hot water. Id. In 

both cases, DOE made its finding based 

on consumer type and utility type, 

rather than technology utilized that 

impacts product efficiency. 

In its March 2015 energy conservation 

standards rulemaking proposal for 

residential furnaces, DOE expressed 

concern that tying the concept of 

‘‘feature’’ to a specific technology would 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4781 

effectively lock-in the currently existing 

technology as the ceiling for product 

efficiency and eliminate DOE’s ability to 

address technological advances that 

could yield significant consumer 

benefits in the form of lower energy 

costs while providing the same 

functionality for the consumer. DOE 

stated that it was very concerned that 

determining features solely on product 

technology could undermine the 

Department’s Appliance Standards 

Program. DOE reasoned that if it is 

required to maintain separate product 

classes to preserve less-efficient 

technologies, future advancements in 

the energy efficiency of covered 

products would become largely 

voluntary, an outcome which seems 

inimical to Congress’s purposes and 

goals in enacting EPCA. 80 FR 13120, 

13138 (Mar. 12, 2015). 

Turning to the product at issue in that 

2015 furnaces rulemaking, DOE noted 

that residential furnaces are currently 

divided into several product classes. For 

example, furnaces are separated into 

product classes based on their fuel 

source (gas, oil, or electricity), which is 

required by statute. In the most recent 

rulemaking for that covered product, 

DOE analyzed only two product classes 

for residential furnaces: (1) Nonweatherized gas-fired furnaces (NWGFs) 

and (2) mobile home gas-fired furnaces 

(MHGFs). DOE did not additionally 

separate NWGFs and MHGFs into 

condensing and noncondensing product 

classes. Id. 

In that 2015 furnaces rulemaking, 

DOE tentatively concluded that the 

methods by which a furnace is vented 

did not provide any separate 

performance-related impacts, and, 

therefore, that DOE had no statutory 

basis for defining a separate class based 

on venting and drainage characteristics. 

DOE reasoned that NWGF and MHGF 

venting methods did not provide unique 

utility to consumers beyond the basic 

function of providing heat, which all 

furnaces perform. Using this logic, the 

possibility that installing a noncondensing furnace may be less costly 

than a condensing furnace due to the 

difference in venting methods did not 

justify separating the two types of 

NWGFs into different product classes. 

Unlike the consumers of ventless dryers, 

which DOE had determined to be a 

performance-related feature based on 

the impossibility of venting in certain 

circumstances (e.g., high-rise 

apartments), DOE reasoned that 

consumers of condensing NWGFs are 

homeowners that may either use their 

existing venting or have a feasible 

alternative to obtain heat. In other 

words, homeowners would still be able 

to obtain heat regardless of the venting. 

In contrast, DOE reasoned that a 

resident of a high-rise apartment or 

condominium building that is not 

architecturally designed to 

accommodate vented clothes dryers 

would have no option in terms of 

installing and enjoying the utility of a 

dryer in their home unless he or she 

used a ventless dryer. Id. 

As explained previously, DOE’s 

conclusion in the March 12, 2015 NOPR 

was that the utility of a furnace involves 

providing heat to a consumer. DOE 

reasoned that such utility is provided by 

any type of furnace, but to the extent 

that a consumer has a preference for a 

particular fuel type (e.g., gas), 

improvements in venting technology 

may eventually allow a consumer to 

obtain the efficiency of a condensing 

furnace using the existing venting in a 

residence by sharing venting space with 

water heaters. DOE postulated that this 

update in technology would 

significantly reduce the cost burden 

associated with installing condensing 

furnaces and reduce potential instances 

of ‘‘orphaned’’ water heaters, where the 

furnace and water heater can no longer 

share the same venting (due to the 

furnace being a Category IV, condensing 

product and the water heater being a 

Category I, noncondensing product). In 

other words, when mature, this 

technology could allow consumers to 

switch from a non-condensing furnace 

to a condensing furnace in a greater 

variety of applications, such as urban 

row houses. For more information, 

interested parties were asked to consult 

appendix 8L of the NOPR TSD. Id. 

C. The Gas Industry Petition 

As noted previously, on October 18, 

2018, DOE received a petition from the 

Gas Industry Petitioners asking DOE to: 

(1) Issue an interpretive rule stating that 

DOE’s proposed energy conservation 

standards for residential furnaces and 

commercial water heaters would result 

in the unavailability of ‘‘performance 

characteristics’’ within the meaning of 

the Energy Policy and Conservation Act, 

as amended (i.e., by setting standards 

which can only be met by products/ 

equipment using condensing 

combustion technology) and (2) 

withdraw the proposed energy 

conservation standards for residential 

furnaces and commercial water heaters 

based upon such findings. In their 

petition, the Gas Industry Petitioners 

argue that DOE misinterpreted its 

mandate under section 325(o)(4) of 

EPCA by failing to consider as a 

‘‘feature’’ of the subject residential 

furnaces and commercial water heating 

equipment the compatibility of a 

product/equipment with conventional 

atmospheric venting systems, the ability 

to operate without generating liquid 

condensate requiring disposal via a 

plumbing connection, and the ability to 

operate with other commonly vented 

appliances. Consequently, the Gas 

Industry Petitioners assert that DOE’s 

proposals would make unavailable noncondensing products/equipment with 

such features, which currently exist in 

the marketplace, in contravention of the 

statute. The petition makes a number of 

technical, legal, and economic 

arguments in favor of its suggested 

interpretation, and it points to DOE’s 

past precedent related to space 

constraints and differences in available 

electrical power supply (and associated 

installation costs) as supporting its call 

to find that non-condensing technology 

amounts to a performance-related 

‘‘feature.’’ Based upon these arguments, 

the Gas Industry Petitioners concluded 

that DOE should issue an interpretive 

rule treating non-condensing technology 

as a ‘‘feature’’ under EPCA, withdraw its 

rulemaking proposals for both 

residential furnaces and commercial 

water heaters, and proceed on the basis 

of this revised interpretation. 

D. DOE’s Proposed Interpretive Rule 

As discussed in section I of this 

document, DOE published a notice of 

proposed interpretive rule in the 

Federal Register on July 11, 2019. 84 FR 

33011. The substance of that proposed 

interpretation (summarized in the 

following paragraphs) was presented in 

that document. 84 FR 33011, 33020– 

33021 (July 11, 2019). 

In its proposed interpretive rule, the 

Department noted that in consideration 

of public comments and other 

information received on the Gas 

Industry Petition, DOE proposed to 

revise its interpretation of EPCA’s 

‘‘features’’ provision in the context of 

condensing and non-condensing 

technology used in furnaces, water 

heating equipment, and similarlysituated appliances (where permitted by 

EPCA). Based on those comments and 

for the reasons set forth fully in that 

document, DOE proposed to interpret 

prospectively the statute to provide that 

adoption of energy conservation 

standards that would limit the market to 

natural gas, propane gas and/or oil-fired 

furnaces, water heaters, or similarlysituated products/equipment (where 

permitted by EPCA) that use condensing 

combustion technology would result in 

the unavailability of a performance 

related feature within the meaning of 42 

U.S.C. 6295(o)(4) and 42 U.S.C. 

6313(a)(6)(B)(iii)(II)(aa) (and as 

4782 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

applicable in certain cases through 42 

U.S.C. 6316(a)). 

As explained in the proposed 

interpretive rule, the statute accords the 

Secretary of Energy considerable 

discretion in terms of determining 

whether a performance characteristic of 

a covered product/equipment amounts 

to a performance-related feature which 

cannot be eliminated through adoption 

of an energy conservation standard. 

DOE stated that it has taken the 

opportunity presented by the Gas 

Industry Petition to reconsider its 

historical interpretation of EPCA’s 

‘‘features’’ provision in the context of 

condensing and non-condensing 

technologies used by certain gas 

appliances. A number of factors 

convinced DOE to propose a revision to 

its interpretation. 

First, DOE acknowledged that it has, 

in the past, taken space constraints and 

similar limitations into account when 

setting product classes (e.g., PTACs, 

ventless clothes dryers). For example, 

DOE was sensitive to the costs 

associated with requiring expensive 

building modifications when it decided 

to set separate equipment classes for 

standard size PTACs and non-standard 

size PTACs. 73 FR 58772, 58782 (Oct. 7, 

2008). DOE stated that it expects that 

similar expenses would occur here, if 

DOE were to hold to its historical 

interpretation, at least for some subset of 

installations. Although limited data 

were provided to address the actual 

costs that consumers and commercial 

customers would face to modify their 

existing category I venting, there is little 

doubt that some number of such 

installations would be quite costly. 

These more complicated/costly 

installations are documented as part of 

DOE’s analysis of the venting costs for 

residential furnaces, which considered 

potential venting modifications that 

could be required when replacing an 

existing category I furnace with a 

condensing (category IV) furnace (see 

appendix 8D of the 2016 SNOPR TSD 

for further details). 

Second, DOE stated that it has in the 

past focused on the consumer’s 

interaction with the product/equipment 

in deciding whether a performance 

feature is at issue. In the context of 

residential furnaces and commercial 

water heaters, DOE has focused on the 

primary function of the appliance (e.g., 

providing heat to a home or potable hot 

water) in establishing the nexus to the 

consumer. In the past, DOE opined that 

consumers were only interested in 

obtaining heat or hot water from the 

appliance, so they would not care about 

the mechanism for generating that end 

product. However, commenters have 

made clear that in at least some cases, 

the physical changes associated with a 

condensing appliance may change a 

home’s aesthetics (e.g., by adding new 

venting into the living space or 

decreasing closet or other storage space), 

thereby impacting consumer utility even 

under DOE’s prior approach. 

Third, DOE noted that it has been the 

Department’s policy to remain neutral 

regarding competing energy sources in 

the marketplace. As certain commenters 

have pointed out, and as DOE’s own 

analyses have shown, some enhanced 

level of fuel switching is likely to 

accompany standard setting using 

DOE’s prior interpretation. Many 

consumers who are currently gas 

customers may show a preference for 

that fuel type and would be negatively 

impacted by a standard that requires the 

purchase of a condensing unit to the 

extent they feel compelled to change to 

a different fuel type. DOE explained that 

it seeks neither to determine winners 

and losers in the marketplace nor to 

limit consumer choice. 

Finally, DOE stated that it is very 

concerned about ensuring energy 

affordability, particularly for persons 

with low incomes. Although energy 

efficiency improvements may pay for 

themselves over time, there is typically 

a significant increase in upfront costs 

associated with furnaces and water 

heaters using condensing technology. 

For consumers with difficult installation 

situations (e.g., inner-city row houses), 

there would be the added cost of 

potentially extensive venting 

modifications. In certain cases, 

commenters have argued that 

accommodating condensing products 

may not even be possible. Although 

DOE continues to believe that costs are 

properly addressed in the economic 

analysis portion of its rulemakings, it 

stated that it remains cognizant of such 

issues. DOE stated that it has tentatively 

concluded that the other reasons 

discussed immediately above are 

sufficient in and of themselves to justify 

the Department’s proposed change in 

interpretation, but it acknowledged 

these cost impacts in order to be fully 

transparent in terms of the agency’s 

thinking. 

The agency reasoned that creating 

separate product classes for condensing 

and non-condensing furnaces, water 

heaters, and similarly-situated products/ 

equipment (where permitted by EPCA) 

would prevent many of these potential 

problems. Although DOE’s proposed 

revised approach may have some impact 

on overall energy saving potential as a 

result of establishing separate product/ 

equipment classes, the Department 

noted that that is not the touchstone of 

EPCA’s ‘‘features’’ provision; through 

that provision, Congress expressed its 

will that certain product utilities will 

take priority over additional energysaving measures. (For example, DOE did 

not eliminate the oven window which 

consumers found useful.) With that 

said, DOE expressed its belief that any 

potentially negative programmatic 

impacts of its revised interpretation are 

likely to be limited. DOE reasoned that 

the proposed interpretation would be 

likely to impact only a limited set of 

appliances, and DOE noted that market 

trends have favored the growing reach 

of condensing furnaces, even as noncondensing alternatives have remained 

available. DOE stated that it has every 

reason to believe that such trends will 

continue. 

DOE sought to clarify the limitations 

of its proposed revised interpretation, 

based upon the existing statutory 

provisions. As noted, additional, 

subsequent DOE action would be 

required before the interpretation in the 

proposed interpretive rule could be 

implemented. The proposed interpretive 

rule, even once finalized, would not 

alter the Department’s current 

regulations. DOE anticipates continued 

engagement and productive 

involvement of members of the public 

and the regulated community in 

subsequent activities that may follow 

this interpretation. 

As discussed in the proposed 

interpretive rule, DOE decided to grant 

the Gas Industry Petition to the extent 

that it proposed to prospectively 

interpret the statute to provide that 

adoption of energy conservation 

standards that would limit the market of 

natural gas and/or propane gas furnaces, 

water heaters, or similarly-situated 

products/equipment (where permitted 

by EPCA) to appliances that use 

condensing combustion technology 

would result in the unavailability of a 

performance related feature within the 

meaning of 42 U.S.C. 6295(o)(4) and 42 

U.S.C. 6313(a)(6)(B)(iii)(II)(aa) (and as 

applicable in certain cases through 42 

U.S.C. 6316(a)). The proposal clarified 

that such interpretation would apply to 

all applicable residential products, nonASHRAE commercial equipment, and 

ASHRAE equipment where DOE adopts 

a level more stringent than the ASHRAE 

level. 

DOE stated in the 2019 proposed 

interpretive rule that it is denying the 

Gas Industry Petition as it pertains to 

those rulemakings where ASHRAE sets 

standard levels that trigger DOE to 

consider and adopt those level (unless 

DOE finds clear and convincing 

evidence to adopt more-stringent 

levels), due to lack of authority. DOE 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4783 

also denied the Gas Industry Petition’s 

request for DOE to withdraw the 

proposed rules for residential furnaces 

and commercial water heaters as 

unnecessary. DOE stated that if the 

interpretive rule were to be finalized, it 

would anticipate developing 

supplemental notices of proposed 

rulemaking (SNOPRs) that would 

implement the new legal interpretation 

for those two rulemakings that were the 

subject of the petition for rulemaking. 

E. DOE’s Supplemental Proposed 

Interpretive Rule 

As noted in section I of this 

document, DOE published a notice of 

supplemental proposed interpretive rule 

in the Federal Register on September 

24, 2020. 85 FR 60090. DOE’s 

supplemental proposal was designed to 

gather further information in response 

to comments from U.S. Boiler, BHI, and 

Crown Boiler, suggesting an alternative 

approach that did not focus on ‘‘noncondensing’’ technology as the 

performance-related feature. While the 

commenters suggesting this alternative 

were generally supportive of the 

proposed revised interpretation, they 

expressed concern that unless 

subsequent DOE rulemakings 

implement the interpretation through 

product/equipment classes focused on 

venting compatibility (particularly 

preservation of Category I venting), 

many of the same problems identified in 

the Gas Industry Petition may still arise. 

(USB, No. 78 at pp. 1–2; BHI, No. 83 at 

pp. 1–2; Crown Boiler, No. 79 at pp. 1– 

2) In order to gather further information 

and comment on this issue, DOE 

proposed alternative approaches to 

product/equipment class setting in this 

context, as explained in the September 

24, 2020 notice of supplemental 

proposed interpretation at 85 FR 60090, 

60094–60095, and as summarized in the 

following paragraphs. 

In the supplemental proposed 

interpretive rule, DOE initially 

responded to these comments from 

USB, BHI, and Crown Boiler by noting 

that, while separate from the product/ 

equipment, the venting system is 

inextricably linked to the design of the 

appliance. Because the venting system 

is a separate component from the 

product, DOE initially sought to focus 

on non-condensing operation as the 

performance-related characteristic of the 

appliance itself. However, after further 

considering these commenters’ 

concerns, DOE stated its intention to 

explore whether interpreting noncondensing operation to be a feature 

might still result in a reduction of utility 

for certain consumers, because some 

non-condensing appliances require 

connection to venting systems other 

than Category I and may result in many 

of the installation issues that DOE seeks 

to address through this interpretive 

rulemaking. 

As a result, in the supplemental 

proposed interpretation, DOE further 

considered what constitutes a ‘‘feature’’ 

or ‘‘performance-related characteristic’’ 

under EPCA, and in particular, whether 

such feature might be based on venting 

system compatibility of the appliance. 

Because the most significant concerns 

regarding venting system compatibility 

involve use of gas appliances that are 

not compatible with Category I venting 

in place of gas appliances that are 

compatible with Category I venting, 

DOE considered whether compatibility 

with Category I venting should be a 

protected feature under EPCA. 

Moreover, DOE also considered whether 

any impact to venting system 

compatibility resulting from increasing 

product or equipment efficiency 

standards would cause the 

aforementioned issues. For example, it 

is conceivable that if a more-stringent 

standard results in an appliance 

compatible with Category III venting 

systems being replaced with an 

appliance that is only compatible with 

Category IV venting systems, many of 

the same issues might arise as have been 

identified for the replacement of 

appliances compatible with Category I 

venting systems. Thus, compatibility 

with venting systems of any type could 

conceivably be a feature that consumers 

desire and which DOE must consider 

when evaluating more-stringent 

standards. Under such an interpretation, 

compatibility with each existing venting 

technology would be a feature under 

EPCA that could require separate classes 

based on compatibility with venting 

systems for each venting category, and 

uncategorized venting systems could 

also require separate classes. 

DOE noted that the first approach (i.e., 

considering only Category I venting 

compatibility as a performance-related 

feature) has the benefit of potentially 

simplifying the regulatory scheme in 

comparison to the latter approach, 

which could require classification of 

appliances in each venting category 

separately. The first approach would 

result in more streamlined regulations 

and product/equipment classes for gas 

appliances, as compared to the latter 

approach, while resolving the most 

significant issues involved with venting 

system compatibility. The latter 

approach potentially would address 

more comprehensively possible issues 

related to the compatibility of an 

appliance with venting systems, but it 

would make the regulatory scheme more 

complex and could result in elevated 

compliance burdens, as the number of 

product/equipment classes for vented 

appliances could increase greatly (e.g., 

each current class of gas appliance 

could require further segmentation by 

each of the four categories of venting 

and also could need to account for gas 

appliances that are compatible with 

uncategorized venting systems). DOE 

stated that both approaches would have 

the benefit of not limiting the 

Department to consideration of the 

combustion technology that provides 

the function of the appliance (e.g., 

condensing, non-condensing), about 

which some commenters have 

expressed concerns. Instead, DOE’s 

focus would be to ensure compatibility 

with existing venting, thereby allowing 

DOE to be responsive to potential future 

technological advances in venting 

system compatibility. 

Based on these considerations, DOE 

stated that it was considering an 

alternative interpretation (with two 

potential variations), in addition to the 

interpretation proposed in the July 2019 

notice of proposed interpretive rule. As 

discussed previously, the July 2019 

notice of proposed interpretive rule 

proposed that adoption of energy 

conservation standards that would limit 

the market to natural gas and/or 

propane gas furnaces, water heaters, or 

similarly-situated products/equipment 

(where permitted by EPCA) that use 

condensing combustion technology 

would result in the unavailability of a 

performance-related feature within the 

meaning of 42 U.S.C. 6295(o)(4) and 42 

U.S.C. 6313(a)(6)(B)(iii)(II)(aa) (and as 

applicable in certain cases through 42 

U.S.C. 6316(a)). In the notice of 

supplemental proposed interpretation, 

DOE also proposed an interpretation 

that an appliance’s compatibility with a 

venting system is a performance-related 

characteristic of that appliance under 

EPCA. Specifically, DOE stated that it is 

also considering an interpretation that, 

based on current appliance/venting 

system compatibility limitations, the 

adoption of energy conservation 

standards that would limit the market to 

natural gas and/or propane gas furnaces, 

water heaters, or similarly-situated 

products/equipment (where permitted 

by EPCA) that are incompatible with 

any existing venting systems available 

on the market would result in the 

unavailability of a performance related 

feature within the meaning of 42 U.S.C. 

6295(o)(4) and 42 U.S.C. 

6313(a)(6)(B)(iii)(II)(aa) (and as 

applicable in certain cases through 42 

U.S.C. 6316(a)). DOE stated that it 

considered limiting its proposal to 

4784 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

12 DOE notes that it received two comments 

which appear to relate to a separate DOE 

rulemaking for revisions to the Department’s 

waiver/interim waiver process for test procedures 

(Docket No. EERE–2019–BT–NOA–0011). 

Apparently, these comments were either submitted 

or posted to the wrong docket. DOE has referred 

these comments to staff of the Appliance Standards 

Program for placement in the correct docket. 

13For non-ASHRAE equipment, the ‘‘features’’ 

provision at 42 U.S.C. 6295(o)(4) is applicable 

through 42 U.S.C. 6316(a); for ASHRAE equipment 

where DOE is setting more-stringent standards, the 

‘‘features’’ provision at 42 U.S.C. 

6313(a)(6)(B)(iii)(II)(aa) applies. 

14For non-ASHRAE equipment, the class 

provision at 42 U.S.C. 6295(q)(1) is applicable 

through 42 U.S.C. 6316(a). 

include only that compatibility with 

Category I venting systems is a feature, 

as suggested by the commenters, and 

seeks comment on doing so. In addition, 

DOE indicated that it is considering a 

broader approach taking into 

consideration all venting categories 

since concerns similar to those that gave 

rise to the petition could conceivably 

occur for appliances that are compatible 

with venting systems other than 

Category I. The Department noted that 

after examining the totality of public 

comments on this issue and the 

potential approaches, it will consider 

adopting either of these alternative or 

the original proposed approach, as 

appropriate, in its final interpretation. 

The comment period on the 

September 24, 2020 supplemental 

proposed interpretive rule was 

originally scheduled to end on October 

26, 2020. However, on September 25, 

2020 and October 6, 2020, DOE received 

two requests for extension of the 

comment period (from A.O. Smith and 

Lennox, respectively), asserting that 

additional time is needed because the 

supplemental proposed interpretive rule 

addresses multiple product types and 

raises complex issues. On September 29, 

2020, DOE received a comment from the 

submitters of the Gas Industry Petition 

seeking prompt action on their petition. 

Balancing these competing requests, 

DOE determined it appropriate to 

extend the public comment period on 

the supplemental proposed interpretive 

rule until November 9, 2020. 

Notification of the extension of the 

public comment period was published 

in the Federal Register on October 22, 

2020. 85 FR 67312. 

III. Response to Comments 

DOE received a number of comments 

with divergent views on the 

Department’s proposed interpretive rule 

and supplemental proposed interpretive 

rule related to the Gas Industry Petition, 

with some supporting the proposal and 

others in opposition.12 Comments from 

gas industry associations, certain trade 

associations, and some individual 

manufacturers generally expressed 

support for the proposed interpretive 

rule. Comments from environmental 

and efficiency advocacy organizations, 

consumer advocacy organizations, other 

manufacturers, certain States and 

Attorneys General, and a few members 

of the public generally opposed it. The 

following sections of this final 

interpretive rule summarize the 

comments received on the proposed 

interpretive rule and supplemental 

proposed interpretive rule and provide 

DOE’s responses to those comments. 

Then, consistent with its statutory 

authority and after considering the 

comments received along with all other 

available information, DOE sets forth its 

final interpretation. To aid in organizing 

the comments, this section categorizes 

public comments on the proposed 

interpretive rule and supplemental 

proposed interpretive rule in terms of 

legal authority, economic issues, 

analytical matters, and other related 

issues. 

A. Legal Authority 

As DOE explained in section II.B of 

this document, for the purposes of 

EPCA, DOE has in prior instances 

considered product/equipment 

‘‘features’’ in the context of a 

consumer’s interaction with the 

appliance in question. With the 

submission of the Gas Industry Petition, 

DOE had the opportunity to re-evaluate 

its prior interpretation and to seek 

public input to further inform the 

agency’s consideration, particularly in 

regards to its technical implications, as 

well as the needs of consumers 

(including those with low incomes). 

While DOE continues to embrace the 

concept of a ‘‘feature’’ being tied to a 

consumer’s interaction with an 

appliance, the Department has come to 

see that it has been too narrow in its 

focus on what constitutes such 

consumer interaction with residential 

furnaces, commercial water heaters, and 

similarly-situated products/equipment 

that utilize non-condensing technology 

(and associated Category I venting). For 

the reasons explained subsequently, in 

future rulemakings, DOE will carefully 

examine the range of consumer impacts 

(based upon the record evidence in a 

given rulemaking) and may establish 

separate product/equipment classes for 

appliances using non-condensing 

technology (and associated venting), 

consistent with this final interpretive 

rule. 

DOE is issuing this interpretation as 

an interpretive rule within the meaning 

of the Administrative Procedure Act. 5 

U.S.C. 551(4); 5 U.S.C. 553(b)(A). In 

issuing its proposed interpretation, DOE 

solicited public comment regarding the 

Department’s views on a specific legal 

question: Whether non-condensing 

technology (and associated venting) 

constitutes a performance-related 

‘‘feature’’ under 42 U.S.C. 6295(o)(4),13

as could support a separate product/ 

equipment class under 42 U.S.C. 

6295(q)(1),14 including the authority 

that Congress conferred on DOE through 

those provisions. 

1. Legal Authority To Set Separate 

Product/Equipment Classes Based Upon 

Condensing and Non-Condensing 

Technologies 

As discussed, the Gas Industry 

Petition raised the issue of whether noncondensing technology, including 

associated venting, constitutes a 

‘‘performance characteristic’’ or 

‘‘feature’’ under 42 U.S.C. 6295(o)(4), 

and if it is, whether it justifies a separate 

product/equipment class under 42 

U.S.C. 6295(q)(1). Not unlike the 

submissions on the notice of petition, 

commenters on the proposed 

interpretive rule expressed strongly held 

but conflicting views regarding DOE’s 

legal authority to determine noncondensing technology used in furnaces 

and water heaters, including the 

associated venting, to be a ‘‘performance 

characteristic’’ or ‘‘feature’’ within the 

meaning of the statute, and whether as 

a ‘‘performance characteristic’’ or 

‘‘feature’’ it would justify a separate 

product/equipment class and energy 

conservation standard. 

a. Comments Supporting the Proposed 

Interpretation 

A number of commenters expressed 

support for DOE’s proposed interpretive 

rule and recommended that the 

Department take action to finalize its 

interpretation along the lines proposed. 

(Petitioners et al. Joint Comment, No. 80 

at p. 2; Weil-McLain, No. 86 at p. 1; 

AHRI, No. 91 at p. 1; Carrier, No. 92 at 

p. 1; BHI, No. 83 at pp. 1–2; USB, No. 

78 at p. 1; BWC, No. 77 at pp. 1–2; 

Nortek, No. 71 at p. 1; Mortex, No. 72 

at p. 1) Crown Boiler and USB stated 

that adoption of an energy conservation 

standard at levels requiring the use of 

condensing technology would result in 

the unavailability of a performancerelated feature under EPCA. (Crown 

Boiler, No. 79 at p. 1; USB, No. 78 at p. 

1) 

Several commenters argued that 

DOE’s proposed interpretive rule would 

enhance consumer choice. (Mortex, No. 

72 at p. 1; Carrier, No. 92 at p. 1; Nortek, 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4785 

15The Petitioners et al. Joint Comment provided 

a figure depicting multi-family housing and stated 

that a building design using atmospherically-vented 

products eliminates the need for vent-studded 

columns of vertically-stacked utility spaces along 

the outside wall of the building, as well as the 

resulting loss of available window or balcony space. 

No. 71 at p. 1) Other commenters found 

that DOE’s proposed interpretation 

offers greater consumer utility, 

particularly in those applications where 

venting represents a significant 

challenge. (AHRI, No. 91 at p. 1) 

Regarding residential furnaces, AHRI 

argued that in some applications, 

conversion to use of venting compatible 

with condensing systems would create 

problems that cannot be ‘‘simplistically 

rolled into an economic analysis.’’ More 

specifically, the trade association argued 

that a separate product class would 

assist consumers who require like-forlike replacement of their existing 

furnace due to size or drainage 

constraints or water heater co-venting (a 

point echoed by Nortek, No. 71 at pp. 

1–2, and Carrier, No. 92 at p. 1). 

According to AHRI, ‘‘EPCA prohibits 

eliminating product utility precisely to 

prevent the disproportionate harm to a 

subset of unlucky consumers.’’ (AHRI, 

No. 91 at p. 2) Making the same point, 

Nortek reasoned that because consumers 

are already moving in the direction of 

condensing furnaces, banning noncondensing furnaces is not necessary 

and would only serve to 

disproportionately harm those 

consumers for whom venting changes 

would be difficult or impossible. 

(Nortek, No. 71 at pp. 1–2) 

Regarding commercial water heaters, 

AHRI argued that Commercial Buildings 

Energy Consumption Survey (CBECS) 

data suggest that over half of 

commercial buildings were constructed 

prior to the introduction of condensing 

venting requirements, which means that 

many of these commercial buildings 

face the same venting challenges as 

some residences. AHRI pointed to 

examples where mechanical rooms are 

built into the core of the building 

(thereby preventing the side-wall 

venting sometimes required by 

condensing equipment), so such 

building owners would be forced to 

either switch fuels or to use up valuable 

retail, restaurant, or office space for an 

enlarged or relocated mechanical room 

to accommodate new drainage or 

different venting configurations. 

Especially since there is already a 

market trend toward condensing 

commercial water heaters, AHRI argued 

that it is neither necessary nor advisable 

to require condensing equipment in all 

applications. Instead, the commenter 

stated that establishment of a separate 

class for non-condensing equipment 

would preserve the ability of 

commercial consumers facing difficult 

installation situations to make like-forlike replacements and to avert the need 

to reconstruct a mechanical room, add 

unsightly piping, or switch to an electric 

water heater, all without impacting the 

overall trend toward installation of 

more-efficient condensing water heaters. 

(AHRI, No. 91 at p. 3) 

Regarding residential and commercial 

boilers, AHRI noted that DOE’s 

proposed interpretation provides an 

important safety measure for gas-fired 

products/equipment that assures safer 

use and installation. More specifically, 

AHRI commented that gas-fired boilers 

are not simply divided into condensing 

and non-condensing models but are 

split into four different categories based 

on venting type (Category I–IV). AHRI 

stated that Category I venting is at the 

crux of DOE’s proposed interpretation, 

because that is the type of venting 

which is difficult to substitute for 

another type once installed. The 

commenter added that a minimum 

energy conservation standard that 

‘‘pushes the efficiency envelope’’ may 

cause nominally non-condensing 

equipment to become incompatible with 

Category I venting and could result in 

the unsafe installation or use of 

misapplied equipment. AHRI stressed 

that safety of venting is unquestionably 

a performance-related feature. Once 

again, AHRI stated that the boilers 

market in new construction is trending 

toward condensing equipment and 

venting, so the performance feature of 

Category I venting is most necessary for 

the replacement market. The commenter 

also suggested that further increases in 

the minimum energy conservation 

standards for boilers should be 

examined carefully, because those 

standards are already near the level 

where venting challenges similar to 

those for condensing equipment could 

arise. (AHRI, No. 91 at pp. 4–5) Mortex 

made similar arguments in the context 

of furnaces, suggesting that DOE’s 

proposed interpretation would promote 

flexibility and safety by not forcing an 

upgrade to a condensing furnaces in 

some applications where noncondensing venting remains the best 

choice. (Mortex, No. 72 at p. 1) 

The Petitioners et al. Joint Comment 

asserted that energy conservation 

standards that would make 

atmospherically-vented products 

unavailable to consumers would do 

more to promote electrification (i.e., a 

shift to electric appliances) than to 

promote the efficiency of gas products, 

because many consumers would feel 

that they have no choice but to give up 

their gas appliances in favor of electric 

alternatives. These commenters 

characterized the situation as one where 

the imposition of a standard that 

effectively bans atmospherically-vented 

gas appliances would result not in the 

sale of an increased number of more 

efficient gas products, but in the sale of 

fewer gas products overall. The Gas 

Industry Petitioners argued that they are 

not opposed to condensing technology 

generally or market trends favoring such 

technology, nor are they seeking to 

create missed opportunities for 

consumers, businesses, and 

governments, as some of their 

opponents have claimed. Instead, these 

commenters stated that they are simply 

making the case that condensing 

products are not suitable for all 

installations and that it is the opponents 

of the petition who are the ones seeking 

to deny consumers the products which 

best serve their needs. (Petitioners et al. 

Joint Comment, No. 80 at pp. 3–4) 

Regarding the consumer utility of 

atmospherically-vented appliances, the 

Petitioners et al. Joint Comment stated 

that for some consumers, the consumer 

utility provided by the proposed 

interpretive rule would be the same 

utility as DOE found with ventless 

clothes dryers (i.e., the ability to have 

the product installed at all). The 

comment argued that for other 

consumers, the utility may be similar to 

that found for ‘‘space-constrained’’ 

appliances (i.e., the ability to have the 

product fit without the need for 

building modifications). For yet other 

consumers, the comment stated that the 

utility may be preventing the need to 

scrap another perfectly good appliance 

(e.g., an orphaned water heater). The 

Petitioners et al. Joint Comment added 

that other consumers may find utility in 

an appliance which obviates the need 

for undesirable building modifications 

(e.g., sacrifice of an existing interior 

living space, balcony, or window— 

concerns which can also arise in the 

context of new construction.15) These 

commenters concluded that there is no 

basis for characterizing these losses of 

utility as a mere matter of cost, rather 

than performance-related characteristics 

under EPCA’s ‘‘features’’ provision. 

(Petitioners et al. Joint Comment, No. 80 

at pp. 10–11) 

Pointing to EPCA’s statutory 

standards for direct heating equipment 

which are differentiated ‘‘principally in 

their manner of installation,’’ the 

Petitioners et al. Joint Comment argued 

that ‘‘it is absurd to suggest that 

Congress intended to ensure the 

continued availability of products with 

sizes—but not products with venting or 

4786 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

other performance characteristics— 

needed to ‘fit in standard building 

spaces’ without the need for building 

modifications.’’ (Petitioners et al. Joint 

Comment, No. 80 at p. 12) Applying this 

principle in the present context, the 

Petitioners et al. Joint Comment stated 

that condensing products are at least 

typically larger than comparable 

atmospherically-vented products, and 

that even small differences can have 

significant practical impacts, such as 

cases where a furnace and air handler 

must fit inside a confined space with 

required clearance on all sides. 

(Petitioners et al. Joint Comment, No. 80 

at p. 13) Along these same lines, BWC 

opined that because condensing 

technology generally requires greater 

surface area, the size of the product/ 

equipment is likely to increase, and this 

can cause issues related to size and 

aesthetics within the home or business. 

The commenter suggested that this 

could pose real world problems, such as 

with mechanical rooms that are no 

longer large enough to house an 

appliance using condensing technology. 

BWC added that the issue of aesthetic 

impacts also extends to commercial 

applications, not just residential ones, 

with the commenter arguing that 

venting running through the finished 

space of a school, office building, or 

hospital could likewise be a significant 

detriment to their usable space. (BWC, 

No. 77 at pp. 1–2) 

Although USB generally agreed with 

DOE’s revised interpretation, the 

commenter argued that DOE has erred 

in focusing on ‘‘non-condensing’’ 

technology as the performance-related 

feature, suggesting that the agency 

should instead focus on Category I 

venting. According to USB, Category II, 

III, and IV (as well as non-categorized 

direct vent furnaces and boilers) are 

currently available using noncondensing technology, but many of the 

same problems may arise. USB stated 

that non-condensing Category II, III, and 

IV appliances generally share the same 

venting consumer utility issues as 

condensing appliances and equipment, 

and that they can theoretically operate 

at higher efficiencies than Category I. 

However, the commenter argued that 

elimination of models using Category I 

venting (under a standard level that 

could only be met by products/ 

equipment using Category II, III, or IV 

venting) would create the same 

problems which DOE has sought to 

address through its revised 

interpretation. USB commented that 

vent categorization has been recognized 

for over 20 years by manufacturers, 

utilities, and code enforcement officials 

as the best way to determine how to 

safely vent appliances. (USB, No. 78 at 

pp. 1–2) BHI made essentially identical 

arguments to those raised by USB, and 

Crown Boiler offered a similar comment 

that DOE should focus product classes 

based upon type of venting used, rather 

than the use of condensing or noncondensing technology. (BHI, No. 83 at 

pp. 1–2; Crown Boiler, No. 79 at pp. 1– 

2) 

AHRI also made the point that DOE 

has already established product classes 

which are differentiated based upon the 

features of condensing and noncondensing products—specifically in 

the context of furnace fan standards (i.e., 

fan efficiency rating (FER); see 10 CFR 

430.32(y)). The furnace fan product 

classes are distinguished by: (1) Fuel 

type; (2) whether the furnace is 

weatherized, and (3) whether its heat 

exchanger condenses the flue gases to 

water (i.e., condensing/noncondensing). (AHRI, No. 91 at p. 2; 

similar point made by Carrier, No. 92 at 

p. 2 and Nortek, No. 71 at p. 2) 

In response, DOE would start by 

reiterating that it is the Department’s 

position to remain neutral in terms of 

the available fuel sources. Obviously, 

whenever the agency takes regulatory 

action, there is the potential for market 

shifts based upon consumer reaction, 

but DOE acts in keeping with the 

statute, which is at the core of this 

market neutrality principle. In other 

words, following the statute where it 

leads is not only the proper approach 

from a legal standpoint, but it helps 

ensure fair and unbiased treatment to all 

market participants, with impacts 

deemed as favorable or unfavorable 

arguably balancing out over time. Thus, 

in line with this principle, DOE rejects 

the arguments of certain commenters 

(e.g., Lennox, No. 87 at p. 1; Ceres, No. 

69 at p. 2 (discussed respectively at 

sections III.A.1.b.v and III.B.1.b of this 

document)) that the Department is 

favoring the gas industry through its 

revised interpretation. DOE is making 

an informed determination applying the 

law to the facts presented and in light 

of the competing, well-argued 

comments from interested parties. 

As stated previously, DOE has 

decided to revise its prior interpretation 

of whether non-condensing technology 

(and associated venting) constitutes a 

‘‘feature’’ under EPCA, concluding that 

products/equipment with such 

characteristics can be deemed as having 

a protected feature where supported by 

available evidence in the context of 

individual standards rulemakings. The 

reasons for the Department’s change in 

position largely arise from a 

reevaluation of the arguments made in 

these comments and new information 

presented by the Petitioners, as well as 

evidence already contained in existing 

rulemaking dockets (e.g., residential 

furnaces, commercial water heaters). As 

explained in the paragraphs that follow, 

DOE has come to understand that such 

models offer distinct consumer utility 

beyond their primary function of 

providing warm air or hot water, 

particularly in difficult installation 

situations. Their continued availability 

would also be expected to maintain a 

robust level of consumer choice. DOE 

will touch upon each of these topics in 

turn. 

First, DOE has come to see that a 

consumer’s interaction with a furnace or 

water heaters can go beyond the 

appliance’s primary function of 

providing warm air or water. If the 

replacement of an appliance 

necessitates additional piping or venting 

in the usable space of a home or 

business, major modifications to a 

utility room, or encroachment upon an 

existing window or patio, the consumer 

will assuredly be aware of such 

interaction with the appliance. Even in 

new construction, if a builder has to 

modify designs to accommodate a 

condensing furnace, thereby losing 

usable space, that builder and potential 

customers will perceive this difference. 

Thus, a consumer may reasonably prefer 

to retain this residential or commercial 

space and pay the costs associated with 

a less-efficient, non-condensing 

appliance. DOE similarly acknowledges 

the difficulties faced by consumers who 

require like-for-like replacement of their 

existing furnace due to size or drainage 

constraints or water heater co-venting. 

The Department also takes AHRI’s point 

(focused on commercial water heaters), 

that based upon CBECS data, over half 

of commercial buildings were 

constructed prior to the introduction of 

condensing venting requirements, 

which means that many of these 

commercial buildings face the same 

venting challenges as some residences. 

DOE further takes note of AHRI’s 

examples where mechanical rooms are 

built into the core of the building 

(thereby preventing the side-wall 

venting sometimes required by 

condensing equipment), so such 

building owners could be forced to use 

up valuable retail, restaurant, or office 

space for an enlarged or relocated 

mechanical room to accommodate new 

drainage or different venting 

configurations. 

Although DOE does not have precise 

numbers in terms of the frequency of 

these difficult installation situations, 

commenters have previously provided 

examples of older, inner-city row 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4787 

16As DOE explained in the final rule, ‘‘DOE did 

not receive comment or additional information on 

the proposed product classes, [and] thus, DOE is 

not making changes to the product classes in this 

Final Rule.’’ 79 FR 38130, 38150 (July 3, 2014). 

houses presenting significant re-venting 

issues, such as those in Philadelphia, 

Newark and Baltimore, of which there 

are many. DOE also has data in its 

existing rulemaking dockets related to 

fuel switching that may result from 

adoption of a standard that can only be 

met through use of condensing 

technology; DOE reasons that such 

estimates could serve as a proxy for 

those difficult installations, although 

other explanations are also expected to 

be included in that total (e.g., decisions 

made for purely economic reasons). For 

example, as the CEC pointed out, the 

September 2016 residential furnaces 

SNOPR reported that at the proposed 

level, 7.9 percent of consumers would 

switch from gas furnaces to heat pumps 

or electric furnaces under a condensing 

standard (a number which could reach 

16 percent at the max-tech level). 81 FR 

65720, 65813 (Sept. 23, 2016). The 

precise number of difficult installation 

situations is not required for DOE to 

reasonably conclude that the magnitude 

of such occurrences would not be de 

minimis. DOE agrees with AHRI’s 

comment that in some applications, 

conversion to use of venting compatible 

with condensing systems would create 

problems that cannot be ‘‘simplistically 

rolled into an economic analysis’’ and 

that ‘‘EPCA prohibits eliminating 

product utility precisely to prevent the 

disproportionate harm to a subset of 

unlucky consumers.’’ (AHRI, No. 91 at 

pp. 1–2) 

DOE acknowledges that some portion 

of difficult installations referenced in 

the Petitioners et al. Joint Comment may 

involve size constraints, because as the 

commenters point out, condensing 

technology generally requires greater 

surface area, so the size of the product/ 

equipment in some cases could 

increase. Data referenced by the 

Petitioners et al. Joint comment 

demonstrate that such constraints could 

negatively impact a home or business, 

such as where a mechanical room is no 

longer large enough to house an 

appliance using condensing technology, 

or where the running of venting lines 

through the finished space of a school, 

office building, or hospital could 

detrimentally impact their usable space. 

In this regard, this situation is analogous 

to that which DOE faced when setting 

separate classes and standards for spaceconstrained air conditioners and heat 

pumps (see 10 CFR 430.32(c)) and 

standard-size packaged terminal air 

conditioners and heat pumps (see 10 

CFR 431.97(c)). A consumer’s 

expectation to be able to obtain a 

replacement appliance that is 

compatible with existing venting is to 

some extent an issue of size as well. 

‘‘Size’’ is also one of the bases for 

making a ‘‘features’’ determination 

under 42 U.S.C. 6295(o)(4). 

As to AHRI’s point that the proposed 

interpretation would further safety in 

the context of installing gas-fired 

residential and commercial boilers, DOE 

presumes that boilers (and other types 

of products/equipment for which both 

condensing and non-condensing 

technologies are available) can be and 

are being installed safely in the field by 

contractors and other service 

professionals. DOE acknowledges the 

safety concerns that AHRI points out, 

namely that boilers are generally split 

into four different categories based on 

venting type (Category I–IV), and a 

minimum energy conservation standard 

that ‘‘pushes the efficiency envelope’’ 

may cause nominally non-condensing 

equipment to become incompatible with 

Category I venting and could result in 

the unsafe installation or use of 

misapplied equipment. Deterioration of 

venting due to corrosive condensate 

could allow carbon monoxide to enter 

the inhabited space, thereby presenting 

a safety risk. However, the Department 

is aware of no substantial evidence to 

suggest that installers are improperly 

installing condensing appliances and 

thereby triggering associated safety 

concerns. However, DOE agrees with 

AHRI and Mortex that DOE’s proposed 

interpretation might prevent rare cases 

of contractor error. 

In response to AHRI, DOE 

acknowledges that existing furnace fan 

standards already establish product 

classes which are differentiated based, 

in part, upon the use of condensing or 

non-condensing technology (i.e., fan 

efficiency rating (FER); see 10 CFR 

430.32(y)). Specifically, the furnace fan 

product classes are distinguished by: (1) 

Fuel type; (2) whether the furnace is 

weatherized, and (3) whether its heat 

exchanger condenses the flue gases to 

water (i.e., condensing/noncondensing). There was no objection 

among public commenters about the 

inclusion of a condensing/noncondensing criteria in the furnace fans 

class designations at the time of the 

furnace fans final rule.16

As discussed previously, the 

comments submitted by USB, BHI, and 

Crown Boiler on the July 2019 proposed 

interpretive rule, while generally 

supportive, raised questions as to 

whether DOE’s proposed approach 

could be successfully implemented as 

initially drafted. These commenters 

argued that because DOE’s proposed 

interpretation focused on the distinction 

between an appliance’s use of 

condensing versus non-condensing 

technology, the same installation 

challenges may still arise unless DOE 

took steps to maintain compatibility 

with a product’s intended venting 

(particularly Category I venting). DOE 

was interested in the views of other 

interested parties on the thoughts 

expressed by USB, BHI, and Crown 

Boiler, because the Department does not 

wish to adopt an interpretation that 

would not be workable in practice and 

that would ultimately leave the problem 

raised in the Gas Industry Petition 

unresolved. Consequently, DOE 

proceeded to issue the September 2020 

SNOPIR, which is more fully discussed 

in section II.E of this document, in order 

to receive public input on this topic. In 

short, in the September 2020 SNOPIR, 

DOE presented two alternative 

approaches to implementing its 

proposed interpretation (i.e., regarding 

how to set product/equipment classes 

for the appliances impacted by this 

interpretation). One alternative was to 

maintain compatibility with all existing 

venting types intended for the covered 

appliance. The other alternative was to 

ensure compatibility with Category I 

venting, the type most commonly 

associated with non-condensing 

products/equipment. DOE also noted 

that, depending upon the input 

received, the Department might also 

move to adopt the approach originally 

presented in its July 2019 proposed 

interpretive rule. 

DOE received 18 sets of comments in 

response to the September 2020 SNOPIR 

(see section I, Table I.2 of this document 

for a complete list of commenters on the 

September 2020 SNOPIR). Stakeholders 

that opposed DOE’s July 2019 proposal 

tended to object to the September 2020 

SNOPIR for many of the same reasons 

recited in their earlier comments, and 

any such broader, overarching 

objections are addressed elsewhere in 

this final interpretive rule. The balance 

of the arguments raised in comments 

directly addressed the issues presented 

in the September 2020 SNOPIR and are 

set forth in the paragraphs that follow. 

DOE appreciates the valuable insights 

provided by all commenters on the 

matter of venting compatibility initially 

raised by USB, BHI, and Crown Boiler. 

In broad overview of the comments 

received on the SNOPIR, there was 

virtually no support for the proposed 

approach to maintain compatibility with 

all existing venting types (although one 

commenter did express some support as 

a secondary preference). There was 

4788 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

17As discussed further in section III.A.4 of this 

document, DOE notes that in seeking clarification 

on the July 2019 proposed interpretive rule, WeilMcLain also suggested that the Department should 

make class distinctions based on an appliance’s 

venting category (as defined in the National Fuel 

Gas Code NFPA 54), rather than using the terms 

‘‘condensing’’ and ‘‘non-condensing.’’ The 

commenter pointed to what the National Fuel Gas 

Code refers to as Category I vented appliances, 

which operate with a non-positive vent static 

pressure and with a vent temperature which avoids 

excessive condensate production in the vent. Thus, 

Weil-McLain suggested that going forward, DOE 

should tie the performance-related feature to the 

term ‘‘Category I Vented Appliance’’ in its 

interpretation. (Weil-McLain, No. 86 at pp. 1–2) 

However, DOE points out that although WeilMcLain expressed this opinion in response to the 

July 2019 proposed interpretive rule, the company 

did not comment on the September 2020 SNOPIR 

where this matter was discussed in further detail. 

Consequently, DOE can only presume that WeilMcLain continues to maintain this position. 

limited support for the proposed 

approach to maintain compatibility with 

Category I venting, with two 

commenters favoring that approach and 

another naming it a secondary 

preference. DOE’s initial proposal to 

establish product/equipment classes 

based upon the use of condensing or 

non-condensing technology had the 

broadest support of the three 

alternatives presented, with five 

commenters preferring that approach. 

One group of commenters (which 

included many of the entities filing the 

original Gas Industry Petition) did not 

express a preference for any of the three 

approaches presented, arguing that a 

proper course should be determined in 

the context of individual product/ 

equipment rulemakings. Finally, as 

noted, there were also ten commenters 

who opposed DOE’s July 2019 proposed 

interpretive rule, and that opposition 

extended to the September 2020 

SNOPIR as well. 

DOE will first address the proposed 

approach of establishing product/ 

equipment classes so as to maintain 

appliance compatibility with all existing 

venting types intended for that 

appliance. 

Crown Boiler and USB explained 

their rationale for why they do not 

support a class structure based upon 

ensuring compatibility with all existing 

venting categories (e.g., Categories II and 

III). The commenters stated that 

Category II venting systems are 

extremely rare, mostly because of the 

problems associated with relying on the 

buoyancy of low-temperature flue gases 

and/or a draft inducer located at the 

vent system terminal for proper venting. 

Crown Boiler and USB added that 

because there is no upper efficiency 

limit for Category II venting, any effort 

to protect a class of Category II vented 

appliances would create a problem for 

DOE in determining whether a proposed 

standard would preclude the use of this 

vent system. As to Category III venting 

systems, Crown Boiler and USB 

questioned the need to explicitly act to 

preserve this venting option, despite its 

more widespread use. More specifically, 

the commenters argued that Category III 

venting systems can, in some cases, 

utilize Category IV venting. Also, 

because most Category III venting is 

used to vent an appliance through a side 

wall, Crown Boiler and USB asserted 

that the most problematic installation 

situations would not arise. Furthermore, 

Crown Boiler and USB argued that 

because Category III vent systems 

operate with positive pressure, they are 

rarely, if ever, used to vent multiple 

appliances (due to the risk of flue 

products entering the interior space 

from the pressurized vent system 

through an off-cycle appliance), so the 

issue of ‘‘orphaned’’ appliances should 

not be applicable to Category III 

appliances. Crown Boiler and USB 

acknowledged that their comments 

about Category III appliances are 

generalizations and that there may be a 

few instances where such appliances are 

difficult or impossible to reuse or 

replace, but they reasoned that those 

rare instances would not merit the 

additional regulatory complexity 

associated with guaranteeing Category 

III venting compatibility. (Crown Boiler, 

No. 103 at pp. 2–3; USB, No. 105 at pp. 

1–2) 

Crown Boiler and USB further argued 

that addressing appliances with 

uncategorized venting would be even 

more problematic. Examples include 

direct vent appliances and uncertified 

gas appliances (such as a boiler 

designed primarily to use fuel oil which 

is installed with a gas conversion 

burner). Crown Boiler and USB argued 

that because these unusual vent systems 

are generally replaced along with the 

appliance, there would be no need to 

preserve or reuse them, thereby making 

it preferable to leave them unaddressed 

in favor of regulatory simplicity. (Crown 

Boiler, No. 103 at p. 3; USB, No. 105 at 

p. 2) 

For these reasons, Crown Boiler and 

USB concluded that DOE should not 

pursue further the proposed approach of 

establishing product/equipment classes 

so as to maintain appliance 

compatibility with all existing venting 

types intended for that appliance. (DOE 

notes that other commenters also 

provided input as to why this 

alternative approach should be 

abandoned, but their reasoning likewise 

extended to DOE’s other alternative 

proposal to establish product/ 

equipment classes so as to maintain 

appliance compatibility with Category I 

venting. Those arguments will be 

presented following discussion of 

Crown Boiler’s and USB’s arguments in 

favor of an approach to maintain 

Category I venting compatibility.) 

Crown Boiler and USB then went on 

to explain why they support the 

proposed approach of establishing 

product/equipment classes to maintain 

appliance compatibility with Category I 

venting as the performance-related 

feature, for the reasons (largely 

identical) that follow.17 These 

commenters stated that this approach 

would address their previously raised 

concerns regarding the matter of venting 

compatibility, while simplifying the 

interpretive rule by not advancing the 

more complex option of trying to ensure 

compatibility with all existing venting 

category applications. (Crown Boiler, 

No. 103 at p. 1; USB, No. 105 at p. 1) 

Crown Boiler reasoned that because 

American National Standards Institute 

(ANSI) safety standards provide a test 

method to ascertain the appropriate type 

of venting so as to ensure that the 

appliance in question can be vented 

safely, the vent category is both an 

essential design requirement and ‘‘an 

objective performance characteristic of 

the above appliance and not just of the 

vent system to which it is connected.’’ 

The commenter further noted that the 

vent category is found on the 

appliance’s rating plate and in the thirdparty certification report. (Crown Boiler, 

No. 103 at p. 2 (emphasis in original)) 

Crown Boiler and USB added that 

DOE should define any gas appliance 

venting performance characteristics in 

terms of the test procedure in the 

appropriate ANSI safety standard, rather 

than the definitions in the National Fuel 

Gas Code, because the latter source uses 

vague terms such as ‘‘excessive 

condensate’’ and vague conditions 

under which such condensation might 

occur. Thus, as an example, Crown 

Boiler and USB recommended defining 

a Category I class of residential boilers 

as ‘‘ ‘those boilers which have been 

determined to be Category I using the 

test method in ANSI Z21.13.’ ’’ (Crown 

Boiler, No. 103 at p. 3; USB, No. 105 at 

p. 2) 

Other commenters (who also support 

DOE’s revised interpretation as a general 

matter) disagreed with Crown Boiler’s 

and USB’s position, arguing that even 

an approach limiting venting 

compatibility to Category I is too 

complicated and fraught with potential 

problems. Consequently, the 

commenters expressed support for DOE 

to adopt the approach in its original 

proposal, which would define the 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4789 

18 If DOE’s original proposed interpretation is not 

adopted, Mortex then expressed support for either 

of the two alternative interpretations presented in 

the September 2020 SNOPIR based on venting 

compatibility. Mortex stated that any of these 

approaches would preserve the performance-related 

features of its mobile home gas furnaces, which are 

designed for use with Category I venting systems. 

(Mortex, No. 111 at p. 2) 

performance-related feature (and 

subsequent class setting) in terms of 

condensing or non-condensing 

operation of the subject appliance. This 

viewpoint was expressed by Nortek, 

BWC, AHRI, Mortex,18 and Carrier. 

(Nortek, No. 107 at p. 1; BWC, No. 108 

at p. 2; AHRI, No. 109 at pp. 1, 5; 

Mortex, No. 111 at p. 2; Carrier, No. 110 

at p. 1) The following discussion 

explains these commenters’ rationale for 

opposing a venting compatibility-based 

approach to defining a performancerelated feature under EPCA, as well as 

their rationale for supporting DOE’s 

original proposal. Commenters who 

generally oppose DOE’s revised 

interpretation (e.g., NRDC, A.O. Smith, 

Lennox, CA IOUs, Advocates Joint 

Comment II, and NEEA) also provided 

reasoning as to why it would be 

inadvisable to adopt the alternative 

approaches presented in the September 

2020 SNOPIR, and these comments are 

summarized in the paragraphs that 

follow as well. 

One line of argument surrounded the 

complexity of a regulatory framework 

based upon venting compatibility. 

Nortek, AHRI, and Lennox argued that 

categorization of appliances by venting 

system is a complex matter, and in 

application, it can vary for different 

product/equipment types, as 

determined according to the applicable 

ANSI safety standards. According to 

these three commenters, venting, 

condensate generation, and efficiency 

are among several factors that determine 

how a boiler, water heater, or furnace is 

designed, safety-certified, and installed. 

Thus, Nortek, AHRI, and Lennox stated 

that they do not find venting to be an 

inherent product feature, but rather an 

installation requirement that may vary 

depending upon the design and 

application of the product. (Nortek, No. 

107 at p. 2; AHRI, No. 109 at p. 2; 

Lennox, No. 114 at p. 5) 

Another line of argument involved the 

potential for appliances to be certified 

for use with multiple venting categories 

or ones that do not have a designated 

venting category. Relatedly, BWC 

argued that if DOE were to adopt a 

highly segmented class structure based 

upon venting compatibility, further 

complications would be likely to arise 

in terms of setting efficiency regulations 

for gas-fired products. For example, the 

commenter pointed to certain water 

heaters that are listed with multiple 

venting categories, which leaves it to a 

plumbing contractor’s discretion to 

determine the most appropriate venting 

for a given installation situation. 

Because more than one efficiency 

requirement could apply in such cases, 

BWC stated that the alternative 

approaches presented in the September 

2020 SNOPIR would not be practical, 

either generally or from a technical 

perspective. Similarly, BWC added that 

operational conditions for a type of 

appliance may affect the selection of 

venting category, so the installing 

contractor will need to be aware of and 

take appropriate action regarding the 

sizing and selection of proper vent 

materials. BWC also stated that the 

alternative approaches presented in the 

September 2020 SNOPIR failed to 

address products that do not have a 

venting category (i.e., non-categorized 

products), such as ones that are direct 

vent or installed outdoors. (BWC, No. 

108 at p. 1) 

A.O. Smith stated that venting 

category definitions vary by appliance 

type, and it commented that some 

models can carry certification with 

multiple venting categories. A.O. Smith 

also stated that the non-condensing 

characterization is broader than the 

Category I venting certification. (A.O. 

Smith, No. 113 at p. 4) The CA IOUs 

made a similar point about gas 

appliances capable of being configured 

to work with more than one category of 

venting system, and they reasoned that 

this would make it impossible for 

compatibility of a product category with 

a specific venting system to be 

designated as a protected feature under 

EPCA. (CA IOUs, No. 117 at p. 5) 

Similar to the points raised by Crown 

Boiler and USB, AHRI also noted that 

complexities that could arise from 

seeking to maintain venting 

compatibility for water heaters using 

Category II or Category III venting, and 

similar to BWC, AHRI commented as to 

the difficulty in classifying water heater 

models that can have multiple 

categorizations depending upon design. 

AHRI added that similar to water 

heaters, boilers may be subject to more 

than one venting characterization, 

depending upon how they are installed 

in the field. According to the 

commenter, some non-condensing 

boilers operate at positive vent pressure, 

which requires Category III venting. The 

trade association suggested that these 

concerns could lead to a regulatory 

structure that is not easy to understand 

and implement at the point of 

manufacture. (AHRI, No. 109 at p. 4) 

Carrier also stated that some boilers and 

water heaters can use multiple vent 

categories, although it noted that this is 

a small subset of products. (Carrier, No. 

110 at p. 2) 

For the reasons stated, Nortek and 

AHRI concluded that dividing product/ 

equipment classes by venting categories 

would unnecessarily complicate the 

approach to class setting, and AHRI 

expressed concern that such an 

approach could have unintended 

consequences. (Nortek, No. 107 at p. 2; 

AHRI, No. 109 at pp. 2, 5) Other 

commenters also remarked as to the 

complexity surrounding a regulatory 

structure based on venting categories. 

(Carrier, No. 110 at p. 2; Lennox, No. 

114 at p. 5) Carrier added that such an 

approach may not achieve a result 

different from DOE’s original proposal. 

(Carrier, No. 110 at p. 2) Consequently, 

Nortek and AHRI opined that a blanket 

rule encompassing all gas appliances 

that turns on venting categories may not 

capture detailed technical nuances, or it 

may overly complicate the product 

classes, thereby resulting in unintended 

regulatory burden or market impacts. 

(Nortek, No. 107 at p. 2; AHRI, No. 109 

at p. 2) Lennox also argued that such an 

approach would further segment the 

already unduly complicated residential 

furnaces product class structure in 

DOE’s original proposal, thereby 

compounding the problem, and 

significantly increase regulatory burden 

without any apparent benefit to 

consumers or manufacturers. (Lennox, 

No. 114 at pp. 1, 5) 

BWC advised that if DOE ultimately 

decides to pursue one of the alternate 

paths to defining the performancerelated feature, as set forth in its 

September 2020 SNOPIR, the 

Department should convene a 

stakeholder meeting to parse out the 

implementation issues that may arise in 

the context of different types of 

products and to discuss how to proceed. 

(Nortek, No. 108 at p. 2) 

A.O. Smith disagreed with the 

alternate approaches to the feature 

determination focused on venting 

compatibility as presented in the 

September 2020 SNOPIR, because 

venting is not applied at the point of 

manufacture, nor is it known what the 

installation circumstances may be for a 

given residence or commercial building. 

The commenter argued that EPCA grants 

DOE authority to regulate covered 

products and equipment at the point of 

manufacture, which does not extend to 

the point of installation. Thus, A.O. 

Smith questioned whether DOE has 

authority to differentiate product/ 

equipment classes based upon 

categories of venting materials. (A.O. 

Smith, No. 113 at p. 4) 

4790 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

Another line of arguments suggested 

that the alternative approaches based 

upon venting compatibility set forth in 

the September 2020 SNOPIR may 

encounter problems with changing 

building safety codes. NRDC argued that 

such approaches are not feasible, 

practical, or necessary, stating that even 

current standards are not universally 

consistent with every type of ventilation 

system found in every building because 

of different codes and standards put in 

place over time. (NRDC, No. 112 at pp. 

2–3) To this point, the CA IOUs argued 

that in many cases, safety codes may 

have changed by the time a gas-fired 

appliance needs to be replaced, so the 

existing venting would need to be 

changed, regardless of the type of 

venting with which the appliance may 

be compatible. (CA IOUs, No. 117 at p. 

4) 

The Advocates Joint Comment II also 

argued that DOE’s professed intent in 

the September 2020 SNOPIR about 

maintaining venting compatibility is not 

achievable. These commenters stated 

that there are currently many situations 

where there are no products on the 

market compatible with the existing 

venting system due to current safety 

requirements. For example, the 

Advocates Joint Comment II pointed to 

DOE’s own past rulemakings in 

explaining that the National Fuel Gas 

Code has lining requirements that 

effectively require all chimneys to be 

lined in order to install a new gas 

furnace or boiler; however, prior to 

1995, building codes did not require 

such lining of chimneys, so homes built 

before 1995 would need to have their 

chimneys lined in order to install a new 

non-condensing furnace that is 

compatible with Category I venting. 

Similarly, the Advocates Joint Comment 

II stated that DOE’s past rulemakings 

have found that with Type B vents, 

when a new non-condensing furnace or 

boiler that is compatible with Category 

I venting replaces an existing natural 

draft non-condensing product, in almost 

all cases, the vent connectors need to be 

replaced or the entire venting system 

needs to be resized. These commenters 

noted that DOE has traditionally 

accounted for such changes in its 

analysis of installation costs and 

suggested that that was the correct 

approach. However, the Advocates Joint 

Comment II argued that even if venting 

compatibility were to be considered a 

performance-related feature, the 

availability of products compatible with 

Category I venting would not 

necessarily ensure compatibility with 

existing venting systems, for the reasons 

explained above. (Advocates Joint 

Comment II, No. 118 at pp. 3–4) 

Furthermore, the CA IOUs added that 

the concept of discrete classes of gas 

appliances which can be defined by 

compatibility with specific venting 

systems does not match what is 

occurring in the field. The CA IOUs 

explained that in the commercial sector, 

there are already venting systems that 

are compatible with gas-fired appliances 

designed for Category I–IV venting 

systems, and there is an ongoing trend 

to upgrade all commercial venting 

systems to those that comply with 

Underwriters Laboratory (UL) 1738, 

Special Gas Vents, for condensing 

appliances. Accordingly, the CA IOUs 

opined that as universal venting systems 

become more widespread, concerns 

about the compatibility of gas 

appliances with different venting 

systems will continue to become less 

relevant. (CA IOUs, No. 117 at p. 4) 

NRDC stated that instead of pursuing 

the proposed approaches, DOE should 

consider and evaluate alternative 

venting technologies to solve difficult 

installation scenarios, both those on the 

market and under development. (NRDC, 

No. 112 at pp. 2–3) NRDC and NEEA 

criticized the approach in the 

September 2020 SNOPIR as potentially 

freezing venting technologies in place 

and limiting innovation in both venting 

strategies and equipment design, 

thereby harming consumers through 

higher energy costs and reduced 

product features. (NRDC, No. 112 at p. 

3; NEEA, No. 119 at p. 3) 

Beyond these technical comments 

focused on the merits of DOE’s 

alternative proposals tying the 

performance-related feature to 

maintaining venting compatibility, the 

commenters essentially fell into three 

camps in terms of their 

recommendations for how DOE should 

move forward. Several commenters 

recommended that DOE adopt its 

original proposal to establish product/ 

equipment classes on the basis of the 

subject gas appliance’s utilization of 

condensing/non-condensing technology 

for purposes of 42 U.S.C. 6295(o)(4). 

This approach was favored by Nortek, 

BWC, AHRI, Carrier, and Mortex. 

(Nortek, No. 107 at p. 1; BWC, No. 108 

at p. 2; AHRI, No. 109 at pp. 1, 5; 

Carrier, No. 110 at p. 1; Mortex, No. 111 

at p. 2) Another group recommended 

that DOE abandon not only the 

approaches presented in the September 

2020 SNOPIR, but the approach in the 

July 2019 proposed interpretive rule as 

well, largely based upon the legal, 

technical, and policy arguments raised 

in their earlier comments. This pathway 

was favored by NRDC, A.O. Smith, 

Lennox, the AGs Joint Comment, the CA 

IOUs, the Advocates Joint Comment II, 

and NEEA. (NRDC, No. 112 at p. 2; A.O. 

Smith, No. 113 at p. 2; Lennox, No. 114 

at p. 1; AGs Joint Comment II, No. 115 

at p. 1; CA IOUs, No. 117 at p. 1; 

Advocates Joint Comment II, No. 118 at 

p. 1; NEEA, No. 119 at p. 1) Finally, the 

organizations submitting the Petitioners 

et al. Joint Comment II argued that the 

issues of venting compatibility raised in 

the September 2020 SNOPIR do not 

need to be addressed at the present time 

in order to resolve the core issue of 

applying the ‘‘unavailability’’ provision 

of EPCA to the specific proposed 

standards for residential furnaces and 

commercial water heaters, as requested 

by the Gas Industry Petition. Instead, 

these commenters argued that these 

important issues are more appropriately 

addressed in the context of the 

development of new standards for 

residential furnaces, commercial water 

heaters, and other gas or propane-fueled 

products/equipment. (Petitioners et al. 

Joint Comment II, No. 116 at pp. 4, 6) 

The residual comments of these three 

groups are summarized in the 

paragraphs that follow. 

Commenters supporting adoption of 

DOE’s original proposal to establish 

product/equipment classes on the basis 

of the subject gas appliance’s utilization 

of condensing/non-condensing 

technology made the following 

additional points. For furnaces currently 

on the market, Nortek, AHRI, and 

Carrier stated that they are all already 

divided into non-condensing/Category I 

and condensing/Category IV, so there is 

no substantive distinction between the 

two. Of the two, these commenters 

prefer categorization based upon a 

‘‘condensing/non-condensing’’ 

distinction, because furnaces are already 

divided in that manner for purposes of 

DOE’s energy conservation standards for 

furnace fans. (Nortek, No. 107 at pp. 2– 

3; AHRI, No. 109 at p. 3; Carrier, No. 

110 at p. 2) Carrier also stated that it 

continues to believe that noncondensing operation is the key 

performance-related feature at issue. 

(Carrier, No. 110 at p. 2) AHRI opined 

that a ‘‘non-condensing’’ product class 

should be sufficient to capture all 

boilers requiring Category I venting, but 

it nonetheless encouraged DOE to 

explicitly incorporate the ability to use 

existing venting categories associated 

with atmospheric venting. (AHRI, No. 

109 at p. 5) 

Nortek and AHRI added that 

finalizing DOE’s interpretation based 

upon a ‘‘condensing/non-condensing’’ 

distinction, as originally proposed, 

would not preclude the Department 

from considering and analyzing venting 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4791 

applications when creating product/ 

equipment classes during the course of 

individual energy conservation 

standards rulemakings, as necessary. 

These commenters argued that a 

thorough, product-specific definition 

and technology-focused characteristics 

should be evaluated to create functional 

product/equipment classes that might 

vary for different types of appliances. 

(Nortek, No. 107 at p. 2; AHRI, No. 109 

at p. 2) Finally, AHRI stated that 

tolerances and operational 

characteristics of the product-specific 

test procedure must be considered in 

future rulemakings to ensure that any 

energy conservation standards are safe, 

functional, and cost-effective. (AHRI, 

No. 109 at p. 2) 

Mortex cautioned that in moving 

forward with standard setting for 

revised energy conservation standards 

for residential gas furnaces, including 

mobile home gas furnaces, DOE must 

take into account the product class 

structure established for residential 

furnace fans manufactured on or after 

July 3, 2019 (codified at 10 CFR 

430.32(y)). Mortex argued that pursuant 

to 42 U.S.C. 6295(m)(4)(B), any revised 

energy conservation standards for noncondensing, non-weatherized mobile 

home gas furnaces must not preclude 

the continued sale of mobile home gas 

furnaces containing furnace fans that 

comply with the new furnace fan 

standards, because under that provision, 

EPCA prohibits DOE from subjecting 

manufacturers to a new standard for a 

product with respect to which other 

new standards have been required 

during the prior 6-year period. The 

commenter argued that this requirement 

can only be met by ensuring that any 

revised energy conservation standards 

applicable to non-weatherized mobile 

home gas furnaces permit the continued 

sale of non-condensing mobile home gas 

furnaces. (Mortex, No. 111 at p. 2) 

Commenters supporting withdrawal 

of DOE’s July 2019 proposed 

interpretive rule and September 2020 

SNOPIR made the following additional 

points. NRDC opposes and urged DOE 

to withdraw both the July 2019 

proposed interpretive rule and the 

September 2020 SNOPIR, because the 

commenter argued that both suffer from 

technical and legal issues which the 

Department has failed to address. NRDC 

and Lennox renewed and reiterated 

many of the arguments raised in their 

earlier comments to this docket, because 

the commenters stated that those same 

objections apply regardless of whether 

the performance characteristics at issue 

involve the use of condensing 

technologies or venting compatibility. 

(NRDC, No. 112 at p. 2; Lennox, No. 114 

at pp. 7–8) Other commenters did the 

same, and as mentioned previously, 

such arguments are addressed elsewhere 

in this document. 

Lennox criticized DOE’s September 

2020 SNOPIR as being ‘‘overtly vague 

and unsupported,’’ and in particular, 

the commenter faulted the alternate 

approach which would consider the 

creation of separate product classes for 

any existing venting system available on 

the market as ambiguous and illdefined, such that it deprives 

stakeholders the opportunity to 

comment. For example, Lennox 

questioned whether DOE’s proposal 

would include specialty or unique 

ventilation types. (Lennox, No. 114 at 

pp. 1, 3, 6) Lennox also faulted DOE’s 

proposals for making what it calls 

‘‘speculative and unsupported 

statements,’’ such as the number and 

cost of problematic installations and 

DOE’s expectation regarding limited 

negative programmatic impacts 

resulting from its proposed 

interpretation. Accordingly, the 

commenter argued that DOE’s lack of 

analysis and supporting data once again 

deny stakeholders the opportunity to 

comment on the September 2020 

SNOPIR. (Lennox, No. 114 at p. 3) 

Lennox added that the September 2020 

SNOPIR offers no meaningful cost 

analysis or quantification of installation 

issues, so it argued that DOE has no 

record basis to move forward with its 

proposed interpretive rule. (Lennox, No. 

114 at p. 4) Similarly, the CA IOUs 

requested that DOE quantify the 

potential negative impacts of its 

proposal in the September 2020 SNOPIR 

for residential furnaces, commercial 

water heaters, and other similarlysituated products/equipment. (CA IOUs, 

No. 117 at p. 4) 

In addition, A.O. Smith alleged that 

DOE is improperly attempting to use 

venting categorization in the features 

provision as a proxy for how to consider 

increased installation cost in its 

rulemakings. Instead, the commenter 

argued that such installation cost 

considerations belong in DOE’s 

economic analysis. (A.O. Smith, No. 113 

at p. 3) Furthermore, A.O. Smith argued 

that DOE’s proposed interpretation, if 

applied to maintain Category I venting, 

would eliminate more-efficient noncondensing products from the market, 

which would restrict the opportunity for 

incremental gains in efficiency for noncondensing appliances through Federal 

regulation. (A.O. Smith, No. 113 at pp. 

4–5) 

Commenters supporting finalization 

of the core ‘‘features’’ determination 

under EPCA and deferral of 

implementation issues (e.g., class 

setting) to individual product/ 

equipment rulemakings made the 

following additional points. The 

Petitioners et al. Joint Comment II 

argued that the issues of venting 

compatibility raised in the September 

2020 SNOPIR do not need to be 

addressed at the present time in order 

to resolve the core issue of applying the 

‘‘unavailability’’ provision of EPCA to 

the specific proposed standards, as 

requested by the Gas Industry Petition. 

Instead, these commenters argued that 

these important issues are more 

appropriately addressed in the context 

of the development of new standards for 

residential furnaces, commercial water 

heaters, and other gas or propane-fueled 

products/equipment. (Petitioners et al. 

Joint Comment II, No. 116 at pp. 4, 6) 

The Advocates Joint Comment II also 

stated that venting considerations for 

each product potentially covered by 

DOE’s interpretation are different, so 

such impacts must be considered in the 

context of individual rulemakings, 

which can consider the specific 

circumstances of each product (although 

the advocates still consider venting to 

be a matter for DOE’s economic 

analysis). (Advocates Joint Comment II, 

No. 118 at p. 5) 

In conducting inquiries in these 

individual rulemakings, the Petitioners 

et al. Joint Comment II stated that the 

Department should consider product 

class definitions for residential products 

which reflect venting requirements that 

are established and codified under 

national consensus standards, and then 

DOE should assess the need for separate 

minimum efficiency standards for these 

classes. These commenters stated that 

for the subject residential furnaces and 

commercial water heaters, these 

appliances are design-certified for safety 

based on the venting characteristics. 

According to these commenters, there 

are four venting criteria specified in the 

applicable industry consensus standards 

for residential furnaces and commercial 

water heaters, as identified in ANSI 

Z21.47, Gas-Fired Central Furnaces, and 

ANSI Z21.10.3, Gas-Fired Water 

Heaters, respectively. The Petitioners et 

al. Joint Comment II added that the 

installation codes for gas furnaces— 

ANSI Z223.1/NFPA 54, National Fuel 

Gas Code, and the International Fuel 

Gas Code—include requirements for 

proper installation (e.g., vent sizing, 

termination, and clearance 

requirements). The commenters 

surmised that these product categories 

would provide an appropriate starting 

point for DOE’s technical and economic 

analysis to determine whether separate 

minimum efficiency standards are 

4792 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

19See 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. 

appropriate for each equipment class. 

The Petitioners et al. Joint Comment II 

recommended that these issues should 

be addressed in individual product 

rulemakings under DOE’s Process 

Rule 19 and using the most current 

information available. (Petitioners et al. 

Joint Comment II, No. 116 at pp. 7–8) 

The Petitioners et al. Joint Comment 

II stressed that action on the Gas 

Industry Petition is a matter of some 

urgency, because litigation has been 

filed seeking to compel final action in 

a number of energy conservation 

standards rulemaking proceedings, 

including the proceedings in which 

proposals were issued that are the 

subject of the Gas Industry Petition. As 

a result, the Petitioners et al. Joint 

Comment II argued that DOE should 

clarify the situation by withdrawing its 

prior rulemaking proposals for 

residential furnace and commercial 

water heater energy conservation 

standards, because those proposals 

cannot not be legally finalized as 

proposed if the Department promulgates 

a final interpretive rule along the lines 

of that set forth in the July 2019 

proposed interpretive rule. (Petitioners 

et al. Joint Comment II, No. 116 at p. 5) 

In light of the above arguments, it has 

become apparent to DOE that its 

alternative proposals to establish 

product/equipment classes based upon 

maintaining venting compatibility drew 

little public support, and problems may 

arise from adopting them as an 

overarching approach. Support for 

maintaining compatibility with Category 

I venting was limited to only Crown 

Boiler and USB, and no commenter 

spoke in favor of an approach to 

maintain compatibility with all existing 

venting types. However, a broad crosssection of industry stakeholders with 

considerable technical expertise 

confirmed their understanding that 

DOE’s original proposal to define the 

subject performance-related feature as 

the appliance’s condensing or noncondensing operation would represent a 

workable approach to implementing 

DOE’s revised interpretation. 

Based upon DOE’s careful review of 

the comments received, the Department 

has decided it is not appropriate to 

move forward with either of the two 

alternative approaches based upon 

venting compatibility presented in the 

September 2020 SNOPIR, but to instead 

adopt its original proposal presented in 

the July 2019 proposed interpretive rule, 

which focused on an appliance’s 

condensing or non-condensing 

operation. Comments on the September 

2020 SNOPIR have convinced the 

agency that its alternative proposals 

would have increased the complexity 

and regulatory burden of its regulatory 

framework with little benefit. Because 

DOE is no longer pursuing these 

alternative approaches, the Department 

finds it unnecessary to address all of the 

technical arguments and other 

contentions against making 

maintenance of venting compatibility a 

touchstone of its ‘‘features’’ 

determination. DOE is also persuaded 

by the stakeholder comments that have 

positively assessed the implementation 

potential of DOE’s revised interpretation 

along the lines of its original proposal. 

DOE agrees with the commenters who 

suggested that DOE should move to 

resolve the ‘‘core issue’’ at the heart of 

the Gas Industry Petition in this final 

interpretive rule, while reserving 

appliance-specific implementation 

issues (including class setting) for 

review and analysis in the context of 

individual product rulemakings. DOE 

has concluded that such an approach 

would best serve all parties, including 

manufacturers and consumers. 

Individual product rulemakings will 

have the requisite mix of interested 

stakeholders, technical experts, a 

comprehensive record with productspecific data (including a review of 

relevant industry consensus standards), 

and the full suite of analyses for class 

and standard setting. In that venue, DOE 

and interested stakeholders will be 

better able to address any relevant 

technical matters or product-specific 

nuances, including the tolerances and 

operational characteristics of test 

procedures mentioned by AHRI, and 

any lingering concerns related to the 

issue initially raised by USB, BHI, and 

Crown Boiler. 

Because the approach in DOE’s earlier 

proposals for residential furnaces and 

commercial water heaters are 

inconsistent with this final 

interpretation and, therefore, will 

require revision, DOE has decided to 

grant the request in the Petitioners et al. 

Joint Comment II for the withdrawal of 

those proposals. Published elsewhere in 

this issue of the Federal Register, DOE 

withdraws its March 12, 2015 proposed 

rule and September 23, 2016 

supplemental proposed rule for energy 

conservation standards for nonweatherized gas furnace and mobile 

home gas furnaces, as well as its May 

31, 2016 proposed rule for energy 

conservation standards for commercial 

water heating equipment. DOE’s 

decision to withdraw its earlier 

proposals is discussed in further detail 

in section III.D.3 of this document. 

Regarding arguments challenging the 

technical/legal/policy bases for the 

September 2020 SNOPIR, DOE found 

many of these comments to essentially 

be re-statements of their comments 

submitted in response to the July 2019 

proposed interpretive rule, rather than 

specifically focused on the particulars of 

DOE’s supplemental proposed 

interpretation. Accordingly, those 

concerns are cited and addressed 

elsewhere in this document. 

As to Mortex’s concern about the 

statutory prohibition on applying new 

standards to a covered product for 

which other new standards have been 

required within the prior six-year period 

(42 U.S.C. 6295(m)(4)(B)), DOE would 

point out that, given that requirements 

for furnace fans came into effect on July 

3, 2019, and given the anticipated fiveyear lead time for amended standards 

for residential furnaces (including 

mobile home gas furnaces), it is 

anticipated that more than six years will 

have passed by the time any new 

furnaces standards would come into 

effect. 

b. Comments Opposing the Proposed 

Interpretation 

Other commenters strongly opposed 

and urged withdrawal of DOE’s 

proposed revised interpretation 

regarding whether non-condensing 

technology and associated venting 

constitutes a ‘‘feature’’ under EPCA. (CA 

IOUs, No. 85 at p. 1; CFA/NCLC, No. 93 

at p. 1; AGs Joint Comment, No. 82 at 

p. 2; NRDC, No. 94 at p. 1; Advocates 

Joint Comment, No. 95 at p. 1; 

Environmentalists Joint Comment, No. 

90 at p.1: AGs Joint Comment II, No. 115 

at p. 2) These commenters raised a 

number of arguments which are set forth 

and addressed in the paragraphs that 

follow. 

i. Support for DOE’s Prior Interpretation 

Several commenters expressed 

support for DOE’s prior position, as 

presented in past rulemaking 

documents published in the Federal 

Register, which concluded that noncondensing technology (and associated 

venting capabilities) do not merit a 

‘‘feature’’ designation and the 

establishment of a separate product 

class with a different energy 

conservation standard. (Ceres, No. 69 at 

p. 3; Lennox, No. 87 at p. 4; A.O. Smith, 

No. 88 at p. 2; NRDC, No. 94 at pp. 4– 

5; CA IOUs, No. 85 at p. 3; A.O. Smith, 

No. 113 at p. 2; Lennox, No. 114 at pp. 

6–7; AGs Joint Comment II, No. 115 at 

p. 2; CA IOUs, No. 117 at p. 1; NEEA, 

No. 119 at p. 1) In making that point, the 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4793 

20 DOE notes that this final rule was actually 

published in the Federal Register on April 16, 

2010. 21 DOE notes that this final rule was actually 

published in the Federal Register on April 21, 

2011. 

22 In its energy conservation standards 

rulemaking for cooking products that culminated in 

the September 8, 1998 final rule (63 FR 48038), 

DOE explained its rationale for initially considering 

a design option to eliminate oven door windows as 

a means to improve energy efficiency in the 

technical support document (TSD) for that 

rulemaking. (See Volume E, Chapter 1, Engineering 

Analysis, section 1.4.1, Design Options for Ovens, 

pp. I–22 to I–23. (Available at: https://

beta.regulations.gov/document/EERE-2006-STD0048-0027; (select EE–RM–90–201 COMMENT 

OOA2–4). 

AGs Joint Comment argued that DOE’s 

proposed interpretive rule would 

effectively grandfather inefficient 

designs. (AGs Joint Comment, No. 82 at 

p. 3) The AGs Joint Comment pointed to 

and even quoted from a number of 

DOE’s past rulemakings which 

articulated the rationale for finding that 

venting capabilities (and any related 

costs) are not a performance-related 

feature under EPCA. Specifically, these 

commenters cited to language contained 

in the [March 12,] 2015 NOPR and 

[September 23,] 2016 SNOPR for 

residential furnaces, the 2009 final rule 

for residential water heaters,20 and the 

2015 final rule for residential clothes 

dryers.21 In short, the AGs Joint 

Comment (and other commenters) 

agreed with DOE’s historic view that a 

furnace’s or water heater’s manner of 

venting does not provide consumers 

unique utility separate and apart from 

its basic function of providing heat or 

hot water. (AGs Joint Comment, No. 82 

at pp. 3, 8–10; A.O. Smith, No. 88 at pp. 

2, 4; NRDC, No. 94 at pp. 4–5; CA IOUs, 

No. 85 at pp. 2–3; NRDC, No. 112 at p. 

2) NRDC added that when DOE acts to 

reverse a long-held interpretation, as it 

seeks to do with the proposed 

interpretation for condensing/noncondensing products/equipment, DOE 

has the burden of proof to clearly 

explain and justify its rationale. (NRDC, 

No. 94 at p. 3) 

In response, DOE disagrees with these 

commenters’ view that the Department’s 

revised interpretation is inappropriate 

or lacking in evidentiary basis, and DOE 

notes that numerous other commenters 

on the proposed interpretive rule held a 

contrary opinion. As explained 

elsewhere in this document, the Gas 

Industry Petition gave DOE the 

opportunity to revisit its prior 

interpretation, and the information 

provided in that petition and in 

subsequent comments thereon caused 

DOE to reevaluate prior data and, 

ultimately, its position. These 

commenters cannot reasonably claim 

that the rulemaking dockets for 

residential furnaces, commercial water 

heaters, and other similarly-situated 

products/equipment are lacking in data. 

Because data is always subject to 

interpretation, it is not reasonable for 

these commenters to demand that a 

revised interpretation must rely solely 

upon new data. Here, the petitioners did 

present the Department with new 

arguments, perspectives, and 

information that were useful to DOE in 

reexamining its position. More 

specifically, the petitioners explained 

how the shift to energy conservation 

standards set at a condensing level 

could necessitate significant 

modifications to both new and existing 

buildings, such that interior residential 

or commercial space may need to be 

sacrificed, additional unattractive 

venting would need to be added, or 

desirable window or patio space could 

be lost. These new arguments 

demonstrate ongoing impacts that 

would be noticed and likely perceived 

negatively by consumers, and this 

reasoning is in addition to the other 

arguments and data previously 

submitted by the petitioners and 

considered by DOE during the course of 

various rulemakings. As noted, DOE 

also relied upon the significant data 

already in these rulemaking dockets to 

assess its prior interpretation as to 

whether non-condensing technology 

(and associated venting) constitutes a 

performance-related ‘‘feature’’ for 

purposes of EPCA. Based upon the 

totality of the information, DOE has 

determined that the change in 

interpretation reflected in this final 

interpretive rule is appropriate under 

the statute. 

Regarding the assertion in the AGs 

Joint Comment that the revised 

interpretation would grandfather 

inefficient designs, that same argument 

could be ventured virtually every time 

a determination is made under EPCA’s 

‘‘features’’ provision. An oven without a 

window in the door would be more 

efficient than one that retains that 

feature.22 However, the statute, by the 

very nature of its ‘‘features’’ provision, 

makes clear that efficiency will not be 

paramount in all situations. In fact, the 

words of the statute make clear that is 

the precise purpose of the ‘‘features’’ 

provision. In that provision, EPCA 

prohibits the Secretary from prescribing 

a new or amended standard (i.e., 

imposing a standard for a product where 

a standard did not previously exist or 

increasing the stringency of an existing 

standard) if doing so is likely to result 

in the unavailability of a performance 

characteristic, feature, etc. substantially 

the same as those generally available in 

the absence of the Secretary prescribing 

a new or amended standard. See 42 

U.S.C. 6295(o)(4). Thus, DOE finds this 

argument in the AGs Joint Comment to 

be contrary to the statute. 

ii. Violations of Legal Standards 

Related to their support of DOE’s 

prior interpretation, a number of 

commenters challenged DOE’s proposed 

interpretation on a variety of legal 

grounds. For example, these 

commenters faulted the Department’s 

proposal as being arbitrary and 

capricious; contrary to law; and contrary 

to precedent and factually unsupported. 

DOE recognizes that such topics are 

often intertwined. However, given the 

rather voluminous nature of these 

submitted arguments, DOE has 

segmented the discussion into these 

broad categories for response in the 

subsections that follow. 

Arbitrary & Capricious 

A number of commenters 

characterized DOE’s proposed reversal 

of its prior interpretation and dismissal 

of its prior concerns as arbitrary and 

capricious and an abuse of discretion, 

despite DOE’s stated expectation that 

the programmatic impacts of its revised 

interpretation are likely to be limited 

(which was characterized as a claim 

alleged to be lacking in data and 

analysis). (AGs Joint Comment, No. 82 

at pp. 2, 7–10; CEC, No. 89 at p. 3; AGs 

Joint Comment II, No. 115 at p. 2; CA 

IOUs, No. 117 at p. 3) The CEC 

predicted that without sufficient record 

evidence to support its decision (i.e., 

changed interpretation), a court would 

overturn such agency action as arbitrary 

and capricious. Overall, the commenter 

expressed its belief that DOE’s proposed 

interpretation is contrary to the 

preponderance of evidence in the 

record, particularly since DOE 

improperly conflates economic and 

performance characteristics. 

Accordingly, the CEC concluded that 

DOE’s historical interpretation on this 

matter is both consistent with the 

evidence and reflects congressional 

intent to improve energy efficiency and 

protect human health. (CEC, No. 89 at 

p. 7) 

DOE disagrees with these 

commenters’ notion that the Department 

lacks sufficient evidence to support a 

revised interpretation, thereby rendering 

the agency vulnerable to a legal 

challenge claiming arbitrary and 

capricious action. As noted previously, 

the petitioners presented new 

information and arguments explaining 

how the shift to energy conservation 

standards set at a condensing level 

4794 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

could necessitate significant 

modifications to both new and existing 

buildings, such that interior residential 

or commercial space may need to be 

sacrificed, additional unattractive 

venting would need to be added, or 

desirable window or patio space could 

be lost. These new arguments 

demonstrate ongoing impacts that 

would be noticed and likely perceived 

negatively by consumers, and this 

reasoning is in addition to the other 

arguments and data previously 

submitted by the petitioners and 

considered by DOE during the course of 

various rulemakings. In sum, DOE’s 

existing rulemaking dockets are replete 

with evidence bearing on this matter. 

DOE appropriately reassessed that 

information in response to the 

submitted petition for rulemaking and, 

based upon the totality of the available 

information, came to the reasoned 

conclusion that its revised 

interpretation better comports with the 

statute, as explained in this document. 

Contrary to Law 

Other commenters characterized 

DOE’s proposed interpretation as 

contrary to law. (Lennox, No. 87 at p. 4; 

AGs Joint Comment, No. 82 at pp. 2–3; 

A.O. Smith, No. 88 at p. 2; CEC, No. 89 

at p. 3; NRDC, No. 94 at p. 4; A.O. 

Smith, No. 113 at p. 2; AGs Joint 

Comment II, No. 115 at p. 1) The AGs 

Joint Comment asserted that DOE’s 

proposed interpretation is contrary to 

law under 5 U.S.C. 706(2), and that a 

plain reading of EPCA and review of 

public comments make clear that 

venting technology is not a 

performance-related feature under the 

statute. Consequently, these 

commenters reasoned that DOE cannot 

create a separate product class for noncondensing products on that basis 

which would be subject to lower 

efficiency requirements. (AGs Joint 

Comment, No. 82 at p. 7; AGs Joint 

Comment II, No. 115 at p. 2) Lennox 

added that Congress set initial energy 

conservation standards for residential 

furnaces with product classes based on 

capacity and fuel source, but it did not 

segment classes by condensing and noncondensing technology, so the 

commenter argued that DOE should not 

do so now. (Lennox, No. 87 at p. 3) 

In response, DOE’s proposed 

interpretive rule is in accordance with 

the pertinent statutory provisions of 

EPCA. As commenters acknowledged, 

the statute does not define the terms 

‘‘feature’’ or ‘‘performance-related 

feature,’’ so resolution of this ambiguity 

is left to the agency’s discretion as a 

matter of statutory interpretation. Over 

the more than 30-year life of the 

Appliance Standards Program, DOE has 

made numerous ‘‘features’’ 

determinations, so the Department has 

expertise in weighing issues of 

consumer utility. Size constraints and 

building modifications to a dwelling or 

business seem clearly within the bounds 

of product characteristics that would 

matter to an average consumer, and 

have mattered in the past to DOE 

without objection (see e.g., 76 FR 22454, 

22485 (April 21, 2011) (discussing 

ventless and compact clothes dryers); 76 

FR 37408, 37446 (June 27, 2011) 

(discussing space-constrained 

residential central air conditioners and 

heat pumps)). DOE also rejects Lennox’s 

argument that just because Congress 

based initial furnace standards on 

capacity and fuel source that 

modifications to that existing class 

structure would be forever off limits. 

Such argument would render the 

‘‘features’’ provisions at 42 U.S.C. 

6295(o)(4) and 42 U.S.C. 

6313(a)(6)(B)(iii)(II)(aa) superfluous, so 

DOE declines to adopt Lennox’s 

suggested approach. Although DOE has 

found the Gas Industry Petition to 

encompass a number of complex issues, 

DOE has concluded that its revised 

interpretation set forth in this final 

interpretive rule is well grounded in 

current law. 

Lennox opined that DOE would be 

violating the legal standard pronounced 

by the Supreme Court that for an agency 

to change a regulatory interpretation, it 

must articulate a ‘‘ ‘rational connection 

between the facts found and the choices 

made’ ’’ (citing Motor Vehicle Mfrs. 

Ass’n v. State Farm Mut. Auto. Ins. Co., 

463 U.S. 29, 52 (1983)). (Lennox, No. 87 

at p. 4) Similarly, A.O. Smith’s 

comments claim that DOE’s proposed 

interpretation deviates from the 

Department’s past precedent without 

sufficient justification, administrative 

record support, or reasoned explanation. 

The commenter stated that DOE must 

provide a reasonable basis for its new 

interpretation, but it concluded that 

none of the Department’s justifications 

are reasonable. (A.O. Smith, No. 88 at p. 

6) First, A.O. Smith challenged the 

Department’s tentative findings in the 

proposed interpretation related to space 

constraints, distinguishing DOE’s past 

regulatory actions related to PTACs and 

ventless clothes dryers. The commenter 

acknowledged that the statute does 

expressly recognize ‘‘size’’ as a relevant 

factor under EPCA’s ‘‘features’’ 

provision (see 42 U.S.C. 6295(o)(4); 42 

U.S.C. 6313(a)(6)(B)(iii)(II)(aa)), but it 

argued that DOE’s proposed 

interpretation, as it relates to 

commercial water heaters and similarly 

situated products, does not turn on size 

(given the wide availability of water 

heaters in a wide variety of diameters, 

heights, and footprints), but rather on 

condensing technology itself. (A.O. 

Smith, No. 88 at pp. 6–7) A.O. Smith 

also distinguished DOE’s creation of 

distinct product classes for vented and 

ventless clothes dryers, noting that the 

presence or absence of vents in the 

residential space was a proxy for 

moisture removal designs (necessary to 

prevent mold growth and other health 

concerns). The commenter argued that 

without adequate venting or a ventless 

dryer option, some consumers would be 

unable to have a dryer at all (e.g., highrise condo residents), but that situation 

would not apply to commercial water 

heaters, because commercial settings 

can accommodate condensing 

technology. Furthermore, A.O. Smith 

argued that DOE has proffered no new 

facts or changed circumstances to 

support its new conclusion, but instead, 

the company asserted that the 

Department has failed to acknowledge 

the wide variety of vent and intake air 

pipes that exist and that may 

accommodate differing condensing 

water heater installations, all of which 

should be properly considered in DOE’s 

economic analyses. (A.O. Smith, No. 88 

at pp. 7–8, 10) 

In response, DOE has articulated a 

rational and reasonable basis for its 

proposed change of interpretation. As 

mentioned previously, DOE’s prior 

interpretation did not adequately 

account for the consumer utility of noncondensing appliances (and associated 

venting) in difficult installation 

situations. Commenters have also 

identified benefits related to expanded 

consumer choice. DOE disputes A.O. 

Smith’s statements that the difficult 

installation situations examined do not 

pertain to size constraints, as well as its 

attempt to imply that alternate venting 

and piping would offer a panacea for the 

larger problem identified. Gas industry 

commenters provided considerable 

information in these regards to the 

residential furnaces, commercial water 

heaters, and other dockets, and DOE’s 

own analyses showed that difficult 

installation situations exist, with many 

cases reflected in the Department’s 

investigation of fuel switching. The Gas 

Industry Petition provided occasion for 

DOE to revisit its prior interpretation, 

and the agency has concluded that it 

erred in failing to consider consumer 

utility more broadly in this context. The 

Department would argue that there 

already was and is extensive evidence 

in the record bearing on this issue as 

would support DOE’s change of course. 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4795 

While DOE outlines the general factual 

basis and legal principles in this final 

interpretive rule, the Department will 

make a more explicit statement of the 

evidentiary basis for separate product/ 

equipment classes and standards for 

non-condensing products/equipment in 

the context of a specific energy 

conservation standards rulemaking for 

each appliance impacted by this revised 

interpretation. Such detailed 

information resides in those individual 

rulemaking dockets and cannot be 

comprehensively addressed here. 

However, an expanded statement of the 

basis for regulatory action is appropriate 

before such rulemakings alter existing 

regulatory requirements. 

According to A.O. Smith, DOE’s 

proposed interpretation conflicts with 

the Department’s statutory obligations 

pursuant to EPCA and would 

undermine the Appliance Standards 

Program. It argued that although EPCA 

does not define the term ‘‘feature,’’ DOE 

cannot adopt a definition that conflicts 

with its statutory obligations to improve 

energy efficiency and the statutorilymandated process for setting new and 

amended standards. A.O. Smith alleged 

that such reinterpretation would have 

profound negative consequences for 

energy efficiency and consumer choice. 

More specifically, the commenter 

asserted that it would impose an 

artificial ceiling on efficiency and create 

a loophole by locking in an outdated 

and inefficient technology with no 

consumer benefit. According to A.O. 

Smith, the logical consequence of DOE’s 

reinterpretation would be the 

establishment of separate standards, but 

because non-condensing commercial 

water heaters can only be made 

minimally more efficient than the levels 

in the current energy conservation 

standards, the commenter concluded 

that no further standard would likely be 

cost-effective, thereby leaving these 

products ‘‘effectively unregulated.’’ The 

commenter predicted that in its next 

commercial water heaters rulemaking, 

DOE would set a condensing standard of 

no less than 95 percent thermal 

efficiency, and as a result, 

manufacturers who are unable to meet 

the more-stringent standards for 

condensing commercial water heaters 

would revert to producing noncondensing models which enjoy a lower 

standard, all of which would have the 

effect of increasing condensing 

appliance costs and shrinking the 

market for high-efficiency products. 

(A.O. Smith, No. 88 at pp. 10–11; A.O. 

Smith, No. 113 at p. 5) 

DOE cannot agree with the 

interpretation of EPCA that A.O. Smith 

seeks to advance, because it is 

inconsistent with the legal obligations 

set forth under the statute’s ‘‘features’’ 

provision. The ‘‘features’’ provision was 

enacted by Congress to maintain 

important aspects of appliances’ utility 

to consumers even if some measure of 

energy savings would be lost. To apply 

a litmus test of ‘‘no lost energy savings’’ 

or some vague ‘‘fidelity to the statute’’ 

standard would render EPCA’s 

‘‘features’’ provision rarely used, if not 

impossible to use—the very definition 

of ‘‘superfluous.’’ Whereas A.O. Smith 

accuses DOE’s proposed interpretive 

rule of undermining the Appliance 

Standards Program, the commenter’s 

suggested approach would undermine 

the statute by giving DOE unlimited 

authority to override one of the checksand-balances Congress explicitly 

enacted. A.O. Smith mischaracterizes 

Congress’s judgment to put elimination 

of ‘‘performance-related features’’ 

beyond the Department’s regulatory 

reach as DOE’s effort to create an 

artificial ceiling on standards or to 

create a loophole for inefficient 

technology. That is simply not the case; 

rather, DOE is following clear statutory 

direction to protect consumer utility, 

even if that means foregoing the 

potential opportunity for increased 

energy efficiency, and is applying facts 

to those words in a specific 

circumstance. Also, contrary to what 

A.O. Smith suggests, DOE’s proposal 

would enhance consumer choice by 

maintaining a greater variety of 

appliances on the market. Nothing about 

creating separate product classes for 

condensing and non-condensing 

products in any way requires a 

consumer to purchase any particular 

product. As A.O. Smith recognizes, the 

market today consists of both 

condensing and non-condensing 

products, and consumers are perfectly 

free to make the choice to purchase the 

more efficient product when doing so 

fits their needs. This interpretation does 

nothing to change that purchasing 

decision. 

DOE also takes issue with other of 

A.O. Smith’s assertions. First, A.O. 

Smith argues that because noncondensing commercial water heaters 

are near the limits of their energy 

efficiency, they would be ‘‘effectively 

unregulated.’’ This is untrue both 

factually and in terms of what the 

statute requires. Non-condensing water 

heaters would still be subject to 

standards at the current levels (or higher 

if a subsequent rulemaking periodically 

reviewing existing standards determines 

that further technical improvements can 

be made to non-condensing technology 

as would justify an amended standard). 

In addition, nowhere does the statute 

require or establish an expectation that 

there shall be a never-ending cycle of 

increasingly more-stringent standards. 

Such a reading of the statute is belied 

by the fact that the statute expressly 

provides for notices of determination 

that standards for a product do not need 

to be amended where such standards 

would not result in significant energy 

savings, would not be technologically 

feasible, and/or would not be costeffective. (42 U.S.C. 6295(m)(1)(A)) 

In addition, DOE does not agree with 

A.O. Smith’s prediction that 

manufacturers who are unable to meet 

a more-stringent standard for 

condensing commercial water heaters 

would revert to producing noncondensing models which are subject to 

a lower standard, thereby shrinking the 

market for high-efficiency products. As 

discussed in greater detail in section 

III.A.3 of this document, current market 

trends show consumers moving strongly 

towards condensing products based 

upon their substantial demonstrated 

energy savings. Manufacturers have 

every incentive to adjust their product 

lines and processes in response to this 

market demand, even if the condensing 

appliances come to have their own 

higher standard. In the current market, 

consumers are already choosing to pay 

a premium for condensing appliances to 

achieve greater energy savings, and A.O. 

Smith has offered no rational basis 

supported by evidence to show this 

trend would reverse or that other 

manufacturers would rush to forego 

prior investment in condensing 

products to chase a declining market for 

non-condensing products. For those 

same reasons, A.O. Smith has failed to 

provide evidence demonstrating that 

any price increases for condensing 

appliances under a separate energy 

conservation standard would 

appreciably differ from price increases 

under a unified energy conservation 

standard set at a condensing level. 

The Environmentalists Joint Comment 

argued that the Department has failed to 

demonstrate that a violation of EPCA 

would occur by adoption of an energy 

conservation standard that can only be 

met by use of condensing technology. 

(Environmentalists Joint Comment, No. 

90 at p. 1) Along these lines, the 

Environmentalists Joint Comment stated 

that energy conservation standards that 

can only be met by use of condensing 

technology would not lead to minimal 

demand for gas appliances, which they 

assert is the legal test for DOE to take 

action under EPCA’s ‘‘features’’ 

provisions at 42 U.S.C. 6295(o)(4) and 

42 U.S.C. 6313(a)(6)(B)(iii)(II). These 

commenters asserted that in order for 

4796 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

the features provision to come into play, 

a DOE standard would need to leave the 

market with no alternative performance 

characteristics, features, sizes, 

capacities, or volumes that are 

‘‘substantially the same’’ as those that 

would be eliminated from the market. 

They opined that Congress intended 

DOE to balance the preservation of 

product utility with the energy-saving 

objectives of the statute. In explaining 

their position, the Environmentalists 

Joint Comment quoted from the 

legislative history accompanying those 

statutory provisions: ‘‘ ‘A valid standard 

may entail some minor loss of 

characteristics, features, sizes, etc.; for 

this reason, the Act requires that 

‘substantially the same,’ though not 

necessarily identical, characteristics or 

features should continue to be 

available.’ H. Rep. 100–11 at 23 (1987).’’ 

‘‘[T]he Senate Energy and Natural 

Resources Committee explained that, in 

the context of residential gas furnaces, 

section 325(o)(4) [42 U.S.C. 6295(o)(4)] 

would forbid a standard from ‘being set 

at a level that would increase the price 

to the point that the product would be 

noncompetitive and that would result in 

minimal demand for the product.’ S. 

Rpt. 100–6 at 8–9 (Jan. 30, 1987), 

reprinted in 1987 U.S.C.C.A.N. 52, 59.’’ 

Relying on this language, the 

Environmentalists Joint Comment 

concluded that DOE’s proposed 

interpretation is impermissible because 

it does not meet this test, arguing not 

only that the Department has failed to 

demonstrate that condensing standards 

for both residential furnaces and 

commercial water heaters would result 

in minimal demand for these types of 

gas appliances, but also that the record 

in those rulemakings establish that fuel 

switching would be less than 10 

percent. (Environmentalists Joint 

Comment, No. 90 at p. 2) 

The Petitioners et al. Joint Comment 

sought to refute comments suggesting 

that EPCA’s ‘‘features’’ provision would 

only apply if the unavailability of the 

performance characteristic or feature at 

issue would completely destroy the 

market for the covered product/ 

equipment. The Petitioners et al. Joint 

Comment argued that opponents of the 

Gas Industry Petition have 

misinterpreted the legislative history 

and that standards for residential 

furnaces which result in the 

unavailability of a performance 

characteristic would still be precluded 

under the statute, even if it would not 

fully eliminate the market for gas 

furnaces. (Petitioners et al. Joint 

Comment, No. 80 at pp. 18–19) 

Likewise, the Petitioners et al. Joint 

Comment disputed the arguments of 

NRDC and Earthjustice that the 

placement of parentheses marks in 

EPCA’s two ‘‘features’’ provisions (42 

U.S.C. 6295(o)(4) and 42 U.S.C. 

6313(a)(6)(B)(iii)(II)) indicate a 

substantive or material difference 

between those two provisions. These 

commenters argued that those 

opponents of the petition—lacking any 

explicit language or legislative history to 

show a difference between these two 

provisions—rely on improper, extrastatutory qualifications in an attempt to 

exclude atmospherically vented 

products from the ‘‘features’’ provisions’ 

applicability. (Petitioners et al. Joint 

Comment, No. 80 at p. 19) 

In response, DOE agrees with the 

Petitioners et al. Joint Comment that 

these commenters have misconstrued 

the application of EPCA’s ‘‘features’’ 

provision and the relevant legislative 

history. While DOE agrees that adoption 

of an energy conservation standard may 

compel minor changes and 

modifications to an appliance without 

triggering the protections of the statute’s 

‘‘features’’ provisions, it does not seem 

to be a reasonable reading to bar 

application of the ‘‘features’’ provision 

and its protections, except in an extreme 

case where a regulation would vitiate 

demand for a gas-fired appliance 

entirely. Here, the loss of feature would 

not be minor, because elimination of 

non-condensing appliances (and the 

introduction of associated venting 

requirements) would have the 

significant negative consequences 

previously discussed for those 

consumers facing difficult installation 

situations, a subgroup which could be 

upwards of 10 percent of households 

with gas-fired furnaces (based upon fuel 

switching data), as one example. (81 FR 

65720; Sept. 23, 2016) Furthermore, a 

Draconian reading requiring the 

potential elimination of all gas-fired 

appliances would once again threaten to 

read the ‘‘features’’ provision out of 

existence, as a practical matter. This 

cannot be what Congress intended, so 

DOE declines to follow this path. 

The Environmentalists Joint Comment 

echoed the rationale in past DOE 

rulemakings that the consumer utility of 

a residential furnace is to provide heat 

to a dwelling and that the consumer 

utility of a commercial water heater is 

to provide hot water, functional outputs 

which do not change with type of 

venting. Along these lines, they sought 

to link the function of these appliances 

to the statutory definitions of ‘‘furnace’’ 

at 42 U.S.C. 6291(23) and ‘‘storage water 

heater’’ at 42 U.S.C. 6311(12)(A). 

According to the Environmentalists 

Joint Comment, properly installed 

condensing gas appliances exhibit the 

same or substantially the same attributes 

as non-condensing appliances. 

(Environmentalists Joint Comment, No. 

90 at p. 3) Consequently, the 

Environmentalists Joint Comment 

concluded that DOE’s proposed 

determination failed to demonstrate any 

performance-related features of noncondensing gas appliances that require 

protection from standards. 

(Environmentalists Joint Comment, No. 

90 at p. 2) 

As discussed in section III.A.1.a of 

this document, DOE has determined 

that a consumer’s interaction with and 

utility from a non-condensing appliance 

can go beyond such unit’s ability to 

provide hot air or water, particularly in 

difficult installation situations where 

eventual replacement of the appliance 

would necessitate structural 

modifications to a dwelling or business 

(e.g., loss of usable living/retail/storage 

space, addition of unsightly piping or 

venting to the finished space, or loss of 

a window(s)). The Environmentalists 

Joint Comment seeks to tie the statutory 

‘‘features’’ determination to the 

appliance’s primary function by 

focusing on the statutory definitions at 

42 U.S.C. 6291 and 42 U.S.C. 6311. 

However, DOE finds that to be an 

improper reading of statute. The 

commenters’ theory ignores the fact that 

pursuant to 42 U.S.C. 6295(q), DOE is 

bound to focus on the performancerelated feature, rather than the overall 

function of the appliance. For example, 

DOE has determined an oven window to 

be a feature, although it does nothing to 

actually bake the cake placed inside the 

oven. Similarly, DOE has determined 

the angle of access of a residential 

clothes washer to be a feature, although 

it does nothing to make one’s clothes 

cleaner. Under the Environmentalists 

Joint Comment’s theory, such features 

offering distinct utility to consumers 

would no longer deserve protection 

because they are not directly mentioned 

in a statutory definition. Such reading 

would render EPCA’s ‘‘features’’ and 

class-setting provisions significantly 

and improperly diminished, because a 

feature is unlikely to ever be mentioned 

in such definition. If the performancerelated characteristic were so uniform 

and ubiquitous as to be part of the 

general product definition, it would 

arguably come ‘‘standard’’ rather than 

being a ‘‘feature.’’ Accordingly, DOE 

declines to adopt this suggested reading 

of the statute. 

Contrary to Precedent & Factually 

Unsupported 

A number of commenters stated that 

DOE’s proposed interpretation is 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4797 

contrary to DOE precedent and factually 

unsupported. (Lennox, No. 87 at p. 4; 

AGs Joint Comment, No. 82 at p. 3; CEC, 

No. 89 at p. 3) NRDC asserted that 

DOE’s justification in its proposed 

interpretive rule is insufficient and not 

supported by data or research, arguing 

that neither the Gas Industry Petitioners 

nor any other commenter provided new 

arguments, data, or evidence sufficient 

to justify a reversal of DOE’s existing 

policy. (NRDC, No. 94 at pp. 3, 5) The 

AGs Joint Comment characterized DOE’s 

proposed interpretive rule as a radical 

departure from DOE’s historical 

interpretation of EPCA’s ‘‘features’’ 

provision. They stated that DOE has 

already specifically addressed and 

rejected the arguments raised in the Gas 

Industry Petition in a number of 

rulemakings, and they added that the 

Department has failed to identify any 

valid reasons for it proposed change of 

position (e.g., dismissing as insufficient 

DOE’s rationales related to aesthetics, 

compatibility of co-vented appliances, 

and economic factors). (AGs Joint 

Comment, No. 82 at p. 7) The CEC 

faulted DOE for not offering any new 

relevant evidence, reasoning, or facts to 

support its proposed change of 

interpretation. (CEC, No. 89 at p. 5) 

Lennox added that DOE’s proposal is 

not factually supported and relies on 

speculation, particularly with regards to 

the Department’s tentative conclusions 

that new venting may change a home’s 

aesthetics or that some consumers may 

have a preference for gas heating. The 

commenter similarly faulted DOE’s cost 

analysis as lacking in data and 

speculative, even as it attacked costs as 

an inappropriate consideration for 

product class setting. (Lennox, No. 87 at 

p. 4; Lennox, No. 114 at p. 3) 

As stated previously, DOE disagrees 

with these commenters’ view that the 

Department’s revised interpretation is 

inappropriate because it diverges from 

past precedent or that it is lacking in 

evidentiary basis. The Gas Industry 

Petition gave DOE the opportunity to 

revisit its prior interpretation, and the 

information provided in that petition 

and in subsequent comments thereon 

caused DOE to reevaluate prior data 

and, ultimately, its position. These 

commenters cannot reasonably claim 

that the rulemaking dockets for 

residential furnaces, commercial water 

heaters, and other similarly-situated 

products/equipment are lacking in data. 

Here, however, the petitioners presented 

the Department with new arguments, 

perspectives, and information that were 

useful to DOE in reexamining its 

position. However, DOE also relied 

upon the significant data already in 

these rulemaking dockets to assess its 

prior interpretation as to whether noncondensing technology (and associated 

venting) constitutes a performancerelated ‘‘feature’’ for purposes of EPCA. 

Based upon the totality of the 

information, DOE has determined that 

the change in interpretation reflected in 

this final interpretive rule is appropriate 

under the statute. 

The CA IOUs commented that 

product classification and performance 

standards should never be inoperative 

or superfluous, but argued that that is 

precisely what DOE’s proposed 

classifications for residential furnaces 

and commercial water heaters would 

do, because a performance standard 

with separate levels for both condensing 

and non-condensing products would 

represent no new standards or savings, 

but would instead simply codify the 

status quo. (CA IOUs, No. 85 at p. 5) 

Reciting the statutory objectives of 

EPCA, the CA IOUs stated that DOE’s 

performance standards should promote 

innovation and embrace new 

technologies and opportunities as they 

become cost-effective for consumers. In 

order to ensure that DOE does not set a 

precedent here regarding ‘‘features’’ that 

weakens the Department’s ability to set 

effective efficiency standards, the CA 

IOUs urged DOE to clearly distinguish 

between differences that are aspects of 

inherent technical product design and 

differences that materially impact the 

way users interact with the products. To 

this end, the commenters urged DOE to 

establish a consistent definition of 

‘‘performance-related feature’’ to guide 

future inquiries as to whether a given 

aspect of a product is a performancerelated feature under EPCA. The CA 

IOUs supported DOE’s prior 

interpretation that such feature would 

be ‘‘accessible to the layperson and is 

based on user operation,’’ and they 

further argued that the agency should 

limit itself to consideration of product 

classes currently available on the 

market, based upon input from industry 

and other stakeholders. These 

commenters stated that DOE should not 

establish new product classes based 

upon its own original interpretations or 

a determination that certain product 

classes should theoretically exist. (CA 

IOUs, No. 85 at p. 3) 

In response, DOE agrees with the CA 

IOUs that statutory provisions should 

never be made inoperative or 

superfluous, yet that is precisely the 

action the CA IOUs would ask the 

agency to take vis-a`-vis EPCA’s 

‘‘features’’ provision. Where DOE has 

determined the existence of a 

performance-related feature under 

EPCA, setting a separate product/ 

equipment class and standard to protect 

such feature is precisely what the 

statute envisions. Such action is only 

‘‘codifying the status quo’’ in the sense 

that it is protecting the feature from 

elimination as the statute directs. As 

noted elsewhere in this document, 

although EPCA seeks to promote energy 

savings, energy efficiency, and related 

product innovation, Congress also made 

a decision to protect important 

‘‘features’’ by enacting the ‘‘features’’ 

provision, even at the expense of 

potential energy savings. 

Regarding the CA IOUs’ suggestion 

that DOE develop a definition for 

‘‘performance-related feature,’’ DOE has 

concluded that it would not be feasible 

to do so. Given the multitude of covered 

products and equipment for which DOE 

is responsible, the Department has 

found the concept of ‘‘feature’’ to be 

very case-specific. No single definition 

could effectively capture the potential 

for features across such a broad array of 

consumer products and commercial 

equipment. That is why when assessing 

‘‘features,’’ DOE developed the concept 

of consumer utility and how the 

consumer interacts with the product/ 

equipment. DOE continues to apply that 

approach here in the context of noncondensing appliances (and associated 

venting), having determined that in 

cases of difficult installation requiring 

reconfiguration and/or loss of usable 

living space of a home or retail space of 

a business, the consumer would become 

very conscious of and appreciate the 

ability to purchase appliances with noncondensing operation. This 

determination is akin to DOE’s prior 

determinations with regard to finding as 

features windows in oven doors and 

top-loading access to clothes washers. 

DOE has found that expanded choice 

would be important to such consumers, 

and accordingly, the Department has 

determined this to be a ‘‘feature’’ under 

the statute which may not be 

eliminated. 

A.O. Smith opined that condensing 

water heaters could replace noncondensing ones in every commercial 

setting (i.e., technically feasible); 

however, A.O. Smith does admit that 

‘‘there are certain circumstances where 

installing a condensing model may be 

cost-prohibitive due to significant 

installation costs.’’ Rather than making 

an overly broad features determination, 

the commenter suggested that such costs 

should be addressed by ‘‘examining 

subgroups of installations in DOE’s 

economic models’’ and that DOE might 

‘‘decline to set a standard for a 

particular subclass [of consumers], 

where supported by the facts and 

4798 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

23According to the U.S. Census Bureau, housing 

units in the U.S. as of July 1, 2018 numbered 

138,537,078. (Available at: https://www.census.gov/ 

quickfacts/fact/table/US/VET605218) (Last 

accessed May 6, 2020). 

economic analysis.’’ (A.O. Smith, No. 88 

at p. 3; A.O. Smith, No. 113 at p. 3) 

Although DOE appreciates A.O. 

Smith’s acknowledgment of the difficult 

installation situations at issue, the 

commenter offered no data to support 

its assertion that it would be technically 

feasible to substitute a condensing 

commercial water heater in all 

commercial applications, nor would 

that conclusion, if found to be true, 

necessarily resolve other concerns 

raised in the Gas Industry Petition about 

undesired modifications to the 

residential or commercial space. 

Moreover, the Department does not find 

the commenter’s suggested solution to 

be a workable one. As those familiar 

with the Appliance Standards Program 

are aware, DOE has authority to set 

energy conservation standards for 

covered products and equipment which 

must be met by manufacturers before an 

appliance may be distributed in 

commerce. The Department does not 

regulate product use, absent specific 

congressional direction (e.g., gridenabled water heaters). Thus, while 

DOE may have the ability to analyze 

impacts of standards on subclasses of 

consumers, and may use 

disproportionate impacts on a subclass 

of individuals as a basis for determining 

a standard is not economically justified, 

DOE has no authority to set standards 

by subclasses of consumers. Moreover, 

A.O. Smith’s suggestion is a false choice 

because DOE has no ability to ensure 

that products of a certain standard level 

are purchased by only those consumers 

in an intended subgroup. 

The CEC stated that DOE discussed its 

analysis of venting costs for residential 

furnaces, but it ignored the significant 

data provided by energy efficiency 

advocates and others supporting DOE’s 

prior interpretation related to features. 

Specifically, the CEC pointed to what it 

described as multiple data points 

demonstrating that only 1% to 5% of 

homes would present difficult or costly 

installation issues. Consequently, the 

CEC concluded that DOE has 

insufficient information to outweigh the 

data provided by proponents of DOE’s 

historical interpretation. (CEC, No. 89 at 

p. 3) 

Once again, the Petitioners et al. Joint 

Comment sought to respond to certain 

criticisms of opponents of the proposed 

interpretation. In this area, the 

Petitioners et al. Joint Comment argued 

that opponents of the petition seek to 

dismiss the substantial difference in 

performance characteristics offered by 

atmospherically vented products by 

making the assertion that such 

differences amount to nothing more 

than installation characteristics, a 

distinction which the joint comment 

stated is without basis. Instead, the 

Petitioners et al. Joint Comment charged 

that it is the opponents of the petition 

who are ignoring the data, adding that 

a study commissioned by opponents of 

the petition repeatedly acknowledged 

that installation of condensing 

appliances frequently presents noneconomic problems for purchasers, 

although the report seeks to characterize 

them as only aesthetic concerns. 

Instead, the Petitioners et al. Joint 

Comment countered that a condensing 

standard would leave many consumers 

facing the need to sacrifice interior 

living space, a balcony, or a window 

simply to replace an existing gas 

appliance. The Petitioners et al. Joint 

Comment also faulted opponents’ study 

for only classifying a building 

modification as ‘‘significant’’ if it more 

than doubles the total system cost of a 

retrofit, an unreasonable approach 

which masks the extent of the 

disruptive impacts which the Gas 

Industry Petition seeks to prevent. 

(Petitioners et al. Joint Comment, No. 80 

at pp. 20–21) 

The Petitioners et al. Joint Comment 

challenged DOE’s prior rationale (to 

which other commenters continue to 

adhere) suggesting that it is possible to 

install condensing systems in virtually 

all cases, arguing that such assertions 

may only be true in a significant number 

of cases from a technical or theoretical 

standpoint. However, these commenters 

stressed that in many cases (as 

discussed in the petitioners’ own 

competing experts study), such 

installations may not be possible from a 

practical perspective, raising the 

example where the owner of a 

condominium unit could not install a 

condensing unit without violating 

applicable restrictive covenants or 

compromising a common venting 

system serving other units. In other 

cases, the Petitioners et al. Joint 

Comment stated that a condensing 

standard would leave consumers with 

no practical gas appliance replacement 

option without having to accept 

substantial and often undesirable 

building modifications. According to 

the Petitioners et al. Joint Comment, this 

is the same logic and meaning of 

‘‘impossibility’’ that DOE used in its 

final rule for ventless clothes dryers, so 

they argued that the Department should 

make clear a similar understanding in 

the context of condensing technology. 

(Petitioners et al. Joint Comment, No. 80 

at pp. 21–23) 

According to the Petitioners et al. 

Joint Comment, nearly half of all 

residential furnaces in the northern part 

of the country are located in finished 

basements; over ten percent nationwide 

are in apartments; many more are in 

townhomes, and all such installations 

are ones where replacement of 

atmospherically vented products would 

routinely require significant building 

modifications. (Petitioners et al. Joint 

Comment, No. 80 at p. 23) The 

Petitioners et al. Joint Comment 

reasoned that EPCA’s ‘‘features’’ 

provisions were intended, among other 

things, to preserve availability of 

product characteristics which 

consumers need in order to be able to 

use those products without having to 

make significant building modifications. 

These commenters argued that when 

Congress acted through the ‘‘features’’ 

provisions to protect ‘‘sizes,’’ as 

exemplified by statutory standards set 

for different type of installation of direct 

heating equipment, it sought to ensure 

that products fit within ‘‘ ‘standard 

building spaces’ ’’ (quoting H.R. Rep. 

No. 100–11 at p. 23 (1987)). According 

to the Petitioners et al. Joint Comment, 

changes to existing venting to replace an 

atmospherically vented furnace with a 

condensing one would require much 

more significant building modifications 

than most other appliances, so they 

stated that there is no reason to believe 

that Congress intended to spare 

purchasers from the lesser types of 

modifications but not the greater. Based 

upon this overall statutory logic, the 

Petitioners et al. Joint Comment 

concluded that there is no basis to 

conclude that Congress, through 

inadvertent drafting or otherwise, 

intended to reach a contrary result. The 

Petitioners et al. Joint Comment strongly 

stated that arguments to the contrary are 

based upon abstract qualifications that 

are without statutory basis, have not 

been consistently applied, and serve 

only to confound an otherwise straightforward issue of statutory interpretation. 

(Petitioners et al. Joint Comment, No. 80 

at p. 24) 

In response, DOE notes that the CEC 

points to 1% to 5% of dwellings facing 

difficult furnace installation situations. 

However, DOE differs with the 

commenter in terms of its assessment of 

the magnitude and importance of such 

impacts. While the CEC may regard 

such percentages to be de minimis, DOE 

would point out that housing units that 

could be potentially impacted may 

number in the millions.23 Thus, DOE 

has found the potential for a significant 

loss of consumer utility were nonVerDate Sep<11>2014 06:18 Jan 15, 2021 Jkt 253001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 E:\FR\FM\15JAR9.SGM 15JAR9
Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4799 

condensing appliances (and associated 

venting) to be eliminated. The parties 

submitting the Petitioners et al. Joint 

Comment also provided their own 

study, and the dockets for the 

residential furnaces, commercial water 

heaters, and other rulemakings with 

similarly-situated products/equipment 

contain a large amount of relevant data. 

DOE also acknowledges the arguments 

made by the Petitioners et al. Joint 

Comment in the preceding three 

paragraphs. In short, DOE reviewed all 

of the arguments and available 

information. That the agency adopted 

the recommendations of one set of 

proponents on this issue does not mean 

that the Department failed to consider 

the viewpoints and data presented in 

opposition to that view. Rather, in 

response to the petition re-raising the 

issue, the Department reviewed all the 

available data it had previously 

considered, assessed the new data 

submitted with the petition, read 

carefully the arguments made by all 

parties, and made a decision. 

Consequently, DOE has concluded that 

it has more than adequate evidentiary 

basis to support its changed 

understanding as to the consumer utility 

of non-condensing appliances (and 

associated venting). 

iii. Aesthetics 

A number of commenters objected to 

DOE’s recitation of aesthetic impacts as 

a factor that impacts consumer utility 

and that supports its proposed 

interpretive rule. (AGs Joint Comment, 

No. 82 at p. 10; A.O. Smith, No. 88 at 

p. 9; CEC, No. 89 at p. 4; 

Environmentalists Joint Comment, No. 

90 at p. 4; NRDC, No. 94 at pp. 7–8; 

Advocates Joint Comment, No. 95 at pp. 

3–5) Several commenters suggested that 

such aesthetic concerns are theoretical, 

anecdotal, and unsubstantiated. (CEC, 

No. 89 at p. 4; A.O. Smith, No. 88 at p. 

9; Environmentalists Joint Comment, 

No. 90 at p. 4; NRDC, No. 94 at p. 7) For 

example, A.O. Smith argued that there 

is no evidence in the record to suggest 

that condensing water heaters are less 

aesthetically pleasing or that consumers 

would value such consideration over 

the energy and cost savings associated 

with more-efficient products/ 

equipment, so the commenter 

concluded that DOE lacks the rational 

basis and supporting data for such a 

change. (A.O. Smith, No. 88 at p. 9) 

One argument presented was that 

Congress did not intend aesthetics to be 

a consideration under EPCA’s 

‘‘features’’ provision. The CEC argued 

that aesthetics are beyond DOE’s 

statutory authority, which refers to 

‘‘performance,’’ ‘‘performance 

characteristics,’’ or ‘‘performancerelated features.’’ According to the 

commenter, there is no evidence that 

Congress deemed subjective aesthetic 

concerns to be relevant to product 

utility or that limited, vague, and 

unsubstantiated anecdotal evidence and 

theoretical concerns should be allowed 

to overcome DOE’s well-documented 

evidence in the record supporting its 

longstanding interpretation of 

performance characteristics. (CEC, No. 

89 at p. 4) Furthermore, the 

Environmentalists Joint Comment 

asserted that such limited aesthetic 

concerns would not have the broad 

adverse impacts on consumer utility 

that Congress envisioned and intended 

to address by drafting the ‘‘features’’ 

provisions at 42 U.S.C. 6295(o)(4) and 

42 U.S.C. 6313(a)(6)(B)(iii)(II). 

(Environmentalists Joint Comment, No. 

90 at p. 4) 

Other commenters stated that 

aesthetics are a highly subjective matter 

and, therefore, ill-suited to serve as the 

basis for regulatory decision making. 

(CEC, No. 89 at p. 4; AGs Joint 

Comment, No. 82 at p. 10; A.O. Smith, 

No. 88 at p. 9; NRDC, No. 94 at p. 8) 

NRDC argued that many modern 

appliances can and do impact how a 

building looks, although that does not 

mean they have different performancerelated features. To proceed otherwise, 

the commenter reasoned, would cause 

the Appliance Standards Program to 

implode under a proliferation of 

‘‘features’’ and separate classes. NRDC 

suggested that changes in aesthetics are 

sometimes a necessary trade-off for the 

benefits of new technology, as reflected 

in DOE’s historical approach which 

limited the focus to the appliance’s 

primary function when considering 

‘‘utility to the consumer,’’ thereby 

providing an appropriate bound. 

(NRDC, No. 94 at pp. 7–8) A.O. Smith 

made a similar point, arguing that DOE’s 

proposed aesthetic considerations are 

well beyond past precedent, which 

focused on the consumer’s interaction 

with the appliance, and the commenter 

expressed the view that basing a 

decision on an expansive view of 

consumer utility related to aesthetics 

would have no bounds. (A.O. Smith, 

No. 88 at p. 9) 

The CEC expressed concern that 

relying on subjective aesthetic concerns 

would weaken DOE’s ability to improve 

energy efficiency through standards that 

are technologically feasible and 

economically justified. (CEC, No. 89 at 

p. 4) The AGs Joint Comment argued 

that DOE’s consideration of aesthetics as 

a matter of consumer utility threatens to 

undermine the statutory goal of 

maximizing energy efficiency by 

creating the potential for unlimited 

product classes subject to lower 

efficiency limits in violation of EPCA. 

These commenters charged that DOE’s 

proposed interpretation would 

effectively prioritize consumer 

aesthetics and the gas industry’s 

financial interests in selling more gas 

over Congress’s desire for national 

energy savings. (AGs Joint Comment, 

No. 82 at p. 10) 

Finally, some commenters urged DOE 

to consider the potential for use of 

alternative technologies or other types 

of products to resolve aesthetic 

concerns, rather than resorting to 

creation of separate product/equipment 

classes under EPCA’s ‘‘features’’ 

provision. The Advocates Joint 

Comment argued that DOE’s concerns 

expressed in the proposed interpretation 

about space constraints of installing a 

condensing appliance (e.g., by adding 

new venting into the living space or 

decreasing closet or other storage space 

and other limitations related to 

installation), aesthetics, and consumer 

preference for gas heating are all, at 

their core, economic rationales. These 

commenters argued that solutions exist 

for difficult venting situations, and that 

DOE has accounted for them in past 

rulemaking documents in the course of 

analyzing potential standards levels. 

The Advocates Joint Comment further 

argued that homeowners could avoid 

unwanted aesthetic impacts by 

purchasing a different (although 

perhaps more expensive) type of 

venting, using new common venting 

technology (e.g., FasNSeal 80/90), or 

switching to an electric product (e.g., 

ones using heat pump technology) 

which does not raise aesthetic concerns. 

(The commenters added that 

unbounded consideration of aesthetics 

could render standard-setting all but 

impossible.) (Advocates Joint Comment, 

No. 95 at pp. 3–4) The 

Environmentalists Joint Comment raised 

similar points. (Environmentalists Joint 

Comment, No. 90 at p. 4) 

In response, DOE would start by 

clarifying that in using the term 

‘‘aesthetics’’ in the proposed 

interpretive rule, it did not intend to 

imply that purely subjective 

considerations (e.g., even the slightest 

change in color or shape) would justify 

the establishment of separate product/ 

equipment classes. The creation of a 

proliferation of classes is neither desired 

nor expected. Instead, DOE used the 

term in the context of describing 

physical modifications to a dwelling or 

business that would result to a 

substantial degree from prescription by 

a standard and that physical 

modification would be appreciably 

4800 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

24The AGs Joint Comment renewed all of the 

objections raised in their March 1, 2019 comments 

on the Gas Industry Petition. DOE notes that these 

comments were fully addressed in the proposed 

interpretive rule published in the Federal Register 

on July 11, 2019. 84 FR 33011. DOE commends the 

reader to consult that document for further details 

on both those comments and the Department’s 

responses. 

noticed by the consumer and impact the 

use of living or commercial space. For 

example, the Petitioners et al. Joint 

Comment provided evidence that a 

performance standard that can only be 

met by a condensing appliance could 

require, particularly in older rowhouses, the sacrifice of a window or 

balcony space. The Petitioners et al. 

Joint Comment provided evidence that 

these design implications can arise in 

both replacement applications as well as 

new construction design. (Petitioners et 

al. Joint Comment, No. 80 at pp. 10–11) 

That comment also pointed to a June 

2015 experts study by Shorey 

Consulting, Inc. (included as part of the 

AHRI comment to the residential 

furnaces docket at Docket No. EERE– 

2014–BT–STD–0031–0159) which 

provided further evidence that there are 

applications where it is not possible to 

install a condensing furnace due to 

existing building constraints and code 

limitations. Only after reviewing the Gas 

Industry Petition and related comments 

did DOE come to fully appreciate the 

extent of these consumer impacts and 

how they can transcend cost. 

Consequently, a reconsideration of the 

available evidence caused DOE to act to 

change its long-standing interpretation. 

Contrary to the views expressed in the 

CEC’s and environmentalists’ 

comments, Congress included the 

‘‘features’’ provision in EPCA to protect 

consumer utility, even at the expense of 

some measure of energy savings. To the 

extent that ‘‘aesthetics’’ equate to a 

substantial degree in significant 

alteration of a dwelling’s or business’s 

structure and that physical modification 

would be appreciably noticed by the 

consumer and impact the use of living 

or commercial space, DOE’s review of 

the available evidence and information 

has led it to conclude that a standard 

level requiring such changes could 

eliminate a ‘‘feature’’ under EPCA. 

Based upon that understanding, DOE 

has determined that non-condensing 

technology (and associated venting) are 

one such feature, and by keeping the 

focus on what the agency determines to 

be significant potential building 

modifications, it would expect to keep 

such ‘‘aesthetic’’ considerations within 

appropriate bounds. DOE also reasons 

that this final interpretation will have 

the added benefit of promoting 

consumer choice, rather than requiring 

fuel switching or extensive retrofits to 

resolve difficult installation situations. 

iv. Delay 

The AGs Joint Comment 24 argued that 

DOE’s proposed interpretive rule would 

unlawfully delay the adoption of 

efficiency standards required by EPCA, 

as well as delay the benefits of such 

mandatory energy conservation 

standards. (AGs Joint Comment, No. 82 

at pp. 2–3; AGs Joint Comment II, No. 

115 at p. 2) A.O. Smith similarly 

asserted that DOE’s proposed 

interpretation would result in delay in 

setting standards (including for 

products subject to statutory deadlines). 

(A.O. Smith, No. 88 at p. 12) More 

specifically, the AGs Joint Comment 

argued that DOE action on the Gas 

Industry Petition impermissibly delays 

DOE’s publication of final rules as 

required under 42 U.S.C. 6295(m)(3)(A) 

and 42 U.S.C. 6313(a)(6)(C)(iii)(I). The 

AGs commented that DOE’s statutory 

deadlines for promulgating final 

residential furnace and commercial 

water heater standards expired in March 

2017 and May 2018, respectively. 

According to the AGs Joint Comment, 

DOE’s proposed interpretive rule 

impermissibly compounds that delay, 

and since those dates have already 

passed and the comment periods for 

those rulemakings have already closed, 

these commenters opined that DOE 

should have rejected the Gas Industry 

Petition as duplicative or untimely. The 

AGs Joint Comment stated that DOE 

cannot further delay its statutory 

obligations by revisiting previously 

rejected arguments, issuing arbitrary 

and capricious interpretive rulings, and 

engaging in supplemental rulemaking to 

implement an unfounded interpretation 

of EPCA. (AGs Joint Comment, No. 82 

at pp. 5–7) 

The Petitioners et al. Joint Comment 

offered several responses to the 

arguments of opponents of the Gas 

Industry Petition. On this particular 

point, these commenters argued that 

neither DOE’s proceedings for 

residential furnaces and commercial 

water heaters, nor the issues presented 

therein, can be lawfully concluded 

without consideration of and response 

to the considerable adverse comment 

raised in those rulemakings. The 

Petitioners et al. Joint Comment also 

made the point that DOE’s obligation to 

comply with statutory deadlines does 

not obviate its responsibility to consider 

comments and to make sure that any 

new standards are lawful on the merits. 

(Petitioners et al. Joint Comment, No. 80 

at p. 18) 

In response, DOE recognizes the 

statutory deadlines associated with 

residential furnaces, commercial water 

heaters, and other energy conservation 

standards rulemakings. Given the 

complex issues at play, as evidenced by 

the public comments in this proceeding, 

DOE is working diligently to bring those 

rulemakings to a conclusion. However, 

DOE agrees with the Petitioners et al. 

Joint Comment that the agency also has 

a legal obligation to address public 

comments filed in those rulemakings, as 

well as to consider the petition for 

rulemaking properly filed under 5 

U.S.C. 553(e). DOE is not at liberty to 

pick and choose among these legal 

obligations. (DOE addresses elsewhere 

in this document the allegations in the 

AGs Joint Comment that the 

Department’s proposed interpretive rule 

is arbitrary and capricious and based 

upon an improper reading of EPCA.) 

v. Regulatory Burdens/Litigation/ 

Uncertainty/Preemption 

Some commenters argued that DOE’s 

proposed interpretation would increase 

regulatory burdens on manufacturers. 

(Lennox, No. 87 at p. 1; A.O. Smith, No. 

88 at pp. 11–12) Along these lines, 

Lennox argued that creation of separate 

product classes for condensing and noncondensing products would increase the 

regulatory burden for manufacturers, 

distributors, contractors, and their 

customers, all to appease a narrow 

group of gas industry interests. (Lennox, 

No. 87 at p. 1; Lennox, No. 114 at p. 1, 

4, 7) Doing so, Lennox asserted, would 

add yet another rulemaking process, and 

it suggested that the timing of 

condensing and non-condensing 

product rulemakings could become 

‘‘split into untenably mis-aligned 

rulemaking cycles.’’ The commenter 

argued that furnace regulation is already 

overly complicated, with separate 

metrics for annual fuel utilization 

efficiency (AFUE), standby mode and 

off mode power, and furnace fan 

efficiency. Lennox argued that the 

additional regulatory costs associated 

with a condensing/non-condensing 

class split would ultimately be pushed 

through the supply chain to the 

consumer, and that such action would 

also increase consumers’ confusion as 

they seek to purchase an appropriate 

furnace product. (Lennox, No. 87 at p. 

3; Lennox, No. 114 at pp. 6–7) Similarly, 

A.O. Smith stated that manufacturers 

will bear the burden of complying with 

multiple standards for a single covered 

product, thereby increasing compliance 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4801 

costs and regulatory burden on the 

industry. (A.O. Smith, No. 88 at p. 11) 

A few commenters predicted that 

adoption of DOE’s proposed 

interpretation would have additional 

negative consequences. For example, 

Lennox argued that DOE’s proposed 

interpretive rule, if finalized, would 

trigger additional litigation, thereby 

creating more uncertainty for industry. 

(Lennox, No. 87 at p. 2; Lennox, No. 114 

at p. 7) A.O. Smith also asserted that 

DOE’s proposed interpretation would 

result in regulatory uncertainty for 

manufacturers. (A.O. Smith, No. 88 at p. 

12) The CA IOUs also expressed 

concern about the potential for DOE’s 

proposed interpretations to create 

market uncertainty for the subject 

appliances. (CA IOUs, No. 117 at p. 3) 

A.O. Smith speculated that the 

proposed interpretation would result in 

DOE’s failure to adopt energy 

conservation standards that 

appropriately reflect the maximum 

improvement in energy efficiency called 

for under the statute, and that in turn 

would jeopardize the preemptive effect 

of those standards by encouraging States 

to seek waivers of preemption under 42 

U.S.C. 6297(d). The commenter 

expressed concern that manufacturers 

could face a burdensome and costly 

patchwork of State regulations, if such 

petitions were to be granted. (A.O. 

Smith, No. 88 at p. 13) In contrast, the 

AGs Joint Comment also expressed 

concern about the potential preemptive 

effects under 42 U.S.C. 6297, if DOE 

does not fulfill its statutory duty when 

developing and adopting energy 

conservation standards, particularly as 

regards States’ renewable energy and 

climate policy goals. (AGs Joint 

Comment, No. 82 at p. 13) 

After considering these comments, 

DOE would point out that any 

regulatory proceeding entails the 

potential for litigation and, therefore, 

some degree of regulatory uncertainty. If 

the potential for litigation (and related 

uncertainty) were to be a basis for DOE 

to not undertake regulatory action 

(including relevant statutory 

interpretations), it could completely 

stall the Department’s rulemaking 

process, because cross-cutting 

stakeholder interests render most 

agency actions subject to potential legal 

challenge. On the other hand, failure to 

take regulatory action for fear of 

litigation would itself lead to litigation 

for not having completed legally 

required regulatory actions. At bottom, 

the potential for litigation is inherently 

part of the regulatory process. 

Lennox mischaracterizes DOE’s 

interpretive rulemaking as an effort to 

‘‘appease’’ members of the gas industry. 

The agency is obligated to consider the 

merits of petitions for rulemaking 

properly brought before it under the 

statute and to take appropriate action. 

Further, the issues addressed in this 

petition for rulemaking have been 

presented in numerous regulatory 

actions DOE has conducted and 

continues to conduct. DOE suspects that 

if Lennox were to submit its own 

petition for rulemaking, it would view 

the matter very differently, and that the 

company would expect DOE to give the 

substance of its petition due 

consideration under the statute. The 

Department has acted responsibly to 

present the issue for public comment 

and to consider that comment in 

determining how to proceed. 

DOE likewise finds Lennox’s and A.O. 

Smith’s claims of regulatory burden to 

be overstated. To start, this final 

interpretive rule does nothing to change 

the current regulatory landscape, even 

though subsequent rulemakings may 

establish separate product/equipment 

classes and energy conservation 

standards for non-condensing 

technology (and associated venting) in 

appropriate cases. Appliance 

manufacturers routinely encounter 

multiple performance, capacity and 

other technical distinctions between 

appliance models that could impact 

energy efficiency, thereby justifying 

different classes and standards. For 

example, there are currently 7 product 

classes for consumer furnaces (see 10 

CFR 430.32(e)), 21 equipment classes for 

commercial water heaters (see 10 CFR 

431.110), and 36 product classes for 

consumer water heaters (see 10 CFR 

430.32(d)). Accounting for a limited 

number of additional product/ 

equipment classes associated with 

condensing and non-condensing 

technology represents a reasonable 

regulatory burden. The statute does not 

foreclose all regulatory burden, but 

instead it requires the agency to 

properly analyze whether a given test 

procedure or energy conservation 

standards would be unduly 

burdensome. DOE further notes that 

neither AHRI nor any of the other 

manufacturer commenters cited 

regulatory burden as a significant 

concern in response to the proposed 

interpretive rule. 

In response to Lennox’s specific 

concern about regulatory burdens 

associated with split rulemaking cycles 

for the same product type, DOE notes 

that in its energy conservation standards 

rulemakings, the Department typically 

addresses product types in a holistic 

fashion for a given covered product. 

Having splintered rulemakings which 

deal with only certain product classes 

would likewise increase burdens on the 

agency, so DOE agrees that such 

scenarios should be avoided to the 

maximum extent possible. Lennox has 

not explained in any detail why it 

believes that DOE’s proposed 

interpretation would lead to misaligned 

rulemaking cycles, so DOE does not find 

this to be a reason to alter its proposed 

interpretation. DOE would add here that 

if the Department decides to grant 

AHRI’s October 2018 AFUE2 petition, 

that could potentially consolidate 

furnace and furnace fans rulemakings, 

thereby reducing regulatory burdens 

and the ‘‘overcomplicated’’ regulatory 

structure for these products mentioned 

by Lennox (see section III.D.1 of this 

document for further discussion). 

Finally, DOE does not agree with A.O. 

Smith’s speculation that adoption of the 

Department’s proposed interpretation 

would impact the normal preemptive 

effects of the statute or lead to favorable 

consideration of a significant number of 

petitions for waiver of preemption 

under 42 U.S.C. 6297(d), potentially 

resulting in a patchwork of State 

regulations. Similarly, DOE does not 

agree with the AGs Joint Comment’s 

objections to the preemptive effects of 

subsequent final rules adopted pursuant 

to a final interpretive rule. DOE will 

conduct future energy conservation 

standards rulemakings in conformity 

with this final interpretation and all 

other statutory requirements, and as 

such, standards resulting from those 

rulemakings will be entitled to their full 

preemptive effect under the law. EPCA 

does permit States to seek a waiver of 

Federal preemption under 42 U.S.C. 

6297(d), but to obtain such a waiver, a 

State must show by a preponderance of 

the evidence that a separate State 

regulation is needed to meet unusual 

and compelling State or local energy 

and water interests (which must be 

substantially different in nature or 

magnitude than those prevailing in the 

United States generally). (42 U.S.C. 

6297(d)(1)) Moreover, the statute 

explicitly provides that DOE may not 

prescribe a waiver of preemption if the 

Secretary finds (and publishes such 

finding) that interested parties have 

established by a preponderance of the 

evidence, that the State regulation is 

likely to result in the unavailability in 

the State of any covered product type 

(or class) of performance characteristics 

(including reliability), features, sizes, 

capacities, and volumes that are 

substantially the same as those generally 

available in the State at the time of the 

Secretary’s finding. (42 U.S.C. 

6297(d)(4)) While DOE is not prejudging 

the outcome of a request not yet before 

4802 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

25NRDC renewed all of the objections raised in 

its March 1, 2019 comments on the Notice of the 

Gas Industry Petition, as well as all of the objections 

raised by the joint NRDC and Earthjustice 

comments filed on that same date. DOE notes that 

these comments were fully addressed in the 

proposed interpretive rule published in the Federal 

Register on July 11, 2019. 84 FR 33011. DOE 

commends the reader to consult that document for 

further details on both those comments and the 

Department’s responses. 

it, because this final interpretive rule is 

in essence a ‘‘features’’ determination 

under the statute, it is difficult to see 

how such waivers of preemption to 

which A.O. Smith alludes could be 

granted, so the threat of a related 

patchwork of State regulations seems 

remote, at best. 

vi. Other Negative Effects of a Change in 

Interpretation 

Several commenters raised concerns 

about deleterious effects that they 

envision would arise from DOE’s 

proposed interpretation. For example, 

Ceres stated that reversing DOE’s longheld position now would ‘‘create 

confusion to the furnace and water 

heater markets, increase energy use and 

decrease efficiency, negate significant 

financial savings opportunities for 

consumers, and slow the transition to a 

more energy efficient future.’’ (Ceres, 

No. 69 at p. 3) A.O. Smith objected to 

and urged rejection of DOE’s proposed 

interpretation as contrary to sound 

public policy, arguing that taking a 

contrary position would deter 

innovation, limit choice in the 

marketplace, and deprive consumers of 

the benefits of reduced energy 

consumption and lower utility bills. 

(A.O. Smith, No. 88 at p. 2; A.O. Smith, 

No. 113 at p. 2) In comments on the 

September 2020 SNOPIR, the CA IOUs 

argued that if DOE continues to advance 

its current approach, it would lock in 

inefficient technologies that waste 

energy, increase consumer costs, and 

inhibit energy efficiency innovation. 

(CA IOUs, No. 117 at p. 2) 

NRDC’s comments 25 faulted DOE’s 

proposed revised interpretation as 

unnecessary and damaging to the 

effectiveness of the Appliance 

Standards Program, arguing that it 

would set the stage for weaker standards 

that would harm consumers; similar 

comments were made by the CA IOUs 

and the Advocates Joint Comment II. 

(NRDC, No. 94 at p. 4; CA IOUs, No. 117 

at p. 3; Advocates Joint Comment II, No. 

118 at pp. 1, 2) Along these lines, the 

CEC argued that because the proposed 

interpretive rule would put a cap on 

energy efficiency, it would lock in 

additional energy costs that would 

disproportionately affect low-income 

populations. The CEC argued that these 

outcomes would be inconsistent with 

DOE’s statutory mandate and the 

purposes of the Energy Conservation 

Program. (CEC, No. 89 at pp. 1–2) The 

AGs Joint Comment added that DOE’s 

proposed interpretation would also 

undermine State and local energy policy 

and conservation goals. (AGs Joint 

Comment, No. 82 at pp. 2–3) In 

commenting on the September 24, 2020 

supplemental proposed interpretive 

rule, Lee Hannah suggested generally 

that DOE’s energy conservation 

standards activities have not done 

enough to promote energy and 

economic savings. (Lee Hannah, No. 99 

at p. 1) 

Commenters such as A.O. Smith and 

the Advocates Joint Comment sought to 

refute DOE’s suggestion that its 

proposed interpretation would only 

have a limited impact and its focus on 

a subset of consumers (i.e., low-income 

residential consumers), instead arguing 

that it would have broad and lasting 

effect. (A.O. Smith, No. 88 at p. 12; 

Advocates Joint Comment, No. 95 at p. 

6) A.O. Smith emphasized that the 

proposal was not limited to just 

residential furnaces and commercial 

water heaters but was instead deemed 

applicable to ‘‘similarly situated 

products/equipment.’’ (A.O. Smith, No. 

88 at p. 12) The Advocates Joint 

Comment II argued that DOE has not 

clearly defined the products to which 

the interpretive rule would apply, 

specifically faulting the language about 

‘‘similarly-situated products/ 

equipment’’ in DOE’s proposals. The 

Advocates Joint Comment II stated that 

DOE’s proposed interpretations have not 

explained whether such interpretations 

would apply to both residential and 

commercial gas furnaces and gas water 

heaters, or whether the interpretation 

would apply to both weatherized and 

non-weatherized furnaces. Therefore, 

these commenters claimed that it is not 

possible to fully evaluate the potential 

impacts of DOE’s proposal. (Advocates 

Joint Comment II, No. 118 at p. 2) 

However, these same commenters 

correctly pointed out that condensing 

technology is available for (and thereby 

suggesting that DOE’s interpretation 

would be potentially applicable to) eight 

categories of products/equipment 

regulated by DOE: Residential furnaces, 

commercial furnaces, residential boilers, 

commercial boilers, residential water 

heaters, commercial water heaters, 

direct heating equipment, and unit 

heaters. (Advocates Joint Comment, No. 

95 at p. 6) 

The Advocates Joint Comment went 

on to analyze what they perceived to be 

the potential impacts of DOE’s proposed 

interpretation and stressed that the 

number of impacted products is not as 

important as the total potential energy 

savings at issue, citing the evidence of 

DOE’s own analyses which have shown, 

even when accounting for market 

trends, that energy conservation 

standards set at condensing levels could 

save about 13 quads of energy over a 30- 

year analysis period and lower utility 

bills by more than $100 billion over the 

same period. (Advocates Joint 

Comment, No. 95 at p. 6) The Advocates 

Joint Comment and A.O. Smith argued 

that DOE’s proposed interpretive rule 

would improperly eliminate DOE’s 

ability to even consider future standards 

based upon condensing technology that 

would have the potential for very large 

energy and cost savings, thereby 

allowing non-condensing products/ 

equipment to remain on the market in 

perpetuity. (Advocates Joint Comment, 

No. 95 at p. 6; A.O. Smith, No. 88 at p. 

12) The Advocates Joint Comment II 

argued that the factors discussed in 

DOE’s proposed interpretations appear 

to relate specifically to residential 

furnaces, and these commenters alleged 

that the Department has not even 

attempted to provide a rationale for its 

proposed interpretation with respect to 

other products, in particular commercial 

equipment. The Advocates Joint 

Comment II contended that DOE’s 

arguments about changes to a home’s 

aesthetics, a preference for gas 

appliances, and concerns about energy 

affordability are ‘‘irrelevant for any 

commercial equipment.’’ (Advocates 

Joint Comment II, No. 118 at pp. 2–3) 

DOE must act within its statutory 

authority (as discussed in further detail 

in section II.A of this document), and 

DOE recognizes that Congress was 

mindful of achieving energy 

conservation while also protecting 

consumer utility when enacting EPCA, 

as evidenced by the statute’s ‘‘features’’ 

provisions. Congress is the ultimate 

arbiter of sound public policy, and 

through EPCA’s ‘‘features’’ provision, it 

made clear that the goal of energy 

savings should not trump all competing 

concerns. If the statute which Congress 

has drafted takes some potential actions 

off the table, DOE must operate within 

the parameters that Congress 

established, even if significant 

additional energy and cost savings, as 

suggested by the Advocates Joint 

Comment, could arise from ignoring 

those parameters. For the reasons 

articulated in this document, DOE’s 

final interpretive rule has determined 

non-condensing technology (and 

associated venting) to be a ‘‘feature’’ 

under the statute which cannot be 

eliminated through adoption of energy 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4803 

conservation standards. Even so, DOE 

has concluded that such action would 

not have any major detrimental effect on 

the Appliance Standards Program, 

stakeholders, or the public. With that 

said, DOE does not agree with the litany 

of negative consequences about which 

these commenters speculate. 

As discussed in section III.A.3 of this 

document, market trends are moving 

increasingly in the direction of 

condensing technology, despite the fact 

that non-condensing appliances remain 

available on the market. With the 

potential for substantial savings on 

utility bills, consumers have been 

availing themselves of more-efficient 

options when doing so makes sense for 

them, and DOE has every reason to 

believe that such trends will continue. 

However, for difficult installation 

situations, consumers can make the 

choice for a like-for-like replacement 

using non-condensing technology. Since 

the same issues would arise for the 

similarly-situated appliance recited by 

the Advocates Joint Comment, it only 

makes sense for the Department to also 

address them at this time. Although 

DOE arguably could have been more 

explicit in reciting the types of covered 

products and equipment subject to its 

interpretation, the Department notes 

that submitters of the Advocates Joint 

Comment and others did not have 

difficulty in practice in homing in on 

the impacted appliances in framing 

their arguments. Furthermore, DOE 

finds that its interpretation (as 

explained more fully in the balance of 

this document) adequately provides a 

rationale for applying its interpretation 

to both covered consumer products and 

commercial equipment, although the 

specifics of the impacts justifying the 

interpretation may vary depending upon 

the appliance in question. Contrary to 

A.O. Smith, DOE views this final 

interpretation as maintaining consumer 

choice, rather than diminishing it. DOE 

fully expects market trends towards 

higher-efficiency products will continue 

as consumers are able to take full 

advantage of the range of choices 

available to them. 

DOE does not agree with Ceres’s 

contention that DOE’s revised 

interpretation would create confusion in 

the marketplace, given that the DOE’s 

statement is clear and that this is a 

mature market with sophisticated and 

knowledgeable actors. Furthermore, 

since non-condensing and condensing 

appliances are currently sold side-byside on the existing market, DOE fails to 

see how such confusion would arise, 

presuming that it does not already exist. 

Likewise, DOE does not find credible 

A.O. Smith’s conjecture that DOE’s 

revised interpretation would decrease 

innovation. Manufacturers have every 

incentive to continue to innovate in this 

competitive market, especially given the 

market trend toward purchase of moreefficient appliances. Finally, DOE 

would note that, as always, State and 

local governments are welcome to 

pursue their own initiatives that fill any 

regulatory and policy space that is not 

preempted by Federal law. 

1. Legal Authority to Set ‘‘Small’’ 

Furnace Product Classes 

Some commenters continued to 

advocate for the approach proposed in 

DOE’s September 2016 SNOPR for 

residential furnaces as a preferable way 

to resolve the concerns raised in the 

proposed interpretive rule (i.e., by 

setting a differentiated standard based 

on capacity). Lennox argued that DOE 

should not move forward on its current 

path, but instead, the commenter stated 

that the Department should achieve its 

energy conservation goals through more 

tailored, alternative regulatory 

approaches, such as capacity-based 

standards to preserve non-condensing 

furnaces for smaller residential 

furnaces. (Lennox, No. 87 at pp. 1, 3, 6– 

7; Lennox, No. 114 at pp. 2–3, 5) Lennox 

recommended that DOE adopt the 

approach previously supported by 

industry to preserve non-condensing 

furnaces below certain kBtu/h 

thresholds, which would address 

smaller applications, including mobile 

homes, impacting middle- and lowincome consumers. (However, the 

commenter clarified that the level of 55 

kBtu/h specified in the September 23, 

2016 SNOPR would need to be raised so 

as to be sufficient to preserve noncondensing furnaces in mobile home 

applications and other difficult 

installation situations.) (Lennox, No. 87 

at p. 6) The CA IOUs also urged DOE to 

finalize the September 2016 SNOPR for 

residential furnaces. (CA IOUs, No. 117 

at p. 2) According to the CFA/NCLC, if 

DOE were to adopt a two-tiered 

standard of 80 percent AFUE for smaller 

furnaces (used in smaller dwellings and 

warmer climates) and 92 percent AFUE 

for larger furnaces (used in colder 

climates), 89 percent of low-income 

consumers would benefit. Conversely, 

CFA/NCLC stated that millions of lowincome households would face 

significantly higher energy bills for the 

useful life of the furnace if DOE were to 

move forward with its proposed revised 

interpretation. (CFA/NCLC, No. 93 at p. 

2) 

The AGs Joint Comment stated that 

DOE’s recent concerns about costs are 

unwarranted, and in the context of the 

residential furnaces rulemaking, these 

commenters appeared to support DOE’s 

prior efforts to establish a separate, 

small furnace product class and 

mentioned AHRI’s past statement that 

that would be a ‘‘reasonable solution.’’ 

(AGs Joint Comment, No. 82 at pp. 10– 

11) Electrify Now also supported that 

prior rulemaking approach for the 

subject residential furnaces, as 

previously proposed by DOE. (Electrify 

Now, No. 106 at p. 1) 

In response, DOE acknowledges that it 

has authority to create product classes 

for consumer products based upon 

capacity under 42 U.S.C. 6295(q)(1)(B), 

and this authority extends to nonASHRAE commercial equipment 

through application of 42 U.S.C. 

6316(a). DOE further recognizes that it 

previously proposed capacity-based 

standards in the September 2016 

furnaces SNOPR, an approach which 

garnered some measure of public 

support. However, that proposal was 

opposed by the gas industry, because 

those commenters argued that it failed 

to fully and adequately resolve the 

problems that they had identified. After 

careful consideration of the Gas 

Industry Petition and comments 

thereon, DOE has come to the 

conclusion that a capacity-based 

approach is not the proper tool to 

address the issues raised in the petition 

because they would not provide a 

comprehensive solution in all instances 

where consumer utility may be 

impacted due to difficult installation 

situations. The following explains how 

the Department’s understanding has 

evolved in this area. 

In essence, the problem identified in 

the Gas Industry Petition is not one of 

capacity. Difficult installation situations 

with the potential to impact consumer 

utility are not cleanly separated by 

capacity, so seeking to advance a 

proposed solution based upon capacity 

as the distinguishing factor would be at 

best an indirect and imperfect way to 

address the problem. In that sense, the 

gas industry’s continued opposition 

would be expected and understandable. 

Furthermore, DOE does not believe that 

commenters currently expressing 

support would likely remain in 

agreement were the Department to move 

forward with a capacity-based approach. 

Illustrative of this point, Lennox’s 

comment supported DOE’s previously 

proposed capacity-based approach for 

residential furnaces but also suggested 

that the capacity threshold of 55 kBtu/ 

h proposed in the September 2016 

SNOPR would need to be raised, an 

opinion expressed by other industry 

commenters on that SNOPR. 81 FR 

65720, 65754 (Sept. 23, 2016). In 

contrast, environmental and advocacy 

4804 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

groups likewise supported the capacitybased approach but pushed for a lower 

threshold. Id. DOE would also note that 

these commenters supporting a 

capacity-based approach would simply 

be recreating the same protections for 

non-condensing appliances at the lower 

end of the capacity range to which they 

so strenuously objected for the reasons 

stated in response to the proposed 

interpretation (e.g., locking in lessefficient technology, depriving savings 

to renters). Moreover, DOE’s prior 

capacity-based proposal assumed 

(without explicitly stating) that small 

capacity furnaces would be noncondensing and large capacity furnaces 

would be condensing. As such, the 

capacity-based proposal these 

comments support made in the past the 

very distinction these same commenters 

so vehemently oppose now. 

Consequently, DOE no longer views a 

capacity-based approach to standards 

for the products/equipment at issue in 

this proceeding to be a viable alternative 

to the ‘‘features’’ determination being 

made in this final interpretive rule. 

2. Market Trends 

A number of commenters speculated 

as to the effect that DOE’s revised 

interpretive rule would have on the 

market for residential furnaces, 

commercial water heaters, and similarly 

situated equipment. One group of 

commenters predicted that DOE’s 

proposed interpretive rule would lead to 

significant market-related impacts with 

negative consequences. For example, 

Lennox alleged that DOE’s proposed 

interpretation would disrupt market 

trends towards more-efficient 

condensing furnaces by creating a 

separate product class for noncondensing furnaces. (Lennox, No. 87 at 

p. 3; Lennox, No. 114 at pp. 4, 5) A.O. 

Smith challenged the proposed 

interpretation’s suggestion that it would 

adhere to the principle of market 

neutrality vis-a`-vis competing energy 

sources, arguing that by insulating noncondensing water heaters from morestringent standards, the Department is 

picking winners and losers in the water 

heaters market at the expense of 

consumer benefits and savings from 

higher-efficiency appliances. (A.O. 

Smith, No. 88 at p. 9) Ceres likewise 

argued that by encouraging a market for 

non-condensing equipment, DOE’s 

proposed interpretive rule would waste 

energy and resources, a result which 

Ceres characterized as inefficient and 

costly. (Ceres, No. 69 at p. 2) Lennox 

and A.O. Smith characterized the Gas 

Industry Petition (and any separate 

product/equipment classes arising 

therefrom) as a mechanism that would 

disrupt the market for more-efficient 

condensing furnaces, drive up the cost 

of condensing products, and potentially 

push many consumers out of the market 

for more-efficient products. (Lennox, 

No. 87 at p. 2; A.O. Smith, No. 88 at p. 

11; Lennox, No. 114 at pp. 4, 5) More 

specifically, Lennox reasoned that if 

condensing furnaces were placed in a 

separate product class, ‘‘EPCA would 

almost certainly mandate maximizing 

condensing furnace energy conservation 

standards to even higher levels, thereby 

pricing many consumers out of a more 

energy efficient furnace.’’ (Lennox, No. 

87 at p. 3; Lennox, No. 114 at p. 5) 

Other commenters opined that DOE’s 

proposed interpretive rule would have 

negligible impacts upon existing market 

trends for the appliances at issue. For 

example, AHRI pointed out that the 

market is already trending towards 

condensing furnaces in applications 

where such venting/installation 

constraints do not exist. According to 

AHRI, even with non-condensing 

furnaces on the market right now, this 

trend toward condensing furnaces 

currently exists, and there is no reason 

to think that establishment of a separate 

product class would hinder the existing 

movement of this well-functioning 

market. (AHRI, No. 91 at p. 2; similar 

points were made by Nortek, No. 71 at 

pp. 1–2, and Mortex, No. 72 at p. 1) 

Likewise, especially since there is 

already a market trend toward 

condensing commercial water heaters, 

AHRI argued that it is neither necessary 

nor advisable to require condensing 

equipment in all applications. Instead, 

the commenter stated that establishment 

of a separate product class for noncondensing equipment would preserve 

the ability of commercial consumers 

facing difficult installation situations to 

make like-for-like replacements and to 

avoid the need to reconstruct a 

mechanical room, add unsightly piping, 

or switch to an electric water heater, all 

without impacting the overall trend 

toward installation of more-efficient 

condensing water heaters. (AHRI, No. 91 

at p. 3) Similarly, Carrier and Nortek 

reasoned that because consumers are 

already moving in the direction of 

condensing furnaces, regulatory 

intervention banning non-condensing 

furnaces is not necessary and would 

only serve to disproportionately harm 

those consumers for whom venting 

changes would be difficult or 

impossible. (Carrier, No. 92 at p. 1; 

Nortek, No. 71 at pp. 1–2) 

BWC sought to allay DOE’s concerns 

about the potential for locking in a lessefficient technology which could act as 

a ceiling on product efficiency. In 

BWC’s experience, especially in 

commercial applications, it stated that 

the market will choose higher-efficiency 

products/equipment where it makes 

sense (i.e., taking into account not only 

economics but other factors, such as 

change in utility, loss of usable space, 

etc.). (BWC, No. 77 at p. 2) Carrier 

largely echoed these comments that 

creation of separate product classes for 

condensing and non-condensing 

equipment would not hinder the market 

trend toward condensing products, 

arguing that consumers and residential 

new construction home builders 

continue to move in the direction of 

condensing technology, despite the 

availability of non-condensing 

appliances in the current market. 

(Carrier, No. 92 at p. 1) 

As a third perspective, the Petitioners 

et al. Joint Comment asserted that 

energy conservation standards that 

would make atmospherically vented 

products unavailable to consumers 

would alter the market by promoting 

electrification (i.e., a shift to electric 

appliances), rather than by promoting 

the efficiency of gas products, because 

it would force many consumers to feel 

that they have no choice but to give up 

their gas appliances in favor of electric 

alternatives. These commenters 

characterized the situation as one where 

the imposition of a standard that 

effectively bans atmospherically vented 

gas appliances would result not in the 

sale of an increased number of more 

efficient gas products, but in the sale of 

fewer gas products overall. The Gas 

Industry Petitioners argued that they are 

not opposed to condensing technology 

generally or market trends favoring such 

technology. Instead, these commenters 

stated that they are simply making the 

case that condensing products are not 

suitable for all installations and that it 

is the opponents of the petition who are 

the ones seeking to deny consumers the 

products which best serve their needs. 

(Petitioners et al. Joint Comment, No. 80 

at pp. 3–4) 

In response, DOE would first note that 

EPCA directs DOE to consider the 

potential unavailability of a 

‘‘performance characteristic’’ or 

‘‘feature’’ as a matter separate and apart 

from economic impacts or market 

trends. Stated simply, EPCA’s 

‘‘features’’ provisions make clear that 

while improved energy efficiency may 

be the overarching goal, it is not the 

only decisional factor in standardsetting. It is often the case that 

elimination of a feature would allow for 

a more energy-efficient product (e.g., an 

oven window), but in drafting the 

statute, Congress made clear its 

intention to preserve consumer utility, 

which in some cases may necessitate the 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4805 

sacrifice of potential additional energy 

savings. Through this final 

interpretation, DOE has determined that 

in certain cases, non-condensing 

technology (and associated venting) is 

one such feature. A.O. Smith 

mischaracterizes this decision as 

abandonment of the principle of market 

neutrality, when in fact it simply 

reflects implementation of the statutory 

provisions enacted by Congress. 

Setting these matters aside, DOE still 

does not find the market trend impact 

envisioned by Lennox, Ceres, and A.O. 

Smith to be credible, but instead, the 

Department agrees with the assessment 

of AHRI, BWC, Nortek, Mortex, and 

Carrier as to the likely market impacts 

of DOE’s proposed interpretive rule. 

While Lennox, Ceres, and A.O. Smith 

posit what they think might happen in 

the market, AHRI, BWC, Nortek, Mortex, 

and Carrier are pointing out what is 

actually happening in the market. That 

is, non-condensing and condensing 

products are competing in the market 

currently under DOE’s existing 

regulations, yet the market trend 

towards condensing products/ 

equipment exists nonetheless. As 

establishment of separate product/ 

equipment classes for non-condensing 

appliances would in general reflect the 

status quo, DOE fails to see how the 

deleterious market trends of which 

Lennox, Ceres, and A.O. Smith 

complain would manifest, given that 

they have not arisen already. Instead, as 

AHRI, BWC, Nortek, Mortex, and Carrier 

suggest, consumers (both residential and 

commercial) make decisions based upon 

their own weighing of economics and 

other relevant factors (e.g., space 

constraints, loss of utility). Thus, the 

trend toward higher-efficiency 

condensing appliances (even where 

non-condensing ones are available) 

suggests that the markets are working 

efficiently, and DOE can discern no 

reason why that current market trends 

towards condensing appliances would 

not continue, regardless of DOE’s final 

interpretation. Thus, DOE expects 

further energy savings gains over time as 

the market share of condensing 

appliance continues to increase. 

Although Lennox and A.O. Smith 

speculate as to the outcomes of the 

ongoing DOE residential furnaces 

rulemaking under the Department’s 

proposed interpretation, such outcomes 

cannot be predicted now; the outcomes 

can be properly determined only after 

completion of the full suite of the 

agency’s rulemaking analyses, as 

applied in each individual rulemaking. 

However, even in the abstract, DOE does 

not agree with the logic of Lennox and 

A.O. Smith. Specifically, Lennox alleges 

that if DOE were to establish separate 

product/equipment classes for 

condensing and non-condensing 

appliances, the levels for condensing 

models would be higher than they 

otherwise might be if there were to be 

single product/equipment class. 

However, amended energy conservation 

standards would ultimately be set at a 

level that results in significant 

conservation of energy, is 

technologically feasible, and is 

economically justified. Any 

determination of those future standards 

would be based on sound economic and 

technical analyses. 

3. Requests for Clarification 

Among the commenters supporting 

DOE’s proposed interpretive rule, a few 

requested clarification (sometimes with 

recommendations) on specific points. 

For example, Weil-McLain argued that 

DOE would be more technically 

accurate to make class distinctions 

based on the appliance’s venting 

category (as defined in the National Fuel 

Gas Code NFPA 54), rather than using 

the terms ‘‘condensing’’ and ‘‘noncondensing.’’ The commenter pointed to 

what the National Fuel Gas Code refers 

to as Category I vented appliances, 

which operate with a non-positive vent 

static pressure and with a vent 

temperature which avoids excessive 

condensate production in the vent. 

Weil-McLain argued that such venting is 

the type used by non-condensing 

appliances. Thus, Weil-McLain 

suggested that going forward, DOE 

should use the term ‘‘Category I Vented 

Appliance’’ in its interpretation. (WeilMcLain, No. 86 at pp. 1–2) 

In response, DOE notes that this 

comment is similar to ones by USB, 

BHI, and Crown Boiler, which prompted 

the Department to issue its September 

2020 SNOPIR to consider two 

alternative approaches that would have 

defined a performance-related feature 

for the subject gas appliances based 

upon venting compatibility (see section 

II.E of this document for further details). 

However, after reviewing public 

comments in response to its 

supplemental proposal, DOE ultimately 

decided not to adopt those alternative 

proposals and to instead proceed with 

its original proposal to define the 

performance-related feature as the 

subject appliances’ condensing or noncondensing operation, for the reasons 

explained in section III.A.1.a of this 

document. Consequently, DOE declines 

to adopt the clarification suggested by 

Weil-McLain for the reasons previously 

discussed. 

The Petitioners et al. Joint Comment 

requested that DOE clarify the language 

used in its proposed interpretation by 

concluding that standards limiting the 

market to products that use condensing 

combustion technology ‘‘would result in 

the unavailability of a performance 

characteristic or feature,’’ language 

which they argued would more closely 

track that of the statute. The Petitioners 

et al. Joint Comment also asked DOE to 

clarify the proposed interpretation’s 

parenthetical ‘‘(where permitted by 

EPCA)’’ and its reference to 42 U.S.C. 

6316(a) to make clear that it relates to 

the situations to which the ‘‘features’’ 

provisions apply under the statute, 

rather than being a ‘‘features’’ provision 

itself. (Petitioners et al. Joint Comment, 

No. 80 at p. 7) 

In response, although DOE does not 

perceive the language in question to be 

unclear, the Department is restating its 

position so as to dispel any confusion. 

Through this final interpretation, DOE 

has concluded that a careful 

examination of anticipated consumer 

impacts and a preponderance of the 

record evidence show that a standard 

limiting the market to products/ 

equipment that use condensing 

combustion technology (and associated 

venting) would impermissibly result in 

the unavailability in the United States of 

a performance characteristic or feature 

under EPCA. In future rulemakings to 

consider energy conservation standards 

regarding products/equipment for 

which this determination is relevant, 

DOE will consider establishing separate 

product/equipment classes for 

condensing and non-condensing 

product types and may set different 

standards for such classes. 

Regarding the language in the 

proposed interpretive rule about 

‘‘(where permitted by EPCA),’’ DOE was 

referring to the situation where DOE is 

triggered by ASHRAE action in 

amending ASHRAE Standard 90.1 and 

where DOE does not have clear and 

convincing evidence to adopt standard 

levels more stringent than those set by 

ASHRAE. Regarding DOE’s reference to 

42 U.S.C. 6316(a), the Petitioners et al. 

Joint Comment is correct that that is not 

a ‘‘features’’ provision itself, but it is 

instead the statutory crosswalk 

provision which makes the ‘‘features’’ 

provision at 42 U.S.C. 6295(o)(4) 

applicable to covered non-ASHRAE 

equipment. 

BWC expressed concern about how 

ASHRAE equipment would be affected 

by DOE’s proposed interpretation 

impacting EPCA’s ‘‘features’’ provision. 

Specifically, BWC stated that DOE has 

not addressed the situations where DOE 

does not act to adopt a level more 

stringent than the level adopted by 

ASHRAE or where DOE cannot adopt 

4806 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

the ASHRAE level (e.g., if such 

standards were differentiated based on 

new construction versus replacement 

installations; or if the levels were set 

based on the system’s efficiency, rather 

than a single product within the 

system). In those cases, BWC 

recommended adopting a similar 

interpretation of the ‘‘features’’ 

provision as if the product were not 

covered by ASHRAE. (BWC, No. 77 at 

p. 1) Similarly, AHRI requested further 

clarification on how DOE’s proposed 

interpretive rule applies to commercial 

equipment, particularly ASHRAE 

equipment rulemakings conducted 

pursuant to EPCA’s 6-year-lookback 

review requirements that are not 

prompted by amendments to ASHRAE 

Standards 90.1. (AHRI, No. 91 at pp. 3– 

4) For water heaters, AHRI agreed with 

DOE that its condensing/noncondensing interpretation would not 

apply in situations where the 

Department, after being triggered by 

ASHRAE action amending ASHRAE 

Standard 90.1, adopts the same standard 

level set by ASHRAE. (AHRI, No. 109 at 

p. 3) 

EPCA includes a ‘‘features’’ provision 

applicable to ASHRAE equipment at 42 

U.S.C. 6313(a)(6)(B)(iii)(II)(aa), but that 

provision applies only to instances 

where DOE is adopting more-stringent 

standards either under the statute’s 

trigger provision or 6-year-lookback 

provision. In those cases where DOE 

adopts the ASHRAE Standard 90.1 

levels under 42 U.S.C. 

6313(a)(6)(A)(ii)(I), there is no 

applicable ‘‘features’’ provision, so 

DOE’s authority limits it to adopting the 

levels and classes set by ASHRAE. 

B. Comments Regarding EconomicsRelated Issues 

A number of commenters disagreed 

with DOE’s proposed interpretive rule, 

because they argued that it improperly 

injects economic considerations into the 

concept of consumer utility used in the 

‘‘features’’ determination. These 

commenters, such as A.O. Smith, argued 

instead that installation and other costs 

are to be considered as part of the 

economic analysis required by the 

statute. (A.O. Smith, No. 88 at p. 4) In 

responses to the September 2020 

SNOPIR, NRDC and A.O. Smith added 

that any issues related to venting are 

likewise an issue of cost, not a 

performance-related feature, and any 

costs associated with upgrading venting 

can and should be addressed when DOE 

analyzes installation costs in its 

economic analysis. (NRDC, No. 112 at 

pp. 2–3; A.O. Smith, No. 113 at p. 3) 

The CA IOUs stated that DOE should 

not inappropriately conflate rulemaking 

analyses (e.g., economic justification 

analyses) with a petition to create a new 

class of products, arguing that such 

approach would undermine the 

rulemaking process and inappropriately 

define economic impacts or incremental 

costs as performance-related features. 

(CA IOUs, No. 85 at pp. 3–4) However, 

while maintaining the position that 

economic considerations are 

inappropriate in a ‘‘features’’ 

determination, such commenters also 

sought to refute, arguendo, DOE’s 

economic concerns and to show that 

even under the agency’s proposed 

approach, declaring non-condensing 

technology (and associated venting) to 

be a ‘‘feature’’ is neither necessary nor 

justified. The following discussion first 

summarizes and addresses the relevant 

statutory arguments, followed by the 

specific economic arguments, along 

with DOE’s responses. 

1. Consumer Impacts 

a. Legal Arguments 

Several commenters objected to DOE’s 

proposed interpretation, arguing that the 

Department violated the statute by 

improperly considering economic 

factors in making its ‘‘features’’ 

determination. For example, A.O. Smith 

argued that DOE’s ‘‘unprecedented’’ 

interpretation that would tie the concept 

of a ‘‘feature’’ to condensing technology 

largely turns on installation costs. (A.O. 

Smith, No. 88 at p. 6) Lennox (and other 

commenters) stated that DOE’s cost 

analysis is unsupported and 

inconsistent with EPCA’s statutory 

mandate, because the ‘‘features’’ 

provision at 42 U.S.C. 6295(o)(4) focuses 

on unavailability and does not mention 

costs as an appropriate consideration. 

(Lennox, No. 87 at pp. 5–6; CEC, No. 89 

at p. 3; Advocates Joint Comment, No. 

95 at pp. 1–3; Lennox, No. 114 at p. 4) 

The CEC made a similar comment and 

also pointed out that costs are likewise 

not relevant under 42 U.S.C. 6295(q)(1) 

(the product class provision). (CEC, No. 

89 at p. 3) The AGs Joint Comment (and 

other commenters) stated that under 42 

U.S.C. 6295(o)(2)(B), the statute directs 

DOE to consider costs as part of its 

analysis of economic justification. (AGs 

Joint Comment, No. 82 at pp. 10–12; 

A.O. Smith, No. 88 at p. 12; CEC, No. 

89 at p. 3; Environmentalists Joint 

Comment, No. 90 at p. 3; Advocates 

Joint Comment, No. 95 at p. 3) 

A.O. Smith also asserted that 

consideration of costs under the 

statute’s ‘‘features’’ provision would 

predetermine the outcome of economic 

justification without performing that 

full analysis as required by the statute. 

(A.O. Smith, No. 88 at p. 12) A similar 

argument was made in the Advocates 

Joint Comment II. (Advocates Joint 

Comment II, No. 118 at pp. 1, 2, 5) The 

Environmentalists Joint Comment 

reasoned that if installed cost concerns 

could block consideration of a standard 

level, it would result in an ‘‘end-run’’ 

around the other statutory factors which 

DOE must consider in assessing 

economic justification. 

(Environmentalists Joint Comment, No. 

90 at p. 3) The Advocates Joint 

Comment added that delineating 

product classes based upon cost 

considerations would subvert the 

statute’s central purpose of energy 

conservation. (Advocates Joint 

Comment, No. 95 at pp. 1–2) 

Commenters identified specific, 

economics-related concerns raised in 

the proposed interpretive rule which 

they believe should only be considered 

in DOE’s economic analyses. For 

example, the Environmentalists Joint 

Comment argued that low-income 

consumers’ ability to absorb the firstcost impacts of installing a condensing 

gas appliance should properly be 

addressed in the economic justification 

of a standards rulemaking. 

(Environmentalists Joint Comment, No. 

90 at p. 5) The Advocates Joint 

Comment argued that affordability and 

other cost impacts should also be 

addressed as part of the economic 

analysis, rather than by establishing 

unjustified product classes which 

would preclude such analysis. 

Furthermore, the Advocates Joint 

Comment stated that topics such as 

housing affordability, higher up-front 

costs crowding out consumer spending 

on other necessities, and long payback 

periods that do little to ameliorate shortterm up-front costs are economic 

matters relevant to whether a potential 

standard level is appropriate, after 

conducting the requisite economic and 

financial analysis called for under the 

statute; they argued that DOE has not 

shown that the difference between 

condensing and non-condensing 

products is more than a matter of cost. 

(Advocates Joint Comment, No. 95 at 

pp. 1–3) 

The Advocates Joint Comment 

asserted that since each of DOE’s 

attempted rationales for characterizing 

non-condensing products as a 

‘‘performance-related feature’’ (i.e., 

space constraints (and other limitations 

related to installation), aesthetics, and 

consumer preference for gas heating) are 

fundamentally cost considerations, the 

Department has failed to provide 

justification for establishing separate 

product classes along those lines. 

(Advocates Joint Comment, No. 95 at 

pp. 1–2, 3–5) Similarly, the CEC stated 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4807 

26See e.g. the joint comment of the Appliance 

Standards Awareness Project, the Alliance to Save 

Energy, the Natural Resources Defense Council, the 

Northeast Energy Efficiency Partnerships, and 

Northwest Energy Efficiency Alliance. (EERE–2014– 

BT–STD–0031–0285) In relevant part, the joint 

comment states at page 3, ‘‘The DOE proposal is 

based on a breakpoint of 55,000 Btu/hour and not 

the 50,000 Btu/hour we had recommended in our 

NOPR comments. While we can live with 55,000 for 

now, we recommend that prior to the next 

rulemaking that DOE conduct additional analysis 

on the heating loads of homes in the south and in 

new construction so that the next rulemaking can 

consider whether 55,000 Btu/hour remains a 

reasonable breakpoint, or whether another value is 

more appropriate.’’ 

that three out of four of DOE’s 

justifications in its proposed 

interpretation rely on economic 

considerations and are, therefore, 

inappropriate for purposes of setting 

product classes. (CEC, No. 89 at p. 3) 

The Advocates Joint Comment 

expressed the view that DOE is seeking 

to solve ‘‘hypothesized’’ harmful 

economic impacts by establishing 

product classes, but that the statute 

allows for the mitigation of any such 

harms by setting an appropriate 

standard level or leaving the existing 

standard unchanged. (Advocates Joint 

Comment, No. 95 at p. 3) According to 

the Advocates Joint Comment, cost 

impacts, including those with respect to 

low-income consumers, are a central 

concern for DOE’s standard level 

selection process, and the Department 

routinely performs consumer subgroup 

analyses, which examine impacts on 

subsets of consumers such as those with 

low incomes. (Advocates Joint 

Comment, No. 95 at pp. 1–2) 

In contrast, several commenters 

supported DOE’s tentative decision to 

interpret the use of non-condensing 

technology (and associated venting) to 

be a ‘‘feature’’ under the statute based 

upon the findings related to consumer 

utility. The Petitioners et al. Joint 

Comment responded to other 

commenters’ suggestions that the 

difference in characteristics between 

condensing products and 

atmospherically vented product being 

simply a matter of cost as factually 

incorrect; instead, these commenters 

stated that an energy conservation 

standard set at a condensing level 

would leave consumers with no 

residential gas furnaces capable of 

operating with existing atmospheric 

venting systems, with other commonlyvented appliances, or without a 

condensate disposal system. The 

Petitioners et al. Joint Comment argued 

that critics of DOE’s proposed 

interpretive rule mischaracterize these 

material differences which have 

significant utility to consumers, separate 

and apart from the substantial costs that 

a ban of such systems would generate. 

(Petitioners et al. Joint Comment, No. 80 

at p. 10) 

DOE agrees with commenters that 

costs are to be properly addressed in a 

rulemaking’s economic analysis, and it 

said as much in the proposed 

interpretive rule. 84 FR 33011, 33020 

(July 11, 2019). On this topic, the 

Department clearly stated, ‘‘DOE has 

tentatively concluded that the other 

[i.e., non-economic] reasons discussed 

immediately above are sufficient in and 

of themselves to justify the 

Department’s proposed change in 

interpretation, but it acknowledges 

these cost impacts to be fully 

transparent in terms of the agency’s 

thinking.’’ Id. (DOE does not concur 

with certain commenters’ attempts to 

classify all of the agency’s stated reasons 

as economic, thereby better suiting their 

own arguments.) Even though 

economics is not an appropriate 

consideration in making a ‘‘features’’ 

determination under the statute, there is 

no question that economic effects will 

need to be considered in whatever 

decision is made with regard to 

establishing or revising standards. 

Discussing the potential economic 

effects of a decision is not equivalent to 

making them the basis for the ‘‘features’’ 

decision itself. This is no different than 

stakeholder comments on the proposed 

interpretation which raised the 

economic implications of an affirmative 

‘‘features’’ determination and its impact 

on the energy conservation standards 

which could subsequently be set for 

products/equipment where both 

condensing and non-condensing models 

exist. Those economic concerns are 

similarly unsuitable for consideration in 

making a ‘‘features’’ determination 

under the statute. Accordingly, DOE 

would reiterate that it based neither its 

proposed interpretive rule nor this final 

interpretive rule upon economic 

considerations. 

DOE notes that many of the 

environmental and efficiency advocacy 

groups raised no similar objections to 

DOE’s September 2016 furnaces SNOPR, 

in which the agency proposed to set a 

separate product class and energy 

conservation standard at a noncondensing level for furnaces with a 

capacity less than 55 kBtu/h.26

Essentially, this would have created a 

non-condensing standard to address, in 

large part, the economic concerns of 

many low-income consumers. 81 FR 

65720, 65795, 65852 (Sept. 23, 2016). 

Arguably, this product class distinction 

was not required to protect the capacity 

from elimination, pursuant to 42 U.S.C. 

6295(o)(4). Since the effect would have 

been comparable, it is difficult to 

reconcile these groups’ differing 

positions regarding the propriety of 

taking economic considerations into 

account. 

b. Factual Arguments 

While maintaining their legal 

arguments in opposition, a number of 

commenters also directly challenged 

what they characterized as economic 

aspects of the proposed interpretive rule 

(i.e., installation costs, changes 

impacting aesthetics, fuel switching, 

and energy affordability). For example, 

the AGs Joint Comment argued that 

while DOE’s proposed interpretive rule 

expressly endorsed the approach that 

economic considerations should be 

addressed as part of a rulemaking’s 

economic justification analyses, the 

agency nevertheless used and gave 

undue weight to economic 

considerations in its ‘‘features’’ analysis. 

Furthermore, the AGs Joint Comment 

emphasized that DOE’s own rulemaking 

record found the Gas Industry 

Petitioners’ claims regarding increased 

consumer costs and challenging 

installation scenarios to be overstated, 

and they further argued that the Gas 

Industry Petitioners had proffered no 

new evidence to support their claims, 

including ones about excessive 

installation costs and consumer 

preference for gas as a fuel type. (AGs 

Joint Comment, No 82 at pp. 10–12; 

similar comment from NRDC, No. 94 at 

pp. 6–7) The CA IOUs and NRDC stated 

that DOE has already shown the 

technological feasibility and economic 

justification for condensing furnaces 

and water heaters through analyses 

supporting the relevant rulemakings and 

that such findings should not be 

allowed to be undermined in a separate 

action to assess new product 

classifications. (CA IOUs, No. 85 at pp. 

3–4; NRDC, No. 94 at pp. 2, 6–7) The 

Joint Advocates Comment added that 

solutions exist for difficult venting 

situations (a point echoed by Electrify 

Now), and that DOE has accounted for 

them in past rulemaking documents 

analyzing potential standards levels. 

(Advocates Joint Comment, No. 95 at 

pp. 3–5; Electrify Now, No. 106 at p. 1) 

Lennox commented that DOE has not 

explained when cost issues may become 

so extreme as to render certain furnace 

installations impossible or 

impracticable, and it argued that the 

lack of data in this regard causes the 

proposed interpretation to fail the 

preponderance of the evidence standard 

for designating a product ‘‘feature.’’ 

(Lennox, No. 87 at p. 6) 

Lennox alleged that DOE has failed to 

consider various studies, analysis, and 

other work to address the extent of, and 

4808 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

solutions to, difficult installation issues 

(e.g., a May 2019 study conducted by 

Oak Ridge National Laboratory (ORNL) 

and UT-Battelle, a document prepared 

by Pacific Gas and Electric (PGE)/ 

NEEA). (Lennox, No. 114 at p. 4) Along 

a similar vein, the Advocates Joint 

Comment II recited numerous 

technological solutions which they 

suggest are available to address 

installation barriers related to venting 

systems for gas-fired products, such as 

DuraVent’s FasNSeal product. These 

commenters also claim that additional 

venting solutions are under 

development, such as the ORNL 

EntrainVent and DuraVent’s vent retrofit 

design, although they acknowledge that 

neither of these products is 

commercially available today. 

(Advocates Joint Comment II, No. 118 at 

pp. 4–5) NEEA also cited DuraVent 

products as a potential solution to the 

problems DOE seeks to address. (NEEA, 

No. 119 at pp. 2–3) 

The CA IOUs stated that DOE’s 

proposal put the U.S. ‘‘out-of-sync’’ 

with other jurisdictions, such as 

Canada, which regulate the energy 

efficiency of similar products. These 

commenters pointed out that Canada 

has regulations in place resulting in 98 

percent of its annual furnace shipments 

being condensing models (in 2017), and 

of these, 85 percent had an AFUE rating 

of at least 95 percent. According to the 

CA IOUs, Canada expanded on these 

regulations in 2019 to require all 

residential housing units (with a few 

relatively narrow exceptions) sold in 

Canada with input rates less than or 

equal to 65.92 kilowatts (or 225,000 Btu/ 

h) that use single-phase electricity to 

achieve an AFUE of 95 percent. The CA 

IOUs added that the European Union’s 

Ecodesign minimums for gas 

instantaneous and gas storage water 

heaters with higher draw patters (XL, 

XXL, and above) also require 

condensing technology levels of 

performance. (CA IOUs, No. 117 at pp. 

2, 3–4) Lennox also commented as to 

DOE’s failure to address the widespread 

installation of condensing furnaces in 

Canada. (Lennox, No. 114 at p. 4) 

Commenters opposing DOE’s 

proposed interpretation sought to 

highlight data suggesting that cost 

impacts associated with installation of 

condensing appliances, in most cases, 

would not have an excessively negative 

impact on consumers. For example, the 

AGs Joint Comment stated that recent 

market research (submitted to the 

present rulemaking docket) contradicts 

petitioners’ claims regarding the 

impracticality or impossibility of 

condensing appliance retrofit 

installations. According to the AGs Joint 

Comment, a report by 2050 Partners, 

Inc. was based upon in-depth interviews 

with installers, distributors, and subject 

matter experts from around the U.S. in 

both residential and commercial 

settings, and it found that less than 5 

percent of retrofit installations required 

significant modifications (i.e., building 

or site modifications where installation 

costs would be more than double the 

total system cost of a typical retrofit). 

According to the AGs Joint Comment, 

that report indicates that condensing 

equipment can typically be incorporated 

with only minor changes into venting 

and plumbing infrastructure, and that 

condensate management, orphaned 

water heaters, and chimney relining 

were not identified as significant 

concerns, and that even in difficult 

cases, technical solutions were always 

available. The AGs Joint Comment also 

cited the earlier comment of Mitsubishi 

Electric on the petition, which stated 

that the percentage of homes with 

challenging retrofit situations is 

probably less than 1 percent of the total 

housing stock. (AGs Joint Comment, No. 

82 at pp. 10–12) In its comments on the 

September 2020, NEEA pointed to the 

same study and made similar 

arguments. (NEEA, No. 119 at p. 2) 

Along similar lines, the CA IOUs 

argued that their research has shown 

that installing a condensate drain is not 

a barrier to installation of condensing 

appliances. These commenters added 

that they only found approximately five 

percent of retrofit installations (going 

from atmospheric combustion natural 

gas appliances to condensing 

equivalents) to be ‘‘ ‘challenging,’ ’’ and 

even these always had technical 

solutions that allowed installation of the 

condensing appliance. The CA IOUs 

concluded that these technical solutions 

have associated costs, but cost is not a 

product feature. (CA IOUs, No. 117 at 

pp. 2–3) 

The AGs Joint Comment also 

challenged DOE’s concern expressed in 

the proposed interpretation that energy 

conservation standards set at a 

condensing level could price some lowincome consumers out of the 

manufactured housing market or create 

other financial hardship, such that these 

concerns could sufficiently raise noncondensing appliances (and associated 

venting) in the consciousness of the 

consumer so as to be deemed a 

‘‘feature’’ under EPCA. These 

commenters argued that DOE’s 

rulemaking record shows that the costs 

for condensing and non-condensing 

mobile home furnaces are comparable 

due to lower installation costs for 

condensing furnaces in most of those 

installations, so these commenters 

reasoned that a condensing furnace 

standard would not have any effect on 

the affordability of single-section mobile 

homes. (AGs Joint Comment, No. 82 at 

p. 12) 

The CEC stated that monthly savings 

from more-stringent standards would 

benefit low-income consumers more 

than the average consumer because, the 

commenter argued, they spend more 

than twice as much (as a percentage of 

income) on energy than median income 

consumers. The CEC did not directly 

respond to the first-cost concerns raised 

in DOE’s proposed interpretation, but 

instead quoted from an ACEEE paper 

which linked high energy costs to the 

cycle of poverty. The commenter added 

that at least in California, a substantial 

number of low-income consumers are 

tenants, so they have no control over the 

appliance choice, but they pay the 

utility bills, a situation which runs 

counter to DOE’s energy affordability 

concerns. (CEC, No. 89 at pp. 6–7) 

Other commenters also raised the 

same issue about split incentives 

between landlords and renters. The 

CFA/NCLC argued that it is owners, 

rather than renters, who purchase 

central heating furnaces, and that most 

owners (particularly those who rent 

apartments to lower-income tenants) 

will choose less expensive, less efficient 

non-condensing furnaces that will result 

in tenants paying significantly more to 

heat their homes. According to these 

commenters, depending upon the noncondensing and condensing units under 

consideration, low-income tenants 

would pay at least 10 percent more and 

a much as 20 percent more for their 

heat. (CFA/NCLC, No. 93 at p. 2) The 

CFA/NCLC argued that DOE’s proposed 

interpretation would harm many more 

low-income and moderate-income 

households than it would help, 

particularly since these households are 

disproportionately renters (not 

homeowners) and, therefore, must pay 

the associated energy bills. (CFA/NCLC, 

No. 93 at pp. 1–2) These commenters 

offered the following evidence to 

support their position. Citing U.S. 

Census Bureau data from 2017 through 

the second quarter of 2019, the CFA/ 

NCLC stated that 78 percent of 

households with income greater than 

the median family income were 

homeowners, as compared to 50 percent 

homeownership for households below 

the median family income. Because the 

poverty line is significantly below the 

median and because homeownership 

rates decline as income declines, these 

commenting organizations reasoned that 

such low-income households would 

have homeownership rates well below 

50 percent. The CFA/NCLC added that 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4809 

homeownership rates are significantly 

lower for non-white families, in large 

part because they are also lower-income 

families; in the past two years, the 

commenters noted that homeownership 

rates for ‘‘Black alone’’ households were 

approximately 42 percent, and 

approximately 47 percent for ‘‘Hispanic 

(of any race)’’ households. (CFA/NCLC, 

No. 93 at p. 2) 

CFA/NCLC challenged DOE’s 

reasoning that an energy conservation 

standard that would require a 

condensing furnace would lead to 

higher rents to cover the landlord/ 

owner’s first cost of the more expensive 

appliance, arguing that it is both 

unsubstantiated and unlikely to occur. 

According to these commenters, the 

incremental cost (including equipment 

and installation) for a condensing 

furnace (beyond the cost of a noncondensing furnace) is likely to be in 

the range of several hundred dollars, but 

given a useful furnace lifetime of over 

20 years, they estimate that a landlord 

would only need to raise rent by $3 per 

month to recoup these incremental costs 

over that period. The commenters noted 

that in an earlier filing with DOE, NCLC 

submitted an affidavit from a non-profit 

housing developer who stated that: (1) 

The incremental costs of a moreefficient furnace are so small compared 

to the owner’s overall operating costs so 

as to not be directly and immediately 

reflected in rent, and (2) rents are 

generally set in accordance with 

governing regulations (in rent-regulated, 

low-income housing) or by external 

market conditions (for unregulated 

properties). Accordingly, CFA/NCLC 

concluded that small changes in the cost 

of one appliance would not lead to a 

rent increase. (CFA/NCLC, No. 93 at p. 

3) 

CFA/NCLC acknowledged that there 

are many low-income homeowners who 

directly bear the cost of a replacement 

furnace, but they did not address the 

issue of first-cost for these homeowners, 

instead focusing on the fact that such 

increased costs would be paid back in 

terms of lower energy operating costs 

over the more than 20-year lifetime of 

the furnace (citing section 8.2.2.5 of the 

technical support document for DOE’s 

residential furnaces rulemaking (August 

30, 2016)). These commenters added 

that low-income homeowners frequently 

face termination of utility services due 

to non-payment, a risk that could 

increase with inefficient, noncondensing furnaces. (CFA/NCLC, No. 

93 at p. 3) 

CFA/NCLC and Electrify Now faulted 

DOE’s proposed interpretation for 

focusing on unquantified burdens that 

might fall on a very small percentage of 

residential households that would be 

required to install condensing furnaces, 

while ignoring the vast majority of 

households that would benefit—as 

clearly demonstrated under the 

Department’s own earlier analysis— 

from adoption of a condensing furnace 

standard. (CFA/NCLC, No. 93 at p. 4; 

Electrify Now, No. 106 at p. 2) 

According to CFA/NCLC, the upshot of 

DOE’s proposed interpretation would be 

that the agency would fail to carry out 

congressional intent, saddle consumers 

with potentially billions of dollars of 

excess energy costs, and impede efforts 

to help consumers use less energy. 

(CFA/NCLC, No. 93 at p. 4) 

Lennox argued that DOE did not 

provide any support to show that failure 

to separate condensing and noncondensing product/equipment classes 

would lead to ‘‘widespread, long-term 

homelessness,’’ further arguing that 

furnace costs are a comparatively small 

fraction of overall housing costs. The 

commenter countered that a more 

factual analysis would show that overlystringent efficiency standards would 

price some consumers out of a new 

furnace and would cause them to either 

continue to repair older, less-efficient 

units or purchase other, less-efficient 

heating options (e.g., kerosene heaters, 

electric space heaters, using a stove or 

oven). Lennox stated that the lack of 

data and support deprives commenters 

of the ability to fully comment on DOE’s 

proposal. (Lennox, No. 87 at p. 5) 

Contrary to the concerns about energy 

affordability raised in DOE’s proposed 

interpretive rule, certain commenters 

stated that such approach would harm 

the very groups most affected by high 

energy bills by allowing less-efficient 

equipment to remain on the market and 

locking in higher energy costs. NRDC 

pointed to research showing that space 

heating represents the largest energy 

expense for the average U.S. home at 45 

percent of energy bills, and it similarly 

stated that about 50 percent of U.S. 

commercial building floor space gets hot 

water from gas-fired or propane-fired 

equipment. (NRDC, No. 94 at p. 2) 

NRDC agreed with DOE that energy 

affordability is a critical issue, stating 

that nearly one-third of U.S. households 

face challenges (often because their 

energy bills are unaffordable) and that 

energy burden is significantly higher for 

low-income households (3.5% for 

median income households but 7.2% for 

low-income households). The 

organization added that low-income 

households, renters, African-American 

households, and Latino households all 

have a higher than average energy 

burden (i.e., paying more for utilities 

per square foot than the average 

household), which indicates that their 

homes are less efficient. NRDC stated 

that heating and cooling are the largest 

contributors to household energy use 

and that inefficient heating systems are 

one of the biggest drivers of household 

energy burden. The commenter argued 

that improving the efficiency of heating 

appliances offers a great opportunity to 

reduce energy burdens, but that DOE’s 

proposed interpretation would move 

things in the wrong direction. Under 

DOE’s proposed interpretation, NRDC 

argued, energy burdens would be 

perpetuated because lower-income 

customers and landlords may be 

inclined to purchase lower-first-cost 

appliances, even if those products have 

net higher operational costs over the 

product’s lifetime. Citing an ACEEE 

study, NRDC made the case that strong 

energy efficiency standards help 

transform the market by making highefficiency products readily available to 

all customers, with products becoming 

less expensive over time as installation 

costs drop and as manufacturers 

innovate. NRDC concluded that costeffective condensing products have the 

potential to lower both energy bills and 

energy burden. (NRDC, No. 94 at pp. 9– 

10) 

Furthermore, the Advocates Joint 

Comment argued that the proposed 

interpretation’s recitation of harmful 

economic effects, at least in the case of 

mobile home furnaces, is specious. 

These commenters cited DOE’s 2016 

furnaces SNOPR (81 FR 65720 (Sept. 23, 

2016)), which proposed a 92-percent 

AFUE standard for mobile home 

furnaces and was estimated to increase 

installed costs by $152. Using this 

example, the Advocates Joint Comment 

disputed DOE’s claim that the resulting 

increased cost in a mobile home 

resulting from the required installation 

of a condensing furnace could price 

some consumers out of the housing 

market. These commenters countered 

that this cost differential would amount 

to less than a dollar a month on the 

monthly mortgage payment and that 

mortgage lending decisions do not turn 

on such small margins. The Advocates 

Joint Comment argued that a condensing 

furnace could actually make a home 

more affordable for such consumers by 

lowering energy bills, thereby freeing up 

money for other necessities such as food 

and medicine (seeking to refute DOE’s 

argument on this point). The 

commenters also used this example to 

challenge DOE’s concerns about energy 

savings being spread out over long 

payback periods, again citing the 2016 

furnaces SNOPR for the proposition that 

under a 92-percent AFUE standard, a 

4810 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

27U.S. Department of Energy Public Meeting 

Transcript on the Energy Conservation Standards 

for Residential Furnaces (April 13, 2015), p. 12, 

lines 3–10 (Available at: https://

www.regulations.gov/document?D=EERE-2014-BTSTD-0031-0050). 

mobile home furnace with a 21.5 year 

lifetime would have a payback period of 

just 1.7 years. (Advocates Joint 

Comment, No. 95 at p. 3) 

Regarding energy affordability, the 

Advocates Joint Comment argued that 

rental housing markets have been 

thoroughly studied in the economic 

literature, and on the topic of whether 

increased appliance costs are passed on 

to consumers in the form of higher rent, 

it quoted Dr. Larry Dale, an economist 

for DOE who stated the following at an 

April 13, 2015 public meeting: ‘‘The 

implications from these findings are: 

tenants benefit from lower energy bills; 

rent increases may not, and I would say 

almost certainly do not, cover the higher 

equipment costs. So overall, tenants 

(meaning largely low-income 

households in this case, or rather the 

other way around, low-income 

households that are largely tenants) are 

probably better off than suggested by 

our LCC [life-cycle cost] analysis.’’ 27

The Advocates Joint Comment 

concluded that the best way for DOE to 

make decisions about future standards 

is to fully evaluate the costs and benefits 

of such potential standards, including 

through a consumer subgroup analysis 

which accounts for effects on renters, as 

opposed to setting separate product 

classes for condensing and noncondensing appliances, where such 

costs and benefits would not even get 

considered. (Advocates Joint Comment, 

No. 95 at pp. 5–6) 

According to the NRDC, if 

implemented, the revised interpretation 

would have an extremely detrimental 

impact on the potential for natural gas 

savings from future appliance energy 

conservation standards, thereby 

resulting in higher energy bills for 

customers using gas appliances, 

especially low-income households. 

(NRDC, No. 94 at p. 1) Focusing on 

commercial consumers, Ceres raised 

similar concerns that if DOE were to 

establish separate product/equipment 

classes for residential furnaces and 

commercial water heaters based upon 

the use of condensing vs. noncondensing technology, such action 

would increase costs for ordinary 

businesses and their customers, who 

own and operate such appliances. 

(Ceres, No. 69 at p. 1) Ceres argued that 

granting the Gas Industry Petition 

would essentially result in a subsidy to 

those special interest groups, rather than 

benefit the American people or 

economy. (Ceres, No. 69 at p. 2) To 

overcome these concerns, NRDC 

reasoned that there are solutions to the 

problems which the proposed 

interpretive rule seeks to address, none 

of which would require reinterpretation 

of EPCA’s ‘‘features’’ provision. More 

specifically, NRDC stated that if a 

consumer decides that the installation 

cost and/or aesthetic implications of a 

condensing appliance are too high, one 

could switch from a gas-fired appliance 

to an electric one; a similar comment 

was made by the Advocates Joint 

Comment II. (NRDC, No. 94 at pp. 6–7; 

Advocates Joint Comment II, No. 118 at 

pp. 4–5) 

Other commenters acknowledged and 

agreed with the Department’s separate 

discussion of likely consumer cost 

impacts (particularly for low-income 

consumers) that would be associated 

with energy conservation standards set 

at a level which can only be met 

through the use of condensing 

technology. For example, Weil-McLain 

expressed appreciation for DOE’s 

acknowledgment of the cost impact that 

requiring a condensing appliance would 

have on low-income segments of the 

population, and it argued that the same 

concerns exist in the commercial 

market, because small businesses could 

face increased costs and job losses if 

they could no longer purchase Category 

I Vented Appliances. (Weil-McLain, No. 

86 at p. 2) Carrier also cited continued 

affordability for low-income consumers 

as an important issue. (Carrier, No. 92 

at p. 1) 

The Petitioners et al. Joint Comment 

argued that suggestions that favorable 

action on the petition would harm the 

economic interests of consumers, 

especially low-income consumers, are 

based upon the flawed premise that a 

condensing standard for residential 

furnaces would give low-income renters 

the benefits of lower utility bills because 

a condensing furnace would then be 

installed in such cases. However, the 

Petitioners et al. Joint Comment 

suggested that existing multi-family 

properties, which provide much of the 

country’s affordable housing stock, face 

some of the most serious technical 

impediments to installation of 

condensing gas furnaces. Consequently, 

the Petitioners et al. Joint Comment 

argued that a condensing furnaces 

standard would, in fact, force many 

property owners to switch to 

alternatives such as electric resistance 

heating as their only practical option, 

which could actually burden lowincome renters with substantially higher 

utility bills. (Petitioners et al. Joint 

Comment, No. 80 at p. 4) 

In response, DOE reiterates that, 

despite discussing potential ancillary 

economic effects, the Department based 

its ‘‘features’’ determination in the 

proposed interpretive rule upon noneconomic grounds. Because DOE did 

not rely on economic factors in reaching 

its decision, commenters’ allegations 

that the agency gave undue weight to 

economic considerations are incorrect. 

Similarly, arguments as to the economic 

justification of proposed standards for 

residential furnaces, commercial water 

heaters, or other similarly situated 

products are not relevant to DOE’s 

‘‘features’’ determination under EPCA. 

As discussed elsewhere in this 

document, DOE reexamined new and 

existing information (including the 

substantial evidence contained in 

existing rulemaking dockets) in light of 

the arguments raised in the Gas Industry 

Petition, and the agency determined that 

a revised interpretation would better 

comport with the requirements of the 

statute. DOE has come to see that in the 

substantial number of difficult 

installation situations, the practical 

differences between condensing and 

non-condensing appliance operation 

would be a distinction that many 

consumers may recognize and value, 

such that maintaining a non-condensing 

option would constitute an important 

consumer utility. DOE’s decision to find 

non-condensing technology (and 

associated venting) to be a ‘‘feature’’ 

under EPCA preserves this consumer 

utility and consumer choice. 

DOE acknowledges that the economic 

impacts of its energy conservation 

standards rulemakings are both complex 

and of great importance. That is why the 

Department conducts a comprehensive 

economic analysis as part of those 

rulemakings, including consumer and 

manufacturer subgroup analyses, as 

appropriate. However, as the 

commenters stress, these economic 

considerations are beyond the scope of 

the ‘‘features’’ determination at issue in 

this final interpretive rule. 

In response to the CA IOUs’ and 

Lennox’s comments about Canadian and 

European experiences with condensing 

furnaces and water heaters, DOE does 

not find them directly opposite to the 

present case. First, such nations are 

situated significantly northward of large 

portion of the United States, so 

consequently, their climatic profile is 

different than that of the U.S., and that 

would be expected to impact their 

determinations of economic justification 

for standard-setting purposes. More 

importantly, however, it must be 

recognized that these foreign nations 

operate under an entirely different legal 

and regulatory structure, and 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4811 

28The Petitioners et al. Joint Comment argued 

that while the adverse impact of a standard on 

product sales should be ignored for purposes of the 

payback period and LCC analyses, it should not be 

ignored for purposes of other analyses, such as the 

manufacturer impact analysis, utility impact 

analysis, and national energy savings analysis. 

29The Environmentalists Joint Comment pointed 

to legislative history in H. Rpt. 100–11 at 35 and 

in S. Rpt. 100–6 at 6, 1987 U.S.C.C.A.N. at 56, 

which suggest that Congress’s concerns were about 

switching to electric resistance heating, not heat 

pumps. 

consequently, they are not subject to 

and have no duty to follow the statutory 

requirements of EPCA, including the 

‘‘features’’ provision. 

2. Fuel Switching 

Commenters on DOE’s proposed 

interpretive rule expressed conflicting 

views on the topic of fuel switching. 

The Petitioners et al. Joint Comment 

urged DOE to reconsider its analysis 

concerning the significance of fuel 

switching in the context of efficiency 

regulation. These commenters argued 

that fuel switching could occur because 

of the unavailability of important 

product characteristics, such as 

instances where it would be impractical 

to install condensing products or where 

such products could not be installed 

without the need for undesirable 

building modifications that consumers 

would be unwilling to accept. They 

added that driving gas products out of 

the market is not a legitimate regulatory 

objective under a statute designed to 

promote the efficiency of regulated 

products. Thus, the Petitioners et al. 

Joint Comment reasoned that in 

conducting its standards rulemakings, 

DOE must justify its standards on the 

basis of the economics of required 

efficiency improvements (i.e., by 

accounting for those cases where poor 

economic outcomes drive consumers to 

alternative products), rather than by 

excluding such outcomes from the 

analysis and substituting more favorable 

economic outcomes based upon 

assumed product substitution. They 

asserted that using the logic of DOE’s 

historic approach to economic analyses, 

standards could be determined to be 

economically justified on the grounds 

that they are so economically 

unjustified that consumers would no 

longer purchase the regulated products 

at all. These commenters argued that 

DOE’s life-cycle cost analysis and 

payback analysis must reflect these real 

economic costs, rather than simply 

reducing the number of products sold.28

(Petitioners et al. Joint Comment, No. 80 

at pp. 13–15) 

The CEC challenged DOE’s statement 

that through its proposed interpretation 

it was seeking neither to determine 

winners and losers nor to limit 

consumer choice. The commenter 

pointed to DOE’s September 2016 

residential furnaces SNOPR, in which 

the Department determined that fewer 

than 8 percent of consumers would 

switch from gas furnaces to heat pumps 

or electric furnaces, and which did not 

find any consumers compelled to switch 

(although some might do so for a variety 

of reasons, including economic savings) 

(citing 81 FR 65720, 65813 (Sept. 23, 

2016)). The CEC argued that by 

following its statutory mandate, DOE 

would be ensuring that consumers can 

make free and informed decisions about 

the cost of products they are purchasing. 

The CEC added that DOE did not offer 

any facts, data, or reasoning to suggest 

that a significant subset of consumers 

would resist switching to a moreefficient product because of fuel type or 

why such concerns would outweigh the 

energy consumption data or the risk of 

undermining the entire appliance 

efficiency program. The commenter 

concluded that these are economic 

concerns more properly addressed by 

the stringency of standards, rather than 

the creation of new product classes. 

(CEC, No. 89 at p. 5) 

Regarding fuel switching, the 

Environmentalists Joint Comment stated 

that such concerns are unsupported. 

These commenters argued that EPCA 

poses no barriers to adoption of an 

energy conservation standard based 

upon fuel switching, recognizing that 

appliances using different fuel types 

compete against each other in the 

marketplace. The Environmentalists 

Joint Comment pointed out that in 1987, 

Congress amended EPCA (at 42 U.S.C. 

6295(f)(1)(B)(iii)) to require that DOE 

prescribe energy conservation standards 

for small gas furnaces at a level ‘‘which 

the Secretary determines is not likely to 

result in a significant shift from gas 

heating to electric resistance heating 

with respect to either residential 

construction on furnace 

replacement.’’ 29 In light of that 

provision, these commenters argued that 

Congress could have easily extended 

this consideration to subsequent 

rulemakings to amend the standards for 

residential furnaces and commercial 

water heaters, but it did not. The 

Environmentalists Joint Comment stated 

that if fuel switching concerns were to 

be addressed by the statute’s ‘‘features’’ 

provisions, such outcome would render 

the statutory language regarding fuel 

switching limitations for small furnaces 

superfluous. (Environmentalists Joint 

Comment, No. 90 at pp. 4–5) 

The Advocates Joint Comment largely 

dismissed any concerns about fuel 

switching and sought to offer alternative 

solutions that would not require the 

establishment of separate product 

classes under EPCA’s ‘‘features’’ 

provision. These commenters argued 

that consumers with a preference for gas 

heat would still have that option, albeit 

with higher installation costs, and that 

DOE can account for any such subset of 

consumer behavior through its modeling 

of fuel switching. (Advocates Joint 

Comment, No. 95 at pp. 3–5) 

In response, DOE acknowledges that 

fuel switching is a more nuanced matter 

when viewed beyond a purely economic 

lens. As an economic matter, a fuelswitching analysis shows how many 

consumers could change from one type 

of appliance to another as a result of 

amended energy conservation 

standards, occurrences that would have 

repercussions for down-steam analyses 

related to costs and benefits. As 

commenters point out, there is 

considerable evidence of the potential 

for fuel switching in the residential 

furnaces, commercial water heaters, and 

other relevant rulemaking dockets. As 

the CEC noted, DOE’s September 2016 

residential furnaces SNOPR found that 

up to 8 percent of consumers would 

switch from gas furnaces to heat pumps 

or electric furnaces under that proposal. 

However, DOE had not previously 

focused on the motivation behind such 

consumer fuel switching. In past 

rulemakings, DOE viewed fuel 

switching as just an economic decision, 

devoid of any consumer utility impacts. 

However, as more fully explained in 

section III.A.1.a of this document, after 

careful review of the Gas Industry 

Petition and public comments, DOE has 

come to see that a non-condensing gas 

appliance (and related venting) offers 

the ability for consumers with difficult 

installation situations to make like-forlike appliance replacements without the 

need for major modifications to their 

dwelling or commercial business. Such 

modifications could potentially result in 

the loss of patio or storage space, the 

installation of unsightly piping, or the 

loss of windows. These are interactions 

with the appliance which the consumer 

would notice, concerns beyond the 

appliance’s primary function of 

providing warm air (for furnaces) or hot 

water (for water heaters). Under DOE’s 

revised interpretation, these utilities are 

to be regarded as performance-related 

characteristics to be protected under 

EPCA’s ‘‘features’’ provision, rather than 

simply an economic matter to be 

resolved through higher standards and 

unwelcome fuel switching, as the 

Advocates Joint Comment and CEC 

recommend. The Gas Industry 

4812 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

Petitioners have provided information 

related to such installations in the 

context of various appliance 

rulemakings, in addition to the current 

docket. Additional benefits of DOE’s 

revised interpretation include expanded 

consumer choice, in terms of both 

product selection and fuel type. 

In light of this final interpretive rule, 

DOE reasons that the Petitioners et al. 

Joint Comment’s primary concerns visa`-vis fuel switching have been 

addressed. However, these commenters’ 

more technical arguments about the fuel 

switching analysis embedded within 

DOE’s analytical methodology are more 

properly a matter to be addressed after 

the conclusion of the ongoing peer 

review of DOE’s analytical processes 

being conducted by the National 

Academies of Sciences, Engineering, 

and Medicine (see more detailed 

discussion at section III.C of this 

document). 

While DOE appreciates the 

Environmentalists Joint Comment’s 

argument about the statutory directive 

to prevent a significant shift from gas 

heating to electric resistance heating 

when prescribing energy conservation 

standards for ‘‘small’’ gas furnaces 

under 42 U.S.C. 6295(f)(1)(B)(iii), the 

Department finds the commenters’ legal 

theory to be a bit off point. First, DOE’s 

goal is not to prevent fuel switching, but 

rather to prevent the loss of consumer 

utility. Having an appliance that fits in 

a limited/confined space is something 

very useful to the average consumer, 

and the statute expressly lists sizes as 

one of the protected aspects under 42 

U.S.C. 6295(o)(4). Furthermore, DOE 

would argue in the alternative that the 

‘‘small’’ furnaces provision to which the 

commenters point does not address the 

matter of fuel switching generally, but 

instead it articulates a particular 

concern to not encourage a shift to a 

certain type of electric appliance—i.e., 

electric resistance heating. Notably, the 

statute does not mention heat pumps, 

another electric heating option. Thus, 

DOE concludes that the 

Environmentalists Joint Comment paints 

with too broad a brush in making its 

argument to prohibit consideration of 

fuel switching effects. 

3. Other Economic Issues 

Commenters also raised a few 

additional economic matters that did 

not fit squarely within any of the 

previous categories. The CA IOUs 

recommended that DOE should perform 

a cost-benefit analysis on the proposed 

new product class(es) that would arise 

from its proposed interpretation, as well 

as evaluating the potential costs to all 

consumers, manufacturers, and the 

environment resulting from such a 

change. The commenters argued that 

even if economic impacts were an 

appropriate rationale for a new product 

class, DOE’s analysis of such impacts is 

incomplete. (CA IOUs, No. 85 at p. 5) 

The CA IOUs’ analysis suggests that the 

potential impact of the new product 

classifications could be both significant 

and widespread, with the impacts 

related to residential furnaces alone 

potentially resulting in $1.8 billion/year 

in lost utility bill savings by 2050 and 

a 78 percent reduction in energy savings 

compared to the SNOPR published in 

2016. Given the tremendous negative 

impacts for consumers, manufacturers, 

and the environment that are likely to 

result from DOE’s proposed 

interpretation, the CA IOUs urged the 

Department not to move forward 

without weighing these impacts against 

the economic impacts used to justify the 

new product/equipment classes. (CA 

IOUs, No. 85 at p. 6) 

A.O. Smith asserted that DOE’s 

proposed interpretation would increase 

business uncertainty and impose 

unnecessary burdens upon 

manufacturers who would need to align 

their stock keeping units (SKUs) and 

divert resources that would otherwise 

be invested in more innovative 

technologies. A.O. Smith further alleged 

that DOE’s proposed interpretation 

would favor low-cost and subsidized 

imported products, thereby creating an 

‘‘un-level’’ playing field for domestic 

manufacturers. (A.O. Smith, No. 88 at p. 

6) 

In response, DOE has explained at 

length elsewhere in this document that 

a ‘‘feature’’ determination pursuant to 

EPCA does not turn on economic 

impacts, whatever the outcome of that 

decision. Although DOE explored some 

of these impacts in its proposed 

interpretive rule to examine the Gas 

Industry Petition in the broader context, 

the agency has not relied upon those 

economic impacts as the basis for either 

its proposal or this final interpretive 

rule determining non-condensing 

technology (and associated venting) to 

be a ‘‘feature’’ within the meaning of the 

statute. Consequently, the Department 

has concluded that it is not necessary to 

conduct the type of cost-benefit analysis 

suggested by the CA IOUs, because 

ultimately, it would not change the 

results of DOE’s ‘‘features’’ 

determination. 

As to A.O. Smith’s unsubstantiated 

arguments about business uncertainty 

and burden associated with the 

proposed interpretive rule, DOE finds 

such arguments to be without merit. 

DOE has been clear in both its earlier 

proposal and in this final interpretive 

rule regarding its revised interpretation. 

Furthermore, if the potential for 

litigation (and related uncertainty) were 

to be a basis for DOE to withhold 

regulatory action (including relevant 

statutory interpretations), it could 

completely ossify the administrative law 

process, because cross-cutting 

stakeholder interests render most 

agency actions subject to potential legal 

challenge. DOE finds A.O. Smith’s 

statements about burden and resource 

diversion to be without merit, given that 

the revised interpretation would 

essentially maintain the status quo. If 

A.O. Smith is operating effectively in 

the current market where both 

condensing and non-condensing 

appliances are available, it is difficult to 

see how its operational landscape 

would shift as a result of DOE’s 

interpretation. Similarly, A.O. Smith’s 

arguments about favoring low-cost/ 

subsidized imported products and 

creating an un-level playing field for 

domestic manufacturers fail for the 

same reason. Because DOE’s final 

interpretation does not alter the current 

standard levels or market, the 

Department is satisfied that the field 

remains appropriately level and fair for 

all market participants. 

C. Analytical Issues 

In seeking to justify the need for a 

determination that non-condensing 

technology (and associated venting) are 

a performance-related feature, the 

Petitioners et al. Joint Comment raised 

what it perceived to be flaws in the 

analytical methodology underlying DOE 

rulemakings. First, the Petitioners et al. 

Joint Comment urged DOE to reconsider 

its analysis concerning the significance 

of fuel switching in the context of 

efficiency regulation. These commenters 

argued that fuel switching could occur 

because of the unavailability of 

important product characteristics, such 

as instances where it would be 

impractical to install condensing 

products or where such products could 

not be installed without the need for 

undesirable building modifications that 

consumers would be unwilling to 

accept. They added that driving gas 

products out of the market is not a 

legitimate regulatory objective under a 

statute designed to promote the 

efficiency of regulated products. Thus, 

the Petitioners et al. Joint Comment 

reasoned that in conducting its 

standards rulemakings, DOE must 

justify its standards on the basis of the 

economics of required efficiency 

improvements (i.e., by accounting for 

those cases where poor economic 

outcomes drive consumers to alternative 

products), rather than by excluding such 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4813 

30The Petitioners et al. Joint Comment argued 

that while the adverse impact of a standard on 

product sales should be ignored for purposes of the 

payback period and LCC analyses, it should not be 

ignored for purposes of other analyses, such as the 

manufacturer impact analysis, utility impact 

analysis, and national energy savings analysis. 

31 42 U.S.C. 6295(o)(1) provides: ‘‘The Secretary 

[of Energy] may not prescribe any amended 

standard which increases the maximum allowable 

energy use, or, in the case of showerheads, faucets, 

water closets, or urinals, water use, or decreases the 

minimum required energy efficiency, of a covered 

product.’’ 

outcomes from the analysis and 

substituting more favorable economic 

outcomes based upon assumed product 

substitution. They asserted that using 

the logic of DOE’s historic approach to 

economic analyses, standards could be 

determined to be economically justified 

on the ground that they are so 

economically unjustified that 

consumers would no longer purchase 

the regulated products at all. These 

commenters argued that DOE’s life-cycle 

cost analysis and payback analysis must 

reflect these real economic costs, rather 

than simply reducing the number of 

products sold.30 (Petitioners et al. Joint 

Comment, No. 80 at pp. 13–15) 

Second, the Petitioners et al. Joint 

Comment urged DOE to acknowledge 

that there is a systemic error in its basecase efficiency assignment (due to the 

random nature of that assignment) 

which these commenters argue 

invalidates the entire economic analysis 

underlying the agency’s pending 

proposals. Their argument was that, 

even if the overall number of efficiency 

investments is correct, DOE’s analysis is 

based upon the wrong efficiency 

investments because it uses a random 

selection of investments rather than a 

selection reflecting outcomes that those 

purchasers would decline to make in 

the absence of regulatory compulsion. 

According to these commenters, this 

defect in DOE’s economic analysis 

provides a separate and independent 

basis for DOE to withdraw its pending 

proposed rules for residential furnaces 

and commercial water heaters. 

(Petitioners et al. Joint Comment, No. 80 

at pp. 15–16) Lennox made a similar 

argument about what it described as the 

‘‘random nature’’ of DOE’s consumer 

analysis, which it argues fundamentally 

(and incorrectly) assumes that 

consumers act irrationally. (Lennox, No. 

114 at p. 4) 

In further critique of DOE’s analytical 

methodology, the Petitioners et al. Joint 

Comment argued that because DOE’s 

analysis is based on the wrong 

installations, it does not provide a valid 

assessment of a rule’s impacts, and it 

produces a systematic overstatement of 

regulatory benefits and understatement 

of costs. These commenters asserted that 

this problem with DOE’s modeling 

approach fatally undermines a 

rulemaking’s economic analysis, so they 

argued that there is no reasonable basis 

to conclude that standards based on that 

analysis are economically justified. For 

this reason alone, the Petitioners et al. 

Joint Comment concluded that 

withdrawal of the Department’s pending 

proposals is warranted. (Petitioners et 

al. Joint Comment, No. 80 at p. 17) 

In response, DOE notes that National 

Academies of Sciences, Engineering, 

and Medicine (collectively, ‘‘the NAS’’) 

are currently conducting a peer review 

of the analytical methods employed by 

DOE in setting energy conservation 

standards regulations for the energy 

performance of consumer products and 

commercial equipment. See https://

www.nationalacademies.org/our-work/ 

review-of-methods-for-setting-buildingand-equipment-performance-standards. 

At the time of the drafting of this final 

interpretive rule, the NAS committee 

responsible for this task has held public 

meetings on November 19–20, 2019, on 

March 2–3, 2020, and on May 5, 2020, 

to discuss various aspects related to 

DOE’s analytical methodology when 

developing standards for those 

consumer products and industrial 

equipment that DOE regulates. DOE 

understands that at least some of the 

authors of the Petitioners et al. Joint 

Comment have participated in the NAS 

proceeding, raising issues regarding 

DOE’s analytical methodologies similar 

to those submitted in the comments on 

DOE’s proposed interpretation. At the 

conclusion of the study, the NAS will 

issue a consensus report with findings 

and recommendations on how DOE can 

improve its regulatory analyses to align 

with best practices for cost-benefit 

analysis. Once completed, DOE will 

review the NAS report and modify or 

adjust its own analytical methods 

consistent with those recommendations 

and DOE’s statutory obligations. Until 

DOE has had the opportunity to assess 

the conclusions of these independent 

experts, the Department has concluded 

that it would be premature to make 

changes to its current analytical 

methodology. Although DOE has 

ultimately decided to withdraw its 

pending rulemaking proposal for 

residential non-weatherized gas 

furnaces, residential mobile home gas 

furnaces, and commercial water heating 

equipment (for the reasons explained in 

section III.D.3 of this document), the 

Department makes clear that it is not 

doing so on the basis of the analytical 

arguments raised by the Gas Industry 

Petitioners and discussed in this 

section. Thus, DOE’s decision to grant 

the withdrawal request should not be 

viewed as in any way prejudging or 

preempting the outcomes of the NAS 

peer review process. 

D. Other Issues 

Finally, commenters on DOE’s 

proposed interpretive rule raised a 

handful of other issues which did not 

fall neatly within the other sections of 

this comment summary, so they are 

addressed here in the balance of this 

comment discussion. 

1. AFUE2 

Regarding residential furnaces, AHRI 

stated that one reason it supports DOE’s 

proposed interpretation is that it would 

help facilitate adoption of a unified 

energy efficiency metric for those 

products. (AHRI, No. 91 at pp. 1–2; 

similar comment by Nortek, No. 71 at 

pp. 1–2; Nortek, No. 107 at p. 3) More 

specifically, AHRI explained that in 

October 2018, it submitted a petition for 

rulemaking to DOE seeking to establish 

a combined energy efficiency metric 

(referred to as ‘‘AFUE2’’) for residential 

furnaces (currently rated using annual 

fuel utilization efficiency (AFUE)), 

furnace fans (currently rated using fan 

efficiency ratio (FER)), and standby 

mode/off mode energy consumption 

(currently rated in watts). AHRI 

suggested that furnace product classes 

split into condensing and noncondensing product classes (similar to 

what is currently done for furnace fans) 

would facilitate this transition by 

ensuring that the new, combined 

AFUE2 metric does not violate EPCA’s 

‘‘anti-backsliding’’ provision at 42 

U.S.C. 6295(o)(1).31 (AHRI, No. 91 at pp. 

2–3) In response to the September 2020 

SNOPIR, AHRI stated that if DOE 

decides not to adopt condensing/noncondensing product classes or its 

recommended AFUE2 approach for 

residential furnaces, then the trade 

association expressed support for the 

Department to pursue more tailored 

approaches such as capacity-based 

standards for smaller residential 

furnaces, which could also preserve 

non-condensing products for many 

difficult replacement installations. 

(AHRI, No. 109 at p. 3) 

A number of other commenters also 

expressed support for AHRI’s AFUE2 

petition for rulemaking. (Nortek, No. 71 

at pp. 2–3; Mortex, No. 72 at p. 1; 

Carrier, No. 92 at p. 2; Nortek, No. 107 

at p. 3) Nortek suggested that there are 

synergies and burden reduction that 

would be associated with granting 

AHRI’s AFUE2 petition. Nortek 

reasoned that efforts to come up with a 

4814 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

32The Gas Industry Petitioners again raised the 

issue of withdrawal of the rulemaking proposals for 

the subject residential furnaces and commercial 

water heating equipment in the September 29, 2020 

letter urging prompt action on the petition. (Docket 

No. EERE–2018–BT–STD–0018–0101) In reiterating 

the arguments raised in its earlier public comments, 

the Gas Industry Petitioners noted that because 

these appliances are now the subject of litigation, 

it would be beneficial to clarify the administrative 

record for these rulemakings so as to be consistent 

with DOE’s final interpretation. 

unified test procedure would be greatly 

simplified if the furnace and furnace fan 

product classes were aligned to 

differentiate condensing and noncondensing products. (Nortek, No. 71 at 

pp. 2–3; Nortek, No. 107 at p. 3) Mortex 

added that an AFUE2 metric would 

make it easier for consumers to use one 

number to compare different furnace 

models (similar point made by Nortek), 

and to this end, Mortex recommended 

using the same product classes set forth 

for furnace fans when developing the 

unified AFUE2 metric and associated 

energy conservation standards. (Mortex, 

No. 72 at p. 1; Nortek, No. 107 at p. 3) 

Carrier also suggested that a 

consolidated AFUE2 metric would 

reduce both the number of required 

rulemakings and unnecessary burdens/ 

costs for manufacturers. (Carrier, No. 92 

at p. 2) Several commenters on the 

September 2020 SNOPIR reiterated 

these arguments in support of transition 

to an AFUE2 metric. (Nortek, No. 107 at 

p. 3; AHRI, No. 109 at p. 3; Carrier, No. 

110 at p. 2) 

In response, DOE notes that the 

Department is currently considering the 

merits of AHRI’s AFUE2 petition for 

rulemaking, including the reasoning 

recited in these comments, in a separate 

proceeding. DOE acknowledges that an 

interpretation finding non-condensing 

technology (and associated venting) to 

be a ‘‘feature’’ could potentially 

facilitate implementation of an AFUE2 

metric, if the agency decides to grant the 

AHRI petition. However, such 

considerations pertaining to that 

distinct regulatory matter did not factor 

into the Department’s decision-making 

process underpinning this final 

interpretive rule. Instead, this final 

interpretive rule is grounded in the law 

and facts particular to the matter raised 

in the Gas Industry Petition and 

discussed in this document. 

2. Environmental and Climate Policy 

Issues 

The AGs Joint Comment faulted 

DOE’s proposed interpretive rule for its 

potential to create missed opportunities 

for consumers, businesses, and 

governments to conserve energy and to 

reduce economic and environmental 

costs of energy production and use 

(similar comment made by Electrify 

Now). These commenters argued that 

DOE’s actions on the Gas Industry 

Petition have delayed promulgation of 

energy conservation standards, which in 

turn has hampered State and municipal 

energy efficiency, clean energy, and 

climate goals. Finally, the AGs Joint 

Comment cited the International Energy 

Agency (IEA) Energy Efficiency 2018 

market report which highlights the 

potential for energy efficiency savings to 

help achieve global energy 

sustainability; these commenters stated 

that according to the IEA report, 

increased energy efficiency could 

account for half of the reductions in 

carbon dioxide emissions needed to 

attain a sustainable development 

scenario in 2040, and U.S. leadership 

would help drive deployment of moreefficient appliances and equipment 

worldwide. (AGs Joint Comment, No. 82 

at p. 13; Electrify Now, No. 106 at p. 2) 

The CEC argued that the proposed 

interpretive rule would weaken human 

health and environmental health 

through increased avoidable air 

pollution. (CEC, No. 89 at pp. 1–2) 

Along these same lines, an anonymous 

commenter (and a number of other 

individuals) expressed opposition to 

DOE’s proposed interpretation and 

urged its withdrawal, alleging that it 

would weaken energy conservation 

standards and harm public health by 

increasing the amount of greenhouse gas 

emissions. (Anonymous, No. 68 at p. 1; 

Sorkin, No. 73 at p. 1; Reed, No. 74; 

Woods, No. 76 at p. 1; Anonymous, No. 

98 at p. 1; A.O. Smith, No. 113 at p. 5) 

In response, DOE agrees that there 

may be costs and benefits resulting from 

energy conservation standards beyond 

those to be considered by Department 

when setting energy conservation 

standards under the Energy Policy and 

Conservation Act. Those impacts are not 

relevant to the current determination. 

Rather, the Department is constrained to 

act within its statutory authority—both 

in terms of standard setting and when 

making ‘‘features’’ determinations—and 

the provisions of EPCA make clear that 

while important, energy and cost 

savings are not the only relevant 

statutory considerations. As a prime 

example, EPCA’s ‘‘features’’ provisions 

demonstrate that Congress intended 

certain aspects of covered products/ 

equipment with consumer utility to be 

preserved, even if that means forgoing 

the energy savings or other benefits that 

might result from their elimination. (42 

U.S.C. 6295(o)(4); 42 U.S.C. 

6313(a)(6)(B)(iii)(II)(aa); and as 

applicable in certain cases through 42 

U.S.C. 6316(a)). Under its revised 

interpretation, DOE has determined 

non-condensing technology (and 

associated venting) to be a ‘‘feature’’ 

within the meaning of the statute, as 

would justify a separate product/ 

equipment class and energy 

conservation standard in appropriate 

cases. Such decision, where justified 

under the statute, does not turn on other 

externalities that may exist in the 

context of energy conservation 

standards. 

3. Other Requested Relief 

Beyond finalizing the interpretive rule 

along the lines proposed, the Petitioners 

et al. Joint Comment urged DOE to take 

further action, including issuing written 

findings consistent with its revised 

interpretation in the context of its 

pending residential furnaces and 

commercial water heaters rulemakings 

pursuant to EPCA’s ‘‘features’’ 

provisions at 42 U.S.C. 6295(o)(4) and 

42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa), 

respectively. These commenters also 

urged DOE to withdraw the pending 

proposed rules in those same 

rulemakings based upon those written 

findings. According to the Petitioners et 

al. Joint Comment, such actions are 

justified by the evidence, warranted by 

DOE’s proposed interpretive rule, and 

sufficient to establish that adoption of 

the pending proposals would be 

contrary to law.32 (Petitioners et al. Joint 

Comment, No. 80 at p. 4) 

The Petitioners et al. Joint Comment 

stated that if DOE adopts its interpretive 

rule as proposed, then the proposals in 

the residential furnaces and commercial 

water heaters rulemakings are legally 

defective and cannot be adopted as 

proposed, so they reasoned that 

withdrawal is appropriate and that it 

would show the public DOE is making 

constructive progress on these 

rulemakings. These commenters 

suggested that the withdrawal document 

could also serve as a vehicle to give the 

public notice that new proposals will be 

required and to request comment 

informing the development of those 

proposals. The Petitioners et al. Joint 

Comment also argued that withdrawal 

of the pending proposals is warranted to 

correct the public record, because both 

were subject to substantial adverse 

comment to which DOE has never 

responded. These commenters also 

argued that transparency dictates that, if 

the Department’s interpretation has 

changed, DOE should not leave these 

documents as the latest statement of its 

views until such time as new proposals 

can be crafted. The Petitioners et al. 

Joint Comment reasoned that failure to 

act quickly would ‘‘undermine the 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4815 

33Under 5 U.S.C. 551(4), ‘‘rule’’ means the whole 

or part of an agency statement of general or 

particular applicability and future effect designed to 

implement, interpret, or prescribe law or policy or 

describing the organization, procedure, or practice 

requirements of an agency and includes the 

approval or prescription for the future of rates, 

wages, corporate or financial structures or 

reorganizations thereof, prices, facilities, 

appliances, services or allowances therefor or of 

valuations, costs, or accounting, or practices bearing 

on any of the foregoing. 

significance of DOE’s response to the 

Petition,’’ and it urged DOE to move 

forward in the manner it suggests, even 

if that were to accelerate the timing of 

potential litigation. (Petitioners et al. 

Joint Comment, No. 80 at pp. 5–6) 

The Petitioners et al. Joint Comment 

also urged DOE to formally renounce its 

prior asserted legal basis for its historic 

position that type of venting is not a 

‘‘feature,’’ a position which rendered a 

ban of atmospherically vented gas 

products permissible. According to 

these commenters, DOE’s previous 

interpretation that there is no difference 

in consumer utility between 

atmospherically vented products and 

condensing products was factually 

unsupported, despite the fact that DOE 

had acknowledged such differences. 

The Petitioners et al. Joint Comment 

asserted that the applicability of the 

statute’s ‘‘features’’ provision was clear 

and that DOE ignored this fact and 

‘‘simply read unqualified statutory 

language to include qualifications of 

DOE’s own creation.’’ The comment 

stated that DOE’s previous analysis was 

too narrow in focus and that questions 

as to whether ‘‘a consumer’s interaction 

with and perception of a furnace or 

water heater may go beyond its primary 

function’’ are legally irrelevant. 

(Petitioners et al. Joint Comment, No. 80 

at pp. 8–9) 

After careful consideration, DOE has 

decided to address these supplemental 

actions requested by the Petitioners et 

al. Joint Comment as follows. The 

Department is quite certain that 

stakeholders and the interested public 

will become aware very rapidly of this 

final interpretive rule once it is 

published in the Federal Register, 

thereby making arguments about the 

need for greater transparency specious. 

After reading this final interpretive rule, 

its meaning should be clear, so 

‘‘renunciation’’ of DOE’s past position is 

not necessary to, in effect, deliver the 

final interpretation’s message a second 

time. It should also be readily apparent 

that the pending rulemakings for 

residential furnaces, commercial water 

heaters, and any other similarly-situated 

products/equipment will require further 

rulemaking action to ensure that they 

are consistent with this revised 

interpretation. DOE has plainly stated as 

much in both its proposed interpretive 

rule, as well as this document. For these 

reasons, DOE had previously tentatively 

determined that withdrawal of its 

existing rulemaking proposals for 

residential non-weatherized gas 

furnaces, residential mobile home gas 

furnaces, and commercial water heating 

equipment would be unnecessary. 

However, given DOE’s own statements 

as to the need for further rulemaking, 

DOE has reconsidered this matter raised 

by commenters and has decided to 

withdraw these rulemaking proposals, 

as requested by the Petitioners et al. 

Joint Comment. As they currently stand, 

the existing proposals are inconsistent 

with this final interpretation and, 

accordingly, cannot be adopted without 

modification, so DOE has determined 

that their withdrawal may have some 

additional benefit in terms of promoting 

clarity and eliminating any potential for 

confusion. As noted previously in the 

preamble of this final interpretive rule, 

elsewhere in this issue of the Federal 

Register, DOE withdraws its March 12, 

2015 proposed rule and September 23, 

2016 supplemental proposed rule for 

energy conservation standards for nonweatherized gas furnace and mobile 

home gas furnaces, as well as its May 

31, 2016 proposed rule for energy 

conservation standards for commercial 

water heating equipment. 

4. Final Agency Action 

A.O. Smith asserted that DOE is 

seeking to shield its features provision 

determination from judicial review by 

claiming that it does not constitute 

‘‘agency action.’’ Instead, A.O. Smith 

commented that the determination, once 

finalized, would be subject to review 

under the Administrative Procedure 

Act. The commenter argued that rather 

than being merely interpretive, the 

interpretation would have a definitive 

and direct effect by requiring/binding 

the Department to maintain noncondensing products/equipment in the 

marketplace, despite the fact that further 

implementing rulemaking may be 

necessary. According to A.O. Smith, a 

final interpretation would constitute 

final agency action because it would: (1) 

Consummate DOE’s features 

determination with respect to 

condensing technology and (2) affect 

legal rights and obligations. The 

commenter argued that such results are 

final and not subject to further DOE 

discretion, and consequently, the 

company reasoned that the final 

interpretation would have a direct and 

certain substantive effect by ensuring 

that manufacturers would continue to 

be able to produce and distribute in 

commerce non-condensing products/ 

equipment, independent of the 

outcomes of the related energy 

conservation standards rulemakings. 

(A.O. Smith, No. 88 at pp. 13–15) 

DOE disputes A.O. Smith’s allegation 

that the Department is attempting to 

shield its final interpretive rule from 

judicial review. Moreover, while DOE 

acknowledges that the courts ultimately 

determine what constitutes a final 

agency action, A.O. Smith’s attempt to 

characterize DOE’s final interpretive 

rule as ‘‘final agency action’’ under the 

APA is based upon a flawed reading of 

the statute and relevant legal precedent. 

This final interpretive rule is a type of 

rule or regulation within the meaning of 

5 U.S.C. 551(4).33 It is well established 

under the APA that agencies have the 

authority to issue interpretive rules, and 

that these rules are a valuable tool for 

an agency to use to advise the public 

prospectively and in a clear and 

transparent manner of the agency’s 

construction of a statute it administers. 

Shalala v. Guernsey Memorial Hospital, 

514 U.S. 87, 99 (1995); compare 

Chrysler Corp. v. Brown, 441 U.S. 281, 

302–303 (1979) (whereas ‘‘legislative 

rules’’ have the ‘‘force and effect of the 

law’’). An interpretive rule does not 

have substantive force and effect on its 

own. It is not until the agency takes an 

action in which the interpretation is 

applied and becomes enforceable that 

the interpretation can have an effect 

and, even then, only through that 

subsequent action. Cf. Bennett v. Spear, 

520 U.S. 154, 177–78, 117 S. Ct. 1154, 

137 L. Ed. 2d 281 (1997); Am. Tort 

Reform Ass’n v. Occupational Safety & 

Health Admin., 738 F.3d 387, 395 (D.C. 

Cir. 2013) (interpretive rules or 

statements of policy generally do not 

qualify as final agency action because 

they are not finally determinative of the 

issues or rights to which they are 

addressed); see also Am. Mining Cong. 

v. Mine Safety & Health Admin., 995 

F.2d 1106, 1112 (D.C. Cir. 1993) 

(holding that whether a rule is 

interpretive turns on whether it has 

independent ‘‘legal effect’’); Sec. Indus. 

& Fin. Mkts. Ass’n v. United States 

CFTC, 67 F. Supp. 3d 373, 416, 425 

(D.D.C. 2014). This rule does not 

determine rights or obligations, or 

produce ‘‘legal consequences,’’ see 

Bennett v. Spear, 520 U.S. at 177–78, or 

carry the force and effect of law, see 

Ass’n of Flight Attendants-CWA, AFL– 

CIO v. Huerta, 785 F.3d 710, 713 (D.C. 

Cir. 2015). This particular interpretive 

rule will have no direct impact on 

regulated parties. 

Moreover, through this final 

interpretive rule, DOE is not making any 

changes to its existing regulations in the 

4816 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 

Code of Federal Regulations or policies 

regarding individual appliance 

standards rulemakings, and it cannot 

and will not take any enforcement 

action pursuant to its revised 

interpretation until after the effective 

date of a legislative final rule, published 

in the Federal Register, amending the 

applicable product/equipment classes 

and energy conservation standards, as 

necessary. 

In this final interpretation, DOE sets 

forth its understanding of EPCA’s 

‘‘features’’ provisions as it relates to 

condensing and non-condensing 

technology (and associated venting), but 

this understanding must then be applied 

to the facts and data underlying any 

given rulemaking. Given the potential 

for technological advances, the outcome 

of a future rulemaking cannot be 

adjudged with certainty until such time 

as a standards rulemaking is 

commenced. Thus, until such 

interpretation is implemented through a 

final rule for energy conservation 

standards, no party can validly claim 

any demonstrable and definite harm. At 

the present time, current product/ 

equipment classes and standard levels 

remain unchanged by the final 

interpretive rule. The market status quo 

is left unaltered by the final interpretive 

rule, and there is no change in the 

products/equipment that can be sold in 

the marketplace as a result. 

IV. DOE’s Final Interpretation 

In consideration of public comments 

and other information received on the 

proposed interpretive rule, DOE is 

revising its interpretation of EPCA’s 

‘‘features’’ provision in the context of 

condensing and non-condensing 

technology (and associated venting) 

used in furnaces, water heating 

equipment, and similarly-situated 

appliances (where permitted by EPCA). 

Based on those comments, DOE 

interprets the statute to preclude the 

adoption of energy conservation 

standards that would limit the market to 

natural gas, propane gas, and/or oil-fired 

furnaces, water heaters, or similarlysituated covered products/equipment 

(where permitted by EPCA) that use 

condensing combustion technology, as 

that would result in the unavailability of 

a performance related feature within the 

meaning of 42 U.S.C. 6295(o)(4) and 42 

U.S.C. 6313(a)(6)(B)(iii)(II)(aa) (and as 

applicable in certain cases through 42 

U.S.C. 6316(a)). Stated differently, DOE 

has determined that non-condensing 

technology (and associated venting) 

constitutes a performance-related 

‘‘feature’’ for such appliances covered 

under EPCA. 

The statute accords the Secretary of 

Energy considerable discretion in terms 

of determining whether a performance 

characteristic of a covered product/ 

equipment amounts to a performancerelated feature which cannot be 

eliminated through adoption of an 

energy conservation standard. DOE has 

taken the opportunity presented by the 

Gas Industry Petition to reconsider its 

historical interpretation of EPCA’s 

‘‘features’’ provision in the context of 

condensing and non-condensing 

technologies used by certain gas 

appliances. A number of factors have 

convinced DOE to revise its 

interpretation, as explained in the 

reasons that follow. 

First, DOE acknowledges that it has, 

in the past, taken space constraints and 

similar limitations into account when 

setting product classes (e.g., PTACs, 

ventless clothes dryers). For example, 

DOE was sensitive to the need for 

extensive building modifications when 

it decided to set separate equipment 

classes for standard size PTACs and 

non-standard size PTACs. 73 FR 58772 

(Oct. 7, 2008). DOE expects that a small 

but substantial number of installations 

would require similar building 

modifications here, if DOE were to hold 

to its historical interpretation. For 

example, these more complicated 

installations are documented as part of 

DOE’s analysis of the venting costs for 

residential furnaces, which considered 

potential venting modifications that 

could be required when replacing an 

existing category I furnace with a 

condensing (category IV) furnace (see 

appendix 8D of the 2016 SNOPR TSD 

for further details). In certain situations, 

commenters have made the case that 

accommodating condensing products 

may not even be possible. 

Second, DOE has focused on the 

consumer’s interaction with the 

product/equipment in deciding whether 

a performance feature is at issue. In the 

context of residential furnaces and 

commercial water heaters, DOE had 

previously tied consumer utility to the 

primary function of the appliance (e.g., 

providing heat to a home or potable hot 

water) in establishing the nexus to the 

consumer. In the past, DOE opined that 

consumers were interested only in 

obtaining heat or hot water from the 

appliance, such that they would not 

care about the mechanism for generating 

that output. However, commenters have 

made clear that in at least some cases, 

a condensing appliance may necessitate 

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 even 

under DOE’s prior approach. Thus, DOE 

is not changing the test for consumer 

utility (i.e., a consumer’s interaction 

with the subject product/equipment), 

but it is refining how that test is to be 

applied in the context of condensing 

and non-condensing appliances (and 

associated venting), after further 

consideration of the facts regarding 

consumer preferences that relate to 

application of the test. 

Third, DOE notes that it has been its 

policy to remain neutral regarding 

competing energy sources in the 

marketplace. As certain commenters 

have pointed out and as DOE’s own 

analyses have shown, some enhanced 

level of fuel switching would be likely 

to accompany standard setting using 

DOE’s prior interpretation. Given that 

DOE’s revised interpretation essentially 

would support maintaining the market 

status quo, the interpretation would 

support and be consistent with 

maintaining a broader range of 

consumer choice across fuel types. 

Creating separate product classes for 

condensing and non-condensing 

furnaces, water heaters, and similarlysituated products/equipment (where 

permitted by EPCA) would prevent 

many of these potential problems. 

Although an approach consistent with 

DOE’s interpretation may have some 

impact on overall energy saving 

potential as a result of establishing 

separate product/equipment classes, 

that is not the touchstone of EPCA’s 

‘‘features’’ provision. Through that 

provision, Congress expressed its will 

that certain product utilities will take 

precedence over additional energy 

savings measures. DOE has applied this 

provision on several occasions without 

major controversy. (For example, DOE 

did not eliminate the oven window, 

which consumers found useful, despite 

the potential for further energy savings 

that elimination of the window would 

have created.) That said, DOE believes 

that any potentially negative 

programmatic impacts of future actions 

consistent with its revised interpretation 

are likely to be limited. This 

interpretation is likely to be relevant to 

only a subset of appliances, and DOE 

notes that market trends have favored 

the growing reach of condensing 

furnaces, even as non-condensing 

alternatives have remained available. 

DOE has every reason to believe that 

such trends will continue. 

DOE would clarify the limitations of 

its revised interpretation, based upon 

the existing statutory provisions. As 

discussed previously, DOE can adopt 

this interpretation for all relevant 

consumer products, all non-ASHRAE 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Rules and Regulations 4817 

commercial and industrial equipment, 

and ASHRAE equipment in those 

instances where DOE has clear and 

convincing evidence to adopt levels 

higher than the levels in ASHRAE 

Standard 90.1. However, additional 

rulemaking action by the Department 

will be required consistent with the 

interpretation contained in this final 

interpretive rule. More specifically, DOE 

is reserving appliance-specific 

implementation issues (including class 

setting, associated venting, etc.) for 

review and analysis in the context of 

individual product rulemakings. DOE 

has concluded that such an approach 

would best serve all parties, including 

manufacturers and consumers. 

Individual product rulemakings will 

have the requisite mix of interested 

stakeholders, technical experts, a 

comprehensive record with productspecific data (including a review of 

relevant industry consensus standards), 

and the full suite of analyses for class 

and standard setting. In that venue, DOE 

and interested stakeholders will be 

better able to address any relevant 

technical matters or product-specific 

nuances. Consequently, DOE anticipates 

continued engagement and productive 

involvement by members of the public 

and the regulated community in 

subsequent activities that may follow 

this revised interpretation. 

V. Conclusion 

In summary, DOE has granted the Gas 

Industry Petition to the extent that DOE 

interprets the statute to preclude the 

adoption of energy conservation 

standards that would limit the market of 

natural gas, propane gas and/or oil-fired 

furnaces, water heaters, or similarlysituated covered products/equipment 

(where permitted by EPCA) to 

appliances that use condensing 

combustion technology, as that would 

result in the unavailability of a 

performance related feature within the 

meaning of 42 U.S.C. 6295(o)(4) and 42 

U.S.C. 6313(a)(6)(B)(iii)(II)(aa) (and as 

applicable in certain cases through 42 

U.S.C. 6316(a)). Stated differently, DOE 

has determined that non-condensing 

technology (and associated venting) 

constitutes a performance-related 

‘‘feature’’ for such appliances covered 

under EPCA. Such interpretation would 

extend to all relevant/applicable cases 

involving consumer products, nonASHRAE commercial equipment, and 

ASHRAE equipment where DOE adopts 

a level more stringent than the ASHRAE 

level. Through this final interpretive 

rule, DOE states its understanding of the 

proper interpretation of the statutory 

text in light of the language and 

purposes of EPCA, so as to be consistent 

with Congress’s direction. Upon further 

consideration and after careful review of 

the information presented with and in 

response to the Gas Industry Petition, 

DOE has concluded that this revised 

interpretation offers the best reading of 

EPCA’s ‘‘features’’ provision. 

DOE has denied the Gas Industry 

Petition as it pertains to those 

rulemakings where ASHRAE sets 

standard levels that trigger DOE to 

consider and adopt those level (unless 

DOE finds clear and convincing 

evidence to adopt more-stringent 

levels), due to lack of authority. (See 

section II.D. of this document.) 

DOE has granted the Gas Industry 

Petition’s request for DOE to withdraw 

the existing proposed rules for 

residential furnaces and commercial 

water heaters. The existing proposals 

are inconsistent with this final 

interpretation and, accordingly, should 

not be adopted. Consequently, DOE has 

determined that their withdrawal may 

have some additional benefit in terms of 

promoting clarity and eliminating any 

potential for confusion. DOE anticipates 

developing new notices of proposed 

rulemaking for the subject residential 

furnaces and commercial water heaters 

that would be consistent with this 

revised legal interpretation. As noted 

previously in the preamble of this final 

interpretive rule, elsewhere in this issue 

of the Federal Register, DOE withdraws 

its March 12, 2015 proposed rule and 

September 23, 2016 supplemental 

proposed rule for energy conservation 

standards for non-weatherized gas 

furnace and mobile home gas furnaces, 

as well as its May 31, 2016 proposed 

rule for energy conservation standards 

for commercial water heating 

equipment. 

DOE wishes to make clear that an 

interpretive rule is a type of rule or 

regulation within the meaning of those 

terms in the Administrative Procedure 

Act, 5 U.S.C. 551(4). It is well 

established under the APA that agencies 

have the authority to issue interpretive 

rules, and that these rules are a valuable 

tool for an agency to use to advise the 

public prospectively and in a clear and 

transparent manner of the agency’s 

construction of a statute it administers. 

As explained above, DOE’s legal 

interpretations do not themselves 

constitute final agency action, and DOE 

does not believe that this rule reflects 

final agency action. 

Implementation of this interpretation 

in the context of energy conservation 

standards for particular covered 

products or equipment, and any changes 

to existing policies that may be 

appropriate in light of this 

interpretation, will be the subject of 

subsequent actions. As appropriate, the 

public will be notified and have an 

opportunity to comment on any such 

proposals implementing the 

interpretation. Furthermore, the many 

substantive comments received, 

including comments that led to 

revisions of DOE’s interpretation of the 

‘‘features’’ provision,’’ as reflected in 

this final interpretive rule, indicate that 

the public had a meaningful 

opportunity to comment on DOE’s 

general interpretation. As DOE has 

indicated, there will be additional 

processes after this interpretation has 

been issued but before any rulemaking 

decisions are implemented that would 

have impacts on regulated parties or any 

other stakeholders. 

Review Under Executive Order 12866. 

This final interpretive rule was 

determined by the Office of 

Management and Budget (OMB) Office 

of Information and Regulatory Affairs 

(OIRA) to be a ‘‘significant regulatory 

action’’ under section 3(f) of Executive 

Order 12866, ‘‘Regulatory Planning and 

Review.’’ 58 FR 51735 (Oct. 4, 1993). 

Accordingly, this final interpretive rule 

was subject to review under the 

Executive Order by OIRA. 

VI. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of this notice of final 

interpretive rule. 

Signing Authority 

This document of the Department of 

Energy was signed on December 23, 

2020, by Daniel R Simmons, Assistant 

Secretary for Energy Efficiency and 

Renewable Energy, pursuant to 

delegated authority from the Secretary 

of Energy. That document with the 

original signature and date is 

maintained by DOE. For administrative 

purposes only, and in compliance with 

requirements of the Office of the Federal 

Register, the undersigned DOE Federal 

Register Liaison Officer has been 

authorized to sign and submit the 

document in electronic format for 

publication, as an official document of 

the Department of Energy. This 

administrative process in no way alters 

the legal effect of this document upon 

publication in the Federal Register. 

Signed in Washington, DC on December 

28, 2020. 

Treena V. Garrett, 

Federal Register Liaison Officer, U.S. 

Department of Energy. 

[FR Doc. 2020–28956 Filed 1–14–21; 8:45 am] 

BILLING CODE 6450–01–P