Vol. 80 Monday, 

No. 26 February 9, 2015 

Part II 

Department of Energy 

10 CFR Part 430 

Energy Conservation Program for Consumer Products: Energy 

Conservation Standards for Hearth Products; Proposed Rule 

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7082 Federal Register / Vol. 80, No. 26 / Monday, February 9, 2015 / Proposed Rules 

DEPARTMENT OF ENERGY 

10 CFR Part 430 

[Docket Number EERE–2014–BT–STD– 

0036] 

RIN 1904–AD35 

Energy Conservation Program for 

Consumer Products: Energy 

Conservation Standards for Hearth 

Products 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Notice of proposed rulemaking 

and announcement of public meeting. 

SUMMARY: The Energy Policy and 

Conservation Act of 1975 (EPCA), as 

amended, sets forth various provisions 

designed to improve energy efficiency 

for consumer products and certain 

commercial and industrial equipment. 

In addition to specifying a list of 

covered residential products and 

commercial equipment, EPCA contains 

provisions that enable the Secretary of 

Energy to classify additional types of 

consumer products as covered products. 

The U.S. Department of Energy (DOE) 

has previously published a proposed 

determination of coverage to classify 

gas-fired hearth products as covered 

consumer products under the applicable 

provisions in EPCA. In this document, 

DOE proposes an energy conservation 

standard for hearth products following 

its notice of proposed coverage 

determination. This proposed rule also 

announces a public meeting to receive 

comment on the proposed standard and 

associated analyses and results. 

DATES: Comments: DOE will accept 

comments, data, and information 

regarding this notice of proposed 

rulemaking (NOPR) before and after the 

public meeting, but no later than April 

10, 2015. See section VII, ‘‘Public 

Participation,’’ for details. 

Meeting: DOE will hold a public 

meeting on Wednesday, March 23, 2015, 

from 9 a.m. to 4 p.m., in Washington, 

DC. The meeting will also be broadcast 

as a webinar. See section VII, ‘‘Public 

Participation,’’ for webinar registration 

information, participant instructions, 

and information about the capabilities 

available to webinar participants. 

ADDRESSES: The public meeting will be 

held at the U.S. Department of Energy, 

Forrestal Building, Room 8E–089, 1000 

Independence Avenue SW., 

Washington, DC 20585. To attend, 

please notify Ms. Brenda Edwards at 

(202) 586–2945. Please note that foreign 

nationals visiting DOE Headquarters are 

subject to advance security screening 

procedures. Any foreign national 

wishing to participate in the meeting 

should advise DOE as soon as possible 

by contacting Ms. Edwards at the phone 

number above to initiate the necessary 

procedures. Please also note that any 

person wishing to bring a laptop 

computer or tablet into the Forrestal 

Building will be required to obtain a 

property pass. Visitors should avoid 

bringing laptops, or allow an extra 45 

minutes. Persons may also attend the 

public meeting via webinar. For more 

information, refer to section VII, ‘‘Public 

Participation,’’ near the end of this 

notice. 

Instructions: Any comments 

submitted must identify the NOPR for 

Energy Conservation Standards for 

Hearth Products, and provide docket 

number EERE–2014–BT–STD–0036 

and/or regulatory information number 

(RIN) number 1904–AD35. Comments 

may be submitted using any of the 

following methods: 

1. Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions for submitting comments. 

2. Email: HearthHeatingProd2014

STD0036@ee.doe.gov. Include the 

docket number and/or RIN in the 

subject line of the message. Submit 

electronic comments in Word Perfect, 

Microsoft Word, PDF, or ASCII file 

format, and avoid the use of special 

characters or any form on encryption. 

3. Postal Mail: Ms. Brenda Edwards, 

U.S. Department of Energy, Building 

Technologies Office, Mailstop EE–5B, 

1000 Independence Avenue SW., 

Washington, DC, 20585–0121. If 

possible, please submit all items on a 

compact disc (CD), in which case it is 

not necessary to include printed copies. 

4. Hand Delivery/Courier: Ms. Brenda 

Edwards, U.S. Department of Energy, 

Building Technologies Office, 950 

L’Enfant Plaza, SW., Suite 600, 

Washington, DC, 20024. Telephone: 

(202) 586–2945. If possible, please 

submit all items on a CD, in which case 

it is not necessary to include printed 

copies. 

Written comments regarding the 

burden-hour estimates or other aspects 

of the collection-of-information 

requirements contained in this proposed 

rule may be submitted to Office of 

Energy Efficiency and Renewable 

Energy through the methods listed 

above and by email to Chad_S_

Whiteman@omb.eop.gov. 

No telefacsimilies (faxes) will be 

accepted. For detailed instructions on 

submitting comments and additional 

information on the rulemaking process, 

see section VII of this document (Public 

Participation). 

Docket: The docket, which will 

include all relevant Federal Register 

notices, public meeting attendee lists 

and transcripts, comments, and other 

supporting documents/materials, is 

available for review at 

www.regulations.gov. All documents in 

the docket are listed in the 

www.regulations.gov index. However, 

some documents listed in the index may 

not be publically available, such as 

those containing information that is 

exempt from public disclosure. 

A link to the docket Web page can be 

found at: http://www1.eere.energy.gov/

buildings/appliance_standards/ 

rulemaking.aspx?ruleid=84 . This Web 

page contains a link to the docket for 

this notice on the www.regulations.gov 

site. The www.regulations.gov Web page 

contains simple instructions on how to 

access all documents, including public 

comments, in the docket. See section 

VII, ‘‘Public Participation,’’ for further 

information on how to submit 

comments through 

www.regulations.gov. 

For further information on how to 

submit a comment, review other public 

comments and the docket, or participate 

in the public meeting, contact Ms. 

Brenda Edwards at (202) 586–2945 or by 

email: Brenda.Edwards@ee.doe.gov. 

FOR FURTHER INFORMATION CONTACT: Mr. 

John Cymbalsky, U.S. Department of 

Energy, Office of Energy Efficiency and 

Renewable Energy, Building 

Technologies Office, EE–5B, 1000 

Independence Avenue SW., 

Washington, DC, 20585–0121. 

Telephone: (202) 287–1692. Email: 

HearthHeatingProd2014STD0036@

ee.doe.gov. 

Mr. Eric Stas, U.S. Department of 

Energy, Office of the General Counsel, 

GC–71, 1000 Independence Avenue 

SW., Washington, DC 20585–0121. 

Telephone: (202) 5869507. Email: 

Eric.Stas@hq.doe.gov. 

For information on how to submit or 

review public comments, contact Ms. 

Brenda Edwards at (202) 586–2945 or by 

email: Brenda.Edwards@ee.doe.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Summary of the Proposed Rule 

A. Benefits and Costs to Consumers 

B. Impact on Manufacturers 

C. National Benefits and Costs 

D. Conclusion 

II. Introduction 

A. Authority 

B. Background 

III. General Discussion 

A. Scope of Coverage 

B. Prescriptive Requirement for Standby 

Mode 

C. Product Classes 

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Federal Register / Vol. 80, No. 26 / Monday, February 9, 2015 / Proposed Rules 7083 

1For editorial reasons, upon codification in the 

U.S. Code, Part B was redesignated Part A. 

2All references to EPCA in this document refer 

to the statute as amended through the American 

Energy Manufacturing Technical Corrections Act 

(AEMTCA), Public Law 112–210 (Dec. 18, 2012). 

D. Test Procedure 

E. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

F. Energy Savings 

1. Determination of Savings 

2. Significance of Savings 

G. Economic Justification 

1. Specific Criteria 

a. Economic Impact on Manufacturers and 

Consumers 

b. Savings in Operating Costs Compared to 

Increase in Price (LCC and PBP) 

c. Energy Savings 

d. Lessening of Utility or Performance of 

Products 

e. Impact of Any Lessening of Competition 

f. Need for National Energy Conservation 

g. Other Factors 

2. Rebuttable Presumption 

H. Compliance Date 

I. Standby Mode and Off Mode 

IV. Methodology 

A. Market and Technology Assessment 

1. Consideration of Products for Inclusion 

in This Rulemaking 

2. Product Classes 

3. Technology Assessment 

B. Screening Analysis 

C. Engineering Analysis 

1. Representative Products for Analysis 

2. Design Options Analyzed 

3. Cost-Assessment Methodology 

a. Teardown Analysis 

b. Cost Model 

c. Manufacturing Production Cost 

d. Cost Comparison 

e. Manufacturer Markups 

f. Manufacturer Interviews 

4. Results 

D. Markups Analysis 

E. Energy Use Analysis 

F. Life-Cycle Cost and Payback Period 

Analysis 

1. Installed Cost 

2. Inputs to Operating Costs 

a. Energy Consumption 

b. Energy Prices 

c. Maintenance and Repair Costs 

d. Product Lifetime 

e. Discount Rates 

f. Base-Case Efficiency Distribution 

3. Inputs to Payback Period Analysis 

G. Shipments Analysis 

H. National Impact Analysis 

1. National Energy Savings 

2. Net Present Value of Consumer Benefit 

I. Consumer Subgroup Analysis 

J. Manufacturer Impact Analysis 

1. Overview 

2. Government Regulatory Impact Model 

a. Government Regulatory Impact Model 

Key Inputs 

b. Government Regulatory Impact Model 

Scenarios 

c. Manufacturer Interviews 

K. Emissions Analysis 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

1. Social Cost of Carbon 

2. Valuation of Other Emissions 

Reductions 

M. Utility Impact Analysis 

N. Employment Impact Analysis 

V. Analytical Results and Conclusions 

A. Trial Standard Levels 

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Individual 

Consumers 

a. Life-Cycle Cost and Payback Period 

b. Consumer Subgroup Analysis 

c. Rebuttable Presumption Payback Period 

2. Economic Impacts on Manufacturers 

a. Industry Cash Flow Analysis Results 

b. Direct Impacts on Employment 

c. Impacts on Manufacturing Capacity 

d. Impacts on Subgroups of Manufacturers 

e. Cumulative Regulatory Burden 

3. National Impact Analysis 

a. Significance of Energy Savings 

b. Net Present Value of Consumer Costs 

and Benefits 

c. Indirect Impacts on Employment 

4. Impact on Product Utility or 

Performance 

5. Impact of Any Lessening of Competition 

6. Need of the Nation To Conserve Energy 

7. Other Factors 

8. Summary of National Economic Impacts 

C. Proposed Standard 

1. Benefits and Burdens of the Trial 

Standard Level Considered for Hearth 

Products 

2. Summary of Benefits and Costs 

(Annualized) of the Proposed Standards 

VI. Procedural Issues and Regulatory Review 

A. Review Under Executive Orders 12866 

and 13563 

B. Review Under the Regulatory Flexibility 

Act 

C. Review Under the Paperwork Reduction 

Act of 1995 

D. Review Under the National 

Environmental Policy Act of 1969 

E. Review Under Executive Order 13132 

F. Review Under Executive Order 12988 

G. Review Under the Unfunded Mandates 

Reform Act of 1995 

H. Review Under the Treasury and General 

Government Appropriations Act, 1999 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General 

Government Appropriations Act, 2001 

K. Review Under Executive Order 13211 

L. Review Under the Information Quality 

Bulletin for Peer Review 

VII. Public Participation 

A. Attendance at the Public Meeting 

B. Procedure for Submitting Requests To 

Speak and Prepared General Statements 

for Distribution 

C. Conduct of the Public Meeting 

D. Submission of Comments 

E. Issues on Which DOE Seeks Comment 

VIII. Approval of the Office of the Secretary 

I. Summary of the Proposed Rule 

Title III, Part B1 of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

the Act), Public Law 94–163 (42 U.S.C. 

6291–6309, as codified), established the 

Energy Conservation Program for 

Consumer Products Other Than 

Automobiles.2 In addition to specifying 

a list of covered residential products 

and commercial equipment, EPCA 

contains provisions that enable the 

Secretary of Energy to classify 

additional types of consumer products 

as covered products. (42 U.S.C. 

6292(a)(20)) In a proposed 

determination of coverage published in 

the Federal Register on December 31, 

2013, DOE proposed to classify hearth 

products as covered consumer products 

under EPCA. 78 FR 79638. 

Pursuant to EPCA, any new or 

amended energy conservation standard 

must be designed to achieve the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. (42 

U.S.C. 6295(o)(2)(A)) Furthermore, the 

new or amended standard must result in 

a significant conservation of energy. (42 

U.S.C. 6295(o)(3)(B)) The statute also 

provides that not later than 6 years after 

issuance of any final rule establishing or 

amending a standard, DOE must publish 

either a notice of determination that 

standards for the product do not need to 

be amended, or a notice of proposed 

rulemaking including new proposed 

energy conservation standards. (42 

U.S.C. 6295(m)(1)) 

In accordance with these and other 

statutory provisions discussed in this 

notice, DOE proposes a new energy 

conservation standard for hearth 

products. The proposed standard is a 

prescriptive design requirement for 

standby mode operation that would 

disallow the use of continuouslyburning pilots (i.e., ‘‘standing pilots’’ or 

‘‘constant-burning pilots’’) in hearth 

products. The proposed standard, if 

adopted, would apply to all hearth 

products, as defined in section IV.A, 

that are manufactured in, or imported 

into, the United States on and after the 

date 5 years after the publication of the 

final rule for this rulemaking. The 

proposed design standard would 

eliminate all standby mode gas 

consumption for hearth products as 

defined in the proposed determination 

rulemaking (78 FR 79638). DOE 

considered a combination of factors in 

developing its proposal to disallow 

continuously burning pilot lights, rather 

than other possibilities such as 

proposing to regulate active mode 

energy consumption with a performance 

standard or other prescriptive 

requirements. The rationale for this 

tentative decision to focus on standby 

mode energy consumption by the 

standing pilot is further explained in 

section III.B of this NOPR. 

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7084 Federal Register / Vol. 80, No. 26 / Monday, February 9, 2015 / Proposed Rules 

3The average LCC savings are measured relative 

to the base-case efficiency distribution, which 

depicts the hearth product market in the 

compliance year (see section III.H). The simple PBP, 

which is designed to compare specific hearth 

product efficiency levels, is measured relative to the 

baseline (see section IV.C.1). 

4See section IV.F.2.d for the derivation of the 

average hearth product lifetime. 

5 Impacts of match-lit hearth products were not 

included in the analysis. For more details, see 

section IV.A.1. 

6All monetary values in this document are 

expressed in 2013 dollars; discounted values are 

discounted to 2014 unless explicitly stated 

otherwise. 

7A quad is equal to 1015 British thermal units 

(Btu). 

8The reported savings are net savings after 

accounting for the slight increase in electricity use 

resulting from the proposed standard. 

9A metric ton is equivalent to 1.1 short tons. 

Results for emissions other than CO2 are presented 

in short tons. 

10The emissions reductions primarily concern 

reduction in combustion emissions from standing 

pilots. DOE calculated emissions reductions relative 

to the Annual Energy Outlook 2014 (AEO 2014) 

Reference case, which generally represents current 

legislation and environmental regulations, 

including recent government actions for which 

implementing regulations were available as of 

October 31, 2013. The impacts on mercury 

emissions are expected to be negligible. 

11 DOE calculated power sector emissions 

impacts relative to the Annual Energy Outlook 2014 

(AEO 2014) Reference case, which generally 

represents current legislation and environmental 

regulations, including recent government actions 

for which implementing regulations were available 

as of October 31, 2013. The impacts on mercury 

emissions are expected to be negligible. 

12Environmental Protection Agency. EPA GHG 

calculator (Last Accessed; December 23, 2014) 

(Available at: http://www.epa.gov/cleanenergy/ 

energy-resources/calculator.html#results). 

13Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive 

Order 12866, Interagency Working Group on Social 

Cost of Carbon, United States Government (May 

2013; revised November 2013) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/

assets/inforeg/technical-update-social-cost-ofcarbon-for-regulator-impact-analysis.pdf). 

14 DOE is investigating valuation of avoided Hg 

and SO2 emissions. 

A. Benefits and Costs to Consumers 

Table I.1 presents DOE’s evaluation of 

the economic impacts of the proposed 

standard on consumers of hearth 

products, as measured by the average 

life-cycle cost (LCC) savings and the 

simple payback period (PBP).3 The 

average LCC savings to consumers are 

positive and estimated at $165 over the 

lifetime of the average hearth product, 

and the PBP is estimated at 2.9 years, 

which is below the average hearth 

product lifetime of approximately 15 

years.4 As noted above, these impacts 

result from the removal of a 

continuously-burning pilot in units that 

would otherwise have them, which 

reduces the standby mode fossil fuel 

energy consumption of hearth 

products.5

TABLE I.1—IMPACTS OF PROPOSED

HEARTH PRODUCT ENERGY CONSERVATION STANDARD ON CONSUMERS OF HEARTH PRODUCTS

Product 

Simple 

average 

LCC 

savings 

2013$ 

Simple 

payback 

period 

years 

Hearth Products 165 2.9 

B. Impact on Manufacturers 

The industry net present value (INPV) 

is the sum of the discounted cash flows 

for the industry from the base year 

through the end of the analysis period 

(2014 to 2050). Using a real discount 

rate of 8.7 percent, DOE estimates that 

the base case INPV for manufacturers of 

gas hearth products is $125.3 million in 

2013$.6 Under the proposed design 

standard, DOE expects that INPV 

impacts may range from a loss of 2.6 

percent of INPV to a gain of 0.4 percent. 

C. National Benefits and Costs 

DOE’s analyses indicate that the 

proposed energy conservation standard 

for hearth products would save a 

significant amount of energy in the form 

of reduced natural gas consumption 

during stand-by mode. The lifetime 

energy savings for hearth products 

purchased in the 30-year period that 

begins in the first full year of 

compliance with an amended standard 

(2021–2050), relative to the base case 

without amended standards, amount to 

0.69 quads7 of full-fuel-cycle (FFC) 

energy.8 This represents a savings of 

about 77 percent relative to the energy 

use of the hearth product ignition 

systems in the base case, which reflects 

the existing market share of electronic 

ignition systems. 

The cumulative net present value 

(NPV) of total consumer costs and 

savings for the proposed hearth 

products standard ranges from $1.03 

billion to $3.12 billion at 7-percent and 

3-percent discount rates, respectively. 

This NPV expresses the estimated total 

value of future operating-cost savings 

minus the estimated increased product 

costs for hearth products purchased in 

2021–2050. 

In addition, the proposed hearth 

products standard would have 

significant environmental benefits. The 

energy savings described above are 

expected to result in cumulative 

emission reductions of 37.0 million 

metric tons (Mt)9 of carbon dioxide 

(CO2), 486 thousand tons of methane 

(CH4), 125 thousand tons of nitrogen 

oxides (NOX), and 0.01 thousand tons of 

nitrous oxide (N2O).10 Projected 

emissions show an increase of 4.26 

thousand tons of sulfur dioxide (SO2) 

and 0.01 tons of mercury (Hg) due to 

higher electricity use associated with 

the shift to electronic ignition in the 

subject hearth products.11 The 

cumulative reduction in CO2 emissions 

through 2030 amounts to 11.1 Mt, 

which is equivalent to the emissions 

resulting from the annual electricity use 

of 1.5 million homes.12

The value of the CO2 reduction is 

calculated using a range of values per 

metric ton of CO2 (otherwise known as 

the Social Cost of Carbon, or SCC) 

developed by a recent Federal 

interagency process.13 The derivation of 

the SCC values is discussed in section 

IV.L. Using discount rates appropriate 

for each set of SCC values (see Table 

I.2), DOE estimates the present 

monetary value of the CO2 emissions 

reduction is between $0.2 billion and 

$3.4 billion, with a value of $1.1 billion 

using the central SCC case represented 

by $40.5/t in 2015. Additionally, DOE 

estimates the present monetary value of 

the NOX emissions reduction to be $0.06 

billion to $0.15 billion at 7-percent and 

3-percent discount rates, respectively.14

Table 1.2 summarizes the national 

economic benefits and costs expected to 

result from the proposed standard for 

hearth products. 

TABLE I.2—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARD

FOR HEARTH PRODUCTS (TSL 1)* 

Category Present value 

Billion 2013$ 

Discount rate 

% 

Benefits 

Consumer Operating Cost Savings ......................................................................................................... 1.536 7 

4.128 3 

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15To convert the time-series of costs and benefits 

into annualized values, DOE calculated a present 

value in 2014, the year used for discounting the 

NPV of total consumer costs and savings. For the 

benefits, DOE calculated a present value associated 

with each year’s shipments in the year in which the 

shipments occur (2020, 2030, etc.), and then 

discounted the present value from each year to 

2014. The calculation uses discount rates of 3 and 

7 percent for all costs and benefits except for the 

value of CO2 reductions, for which DOE used casespecific discount rates. Using the present value, 

DOE then calculated the fixed annual payment over 

a 30-year period, starting in the compliance year 

that yields the same present value. 

TABLE I.2—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARD

FOR HEARTH PRODUCTS (TSL 1)*—Continued 

Category Present value 

Billion 2013$ 

Discount rate 

% 

CO2 Reduction Monetized Value ($12.0/t case) ** .................................................................................. 0.226 5 

CO2 Reduction Monetized Value ($40.5/t case) ** .................................................................................. 1.098 3 

CO2 Reduction Monetized Value ($62.4/t case) ** .................................................................................. 1.763 2.5 

CO2 Reduction Monetized Value ($119/t case) ** ................................................................................... 3.405 3 (95th percentile) 

NOX Reduction Monetized Value (at $2,684/ton) ** ................................................................................ 0.058 7 

0.148 3 

Total Benefits † ........................................................................................................................................ 2.693 7 

5.373 3 

Costs 

Consumer Incremental Installed Costs ................................................................................................... 0.505 7 

1.004 3 

Total Net Benefits 

Including Emissions Reduction Monetized Value † ................................................................................. 2.187 7 

4.369 3 

* This table presents the costs and benefits associated with hearth products shipped in 2021–2050. These results include benefits to consumers that accrue after 2050 from the products purchased in 2021–2050. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of high and low values found in the literature. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with a 3-percent discount rate 

($40.5/t in 2015). 

The benefits and costs of today’s 

proposed energy conservation standard, 

for hearth products sold in 2021–2050, 

can also be expressed in terms of 

annualized values. The annualized 

monetary values are the sum of: (1) The 

annualized national economic value of 

the benefits from consumer operation of 

products that meet the proposed new or 

amended standards (consisting 

primarily of operating cost savings from 

using less energy, minus increases in 

product purchase and installation costs, 

which is another way of representing 

consumer NPV), and (2) the annualized 

monetary value of the benefits of 

emission reductions, including CO2

emission reductions.15

Although combining the values of 

operating savings and CO2 emission 

reductions provides a useful 

perspective, two issues should be 

considered. First, the national operating 

savings are domestic U.S. consumer 

monetary savings that occur as a result 

of market transactions, whereas the 

value of CO2 reductions is based on a 

global value. Second, the assessments of 

operating cost savings and CO2 savings 

are performed with different methods 

that use different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

hearth products shipped in 2021–2050. 

The SCC values, on the other hand, 

reflect the present value of some future 

climate-related impacts resulting from 

the emission of one ton of carbon 

dioxide in each year. These impacts 

continue well beyond 2100. 

Estimates of annualized benefits and 

costs of the proposed standard are 

shown in Table I.3. The results under 

the primary estimate are as follows. 

Using a 7-percent discount rate for 

benefits and costs other than CO2

reduction (for which DOE used a 

3-percent discount rate along with the 

average SCC series that uses a 3-percent 

discount rate ($40.5/t in 2015)), the cost 

of the hearth products standards 

proposed in this rule is $61.1 million 

per year in increased equipment costs, 

while the estimated benefits are $186 

million per year in reduced equipment 

operating costs, $67 million per year in 

CO2 reductions, and $7.0 million per 

year in reduced NOX emissions. In this 

case, the net benefit would amount to 

$199 million per year. Using a 3-percent 

discount rate for all benefits and costs 

and the average SCC series that uses a 

3-percent discount rate ($40.5/t in 

2015), the estimated cost of the hearth 

products standards proposed in this rule 

is $61.2 million per year in increased 

equipment costs, while the estimated 

benefits are $251 million per year in 

reduced equipment operating costs, $67 

million per year in CO2 reductions, and 

$9.0 million per year in reduced NOX

emissions. In this case, the net benefit 

would amount to $266 million per year. 

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7086 Federal Register / Vol. 80, No. 26 / Monday, February 9, 2015 / Proposed Rules 

TABLE I.3—ANNUALIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR HEARTH

PRODUCTS (TSL 1) 

Discount rate 

% 

Primary 

estimate * 

Low net benefits 

estimate * 

High net benefits 

estimate * 

million 2013$/year 

Benefits 

Consumer Operating Cost Savings ................. 7% .............................

3% .............................

186 ............................

251 ............................

175 ............................

235 ............................

195. 

265. 

CO2 Reduction Monetized Value ($12.0/t 

case) **.

5% ............................. 20 .............................. 20 .............................. 20. 

CO2 Reduction Monetized Value ($40.5/t 

case) **.

3% ............................. 67 .............................. 67 .............................. 67. 

CO2 Reduction Monetized Value ($62.4/t 

case) **.

2.50% ........................ 98 .............................. 98 .............................. 98. 

CO2 Reduction Monetized Value ($119/t 

case) **.

3% ............................. 207 ............................ 207 ............................ 207. 

NOX Reduction Monetized Value (at $2,684/

ton) **.

7% .............................

3% .............................

7.00 ...........................

8.99 ...........................

7.00 ...........................

8.99 ...........................

7.00. 

8.99. 

Total Benefits † ................................................ 7% plus CO2 range ... 212 to 400 ................. 202 to 389 ................. 222 to 410. 

7% ............................. 260 ............................ 249 ............................ 269. 

3% plus CO2 range ... 280 to 468 ................. 264 to 452 ................. 294 to 482. 

3% ............................. 327 ............................ 311 ............................ 341. 

Costs 

Consumer Incremental Equipment Costs ........ 7% .............................

3% .............................

61.1 ...........................

61.2 ...........................

61.1 ...........................

61.2 ...........................

61.1. 

61.2. 

Net Benefits 

Total † ............................................................... 7% plus CO2 range ... 151 to 339 ................. 141 to 328 ................. 161 to 349. 

7% ............................. 199 ............................ 188 ............................ 208. 

3% plus CO2 range ... 219 to 407 ................. 203 to 390 ................. 233 to 420. 

3% ............................. 266 ............................ 250 ............................ 280. 

* This table presents the annualized costs and benefits associated with hearth products shipped in 2021–2050. These results include benefits 

to consumers that accrue after 2050 from the products purchased in 2021–2050. The results account for the incremental variable and fixed costs 

incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Net Impacts, and 

High Net Impacts Estimates utilize projections of energy prices from the AEO 2014 Reference case, Low Estimate, and High Estimate, respectively. Incremental product costs are the same for each Estimate. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of high and low values found in the literature. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate 

($40.5/t in 2015). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using 

the labeled discount rate, and those values are added to the full range of CO2 values. 

D. Conclusion 

DOE has tentatively concluded that 

the proposed standard represents the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified, and 

would result in significant conservation 

of energy. DOE further notes that 

products achieving the proposed 

standard are already commercially 

available. Based on the analyses 

described previously, DOE has 

tentatively concluded that the benefits 

of the proposed standards to the Nation 

(energy savings, positive NPV of 

consumer benefits, consumer LCC 

savings, and emission reductions) 

would outweigh the burdens (loss of 

INPV for manufacturers and LCC 

increases for some consumers). 

Based on consideration of the public 

comments DOE receives in response to 

this notice and related information 

collected and analyzed during the 

course of this rulemaking, DOE may 

adopt the standard proposed in this 

notice, or some combination of options 

that incorporate the proposed standard 

in part. 

II. Introduction 

The following section briefly 

discusses the statutory authority 

underlying today’s proposal, as well as 

some of the relevant historical 

background related to the establishment 

of standards for hearth products. 

A. Authority 

Title III, Part B of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

the Act), Public Law 94–163 (42 U.S.C. 

6291–6309, as codified) established the 

Energy Conservation Program for 

Consumer Products Other Than 

Automobiles, a program designed to 

improve energy efficiency for consumer 

products and certain commercial and 

industrial equipment. In addition to 

specifying a list of covered residential 

products and commercial equipment, 

EPCA, as amended, contains provisions 

that enable the Secretary of Energy to 

classify additional types of consumer 

products as covered products. (42 U.S.C. 

6292(a)(20)) Specifically, for a given 

product to be classified as a covered 

product, the Secretary must determine 

that: 

(A) Classifying the product as a 

covered product is necessary or 

appropriate for the purposes of carrying 

out EPCA; and 

(B) The average annual per-household 

energy use by products of such type is 

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16 DOE notes that a drafting error arose at the time 

Congress adopted the amendments to EPCA 

contained in the Energy Independence and Security 

Act of 2007 (EISA 2007), Public Law 110–140. As 

part of the EISA 2007 amendments, Congress added 

metal halide lamp fixtures to the list of specifically 

enumerated covered products at 42 U.S.C. 

6292(a)(19) and shifted the provision for the 

Secretary to classify ‘‘any other type’’ of a consumer 

product as a covered product to 42 U.S.C. 

6292(a)(20). However, Congress did not similarly 

amend the criteria and other requirements for 

setting energy conservation standards for ‘‘other’’ 

covered products in 42 U.S.C. 6295(l)(1) and (2). 

The provisions in 42 U.S.C. 6295(l) continued to 

refer to standards for ‘‘any type’’ of covered 

product, while continuing to refer to 42 U.S.C. 

6292(a)(20). Clearly, the provisions at 42 U.S.C. 

6295(l) were intended to apply more broadly than 

to metal halide lamp fixtures, so DOE continues to 

apply this provision as if the drafting error had not 

occurred. To do otherwise would render the 

provision at 42 U.S.C. 6295(l) a nullity, thereby 

thwarting DOE’s ability to set energy conservation 

standards for newly covered products, an outcome 

which Congress could not have intended. 

17As discussed in section III.D, DOE is not 

prescribing a test procedure because it is 

unnecessary for the prescriptive energy 

conservation standards that were considered for 

this NOPR. 

likely to exceed 100 kilowatt-hours (or 

its Btu equivalent) per year. 

(42 U.S.C. 6292(b)(1)(A) and (B)) 

For the Secretary to prescribe an 

energy conservation standard pursuant 

to 42 U.S.C. 6295(o) and (p) for covered 

products added pursuant to 42 U.S.C. 

6292(a)(20) and (b)(1), the Secretary 

must also determine that: 

(A) The average household energy use 

of the type (or class) of products has 

exceeded 150 kWh (or its Btu 

equivalent) per household for any 12- 

month period; 

(B) The aggregate 12-month 

household energy use of the type (or 

class) of products has exceeded 4.2 

TWh; 

(C) Substantial improvement in 

energy efficiency is technologically 

feasible; and 

(D) Application of a labeling rule 

under 42 U.S.C. 6294 is unlikely to be 

sufficient to induce manufacturers to 

produce, and consumers and other 

persons to purchase, covered products 

of such type (or class) that achieve the 

maximum energy efficiency that is 

technologically feasible and 

economically justified. 

(42 U.S.C. 6295(l)(1)(A)–(D)) 16

Pursuant to EPCA, DOE’s energy 

conservation program for covered 

products consists essentially of four 

parts: (1) Testing; (2) labeling; (3) 

establishing Federal energy 

conservation standards; and (4) 

certification and enforcement 

procedures. The Federal Trade 

Commission (FTC) is primarily 

responsible for labeling, and DOE 

implements the remainder of the 

program. 

DOE must follow specific statutory 

criteria for prescribing standards for 

covered products, including hearth 

products. As indicated previously, 42 

U.S.C. 6295(o) and (p) contain specific 

criteria for establishing or amending 

energy conservation standards for 

covered products. Any new or amended 

standard for a covered product must be 

designed to achieve the maximum 

improvement in energy efficiency that is 

technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A) and (3)(B)) Furthermore, 

DOE may not adopt any standard that 

would not result in the significant 

conservation of energy. (42 U.S.C. 

6295(o)(3)) Moreover, DOE may not 

prescribe a standard: (1) For certain 

products, including hearth products, if 

no test procedure has been established 

for the product,17 or (2) if DOE 

determines by rule that the proposed 

standard is not technologically feasible 

or economically justified. (42 U.S.C. 

6295(o)(3)(A)–(B)) In deciding whether a 

proposed standard is economically 

justified, after receiving comments on 

the proposed standard, DOE must 

determine whether the benefits of the 

standard exceed its burdens. (42 U.S.C. 

6295(o)(2)(B)(i)) DOE must make this 

determination by, to the greatest extent 

practicable, considering the following 

seven factors: 

(1) The economic impact of the 

standard on manufacturers and 

consumers of the products subject to the 

standard; 

(2) The savings in operating costs 

throughout the estimated average life of 

the covered products in the type (or 

class) compared to any increase in the 

price, initial charges, or maintenance 

expenses for the covered products that 

are likely to result from the standard; 

(3) The total projected amount of 

energy (or as applicable, water) savings 

likely to result directly from the 

standard; 

(4) Any lessening of the utility or the 

performance of the covered products 

likely to result from the standard; 

(5) The impact of any lessening of 

competition, as determined in writing 

by the Attorney General, that is likely to 

result from the standard; 

(6) The need for national energy and 

water conservation; and 

(7) Other factors the Secretary of 

Energy (Secretary) considers relevant. 

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

EPCA, as codified, also contains what 

is known as an ‘‘anti-backsliding’’ 

provision, which prevents the Secretary 

from prescribing any amended standard 

that either increases the maximum 

allowable energy use or decreases the 

minimum required energy efficiency of 

a covered product. (42 U.S.C. 

6295(o)(1)) Also, the Secretary may not 

prescribe an amended or new standard 

if interested persons have established by 

a preponderance of evidence that the 

standard is likely to result in the 

unavailability in the United States of 

any covered product type (or class) with 

performance characteristics (including 

reliability), features, sizes, capacities, 

and volumes that are substantially the 

same as those generally available in the 

United States. (42 U.S.C. 6295(o)(4)) 

Further, EPCA, as codified, 

establishes a rebuttable presumption 

that a standard is economically justified 

if the Secretary finds that the additional 

cost to the consumer of purchasing a 

product complying with an energy 

conservation standard level will be less 

than three times the value of the energy 

savings during the first year that the 

consumer will receive as a result of the 

standard, as calculated under the 

applicable test procedure. (42 U.S.C. 

6295(o)(2)(B)(iii)) 

Additionally, 42 U.S.C. 6295(q)(1) 

specifies requirements when 

promulgating an energy conservation 

standard for a covered product that has 

two or more subcategories. DOE must 

specify a different standard level for a 

type or class of covered product that has 

the same function or intended use, if 

DOE determines that products within 

such group: (A) Consume a different 

kind of energy from that consumed by 

other covered products within such type 

(or class); or (B) have a capacity or other 

performance-related feature that other 

products within such type (or class) do 

not have and such feature justifies a 

higher or lower standard. (42 U.S.C. 

6295(q)(1)) In determining whether a 

performance-related feature justifies a 

different standard for a group of 

products, DOE must consider such 

factors as the utility to the consumer of 

the feature and other factors DOE deems 

appropriate. Id. Any rule prescribing 

such a standard must include an 

explanation of the basis on which such 

higher or lower level was established. 

(42 U.S.C. 6295(q)(2)) 

Federal energy conservation 

requirements generally supersede State 

laws or regulations concerning energy 

conservation testing, labeling, and 

standards. (42 U.S.C. 6297(a)–(c)) DOE 

may, however, grant waivers of Federal 

preemption for particular State laws or 

regulations, in accordance with the 

procedures and other provisions set 

forth under 42 U.S.C. 6297(d). 

In addition, pursuant to other 

amendments contained in EISA 2007, 

any final rule for new or amended 

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energy conservation standards 

promulgated after July 1, 2010 is 

required to address standby mode and 

off mode energy use. (42 U.S.C. 

6295(gg)(3)) Specifically, when DOE 

adopts a standard for a covered product 

after that date, it must, if justified by the 

criteria for adoption of standards under 

EPCA (42 U.S.C. 6295(o)), incorporate 

standby mode and off mode energy use 

into a single standard, or, if that is not 

feasible, adopt a separate standard for 

such energy use for that product. (42 

U.S.C. 6295(gg)(3)(A)–(B)) 

Finally, it is noted that under 42 

U.S.C. 6295(m), the agency must 

periodically review established energy 

conservation standards for a covered 

product. Under this requirement, such 

review must be conducted no later than 

6 years from the issuance of any final 

rule establishing or amending a 

standard for a covered product. 

B. Background 

DOE has not previously conducted an 

energy conservation standards 

rulemaking for hearth products. 

Consequently, there are currently no 

Federal energy conservation standards 

for hearth products. 

On December 31, 2013, DOE 

published a notice of proposed 

determination (NOPD) of coverage to 

classify hearth products as covered 

products under EPCA. 78 FR 79638. In 

the proposed determination of coverage, 

DOE presented its preliminary findings 

relating to the energy use of hearth 

products to determine whether they 

could be classified as a type of covered 

product under the requirements of 42 

U.S.C. 6292(b)(1)(A) and (B), and 

whether they would meet the criteria for 

DOE to prescribe an energy conservation 

standard under 42 U.S.C. 6295(l)(1)(A)– 

(D). (See section II.A for a discussion of 

these statutory criteria.) DOE also 

proposed to define a ‘‘hearth product’’ 

as ‘‘a gas-fired appliance that simulates 

a solid-fueled fireplace or presents a 

flame pattern (for aesthetics or other 

purpose) and that may provide space 

heating directly to the space in which it 

is installed.’’ 78 FR 79638, 79640 (Dec. 

31, 2013). The proposed determination 

is still pending, but as discussed in 

section IV.A, DOE is using the proposed 

definition to delineate the scope of this 

NOPR. In addition, DOE has considered 

some of the comments submitted in 

response to the proposed coverage 

determination, which are relevant to the 

development of proposed energy 

conservation standards for hearth 

products and addresses those comments 

as applicable in this NOPR. 

III. General Discussion 

A. Scope of Coverage 

In the December 2013 NOPD, DOE 

proposed to adopt a definition of hearth 

product that means a gas-fired appliance 

that simulates a solid-fueled fireplace or 

presents a flame pattern (for aesthetics 

or other purpose) and that may provide 

space heating directly to the space in 

which it is installed. 

Based upon the scope arising from 

this proposed definition and after 

making the necessary energy use 

calculations, DOE tentatively 

determined that hearth products would 

meet the relevant statutory criteria so as 

to justify coverage as a consumer 

product under EPCA, and provided the 

relevant justifications in the notice. 78 

FR 79638, 79640–41 (Dec. 31, 2013). In 

the December 2013 NOPD, DOE 

provided examples of several common 

hearth product types that would be 

covered under the proposed definition, 

including vented decorative hearth 

products, vented heater hearth products, 

vented gas logs, gas stoves, outdoor 

hearth products, and vent-less hearth 

products. Id. at 79640. 

DOE used the definition proposed in 

the December 2013 NOPD (as stated 

above) to determine the scope of this 

NOPR. 

In setting forth new energy 

conservation standards for any type of 

covered product, EPCA requires DOE to 

determine that: (1) The product 

consumes more than 150 kilowatt-hours 

(or its Btu equivalent) per household in 

any 12 month period occurring before 

such a determination; (2) the aggregate 

energy use within the United States was 

more than 4,200,000,000 kilowatt-hours 

(kWh) (or its Btu equivalent) in any 12 

month period occurring before such a 

determination; (3) substantial 

improvement in energy efficiency for 

the products is technologically feasible; 

and (4) the application of labeling is not 

likely to be sufficient for manufacturers 

to produce or for consumers to purchase 

products that would achieve the 

maximum energy efficiency which is 

technologically feasible and 

economically justified. (42 U.S.C. 

6295(l)(1)(A)–(D)) 

With regards to the first and second 

criteria, DOE has estimated the average 

household consumption to be 7.5 

million Btu (equal to 2,198 kWh), and 

aggregate national energy use to be 95 

trillion Btu (equal to 27,800,000,000 

kWh) for currently-installed hearth 

products. (Details on these calculations 

can be found in chapter 7 of the NOPR 

TSD.) With regard to the third criterion, 

DOE found that several technologies are 

available to substantially improve the 

energy efficiency (or reduce the overall 

energy consumption) of hearth products 

in standby-mode. These technologies 

are discussed in section IV.C.2. Finally, 

with regard to the last criterion, DOE 

found through product literature review 

and manufacturer interviews that 

labeling is already often included in 

manuals that suggest users extinguish 

the pilot light when the product is not 

in use. However, for products such as 

those that include a millivolt gas valve, 

the user must allow the standing pilot 

to remain on so that the valve can be 

activated or deactivated by a thermostat 

or remote control. Further, regardless of 

instructions in the manual, DOE 

understands that a significant 

percentage of consumers allow the 

standing pilot light to burn year-round. 

DOE has, therefore, tentatively 

determined that the application of 

labeling is not sufficient to result in the 

maximum energy savings that would be 

technologically feasible and 

economically justified (i.e., the savings 

achievable through the proposal 

presented, in this NOPR). In summary, 

DOE has tentatively determined that 

hearth products, under the proposed 

definition, meet all the criteria for 

establishing energy conservation 

standards under EPCA. 

The purpose of this NOPR is to 

propose energy conservation standards 

for products that, together with the 

December 2013 proposed coverage 

determination, would establish coverage 

and energy conservation standards for 

hearth products. DOE has not 

previously conducted an energy 

conservation standards rulemaking for 

hearth products. If, after public 

comment, DOE issues a final 

determination of coverage for this type 

of product, DOE would consider 

adoption of the energy conservation 

standards for hearth products proposed 

in this NOPR. 

DOE received several comments in 

response to the December 2013 NOPD 

that pertained to the definition and 

broad range of hearth product types. 

DOE notes that in general, these 

comments pertain to the determination 

of coverage process, not the energy 

conservation standards process, and so 

DOE will respond in full to these 

comments as part of the determination 

of coverage process. However, DOE 

acknowledges that certain comments on 

the December 2013 NOPD do have 

relevance for this NOPR and addresses 

them below and in section III.C in 

relevant part. 

Multiple commenters in response to 

the December 2013 NOPD stated that 

the proposed definition for ‘‘hearth 

product’’ is too broad, and that a 

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18 Description of the hearth product groups can be 

found in chapter 5 of the NOPR TSD. 

19These values are calculated as the main burner 

operating hours multiplied by the average input 

capacity and the standing pilot operating hours 

multiplied by the average pilot light input rate, 

respectively. The operating hours can be found in 

chapter 7 of the NOPR TSD. 

reasonable energy conservation standard 

regulation could not be achieved for a 

definition that encompassed such a 

wide variety of products. (Hearth, Patio 

and Barbecue Association (HPBA), No. 

5 at p. 6; National Propane Gas 

Association (NPGA), No. 7 at p. 2; RH 

Peterson, No. 8 at p. 2; Rasmussen, No. 

9 at p. 2; Hearth & Home Technologies 

(HHT), No. 11 at p. 1; Empire, No. 12 

at p. 1; Air-Conditioning, Heating, and 

Refrigeration Institute (AHRI), No. 15 at 

p. 2; Wolf Steel, No. 4 at p. 2; American 

Public Gas Association (APGA), No. 14 

at p. 2) In response, DOE acknowledges 

that the hearth products market is broad 

and encompasses a wide range of 

products. DOE recognizes this as one 

product market and has proposed a 

definition accordingly. Nevertheless, 

DOE has chosen to conduct its analyses 

for this rulemaking using hearth product 

groups that have similar characteristics. 

For details about the physical 

characteristics of each product group for 

analysis, see chapter 5 of the NOPR 

TSD. 

DOE seeks additional comment 

regarding its proposed definition for 

hearth products found in the December 

2013 NOPD and this is identified as 

Issue 1 in section VII.E ‘‘Issues on 

Which DOE Seeks Comment.’’ 

B. Prescriptive Requirement for Standby 

Mode 

As discussed previously, this NOPR 

proposes to adopt a prescriptive design 

requirement that would reduce hearth 

product energy consumption in standby 

mode. This design requirement would 

not affect energy consumption or 

efficiency in active mode. EPCA defines 

‘‘active mode’’ energy consumption as 

the condition in which an appliance is 

connected to a main power source, has 

been activated, and provides one or 

more main functions. (42 U.S.C. 

6295(gg)(1)(A)(i)) DOE notes that when 

the main burner of a hearth product is 

off, the product can no longer be 

considered in active mode. EPCA 

defines ‘‘off mode’’ as the condition in 

which the product is connected to its 

main power source and is not providing 

any standby or active mode function. 

(42 U.S.C. 6295(gg)(1)(A)(ii)) DOE has 

tentatively concluded that this occurs 

for hearth products when the main 

burner is not lit and, for models with 

continuously-burning pilots, when the 

pilot light is not lit. 

EPCA defines ‘‘standby mode’’ energy 

consumption as the condition in which 

an appliance is connected to a main 

power source (in this case natural gas or 

propane connection) and facilitates the 

activation of other modes (including 

active mode) by remote switch, internal 

sensor, or timer, or serves other 

continuous functions. (42 U.S.C. 

6295(gg)(1)(A)(iii)) DOE notes that the 

standing pilot may serve several 

continuous functions. The continuous 

pilot may provide a safety function by 

proving gas is lit before opening the 

valve for the main burner. In the case of 

an unvented hearth product, the 

standing pilot provides a means for 

ensuring that oxygen levels in the room 

remain at a safe level through 

incorporation of an oxygen depletion 

sensor. In the case of a millivolt gas 

valve, a standing pilot facilitates 

activation of active mode using a remote 

control; this is accomplished by the 

pilot light heating a thermopile, which 

produces a voltage difference, thereby 

allowing use with electronic controls. 

Therefore, DOE has concluded that the 

standing pilot qualifies as standby mode 

energy use. 

DOE estimated the average annual 

amount of energy consumed by the 

main burner and by the standing pilot 

for each hearth product group.18, 19

These estimates can be found in Table 

III.1. Active mode operation may use 

fossil fuels more intensively, but 

standby mode uses fossil fuels over 

significantly more hours on an annual 

basis. 

TABLE III.1—AVERAGE ANNUAL ENERGY USE IN ACTIVE MODE (MAIN BURNER) AND STANDBY MODE (STANDING PILOT) 

Hearth product analysis group 

Main 

burner energy 

consumption 

(MMBtu/yr) 

Standing 

pilot energy 

consumption 

(MMBtu/yr) 

Vented Fireplaces, Inserts, and Stoves .......................................................................................................... 5.19 3.99 

Unvented Fireplaces, Inserts, and Stoves ...................................................................................................... 4.47 3.52 

Vented Gas Log Sets ...................................................................................................................................... 8.31 3.13 

Unvented Gas Log Set .................................................................................................................................... 4.53 2.29 

Outdoor ............................................................................................................................................................ 7.02 3.52 

Weighted Average ........................................................................................................................................... 5.28 3.54 

As shown in Table III.1, the standing 

pilot energy consumption makes up a 

significant portion of the overall energy 

consumption for hearth products. 

Further, the energy savings that can be 

achieved through disallowing standing 

pilot lights is greater than the savings 

that could be achieved through 

increasing the active mode efficiency 

via a performance standard. An active 

mode performance standard would only 

partially reduce the active mode energy 

consumption, whereas a prescriptive 

requirement to remove the standing 

pilot could be applied to all hearth 

product types and would reduce the 

standing pilot energy consumption to 

zero. 

DOE also considered whether a 

maximum energy use performance 

standard would be appropriate for 

hearth products in active mode. DOE 

recognizes that hearth products are 

available for a wide range of input 

capacities depending on the consumer’s 

needs. In general, the gas input is 

proportional to the size of the hearth 

product. A performance standard for 

hearth products that establishes a 

maximum energy use would likely 

eliminate certain sizes of hearth 

products from the market and could 

negatively impact the utility of the 

product. 

DOE considered several individual 

technologies that could potentially 

reduce the energy consumption of 

hearth products as discussed in section 

IV.A.3. All of the technology options 

identified, except for the electronic 

ignition, pertain to active mode energy 

use. Based on manufacturer feedback, 

DOE tentatively concluded that five of 

the technologies considered (air-to-fuel 

ratio, burner port design, simulated log 

design, burner pan media or bead type, 

and reflective combustion zone 

surfaces) would result in immeasurable 

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20See section III.I for discussion of electrical 

standby consumption for hearth products. 

or negligible active mode energy 

savings. Two of the considered 

technologies—the circulating fan and 

the condensing heat exchanger—would 

only apply to a subset of hearth 

products. Also, these two technology 

options may only be implemented in 

those types of units that incorporate an 

enclosure to house the components (i.e., 

they would not be applicable for gas log 

sets and certain types of outdoor 

hearths). 

DOE has tentatively determined that 

all standby fossil fuel consumption 

would be eliminated by disallowing the 

use of standing pilots.20 When turning 

on a gas hearth appliance, a pilot light 

is first ignited before gas flows to the 

main burner and is lighted. The pilot 

light generally may be constant-burning 

(‘‘standing’’) or intermittent. In the case 

of a standing pilot, the pilot light 

continues to consume gas even when 

the main burner is not consuming gas, 

unless the consumer chooses to shut off 

gas to the pilot as well. 

The standby mode operation and 

energy use of hearth products are 

functions of ignition type. Ignition types 

for all hearth products fall under three 

categories: (1) Match-lit; (2), constantburning or ‘‘standing’’ pilot; and (3) 

electronic ignition. For match-lit 

ignition systems, in order to ignite the 

burner, the user must manually turn on 

the gas flow and light the main burner 

with a match, lighter, or other device. 

After use, the user should manually turn 

off the gas valve, thereby reducing the 

fuel flow to zero when the product is 

not in operation. Therefore, match-lit 

products do not consume energy when 

not in active mode. For products with 

electronic ignitions, the most common 

approach is an intermittent pilot 

ignition. In this system, upon a call for 

the burner to ignite (either from the user 

or a thermostat), a spark lights a pilot, 

which in turn ignites the main burner. 

When the main burner shuts off, the 

pilot also shuts off, and, thus, any 

energy use in standby mode is electrical. 

DOE has tentatively determined this 

electrical consumption is de minimis.20

For constant-burning pilots, the user 

must manually light the pilot each time 

it is extinguished, either manually with 

a match or through the use of a piezoigniter. Then the pilot in turn lights the 

main burner. However, in this case, the 

pilot remains on after the main burner 

shuts off, awaiting future calls to ignite 

the burner. Therefore, hearth products 

with standing pilots continue to use gas 

typically at a rate between 700 and 

1,200 Btu/h when the pilot light is not 

extinguished. Since match-lit hearth 

products consume no energy in standby 

mode and off mode and since the 

electrical consumption of electronic 

ignitions has been tentatively 

determined to be de minimis, 

disallowing the use of constant-burning 

pilot ignition systems would effectively 

eliminate all standby mode energy use 

for these products. These characteristics 

are common to the standby mode 

operation across all hearth products. 

Therefore, while an energy efficiency 

performance standard for active mode 

and the technology options to achieve 

efficiency improvements could result in 

only a fractional reduction of energy 

consumption for a subset of hearth 

products, disallowing the standing pilot 

ignition type would eliminate all 

standby fossil fuel use for hearth 

products. Of the three general ignition 

types for hearth products—match-lit, 

standing pilot, and electronic ignition— 

only the standing pilot ignition systems 

contribute substantially to standby 

mode energy, so disallowing their use 

would effectively eliminate standby 

mode energy consumption of hearth 

products. 

DOE also considered performance 

standards for standby mode. Since the 

standing pilot light is used for several 

functions, reducing the allowable use 

during standby mode would hinder 

these products from providing these 

functions. (Note: Electronic ignitions are 

capable of providing the same functions 

as standing pilot ignition systems, and 

so disallowing standing pilots will not 

eliminate this utility from the market.) 

DOE is also unaware, as stated in 

section IV.A.3, of technologies for 

substantially reducing the consumption 

of pilot lights. Additionally, DOE has 

determined that a design requirement 

would be more effective and easier to 

implement than a performance standard 

addressing standby mode. A 

performance standard would likely also 

require a test procedure to be 

established and would increase 

manufacturer burden due to testing 

requirements. 

In summary, DOE has tentatively 

concluded the following: 

(1) A potential maximum energy use 

performance standard for active mode 

would likely restrict the sizes of 

available hearth products, eliminating 

part of the market. 

(2) The technology options available 

for reducing the active mode energy 

consumption of hearth products either 

result in immeasurable or negligible 

energy savings, or only apply to a subset 

of hearth products resulting in limited 

opportunity for energy savings; 

(3) A prescriptive requirement that 

disallows the use of standing pilot 

ignition systems would eliminate all 

standby mode fossil fuel use,20 which 

represents a large fraction of the overall 

energy use for hearth products; 

(4) An performance standard for 

standby mode would be less effective 

than a prescriptive requirement 

disallowing standing pilot ignitions, and 

would result in more manufacturer 

burden due to testing requirements; and 

(5) There are no technology options 

available to substantially reduce the 

energy consumption of pilot lights other 

than removing them; and 

(6) There is no associated public 

health or safety issue associated with 

replacing any constant-burning pilot 

with an intermittent pilot ignition 

system for the hearth products 

identified in this proposal. (DOE also 

requests comment on this assumption 

and this is identified as Issue 2 in 

section VII.E ‘‘Issues on Which DOE 

Seeks Comment.’’) 

For the reasons cited above, DOE has 

focused the analysis for this NOPR on 

a prescriptive requirement for standby 

mode energy use that would disallow 

the use of a constant-burning pilot light. 

DOE recognizes that an equivalent 

performance standard and test 

procedure could be proposed such that 

would measure the standby mode gas 

consumption and ensure it is zero. 

However, such a standard and 

accompanying test procedure would be 

unduly burdensome, since confirming 

that a hearth product does not have the 

components necessary for a standing 

pilot light ensures that there is no 

standby mode gas consumption. 

C. Product Classes 

In evaluating and establishing energy 

conservation standards, DOE generally 

divides covered products into classes by 

the type of energy used or by capacity 

or other performance-related feature that 

justifies a different standard for 

products having such feature. (See 42 

U.S.C. 6295(q)) In deciding whether a 

feature justifies a different standard, 

DOE must consider factors such as the 

utility of the feature to users. Id. DOE 

may also consider other factors it deems 

appropriate when determining product 

classes. Id. DOE normally establishes 

different energy conservation standards 

for different product classes based on 

these criteria. 

According to the proposed definition 

of ‘‘hearth product’’ in the December 

2013 NOPD, a hearth product is a gasfired appliance that simulates a solidfueled fireplace or presents a flame 

pattern. 78 FR 79638, 79640 (Dec. 31, 

2013). In the proposed definition, DOE 

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21Latest version is ANSI Z21.60–2012, Decorative 

gas appliances for installation in solid-fuel burning 

fireplaces (Available at: http://shop.csa.ca/en/

canada/gas-fired-domestic-and-commercialheating-equipment-and-air-conditioning/ansiz2160-2012csa-226-2012/invt/27019512012). 

22Latest version is ANSI Z21.11.2–2013, Gasfired room heaters, volume II, unvented room 

heaters (Available at: http://shop.csa.ca/en/canada/ 

gas-fired-domestic-and-commercial-heatingequipment-and-air-conditioning/ansi-z21112-2013/

invt/27017312013). 

23Latest version is ANSI Z21.88–2014, Vented 

gas fireplace heaters (Available at: http://

shop.csa.ca/en/canada/gas-fired-domestic-andcommercial-heating-equipment-and-airconditioning/ansi-z2188-2014csa-233-2014/invt/

27016252014). 

24Latest version is ANSI Z21.50–2014, Vented 

gas fireplaces (Available at: http://shop.csa.ca/en/

canada/gas-fired-domestic-and-commercialheating-equipment-and-air-conditioning/ansiz2150-2014csa-222-2014-/invt/27020142014). 

acknowledges that hearth products may 

serve one or more functions to the 

consumer, stating that a hearth product 

under the proposed definition ‘‘presents 

a flame pattern (for aesthetics or other 

purpose)’’ and ‘‘may provide space 

heating.’’ Id. DOE also suggested several 

examples of product types that would 

be covered under such a definition, 

including vented decorative hearth 

products, vented heater hearth products, 

vented gas logs, gas stoves, outdoor 

hearth products, and vent-less hearth 

products. 

DOE also received several comments 

that suggested an efficiency metric is 

unachievable or disadvantageous for 

decorative products or gas log sets. 

(HPBA, No. 5 at p. 9; American Gas 

Association (AGA), No. 6 at p. 2; RH 

Peterson, No. 8 at p. 3; Rasmussen, No. 

9 at p. 2; Wolf Steel, No. 4 at p. 1; AHRI, 

No. 15 at p. 3–4) Wolf Steel also 

suggested labeling requirements that 

would clearly identify decorative and 

heater products. (Wolf Steel, No. 4 at 

p.4) 

In addition to the December 2013 

NOPD comments, DOE also examined 

current product offerings and product 

literature, performed teardown analyses 

(described in section IV.C.3.a), and 

conducted manufacturer interviews in 

an effort to better understand the market 

and feature sets unique to various 

hearth products to determine whether 

capacity or performance-related features 

would justify different standards. Based 

on this analysis, DOE has tentatively 

concluded the following and seeks 

comment (Issue 3 in section VII.E) 

regarding these conclusions: 

(1) Within the hearth industry, there 

is no universally accepted definition or 

set of defining features or other physical 

characteristics for what constitutes 

different categories of hearth products. 

The distinction between products is 

sometimes, though not always, defined 

by whether the product is vented or 

unvented. However, even within these 

groupings, the same product is 

sometimes certified to multiple ANSI 

standards and in other cases apparently 

are certified to different ANSI standards. 

For example, unvented gas log sets are 

sometimes certified to the ANSI Z21.60 

decorative gas-fired appliance 

standard 21 in addition to the ANSI 

Z21.11.2 unvented heater standard.22

Vented products are often advertised 

with an AFUE or thermal efficiency 

rating, and may be certified to either or 

both the ANSI Z21.88 vented heater 

fireplace standard 23 or the ANSI Z21.50 

vented fireplace standard.24

(2) Hearth products encompass a wide 

range of configurations to serve size, 

space, and other constraints. Fireplaces, 

freestanding stoves, and gas log sets 

vary widely in their physical 

characteristics, as well as input 

capacities. 

(3) Gas log sets are installed in 

existing fireboxes and masonry 

fireplaces. Therefore, the manufacturer 

of a gas log set has virtually no control 

over an array of factors that would affect 

the efficiency of their product, 

including the firebox size, shape, 

material, and in the case of vented gas 

logs, the amount of draft. 

DOE acknowledges that these issues 

represent challenges in establishing 

product classes (because differentiating 

between different types is often difficult 

due to the similarities of different types 

of hearths) or in developing an 

efficiency metric that would apply for 

all hearth products. 

In comments in response to the 

December 2013 NOPD, HPBA stated 

‘‘under EPCA, a ‘covered product’ is a 

type of product defined by a common 

functional utility and for which a 

common efficiency descriptor can be 

applied.’’ HPBA further stated: ‘‘the 

premise that a ‘covered product’ must 

be defined by a common functional 

utility is the only premise that makes 

sense in EPCA’s context, because the 

‘efficiency’ of a product can be 

determined only by reference to its 

function.’’ (HPBA, No. 5 at p. 7) 

While DOE considered product 

classes in light of the issues presented 

above, these considerations pertain to 

the active mode operation of hearth 

products. As discussed in section III.B, 

DOE has tentatively concluded that a 

prescriptive requirement for standby 

mode (i.e., requiring the removal of 

standing pilot ignition systems) would 

have the most energy savings potential 

and would apply across all types of 

hearth products. Thus, DOE’s analysis 

focused on standby mode. DOE found 

considerable similarity across hearth 

products in their standby mode 

functionality, components, and energy 

use. 

In summary, when DOE analyzed the 

hearth market to consider whether to 

establish product classes based on 

standby mode energy consumption, it 

found that there is a substantial 

similarity among hearth products of all 

types, in that the primary mechanism of 

energy consumption in standby mode is 

a constant-burning pilot. Therefore, 

DOE has tentatively concluded that the 

establishment of product classes is not 

necessary for the energy conservation 

standards proposed by this NOPR. 

D. Test Procedure 

In this NOPR, DOE is proposing to 

adopt a prescriptive design requirement 

for hearth products. Specifically, DOE is 

proposing to disallow the use of a 

continuously-burning pilot light in 

these products. DOE typically 

establishes test procedures by which 

products must be tested in order to 

certify compliance with an energy 

conservation standard. Because this 

proposed standard is a design 

requirement and not a performance 

standard (i.e., minimum efficiency or 

maximum energy consumption), DOE 

has tentatively concluded that a test 

procedure is not required in order to 

determine compliance with the 

standard. 

EPCA states, in relevant part, that an 

amended or new standard may not be 

adopted if a test procedure has not been 

established for the relevant product type 

or class. (42 U.S.C. 6295(o)(3)(A)) 

However, later sections of EPCA 

acknowledge that DOE may establish 

prescriptive design requirements that by 

nature would not require a test 

procedure. For determining compliance 

with standards, EPCA requires use of 

the test procedures and criteria 

prescribed in 42 U.S.C. 6293, except for 

design standards. (42 U.S.C. 6295(s)) 

EPCA also states that a test procedure 

need not be prescribed if one cannot be 

designed to reasonably measure energy 

efficiency, energy use, water use, or 

annual operating cost, and not be 

unduly burdensome to conduct. (42 

U.S.C. 6293(d)(1)) EPCA requires that a 

determination be published in the 

Federal Register providing justification 

for such case. Id. 

DOE contends that any test procedure 

to determine whether a hearth product 

has a continuously-burning pilot would 

be unduly burdensome to conduct in 

light of fact that the proposed standard 

is in the form of a prescriptive design 

requirement. While a test could be 

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25 DOE also presents a sensitivity analysis that 

considers impacts for products shipped in a 9-year 

period. 26 In the past, DOE presented energy savings 

results for only the 30-year period that begins in the 

year of compliance. In the calculation of economic 

impacts, however, DOE considered operating cost 

savings measured over the entire lifetime of 

products purchased in the 30-year period. DOE has 

chosen to modify its presentation of national energy 

savings to be consistent with the approach used for 

its national economic analysis. 

conducted to measure standby mode 

fuel consumption (which would 

indicate the presence of a continuouslyburning pilot if such consumption is 

greater than zero), such a test procedure 

is not required since removing standing 

pilots will effectively reduce standby 

mode gas consumption to zero. Further, 

determining whether a continuouslyburning pilot is present on the unit can 

be easily assessed without testing 

through a review of operating 

instructions and physical inspection. 

Therefore, DOE has tentatively 

concluded that adoption of a test 

procedure is not required for 

establishing the proposed energy 

conservation standards for hearth 

products since that standard is based 

upon a design requirement. If DOE were 

to consider a performance standard for 

hearth products in the future, the 

agency would develop an appropriate 

test procedure at that time. 

E. Technological Feasibility 

1. General 

In each energy conservation standards 

rulemaking, DOE conducts a screening 

analysis based on information gathered 

on all current technology and prototype 

designs that could improve the 

efficiency of the products or equipment 

that are the subject of the rulemaking. 

As the first step in such an analysis, 

DOE develops a list of technology 

options for consideration in 

consultation with manufacturers, design 

engineers, and other interested parties. 

DOE then determines which of those 

means for improving efficiency or 

reducing energy use are technologically 

feasible. DOE considers technologies 

incorporated in commercially-available 

products or in working prototypes to be 

technologically feasible. 10 CFR part 

430, subpart C, appendix A, section 

4(a)(4)(i). 

After DOE has determined that 

particular technology options are 

technologically feasible, it further 

evaluates each technology option in 

light of the following additional 

screening criteria: (1) Practicability to 

manufacture, install, and service; (2) 

adverse impacts on product utility or 

availability; and (3) adverse impacts on 

health or safety. 10 CFR part 430, 

subpart C, appendix A, section 

4(a)(4)(ii)–(iv). Additionally, it is DOE 

policy not to include in its analysis any 

proprietary technology that is a unique 

pathway to achieving a certain 

efficiency level. Section IV.B of this 

notice discusses the results of the 

screening analysis for hearth products, 

particularly the designs DOE 

considered, those it screened out, and 

those that are the basis for the trial 

standard levels (TSLs) in this 

rulemaking. For further details on the 

screening analysis for this rulemaking, 

see chapter 4 of the NOPR technical 

support document (TSD). 

2. Maximum Technologically Feasible 

Levels 

When DOE proposes to adopt an 

amended standard for a type or class of 

covered product, it must determine the 

maximum improvement in energy 

efficiency or maximum reduction in 

energy use that is technologically 

feasible for such product. (42 U.S.C. 

6295(p)(1)) Accordingly, in the 

engineering analysis, DOE determined 

the maximum technologically feasible 

(max-tech) improvements in energy use 

for hearth products, using the design 

parameters for the least energy-intensive 

products available on the market or in 

working prototypes. The max-tech level 

that DOE determined for this 

rulemaking are described in section IV.C 

of this proposed rule and in chapter 5 

of the NOPR TSD. 

F. Energy Savings 

1. Determination of Savings 

For each TSL, DOE projected energy 

savings from the products that are the 

subject of this rulemaking purchased in 

the 30-year period that begins in the 

year of compliance with standards 

(2021–2050).25 The savings are 

measured over the entire lifetime of 

products purchased in the 30-year 

analysis period.26 DOE quantified the 

energy savings attributable to each TSL 

as the difference in energy consumption 

between the new standards case and the 

base case. The base case represents a 

projection of energy consumption in the 

absence of energy conservation 

standards, and it considers market 

forces and policies that affect demand 

for more-efficient products. 

DOE used its national impact analysis 

(NIA) spreadsheet model to estimate 

energy savings from potential standards 

for the products that are the subject of 

this rulemaking. The NIA spreadsheet 

model (described in section IV.H of this 

notice) calculates energy savings in site 

energy, which is the energy directly 

consumed by products at the locations 

where they are used. For electricity, 

DOE reports national energy savings on 

an annual basis in terms of primary 

(source) energy savings, which is the 

savings in the energy that is used to 

generate and transmit the site 

electricity. To calculate the primary 

energy savings, DOE derives annual 

conversion factors from the model used 

to prepare the Energy Information 

Administration’s (EIA) most recent 

Annual Energy Outlook (AEO). 

DOE also estimates full-fuel-cycle 

(FFC) energy savings, as discussed in 

DOE’s statement of policy and notice of 

policy amendment. 76 FR 51282 

(August 18, 2011), as amended at 77 FR 

49701 (August 17, 2012). The FFC 

metric includes the energy consumed in 

extracting, processing, and transporting 

primary fuels (i.e., coal, natural gas, 

petroleum fuels), and, thus, presents a 

more complete picture of the impacts of 

energy conservation standards. DOE’s 

approach is based on the calculation of 

an FFC multiplier for each of the energy 

types used by covered products or 

equipment. For more information on 

FFC energy savings, see section IV.H.1. 

2. Significance of Savings 

To adopt energy conservation 

standards for a covered product, DOE 

must determine that such action would 

result in ‘‘significant’’ energy savings. 

(42 U.S.C. 6295(o)(3)(B)) Although the 

term ‘‘significant’’ is not defined in the 

Act, the U.S. Court of Appeals for the 

District of Columbia Circuit, in Natural 

Resources Defense Council v. 

Herrington, 768 F.2d 1355, 1373 (D.C. 

Cir. 1985), opined that Congress 

intended ‘‘significant’’ energy savings in 

the context of EPCA to be savings that 

were not ‘‘genuinely trivial.’’ The energy 

savings for all of the trial standard levels 

considered in this rulemaking, 

including the proposed standards 

(presented in section V.C), are 

nontrivial, and, therefore, DOE 

considers them ‘‘significant’’ within the 

meaning of section 325 of EPCA. 

G. Economic Justification 

1. Specific Criteria 

EPCA provides seven factors to be 

evaluated in determining whether a 

potential energy conservation standard 

is economically justified. (42 U.S.C. 

6295(o)(2)(B)(i)(I)–(VII)) The following 

sections discuss how DOE has 

addressed each of those seven factors in 

this rulemaking. 

a. Economic Impact on Manufacturers 

and Consumers 

In determining the impacts of a 

potential energy conservation standard 

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on manufacturers, DOE conducts a 

manufacturer impact analysis (MIA), as 

discussed in section IV.J. DOE first uses 

an annual cash-flow approach to 

determine the quantitative impacts. This 

step includes both a short-term 

assessment—based on the cost and 

capital requirements during the period 

between when a regulation is issued and 

when entities must comply with the 

regulation—and a long-term assessment 

over a 30-year period. The industrywide impacts analyzed include: (1) 

INPV, which values the industry on the 

basis of expected future cash flows; (2) 

cash flows by year; (3) changes in 

revenue and income; and (4) other 

measures of impact, as appropriate. 

Second, DOE analyzes and reports the 

impacts on different types of 

manufacturers, including impacts on 

small manufacturers. Third, DOE 

considers the impact of standards on 

domestic manufacturer employment and 

manufacturing capacity, as well as the 

potential for standards to result in plant 

closures and loss of capital investment. 

Finally, DOE takes into account 

cumulative impacts of various DOE 

regulations and other regulatory 

requirements on manufacturers. 

For individual consumers, measures 

of economic impact include the changes 

in LCC and PBP associated with new or 

amended standards. These measures are 

discussed further in the following 

section. For consumers in the aggregate, 

DOE also calculates the national net 

present value of the economic impacts 

applicable to a particular rulemaking. 

DOE also evaluates the LCC impacts of 

potential standards on identifiable 

subgroups of consumers that may be 

affected disproportionately by a national 

standard. 

b. Savings in Operating Costs Compared 

to Increase in Price (LCC and PBP) 

EPCA requires DOE to consider the 

savings in operating costs throughout 

the estimated average life of the covered 

product in the type (or class) compared 

to any increase in the price of, or in the 

initial charges for, or maintenance 

expenses of, the covered product that 

are likely to result from a standard. (42 

U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts 

this comparison in its LCC and PBP 

analyses. 

The LCC is the sum of the purchase 

price of a product (including its 

installation) and the operating expense 

(including energy, maintenance, and 

repair expenditures) discounted over 

the lifetime of the product. The LCC 

analysis requires a variety of inputs, 

such as product prices, product energy 

consumption, energy prices, 

maintenance and repair costs, product 

lifetime, and consumer discount rates. 

To account for uncertainty and 

variability in specific inputs, such as 

product lifetime and discount rate, DOE 

uses a distribution of values, with 

probabilities attached to each value. For 

its analysis, DOE assumes that 

consumers will purchase the covered 

products in the first year of compliance 

with amended standards. 

The PBP is the estimated amount of 

time (in years) it takes consumers to 

recover the increased purchase cost 

(including installation) of a moreefficient product through lower 

operating costs. DOE calculates the PBP 

by dividing the change in purchase cost 

due to a more-stringent standard by the 

change in annual operating cost for the 

year that standards are assumed to take 

effect. 

The LCC savings for the considered 

energy conservation levels are 

calculated relative to a base case that 

reflects projected market trends in the 

absence of new or amended standards. 

DOE identifies the percentage of 

consumers estimated to receive LCC 

savings or experience an LCC increase, 

in addition to the average LCC savings 

associated with a particular standard 

level. In contrast, the PBP is measured 

relative to the baseline product. DOE’s 

LCC and PBP analysis is discussed in 

further detail in section IV.F. 

c. Energy Savings 

Although significant conservation of 

energy is a separate statutory 

requirement for adopting an energy 

conservation standard, EPCA requires 

DOE, in determining the economic 

justification of a standard, to consider 

the total projected energy savings that 

are expected to result directly from the 

standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) 

As discussed in section IV.H, DOE uses 

the NIA spreadsheet to project national 

energy savings. 

d. Lessening of Utility or Performance of 

Products 

In establishing product classes and in 

evaluating design options and the 

impact of potential standard levels, DOE 

evaluates potential standards that would 

not lessen the utility or performance of 

the considered products. (42 U.S.C. 

6295(o)(2)(B)(i)(IV)) Based on data 

available to DOE, the standards 

proposed in this notice would not 

reduce the utility or performance of the 

products under consideration in this 

rulemaking. DOE seeks comment 

regarding this tentative conclusion in 

Issue 4 of section VII.E ‘‘Issues on 

Which DOE Seeks Comment.’’ 

e. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider the 

impact of any lessening of competition, 

as determined in writing by the 

Attorney General, that is likely to result 

from a proposed standard. (42 U.S.C. 

6295(o)(2)(B)(i)(V)) It also directs the 

Attorney General to determine the 

impact, if any, of any lessening of 

competition likely to result from a 

proposed standard and to transmit such 

determination to the Secretary within 60 

days of the publication of a proposed 

rule, together with an analysis of the 

nature and extent of the impact. (42 

U.S.C. 6295(o)(2)(B)(ii)) DOE will 

transmit a copy of this proposed rule to 

the Attorney General with a request that 

the Department of Justice (DOJ) provide 

its determination on this issue. DOE 

will publish and respond to the 

Attorney General’s determination in the 

final rule. 

f. Need for National Energy 

Conservation 

DOE also considers the need for 

national energy conservation in 

determining whether a new or amended 

standard is economically justified. (42 

U.S.C. 6295(o)(2)(B)(i)(VI)) The energy 

savings from new or amended standards 

are likely to provide improvements to 

the security and reliability of the 

nation’s energy system. Reductions in 

the demand for electricity also may 

result in reduced costs for maintaining 

the reliability of the nation’s electricity 

system. DOE conducts a utility impact 

analysis to estimate how standards may 

affect the nation’s needed power 

generation capacity, as discussed in 

section IV.M. 

New or amended standards also are 

likely to result in environmental 

benefits in the form of reduced 

emissions of air pollutants and 

greenhouse gases associated with energy 

production. DOE conducts an emissions 

analysis to estimate how standards may 

affect these emissions, as discussed in 

section IV.K. DOE also estimates the 

economic value of emissions reductions 

resulting from the considered TSLs, as 

discussed in section IV.L. 

g. Other Factors 

EPCA allows the Secretary of Energy, 

in determining whether a standard is 

economically justified, to consider any 

other factors that the Secretary deems to 

be relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VII)) To the extent 

interested parties submit any relevant 

information regarding economic 

justification that does not fit into the 

other categories described previously, 

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27For more information on NEMS, refer to the 

U.S. Department of Energy, Energy Information 

Administration documentation. A useful summary 

is National Energy Modeling System: An Overview, 

DOE/EIA–0581(2009) (October 2009) (Available at: 

http://www.eia.gov/oiaf/aeo/overview/). 

DOE could consider such information 

under ‘‘other factors.’’ 

2. Rebuttable Presumption 

As set forth in 42 U.S.C. 

6295(o)(2)(B)(iii), EPCA creates a 

rebuttable presumption that an energy 

conservation standard is economically 

justified if the additional cost to the 

consumer of a product that meets the 

standard is less than three times the 

value of the first year’s energy savings 

resulting from the standard, as 

calculated under the applicable DOE 

test procedure. DOE’s LCC and PBP 

analyses generate values used to 

calculate the effects that proposed 

energy conservation standards would 

have on the payback period for 

consumers. These analyses include, but 

are not limited to, the 3-year payback 

period contemplated under the 

rebuttable-presumption test. In addition, 

DOE routinely conducts an economic 

analysis that considers the full range of 

impacts to consumers, manufacturers, 

the Nation, and the environment, as 

required under 42 U.S.C. 

6295(o)(2)(B)(i). The results of this 

analysis serve as the basis for DOE’s 

evaluation of the economic justification 

for a potential standard level (thereby 

supporting or rebutting the results of 

any preliminary determination of 

economic justification). The rebuttable 

presumption payback calculation is 

discussed in section V.B.1.c of this 

proposed rule. 

H. Compliance Date 

EPCA typically establishes a lead time 

between the publication of new or 

amended energy conservation standards 

and the date by which manufacturers 

must comply with that standard. As 

specifically relates to hearth products, 

EPCA requires that any new or amended 

standard for a consumer product which 

the Secretary classifies as a covered 

product under 42 U.S.C. 6292(b) shall 

not apply to products manufactured 

within five years after the publication of 

a final rule establishing such standard. 

(42 U.S.C. 6295(l)(2)) Accordingly, 

presuming DOE makes a final coverage 

determination, compliance with any 

standard for hearth products would be 

required five years after publication of 

the final rule. 

I. Standby Mode and Off Mode 

As discussed in section II.A of this 

NOPR, any final rule for amended or 

new energy conservation standards that 

is published on or after July 1, 2010 

must address standby mode and off 

mode energy use. (42 U.S.C. 6295(gg)(3)) 

As previously stated, DOE considers the 

use of a continuously-burning pilot light 

to be standby mode energy 

consumption, and that disallowing use 

of the constant-burning pilot ignition 

systems would eliminate gas 

consumption for hearth products in 

standby mode. 

In addition, DOE has tentatively 

determined that there is no off mode gas 

consumption for a hearth product’s 

ignition module. As indicated in section 

III.B, this energy conservation standards 

rulemaking not only addresses but 

focuses on standby mode fossil fuel 

energy use. 

DOE notes that in some instances, 

certain hearth product ignition modules 

may also have some ancillary electrical 

energy consumption in standby mode 

and/or off mode (see chapter 7 of the 

TSD). However, DOE has tentatively 

determined that such standby mode and 

off mode electrical energy consumption 

is de minimis, and consequently, DOE 

did not analyze energy conservation 

standards to regulate electrical standby 

mode and off mode energy 

consumption. DOE seeks comment on 

this assumption, which is identified as 

Issue 5 in section VII.E, ‘‘Issues on 

Which DOE Seeks Comment.’’ 

IV. Methodology 

This section addresses the analyses 

DOE has performed for this rulemaking 

with regard to hearth products. Separate 

subsections will address each 

component of DOE’s analyses. 

DOE used three spreadsheet tools to 

estimate the impact of today’s proposed 

standards. The first spreadsheet 

calculates LCCs and PBPs of potential 

standards. The second provides 

shipments forecasts and then calculates 

national energy savings and net present 

value impacts of potential standards. 

Finally, DOE assessed manufacturer 

impacts, largely through use of the 

Government Regulatory Impact Model 

(GRIM). All three spreadsheet tools are 

available online at the rulemaking 

portion of DOE’s Web site: 

www1.eere.energy.gov/buildings/

appliance_standards/

product.aspx?productid=83. 

Additionally, DOE estimated the 

impacts on utilities and the 

environment that would be likely to 

result from potential standards for 

hearth products. DOE used the most 

recent version of EIA’s National Energy 

Modeling System (NEMS) for the utility 

and environmental analyses.27 NEMS 

simulates the energy sector of the U.S. 

economy. EIA uses NEMS to prepare its 

Annual Energy Outlook, a widelyknown energy forecast for the United 

States. NEMS offers a sophisticated 

picture of the effect of standards, 

because it accounts for the interactions 

between the various energy supply and 

demand sectors and the economy as a 

whole. 

A. Market and Technology Assessment 

DOE develops information that 

provides an overall picture of the 

market for the products concerned, 

including the purpose of the products, 

the industry structure, manufacturers, 

market characteristics, and technologies 

used in the products. This activity 

includes both quantitative and 

qualitative assessments, based primarily 

on publicly-available information. The 

subjects addressed in the market and 

technology assessment for this hearth 

products rulemaking include: (1) A 

determination of the scope of the 

rulemaking and product classes; (2) 

manufacturers and industry structure; 

(3) quantities and types of products sold 

and offered for sale; (4) retail market 

trends; (5) regulatory and non-regulatory 

programs; and (6) technologies or design 

options that could improve the energy 

efficiency of the product(s) under 

examination. The key findings of DOE’s 

market assessment are summarized 

below. See chapter 3 of the NOPR TSD 

for further discussion of the market and 

technology assessment. 

1. Consideration of Products for 

Inclusion in This Rulemaking 

In section III.A, DOE presented the 

scope of coverage for the rulemaking. 

Presently, hearth products are not 

covered consumer products. Section 

III.A discusses the scope and coverage 

for this rulemaking in the context of the 

notice of proposed coverage 

determination published in the Federal 

Register on December 31, 2013 

(December 2013 NOPD). 78 FR 79638. 

There is no statutory definition of 

‘‘hearth product.’’ In the December 2013 

NOPD, DOE proposed to adopt a 

definition of hearth product that means 

a gas-fired appliance that simulates a 

solid-fueled fireplace or presents a 

flame pattern (for aesthetics or other 

purpose) and that may provide space 

heating directly to the space in which it 

is installed. 

In the December 2013 NOPD, DOE 

provided examples of several common 

hearth product types that would be 

covered under the proposed definition, 

including vented decorative hearth 

products, vented heater hearth products, 

vented gas logs, gas stoves, outdoor 

hearth products, and vent-less hearth 

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products. Id. For purposes of analysis, 

DOE separated hearth products into 

product groups. For more details on the 

product groups DOE used for its 

analysis, see chapter 5 of the NOPR 

TSD. 

DOE recognizes that match-lit hearth 

products would be covered under the 

proposed definition for ‘‘hearth 

product.’’ However, since these 

products do not include a standing pilot 

ignition system, they would not be 

affected by the proposed prescriptive 

standard. Therefore, DOE did not 

include match-lit products in its 

analysis, and accordingly, the results of 

the analysis do not reflect impacts on 

match-lit products. 

2. Product Classes 

As discussed in section III.C, EPCA 

contains criteria that DOE follows when 

establishing product classes for setting 

different energy conservation standards 

for covered product types. (42 U.S.C. 

6295(q)) DOE has tentatively concluded 

that, based on the information presented 

in section III.C, separate hearth product 

classes are not necessary for the 

prescriptive design requirement 

disallowing the use of standing pilots 

that is proposed in this NOPR. 

In comments on the December 2013 

NOPD, HPBA stated that there is no 

basis to assume that a ban on standing 

pilot lights could reasonably be 

implemented for the diverse range of 

products at issue. (HPBA, No. 5 at p. 9) 

With regards to this comment as it 

applies to product classes, it is unclear 

why a prescriptive requirement banning 

standing pilots could not be 

implemented across hearth product 

types. As previously stated, DOE 

surveyed product literature, performed 

teardown analyses, and conducted 

manufacturer interviews which revealed 

that the key components of electronic 

ignitions are shared by multiple product 

types. DOE found that alternatives to 

constant-burning pilot lights, namely 

match-lit and electronic ignition, were 

offered on all types of hearth systems, 

and that some of the alternatives 

(specifically electronic ignitions) would 

meet the safety requirements of those 

local jurisdictions where such 

requirements apply. Such evidence 

supports the conclusion that 

alternatives to constant-burning pilot 

lights are technologically feasible across 

the broad range of hearth products on 

the market. However, DOE also found 

that the implementation of alternatives 

to a constant-burning pilot are not 

implemented uniformly across all 

hearth types, given their slightly 

different characteristics. Thus, 

alternatives could be relatively more or 

less expensive to implement depending 

on the type of hearth product. 

As shown in the engineering analysis 

of section IV.C below, while the 

prescriptive requirement would apply to 

all hearth products without establishing 

classes, DOE chose to analyze the most 

common hearth styles separately to 

more accurately assess the potential 

impacts of imposing a prescriptive 

requirement that would disallow the use 

of standing pilot ignition systems. 

3. Technology Assessment 

In a technology assessment, DOE 

identifies technologies and designs that 

could be used to improve the energy 

efficiency or performance of covered 

equipment. For this NOPR, DOE 

conducted a technology assessment to 

identify technologies or designs that 

could reduce the fuel consumption of 

hearth products. DOE has summarized 

the technologies and designs identified 

in Table IV.1. DOE seeks comment on 

its list of available technologies to 

reduce fuel consumption for hearth 

products; this is identified as Issue 6 in 

section VII.E, ‘‘Issues on Which DOE 

Seeks Comment.’’ See chapter 3 of the 

NOPR TSD for a detailed description of 

each technology option. 

TABLE IV.1—TECHNOLOGIES DOE CONSIDERED FOR HEARTH PRODUCTS

Technology option Description 

Air-to-fuel ratio .......................................................................................... Change in air-to-fuel ratio to achieve fuel savings. 

Burner port design .................................................................................... Size, shape, and pattern of burner ports to reduce fuel consumption. 

Simulated log design ................................................................................ Log style or size that allows use of less fuel for flame pattern. 

Pan burner media/bead type .................................................................... Sand, silica, or other media that achieves taller/more attractive flame 

with less fuel. 

Reflective walls and/or other components inside combustion zone ........ Increase apparent size of flames without requiring additional fuel input. 

Potentially allows for the use of burners with smaller inputs. 

Circulating blower ..................................................................................... Circulate heated air more effectively. 

Electronic ignition ..................................................................................... Removes need for continuous standing pilot. 

Condensing heat exchanger .................................................................... Transfers more heat from flue gas into ambient air. 

After identifying all potential 

technology options for reducing the 

energy consumption of hearth products, 

DOE performed the screening analysis 

(see section IV.B of this NOPR and 

chapter 4 of the NOPR TSD) on these 

technologies to determine which could 

be considered further in the analysis 

and which should be eliminated. 

During manufacturer interviews, DOE 

inquired about these technologies or 

design considerations with regard to 

their prevalence and potential to 

achieve energy savings. With regard to 

the air-to-fuel ratio, burner port design, 

simulated log design, pan burner media, 

or reflective components, manufacturers 

found that these options resulted in 

either immeasurable or negligible 

energy savings. DOE received several 

responses during its manufacturer 

interviews that the design 

considerations DOE listed would have 

little or no bearing on reducing the 

input needed to achieve the required 

flame pattern. Manufacturers also 

indicated that an energy conservation 

standard based on one or more of these 

design options may inhibit hearth 

product manufacturers from providing a 

variety of overall aesthetic options. For 

these reasons, DOE did not consider 

these design options in the screening 

analysis. 

B. Screening Analysis 

DOE uses the following four screening 

criteria to determine which technology 

options are suitable for further 

consideration in an energy conservation 

standards rulemaking: 

1. Technological feasibility. DOE will 

consider technologies incorporated in 

commercial products or in working 

prototypes to be technologically 

feasible. 

2. Practicability to manufacture, 

install, and service. If mass production 

and reliable installation and servicing of 

a technology in commercial products 

could be achieved on the scale 

necessary to serve the relevant market at 

the time of the compliance date of the 

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standard, then DOE will consider that 

technology practicable to manufacture, 

install, and service. 

3. Adverse impacts on product utility 

or product availability. If DOE 

determines a technology would have a 

significant adverse impact on the utility 

of the product to significant subgroups 

of consumers, or would result in the 

unavailability of any covered product 

type with performance characteristics 

(including reliability), features, sizes, 

capacities, and volumes that are 

substantially the same as products 

generally available in the United States 

at the time, it will not consider this 

technology further. 

4. Adverse impacts on health or 

safety. If DOE determines that a 

technology would have significant 

adverse impacts on health or safety, it 

will not consider this technology 

further. 

10 CFR part 430, subpart C, appendix A, 

4(a)(4) and 5(b). 

DOE considered several design 

options to assess their potential to 

reduce the fuel consumption of the 

products that are the subject of this 

rulemaking, both in active mode and in 

standby mode. In the end, three 

technology options were considered in 

the screening analysis: (1) electronic 

ignition; (2), condensing heat 

exchangers; and (3) circulating blowers. 

All technologies considered in the 

technology assessment are listed in 

Table IV.1.See chapter 3 of the NOPR 

TSD for a detailed description of each 

technology option. 

DOE has tentatively concluded that 

the electronic ignition, condensing heat 

exchanger, and circulating blower 

would not be screened out by any of the 

four screening criteria listed above. DOE 

notes that these technologies are 

currently commercially available for 

hearth products as well as other 

residential products and commercial 

equipment, and that their use does not 

pose any significant health or safety 

hazard. 

With regards to impact of the 

electronic ignition on product 

availability, DOE notes that an 

electronic ignition provides the same 

functionality as a millivolt standing 

pilot gas valve, specifically the ability to 

be used with a remote control or 

thermostat. DOE has also tentatively 

determined that electronic ignition 

components are available for a wide 

range of gas-fired equipment beyond 

hearth products, and that the ability of 

hearth manufacturers to comply with 

the standard will not be restricted for 

lack of available components. 

DOE seeks comment regarding the 

tentative conclusions reached in its 

screening analysis including impacts on 

product availability or product utility. 

This is Issue 4 in section VII.E ‘‘Issues 

on Which DOE Seeks Comment.’’ 

C. Engineering Analysis 

This engineering analysis determines 

the change in manufacturing cost of 

hearth products associated with a 

prescriptive design requirement that 

disallows the use of a standing pilot. 

This relationship between manufacturer 

selling price and reduced energy 

consumption serves as the basis for costbenefit calculations for individual 

consumers, manufacturers, and the 

Nation. DOE has identified the 

following three methodologies to 

generate the manufacturing costs 

needed for the engineering analysis: (1) 

The design-option approach, which 

provides the incremental costs of adding 

to a baseline model design options that 

will improve its efficiency; (2) the 

efficiency-level approach, which 

provides the relative costs of achieving 

increases in energy efficiency levels, 

without regard to the particular design 

options used to achieve such increases; 

and (3) the cost-assessment (or reverseengineering) approach, which provides 

‘‘bottom-up’’ manufacturing cost 

assessments for both standing pilot 

models and electronic ignition models, 

based on detailed data as to costs for 

parts and material, labor, shipping/

packaging, and investment. 

For this NOPR, DOE conducted the 

engineering analysis for hearth products 

using a combination of the designoption approach and the costassessment approach. DOE selected 

hearth models that represented a range 

of hearth configurations (e.g., vented 

fireplaces, vented fireplace inserts, 

unvented fireplace inserts, vented gas 

log sets, and unvented gas log sets). In 

light of the analytical focus on a 

prescriptive requirement for standby 

mode energy consumption (as discussed 

in section III.B) representative models 

were chosen that would allow a direct 

comparison between standing pilot and 

electronic ignition systems. DOE 

gathered additional information using 

reverse-engineering methodologies, 

product information from manufacturer 

catalogs and manuals, and discussions 

with manufacturers and other experts 

on hearth products. 

DOE generated a bill of materials 

(BOM) by disassembling products 

representing a range of hearth 

configurations, including vented and 

unvented fireplaces, inserts, and stoves, 

vented and unvented gas log sets, and 

outdoor products. The BOMs describe 

the product in detail, including all 

manufacturing steps required to make 

and/or assemble each part. 

Subsequently, DOE developed a cost 

model that converted the BOMs into 

manufacturer production costs (MPCs). 

By applying derived manufacturer 

markups to the MPCs, DOE calculated 

the manufacturer selling prices. 

DOE seeks comment on its general 

approach to the engineering analysis. 

This is Issue 7 in section VII.E, ‘‘Issues 

on Which DOE Seeks Comment.’’ See 

chapter 5 of the NOPR TSD for 

additional details about the engineering 

analysis. 

1. Representative Products for Analysis 

For the engineering analysis, DOE 

reviewed the most common types of 

hearth products. Within each hearth 

type, DOE chose units for analysis that 

represent a cross-section of the hearth 

products market. As discussed in 

section IV.C.2 below, DOE eliminated 

the circulating blower and condensing 

heat exchanger technology options prior 

to the engineering analysis, since this 

rulemaking is focused on the standby 

mode energy use as described in section 

III.B. Consequently, the remaining 

technology—electronic ignition— 

became the main focus of DOE’s 

analysis. DOE selected representative 

products for analysis that allowed DOE 

to determine whether any differences 

existed in ignition systems between 

hearth product types. DOE assumed 

that, should standing pilot ignitions be 

disallowed, manufacturers would 

convert standing pilot models to 

electronic ignition models rather than 

match-lit in order to provide the same 

level of safety, comfort, and 

functionality. 

In order to inform the model selection 

process, DOE first surveyed product 

literature to determine whether clear 

differences in ignition systems existed 

between hearth products. Parts lists 

contained in installation and operation 

manuals for hearth products revealed 

that the key purchased components for 

electronic ignition systems—gas valves, 

pilot assemblies, and digital or analog 

control modules—are common across 

various hearth products, particularly for 

indoor fireplaces, fireplace inserts, 

stoves, and gas log sets. DOE also is 

aware that while gas log sets share these 

ignition components with other hearth 

product types, the nature of a gas log set 

(lacking a firebox or cabinet), means 

these components (particularly the gas 

valve and control module on electronic 

ignition systems) are more difficult to 

conceal. DOE seeks comment on the 

availability of these components and 

their applicability across hearth product 

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configurations. This is identified as 

Issue 8 in section VII.E, ‘‘Issues on 

Which DOE Seeks Comment.’’ 

DOE selected units that represented 

the hearth configurations in Table IV.2. 

TABLE IV.2—REPRESENTATIVE HEARTH CATEGORIES FOR ENGINEERING ANALYSIS

Hearth product analysis category Standing pilot 

valve Electronic ignition system 

Vented Fireplaces, Inserts, and Stoves ............................................................................. Millivolt .............. Intermittent Pilot Ignition. 

Millivolt .............. Intermittent Pilot Ignition. 

Unvented Fireplaces, Inserts, and Stoves ......................................................................... Millivolt .............. Intermittent Pilot Ignition. 

Vented Gas Log Sets ......................................................................................................... Manual .............. Intermittent Pilot Ignition. 

Unvented Gas Logs Sets ................................................................................................... Manual .............. Intermittent Pilot Ignition. 

Outdoor Hearth Products ................................................................................................... Manual .............. Intermittent Pilot Ignition (Hot Wire). 

Manual .............. Intermittent Pilot Ignition. 

As stated in section IV.A.2, DOE is 

aware of the industry claim that 

different hearth products serve different 

functions and differ in design. However, 

this engineering analysis is limited to a 

determination of the difference in 

manufacturer production cost between 

ignition styles (standing pilot and 

electronic ignition). DOE has tentatively 

determined that there is no difference in 

ignition components between various 

types of vented hearth products. DOE 

believes that the same gas valves, 

control modules, and pilot assemblies 

are used interchangeably between 

vented fireplaces, inserts, and stoves. 

Therefore, the engineering analysis 

determined one MPC that would apply 

globally to vented fireplaces, inserts, 

and stoves. DOE seeks comment on the 

assumption that vented fireplaces, 

inserts, and stoves are equivalent in 

terms of ignition component costs. This 

is identified as Issue 9 in section VII.E, 

‘‘Issues on Which DOE Seeks 

Comment.’’ 

Unvented hearth products differ from 

their vented counterparts in several 

respects; with regards to the ignition 

components, unvented hearth products 

require an oxygen depletion sensor. The 

oxygen depletion sensor consists of a 

thermocouple and a precisely calibrated 

pilot light. DOE analyzed a separate 

unvented fireplace, insert, and stove 

category and an unvented gas log set 

category in order to account for any 

potential cost difference for these 

components. 

In addition, DOE considered that 

there are two main standing pilot valve 

types: manual and millivolt. The 

manual valve requires the user to 

manually open and close the valve and 

is, therefore, smaller, simpler, and 

cheaper. The millivolt gas valve uses a 

thermopile to generate a voltage 

difference such that the valve can be 

coupled with additional control 

systems, for example a remote control or 

thermostat. Since gas log sets are subject 

to physical space constraints that 

fireplaces, inserts, and stoves are not, 

DOE selected gas log sets with manual 

valves as representative of gas log sets 

with standing pilots. DOE selected 

models with millivolt gas valves as 

being representative of the fireplace, 

insert and stove vented and unvented 

categories. 

The pilot light on manual or millivolt 

valves may be ignited using a match or 

using a piezo-electric or batterypowered sparker. Because the standing 

pilot can be ignited manually without 

the use of a sparker, and because the 

function of the pilot is not affected by 

how it is initially lit, DOE does not 

consider this sparker an integral 

component to the ignition system for the 

purposes of this analysis. Therefore, 

DOE did not include these costs in its 

analysis of the cost of a standing pilot 

ignition. 

2. Design Options Analyzed 

As indicated in section III.B, in light 

of the greater energy savings possible 

from a design requirement disallowing 

standing pilot ignitions as opposed to a 

performance standard, this rulemaking 

is focused on standby mode energy 

consumption. However, two of the three 

technologies that passed the screening 

analysis in Section IV.B (the condensing 

heat exchanger and circulating fan) are 

technologies that affect the active mode 

energy consumption of a subset of 

hearth products. DOE therefore 

eliminated the condensing heat 

exchanger and circulating fan prior to 

conducting its engineering analysis. 

Rather, DOE focused its engineering 

analysis on the impacts of a prescriptive 

design requirement to remove the 

standing pilot ignition system and 

replace it with a system that does not 

use a continuously burning pilot. 

For each of the representative 

products, DOE estimated manufacturer 

production costs for standing pilot 

ignitions and electronic ignitions. DOE 

has tentatively determined that the pilot 

light is a feature that can potentially be 

present on any type of hearth product 

and is the primary mode of energy 

consumption for those hearth products. 

Neither public comment nor the 

manufacturer interview process 

revealed additional design options that 

could replace a standing pilot or 

substantially reduce the fuel 

consumption of the pilot light, save for 

a match-lit burner. (However, a matchlit burner would not comply with the 

American National Standards Institute 

(ANSI) safety standards, and, thus, was 

not considered as a direct replacement 

for standing pilot ignition systems.) 

DOE has also tentatively concluded that 

a performance standard for standby 

mode as opposed to a design 

requirement would be impractical, since 

DOE found that there were no 

additional design options that would 

reduce the fuel consumption of a pilot 

light. In addition, a performance 

standard would increase burden on 

manufacturers, as it would require 

testing to demonstrate compliance with 

such standard. 

As previously stated, hearth products 

currently are not covered products. 

They would become covered products 

should the December 2013 NOPD result 

in a positive final determination of 

coverage. Therefore, there is currently 

no minimum efficiency standard in 

place for DOE to use as a baseline for 

comparison. In terms of standby mode 

operation, DOE has tentatively 

determined that the standing pilot 

ignition system represents the baseline 

design in terms of energy consumption. 

A standing pilot consumes the most 

energy during standby mode operation; 

match-lit and intermittent pilots both 

represent reductions in energy 

consumption compared to the standing 

pilot. 

DOE understands that in those 

jurisdictions where match-lit systems 

are permissible, and particularly for gas 

log sets, match-light remains a viable 

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28Raw material prices were obtained from 

American Metals Market (Available at: 

www.amm.com) (Last accessed June 2014). 

alternative to a standing pilot. A matchlit burner does not have an ignition 

system, and so DOE understands that 

the manufacturing cost of a match-lit 

burner is less than either a standing 

pilot or electronic ignition system. 

However, DOE recognizes that many 

jurisdictions require ANSI safety 

standard certification, and as such, a 

match-lit burner is not permissible. 

Since a match-lit system cannot serve as 

a replacement to current standing pilot 

models in these jurisdictions, electronic 

ignition would be the only viable 

alternative. The analysis, therefore, 

assumes that the representative change 

in cost for hearth products resulting 

from this proposed standard would be 

that associated with a change from a 

standing pilot to electronic ignition. 

EPCA requires DOE to determine the 

maximum improvement in energy 

efficiency or maximum reduction in 

energy use that is technologically 

feasible for each class of covered 

products. (42 U.S.C. 6295(o)) As 

described previously (see section IV.A.2 

and IV.B), none of the technologies 

identified by DOE to improve active 

mode efficiency could be applied to all 

hearth products, so DOE’s analysis 

focused on reducing the standby mode 

energy consumption as providing the 

greatest opportunity for energy savings. 

In the case of a standing pilot, the 

maximum reduction in energy use 

possible is removal of the standing pilot 

entirely, and switching to either a 

match-lit or electronic ignition system. 

Both of these possibilities would be 

compliant with the proposed 

requirement to disallow the use of 

standing pilot ignition systems. This is 

the scenario DOE has chosen to analyze 

(see Table IV.2); as noted above, DOE is 

unaware of any other design options on 

the market that would substantially 

reduce the energy consumption of 

hearth products during standby 

operation. 

3. Cost-Assessment Methodology 

DOE identified intermittent pilot 

ignition as the relevant design option for 

reducing standing pilot energy 

consumption, as determined in the 

market assessment. Next, DOE selected 

products for the physical teardown 

analysis that represented the most 

common configurations of hearth 

products. DOE gathered the information 

from the physical teardown analysis to 

create bills of materials using a reverse 

engineering methodology. DOE then 

calculated the manufacturer production 

cost (MPC) for complete hearth products 

utilizing both design options, standing 

pilot and intermittent pilot ignition 

systems. 

During the preparation and refining of 

the cost-efficiency comparison and 

MPCs for this NOPR, DOE also held 

interviews with manufacturers to gain 

insight into the hearth industry. DOE 

used the information gathered from 

these interviews, along with the 

information gathered through additional 

teardown analysis, to refine 

assumptions in the cost model. Next, 

DOE converted the MPCs into MSPs 

using publicly-available industry 

financial data, in addition to 

manufacturers’ feedback. Further 

information on the analysis 

methodology is presented in subsections 

(a) through (g) of this section. For 

additional detail, see chapter 5 of the 

NOPR TSD. 

a. Teardown Analysis 

To assemble bills of materials (BOMs) 

and to calculate the manufacturing costs 

of the different components in hearth 

products, DOE disassembled several 

hearth products into their base 

components and estimated the 

materials, processes, and labor required 

for the manufacture of each individual 

component, a process referred to as a 

‘‘physical teardown.’’ Using the data 

gathered from the physical teardowns, 

DOE characterized each component 

according to its weight, dimensions, 

material, quantity, and the 

manufacturing processes used to 

fabricate and assemble it. The teardown 

analysis for this engineering analysis 

included 14 physical teardowns. 

DOE used the teardown analysis to 

create detailed, structured BOMs for 

each hearth type or style. The BOMs 

incorporate all materials, components, 

and fasteners (classified as either raw 

materials or purchased parts and 

assemblies), and characterize the 

materials and components by weight, 

manufacturing processes used, 

dimensions, material, and quantity. The 

BOMs from the teardown analysis were 

then used as inputs placed into the cost 

model to calculate the MPC for the 

representative product for each product 

type and for each ignition type. See 

chapter 5 of the NOPR TSD for more 

details on the teardown analysis. 

b. Cost Model 

The cost model is a computer 

spreadsheet that converts the materials 

and components in the BOMs into 

dollar values based on the price of 

materials, average labor rates associated 

with manufacturing and assembling, 

and the cost of overhead and 

depreciation. To convert the 

information in the BOMs to dollar 

values for the NOPR analysis, DOE 

collected information on labor rates, 

tooling costs, raw material prices, and 

other factors. For purchased parts, the 

cost model estimates the purchase price 

based on volume-variable price 

quotations and discussions with 

manufacturers. For fabricated parts, the 

prices of raw metal materials (e.g., tube, 

sheet metal) are estimated on the basis 

of 5-year averages (from July 2009 to 

June 2014).28 The cost of transforming 

the intermediate materials into finished 

parts is estimated and confirmed 

through manufacturer interviews. 

Chapter 5 of the NOPR TSD describes 

DOE’s cost model and definitions, 

assumptions, and estimates. 

c. Manufacturing Production Cost 

Once the cost estimate for each 

teardown unit was finalized, DOE 

totaled the cost of materials, labor, and 

direct overhead used to manufacture a 

product in order to calculate the 

manufacturer production cost for the 

NOPR. The total cost of the product was 

broken down into two main costs: (1) 

The full manufacturer production cost 

or MPC; and (2) the non-production 

cost, which includes selling, general, 

and administration (SG&A) expenses; 

the cost of research and development; 

and interest from borrowing for 

operations or capital expenditures. DOE 

estimated the MPC for both ignition 

designs (i.e., standing pilot and 

intermittent pilot). After DOE 

incorporates all of the assumptions into 

the cost model, DOE calculates the 

different percentages of each aspect of 

production cost (i.e. materials, labor, 

depreciation, and overhead) that make 

up the total production cost. DOE uses 

these production cost percentages in the 

MIA (see section IV.J). 

d. Cost Comparison 

The result of this engineering analysis 

is a typical MPC for a unit with standing 

pilot in each product group and the 

added incremental cost of converting a 

standing pilot ignition to an electronic 

ignition. DOE determined five of these 

MPCs and incremental costs, each 

corresponding to one of the five hearth 

product groups DOE selected for 

analysis. Section IV.C.4 of this NOPR 

and chapter 5 of the NOPR TSD contain 

the MPCs and incremental costs. 

e. Manufacturer Markups 

DOE uses MSPs to conduct its 

downstream economic analyses. DOE 

calculated the MSPs by multiplying the 

manufacturer production cost by a 

mark-up and adding the product’s 

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shipping cost. The production price of 

the product is marked up to ensure that 

manufacturers can make a profit on the 

sale of the equipment. DOE gathered 

information from manufacturer 

interviews to determine the mark-up 

used by different manufacturers. Using 

this information, DOE calculated an 

average mark-up of 1.45 for hearth 

products. DOE requests comments on 

the proposed mark-up, and this is 

identified as Issue 10 in section VII.E, 

‘‘Issues on Which DOE Seeks 

Comment.’’ 

f. Manufacturer Interviews 

Throughout the rulemaking process, 

DOE seeks feedback and insight from 

interested parties to improve the 

information used in its analyses. DOE 

interviewed manufacturers as a part of 

the NOPR manufacturer impact analysis 

(see section IV.J). During the 

confidential interviews, DOE sought 

feedback on all aspects of its analyses 

for hearth products. For the engineering 

analysis, DOE discussed the analytical 

assumptions, estimates, and purchased 

part prices with manufacturers. DOE 

considered all the information 

manufacturers provided when refining 

the cost model and assumptions. 

However, DOE incorporated equipment 

and manufacturing process figures into 

the analysis as averages in order to 

avoid disclosing sensitive information 

about individual manufacturers’ 

products or manufacturing processes. 

More details about the manufacturer 

interviews are contained in chapter 12 

of the NOPR TSD. 

4. Results 

The results from the engineering 

analysis are shown in Table IV.3. The 

cost model calculates an MPC for an 

associated annual production volume. 

As described in section IV.C.3.b, the 

cost model calculates manufacturer 

overhead and depreciation costs on a 

per-unit basis. Therefore, given the same 

number of employees, tooling, and 

equipment, a higher annual production 

volume will generally result in a lower 

MPC. Additionally, purchased parts 

scale non-linearly with volume: at low 

volumes, purchase part prices increase 

exponentially. Production volumes 

varied significantly across the segments 

of the hearth products industry. 

Replacing a standing pilot ignition 

system with an intermittent pilot 

ignition system largely means switching 

out one set of purchased part 

components with another. Purchased 

part component prices are dependent 

upon the volumes in which they are 

purchased, and as a result, the annual 

production volume for a given market 

segment could have a large impact on 

the cost of changing from a standing 

pilot ignition system to an intermittent 

pilot ignition system. As part of the 

confidential manufacturer interview 

process, DOE asked manufacturers to 

confirm costs and quantities particularly 

for purchase parts associated with the 

ignition system. DOE notes that this 

feedback is crucial in obtaining MPCs 

that accurately reflect typical industry 

values. Accordingly, DOE is seeking 

further feedback on the derived MPCs 

found in Table IV.3. This is Issue 10 in 

section VII.E, ‘‘Issues on Which DOE 

Seeks Comment.’’ 

TABLE IV.3—ESTIMATED TYPICAL MANUFACTURER PRODUCTION COSTS

Product category 

Representative 

production 

volume 

Standing pilot MPC 

Added electronic 

ignition system 

(EIS) cost 

Vented Fireplaces, Inserts, Stoves ...................................................................... 10,000 $322 $28 

Unvented Fireplaces, Inserts, Stoves .................................................................. 2,000 281 32 

Vented Gas Log Sets .......................................................................................... 2,000 190 70 

Unvented Gas Log Sets ...................................................................................... 5,000 208 56 

Outdoor ................................................................................................................ 3,000 210 55 

The ‘‘Standing Pilot MPC’’ represents 

the cost to the manufacturer of the 

complete hearth product with a typical 

standing pilot ignition. The ‘‘Added EIS 

Cost’’ represents the incremental cost to 

the manufacturer of replacing the 

standing pilot ignition components with 

an electronic ignition. DOE has not 

included remote control or other user 

control features as part of either ignition 

system. While DOE acknowledges many 

electronic ignition systems are sold with 

a remote control and receiver, DOE does 

not consider these components 

necessary to the intermittent function of 

the pilot light. Therefore, DOE has not 

considered remote controls or remote 

control receivers in the ‘‘Added EIS 

Cost.’’ 

The standing pilot MPC derived for 

vented fireplaces, inserts and stoves is 

higher than for unvented for several 

reasons. The representative models used 

for the vented category are direct vent. 

These units typically include a glass 

viewing pane with spring-loaded 

clamps holding the viewing pane in 

place. They also include blowers that 

regulate airflow and moderate surface 

temperatures so that the unit can be 

installed flush against combustible 

building materials. Again, DOE 

estimates that the MPC of similarlysized vented units are the same. DOE 

makes this assumption because product 

advertising and literature and manuals 

indicated that key components to the 

ignitions systems are shared across 

product types and throughout industry. 

In the case of gas log sets, the analysis 

used standing pilot models with manual 

gas valves. These valves are less 

expensive than millivolt gas valves, and 

so the difference between standing pilot 

and electronic ignition system is higher 

for gas log sets than for fireplaces, 

inserts, and stoves. 

The results from the engineering 

analysis were used in the LCC analysis 

to determine consumer prices for hearth 

products using both design options, 

standing pilot and electronic ignition. 

Using the manufacturer markup, DOE 

calculated the MSPs of the 

representative hearth products from the 

MPCs developed using the cost model. 

Again, DOE seeks comment on the 

MPCs estimated for hearth products and 

this is identified as Issue 10 in section 

VII.E ‘‘Issues on Which DOE Seeks 

Comment.’’ Chapter 5 of the NOPR TSD 

provides the full list of MPCs and MSPs 

for each analyzed representative 

product group. 

D. Markups Analysis 

DOE uses distribution channel 

markups (e.g., manufacturer markups, 

retailer markups, distributor markups, 

contractor markups) and sales taxes 

(where appropriate) to convert the 

manufacturer production cost estimates 

from the engineering analysis to 

consumer prices, which are then used in 

the LCC and PBP analysis and in the 

manufacturer impact analysis. The 

markups are multipliers that are applied 

to the purchase cost at each stage in the 

distribution channel for hearth 

products. Before developing markups, 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

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29Heating, Air Conditioning & Refrigeration 

Distributors International 2013 Profit Report 

(Available at: http://www.hardinet.org/ProfitReport) (Last accessed April 10, 2013). 

30Air Conditioning Contractors of America 

(ACCA), Financial Analysis for the HVACR 

Contracting Industry: 2005 (Available at: http://

www.acca.org/store/product.php?pid=142) (Last 

accessed April 10, 2013). 

31U.S. Census Bureau, 2007 Economic Census 

Data (Available at: http://www.census.gov/econ/) 

(Last accessed April 10, 2013). 

32Sales Tax Clearinghouse Inc., State Sales Tax 

Rates Along with Combined Average City and 

County Rates, 2013 (Available at: http://thestc.com/ 

STrates.stm) (Last accessed May 27, 2014). 

33 Docket Number EERE–2011–BT–STD–0047. 

34U.S. Department of Energy: Energy Information 

Administration, Residential Energy Consumption 

Survey: 2009 RECS Survey Data (2013) (Available 

at: http://www.eia.gov/consumption/residential/

data/2009/) (Last accessed March, 2013). 

35Hayden, A.C.S. Fireplace Pilots Take Gas Use 

Sky High. Home Energy Magazine (Jan. 1997). 

(Available at: http://www.homeenergy.org/show/

article/nav/hvac/page/28/id/1264). 

36Menkedick, John, Pam Hartford, Shawna 

Collins, Shawn Shumaker, and Darlene Wells, 

Hearth Products Meter Study (1995–1997), Rep. no. 

GRI–97/0298, Gas Research Institute (1997). 

37National Oceanic and Atmospheric 

Administration, NNDC Climate Data Online (2009) 

(Available at: http://www7.ncdc.noaa.gov/CDO/

CDODivisionalSelect.jsp) (Last accessed July 29, 

2014). 

DOE defines key market participants 

and identifies distribution channels. 

DOE characterized two distribution 

channels to describe how hearth 

products pass from the manufacturer to 

consumers: (1) Replacement market and 

(2) new construction. The replacement 

market channel is characterized as 

follows: 

Manufacturer ➞ Wholesaler ➞ 

Mechanical contractor ➞ Consumer 

The new construction distribution 

channel is characterized as follows: 

Manufacturer ➞ Wholesaler ➞ 

Mechanical contractor ➞ General 

contractor ➞ Consumer 

The derivation of the manufacturer 

mark-up is discussed in section IV.C.3.e. 

To develop mark-ups for the parties 

involved in the distribution of the 

product, DOE utilized several sources, 

including: (1) The Heating, AirConditioning & Refrigeration 

Distributors International (HARDI) 2013 

Profit Report 29 to develop wholesaler 

mark-ups; (2) the Air Conditioning 

Contractors of America’s (ACCA) 2005 

financial analysis for the heating, 

ventilation, air-conditioning, and 

refrigeration (HVACR) contracting 

industry 30 to develop mechanical 

contractor mark-ups, and (3) U.S. 

Census Bureau 2007 Economic Census 

data 31 for the residential and 

commercial building construction 

industry to develop general contractor 

mark-ups. 

For wholesalers and contractors, DOE 

develops baseline and incremental 

mark-ups based on the product markups at each step in the distribution 

chain. The baseline mark-up relates the 

change in the manufacturer selling price 

of baseline models to the change in the 

consumer purchase price. The 

incremental mark-up relates the change 

in the manufacturer selling price of 

higher-efficiency models (the 

incremental cost increase) to the change 

in the consumer purchase price. 

In addition to the mark-ups, DOE 

derived State and local taxes from data 

provided by the Sales Tax 

Clearinghouse.32 These data represent 

weighted-average taxes that include 

county and city rates. DOE derived 

shipment-weighted-average tax values 

for each region considered in the 

analysis. 

Chapter 6 of the NOPR TSD provides 

further detail on the estimation of 

markups. 

E. Energy Use Analysis 

The purpose of the energy use 

analysis is to determine the annual 

energy consumption of pilot lights in 

residential hearth products in use in the 

United States in representative homes 

and to assess the energy savings 

potential in switching from standing 

pilot lights to intermittent pilot lights. 

DOE used information from teardowns 

and manufacturer literature to establish 

a representative input capacity for each 

hearth product pilot light option. These 

input capacities are consistent with 

comments received from stakeholders 

during the previous rulemaking.33 DOE 

estimated the annual energy 

consumption of hearth product pilot 

lights across a range of climate zones for 

a sample of houses that use hearth 

products. The annual energy 

consumption includes the natural gas 

used by the standing pilot or the 

electricity used by the intermittent pilot. 

The annual energy consumption of 

hearth product pilot lights is used in 

subsequent analyses, including the LCC 

and PBP analysis and the national 

impacts analysis. 

The energy use analysis seeks to 

capture the range of operating 

conditions for hearth products in the 

field (i.e., as they are actually used by 

consumers). To determine the field 

energy use of hearth product pilot 

lights, DOE established a sample of 

households using hearth products from 

the Energy Information Administration’s 

(EIA) 2009 Residential Energy 

Consumption Survey (RECS 2009).34

DOE included in the sample all 

households who reported having a 

fireplace fueled by natural gas or 

liquefied petroleum gas (LPG). 

DOE derived a range of possible 

operating hours for hearth products 

from field studies.35 36 The hearth 

product operating hours for each 

household were sampled based on 

typical behavior patterns and 

household-specific characteristics, such 

as heating load, length of heating 

season, and primary heating appliance. 

DOE established three ranges that 

correspond to three modes of consumer 

behavior: (1) Consumers who closely 

monitor the standing pilot light 

operation and only use it when starting 

the hearth product; (2) consumers who 

leave the standing pilot light on for the 

entirety of the heating season but turn 

it off for the remainder of the year; or 

(3) consumers who leave the standing 

pilot light on for the entire year. DOE 

represented each of these three modes 

with a continuous distribution of 

standing pilot operating hours. The field 

data suggest that more than half of 

natural gas-fired hearth product users 

leave the pilot on year round. 

DOE used the household location data 

from RECS 2009 to establish the length 

of the heating season for each household 

by accounting for the National Oceanic 

and Atmospheric Administration 

(NOAA) weather data for that location.37

To establish the maximum standing 

pilot operating hours during the heating 

season, DOE estimated the burner 

operating hours (BOH) of the hearth 

product from the annual space heating 

fuel use reported in RECS 2009. (Note 

that the pilot light remains on when the 

main burner is operating.) 

RECS 2009 data also provided other 

information about the household that 

was used to further refine the analysis, 

such as primary heating appliance type, 

whether the hearth product was the 

primary heating appliance, fuel type of 

primary heating appliance, whether the 

hearth product was vented or vent-less, 

and whether the house has a chimney. 

The pilot light operating hours, 

coupled with the data on fuel use per 

hour from the engineering analysis, 

allowed for the calculation of hearth 

products’ pilot light annual energy 

usage. The average energy use of a 

hearth product’s standing pilot is 

approximately 3.6 million Btu per year. 

To estimate the annual electricity used 

by an intermittent pilot, DOE used the 

representative burner input and the 

average duty cycle length to calculate 

the number of cycles, and a conservative 

estimate of 30 seconds on-time per 

ignition. DOE coupled the above value 

with the representative input of 50 W to 

derive electricity consumption. The 

average energy use of the intermittent 

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38Armstrong M.M., Swinton, M.C. and 

Szadkowski, F., Assessment of the Impact of a 

Natural Gas Fireplace on Heating Energy 

Consumption and Room Temperatures at the 

Canadian Centre for Housing Technology (March 

31, 2010) Canada Mortgage and Housing 

Corporation (Available at: http://chic.cmhc-schl.gc.

ca/uhtbin/cgisirsi.exe/?ps=Ey6u7UxnJz/CHIC/

17510006/60/502/X). 

39National Oceanic and Atmospheric 

Administration, NNDC Climate Data Online (2009) 

(Available at: http://www7.ncdc.noaa.gov/CDO/

CDODivisionalSelect.jsp) (Last accessed July 29, 

2014). 

pilot option is less than one kWh per 

year. 

In the RECS 2009 sample, 23 percent 

of households with hearth products 

used liquefied petroleum gas (LPG). 

Because LPG is a relatively expensive 

fuel, DOE understands that this subset 

of users closely monitors pilot light 

operation. Therefore, for households 

with LPG-fired hearth products, DOE 

assumed the pilot operating hours to be 

approximately equal to the hearth 

product BOH. 

DOE seeks comment regarding its 

assumptions and methodology used in 

determining pilot light energy use and 

this is identified as Issue 11 in section 

VII.E ‘‘Issues on Which DOE Seeks 

Comment.’’ 

In evaluating the energy savings of the 

considered efficiency measure, DOE 

considered the heat input of the pilot 

light into the conditioned space. 

Eliminating the gas pilot would mean 

that some of the heat would not 

contribute to heating the home, which 

would mean that the main heating 

system would need to operate somewhat 

more, and the air conditioning system 

would operate slightly less in cases 

where the pilot is left on year-round. 

DOE based its analysis for vented hearth 

products on a report from the Canadian 

Centre for Housing Technology,38 which 

quantified the fraction of energy 

consumed by the standing pilot light 

that is delivered into the conditioned 

space as useful heat. DOE used this 

study to estimate the ratio of energy 

consumed by the standing pilot light to 

the heat delivered to the conditioned 

space for each vented hearth product 

group. For unvented hearth products, 

DOE assumed that the majority of the 

heat from the pilot is input into the 

space. For outdoor units, none of the 

energy consumed by the pilot is 

considered useful heat. The additional 

energy use of the heating system was 

calculated for each sample household 

based on its estimated heating load and 

heating equipment. The reduction in air 

conditioning energy use was calculated 

in a similar manner. Inclusion of the 

indirect effects on heating and cooling 

systems reduces the gross savings from 

eliminating the standing pilot by 

approximately 20 percent on average. 

It is important to note that DOE is 

proposing a prescriptive standard to 

eliminate the use of standing pilots in 

hearth products. As such, it would only 

reduce standby energy use, and would 

have no effect on hearth products’ 

active-mode energy consumption. 

Therefore, the standard, if adopted, 

would not be expected to affect 

consumer usage of the product, and, 

thus, no rebound effect was applied to 

the energy use of hearth products. 

DOE projected that household weights 

and household characteristics in 2021, 

the first full year of compliance with 

any new energy conservation standards 

for hearth products, would be the same 

as in RECS 2009. To characterize future 

new homes, DOE used a subset of RECS 

2009 homes that were built after 2000. 

DOE adjusted the energy use 

estimated for 2009 to normalize for 

weather by using 10-year heating 

degree-day (HDD) data from NOAA for 

each geographical region.39 Historical 

monthly HDD data from NOAA for each 

geographical region was used to 

disaggregate the total energy use into 

monthly amounts, which allows DOE to 

apply monthly energy prices in the LCC 

and PBP analysis. See chapter 7 in the 

NOPR TSD for additional detail on the 

energy analysis for hearth product 

ignition devices. 

DOE requests comment on the extent 

of assumed pilot light usage, specifically 

the percentages of consumers who 

operate their hearth product’s standing 

pilot: (a) Year-round; (b) during the 

heating season; and (c) only when 

operating the unit. DOE also requests 

comment on the pilot operating hours of 

LPG-fired hearth products and 

determination of heat input from the 

pilot light into the conditioned space. 

This is Issue 12 in section VII.E, ‘‘Issues 

on Which DOE Seeks Comment.’’ 

F. Life-Cycle Cost and Payback Period 

Analysis 

In determining whether an energy 

conservation standard is economically 

justified, DOE considers the economic 

impact of potential standards on 

consumers. The effect of new or 

amended standards on individual 

consumers usually includes a reduction 

in operating cost and an increase in 

purchase cost. DOE used the following 

two metrics to measure consumer 

impacts: 

• LCC (life-cycle cost) is the total 

consumer cost of an appliance or 

product, generally over the life of the 

appliance or product. The LCC 

calculation includes total installed cost 

(manufacturer selling price, distribution 

chain markups, sales tax, and 

installation costs), operating costs 

(energy, repair, and maintenance costs), 

equipment lifetime, and discount rate. 

Future operating costs are discounted to 

the time of purchase and summed over 

the lifetime of the appliance or product. 

• PBP (payback period) measures the 

amount of time it takes consumers to 

recover the assumed higher purchase 

price of a more energy-efficient product 

through reduced operating costs. Inputs 

to the payback period calculation 

include the installed cost to the 

consumer and the first-year operating 

costs. 

DOE analyzed the net effect of 

potential hearth product standards on 

consumers by calculating the LCC and 

PBP for each household for each 

considered pilot option. DOE measured 

the PBP and the change in LCC when 

switching from standing pilot to 

intermittent pilot in each hearth product 

type. 

DOE performed the LCC and PBP 

analysis using a spreadsheet model 

combined with Crystal Ball (a 

commercially-available software 

program used to conduct stochastic 

analysis using Monte Carlo simulation 

and probability distributions) to account 

for uncertainty and variability among 

the input variables (e.g., energy prices, 

installation cost, and repair and 

maintenance costs). It uses weighting 

factors to account for distributions of 

shipments to different building types 

and States to generate LCC savings by 

potential standard level. Each Monte 

Carlo simulation consists of 10,000 LCC 

and PBP calculations using input values 

that are either sampled from probability 

distributions and household samples or 

characterized with single point values. 

The analytical results include a 

distribution of 10,000 data points 

showing the range of LCC savings and 

PBPs for a given standards level relative 

to the base-case forecast (i.e., without 

new energy conservation standards). In 

performing an iteration of the Monte 

Carlo simulation for a given consumer, 

the probability that a hearth product 

type and pilot option is chosen is based 

on the existing market share. If the 

chosen pilot light for the consumer is 

intermittent, the LCC calculation reveals 

that a consumer is not impacted by the 

standard level. Similarly, for those 

consumers who diligently operate their 

standing pilot lights, the LCC 

calculation results in either a net cost or 

no impact, depending on the specific 

simulation round. By accounting for 

consumers who already purchase moreefficient products or operate their units 

efficiently, DOE avoids overstating the 

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40Series ID: PCU3334143334147 (Available at: 

http://www.bls.gov/ppi/). 

41RS Means Company Inc., RS Means Residential 

Cost Data (2013) (Available at: http:// 

rsmeans.reedconstructiondata.com/). 

42Available at www.federalreserve.gov/

econresdata/scf/scfindex.htm. 

43U.S. Department of Energy—Energy 

Information Administration, Form EIA–826 

Database Monthly Electric Utility Sales and 

Revenue Data (2013) (Available at: http://www.eia.

doe.gov/cneaf/electricity/page/eia826.html). 

44U.S. Department of Energy—Energy 

Information Administration, Natural Gas Navigator 

(2013) (Available at: http://tonto.eia.doe.gov/dnav/ 

ng/ng_pri_sum_dcu_nus_m.htm). 

45U.S. Department of Energy—Energy 

Information Administration, 2012 State Energy 

Consumption, Price, and Expenditure Estimates 

(SEDS) (2013) (Available at: http:// 

www.eia.doe.gov/emeu/states/_seds.html). 

potential benefits from increasing 

product energy conservation. 

EPCA establishes a rebuttable 

presumption that a standard is 

economically justified if the Secretary 

finds that the additional cost to the 

consumer of purchasing a product 

complying with an energy conservation 

standard level will be less than three 

times the value of the energy (and, as 

applicable, water) savings during the 

first year that the consumer will receive 

as a result of the standard, as calculated 

under the test procedure in place for 

that standard. (42 U.S.C. 

6295(o)(2)(B)(iii)) DOE determines the 

value of the first year’s energy savings 

by calculating the quantity of those 

savings in accordance with the 

applicable DOE test procedure and 

multiplying that amount by the average 

energy price forecast for the year in 

which compliance with the amended 

standards would be required. Since 

there is no DOE test procedure for 

hearth products, DOE based its 

rebuttable pay back analysis on the 

average energy use and costs calculated 

in the LCC analysis. 

As discussed in section IV.E, DOE 

developed nationally representative 

household samples from 2009 RECS. 

For each sampled household, DOE 

determined the energy consumption of 

the hearth product pilot light and the 

appropriate energy prices in the area 

where the household is located. 

DOE calculated the LCC and PBP for 

all hearth product consumers as if each 

were to purchase the product in the year 

that compliance with amended 

standards is required. At the time of 

preparation of the NOPR analysis, the 

expected issuance date for the final rule 

was in December 2015. For newlycovered products, EPCA prescribes a 

five-year period between the standard’s 

publication date and the compliance 

date (42 U.S.C. 6295(l)(2)), which leads 

to a compliance date in December 2020. 

For purposes of its analysis, DOE 

modeled hearth products purchased on 

or after this date as if they operated for 

a full year beginning on January 1, 2021 

and continuing thereafter. 

As noted above, DOE’s LCC and PBP 

analyses generate values that calculate 

the payback period for consumers of 

potential energy conservation standards, 

which includes, but is not limited to, 

the three-year payback period 

contemplated under the rebuttable 

presumption test. However, DOE 

routinely conducts a full economic 

analysis that considers the full range of 

impacts, including those to the 

consumer, manufacturer, Nation, and 

environment, as required under 42 

U.S.C. 6295(o)(2)(B)(i). The results of 

this analysis serve as the basis for DOE 

to definitively evaluate the economic 

justification for a potential standard 

level (thereby supporting or rebutting 

the results of any preliminary 

determination of economic 

justification). 

1. Installed Cost 

The primary inputs for establishing 

the total installed cost are the baseline 

consumer product price, standard-level 

consumer price increases, and 

installation costs (labor and material 

cost). Baseline consumer prices and 

standard-level consumer price increases 

were determined by applying mark-ups 

to manufacturer selling price estimates, 

including sales tax where appropriate. 

The installation cost is added to the 

consumer price to arrive at a total 

installed cost. 

DOE found that the historic real (i.e., 

adjusted for inflation) producer price 

index (PPI) for floor and wall furnaces, 

unit heaters, infrared heaters, and 

mechanical stokers from 1999 to 2013 

has been relatively flat.40 Hearth 

products are generally similar to the 

products in this PPI. In the absence of 

any data indicating a trend in hearth 

product prices, DOE elected to use a 

constant future price trend. DOE 

requests feedback on the assumption of 

a constant future price trend for hearth 

products. This is identified as Issue 13 

in section VII.E, ‘‘Issues on Which DOE 

Seeks Comment.’’ 

Because the pilot light is a component 

of the hearth product, the installation 

costs for most installations was $0. In a 

fraction of installations, the intermittent 

pilot could necessitate an electrical 

connection, although many intermittent 

pilots are battery powered, and many 

hearth products already have electrical 

connections. For the cases where a new 

electrical connection is needed, DOE 

assumed a percentage of these needed 

electrical connection retrofits, with the 

probability increasing the older the 

house is. Similar assumptions were 

made for electrical grounding. For these 

cases needing retrofits, labor and 

material information was obtained from 

RS Means 2013 Residential Cost Data.41

DOE requests feedback on the 

installation and retrofit assumptions 

regarding electrical connections and 

grounding. This is identified as Issue 14 

in section VII.E, ‘‘Issues on Which DOE 

Seeks Comment.’’ 

2. Inputs to Operating Costs 

The primary inputs for calculating the 

operating costs are product energy 

consumption, product efficiency, energy 

prices and forecasts, maintenance and 

repair costs, product lifetime, and 

discount rates. DOE uses discount rates 

to determine the present value of 

lifetime operating expenses. The 

discount rate used in the LCC analysis 

represents the rate from an individual 

consumer’s perspective. Much of the 

data used for determining consumer 

discount rates comes from the Federal 

Reserve Board’s triennial Survey of 

Consumer Finances.42

a. Energy Consumption 

For each sample household, DOE 

determined the energy consumption for 

the hearth product ignition devices 

using the approach described in section 

IV.E. As noted previously, because the 

proposed standard concentrates on 

reduction in standby mode energy 

consumption, DOE does not anticipate a 

rebound effect in terms of consumer 

usage. 

b. Energy Prices 

Using the most current data from EIA 

on average energy prices in various 

States and regions,43 44 45 DOE assigned 

an appropriate energy price to each 

household in the sample, depending on 

its location (see chapter 8 of the NOPR 

TSD for details). Average electricity and 

natural gas prices from the EIA data 

were adjusted using seasonal marginal 

price factors to derive monthly marginal 

electricity and natural gas prices. For a 

detailed discussion of the development 

of marginal energy price factors, see 

appendix 8–C of the NOPR TSD. 

To estimate future prices, DOE used 

the projected annual changes in average 

residential natural gas, LPG, and 

electricity prices in the Reference case 

projection in AEO 2014. 

c. Maintenance and Repair Costs 

Repair costs are associated with 

repairing or replacing components in 

the hearth product that have failed, 

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46 Jakob, F.E., J.J. Crisafulli, J.R. Menkedick, R.D. 

Fischer, D.B. Philips, R.L. Osbone, J.C. Cross, G.R. 

Whitacre, J.G. Murray, W.J. Sheppard, D.W. 

DeWirth, and W.H. Thrasher, Assessment of 

Technology for Improving the Efficiency of 

Residential Gas Furnaces and Boilers, Volume I and 

II—Appendices (September 1994) Gas Research 

Institute. AGA Laboratories. Report No. 

GRI–94/0175. 

47The Federal Reserve Board, Survey of 

Consumer Finances 1989, 1992, 1995, 1998, 2001, 

2004, 2007, 2010 (Available at: http://

www.federalreserve.gov/pubs/oss/oss2/

scfindex.html). 

whereas maintenance costs are routine 

annual costs associated with 

maintaining the proper operation of the 

equipment. DOE’s review of product 

literature suggests that that no 

maintenance is required for the ignition 

device. DOE estimated that a 7 percent 

failure rate for ignition systems in 

hearth products based on repair rates for 

residential furnace ignition systems.46

DOE estimated separate repair costs for 

each ignition system option as a 

function of the manufacturer price 

estimated in the engineering analysis 

(section IV.C). Due to the increased 

price of the intermittent pilot, the cost 

of repairing these units was 

approximately 44 percent higher than 

for units with standing pilots. See 

chapter 8 of the NOPR TSD for details. 

DOE requests feedback on the repair 

cost assumptions. This is identified as 

Issue 15 in section VII.E, ‘‘Issues on 

Which DOE Seeks Comment.’’ 

d. Product Lifetime 

Product lifetime is the age at which an 

appliance is retired from service. DOE 

assumed that the lifetime of the ignition 

device is identical to the lifetime of the 

hearth product. DOE conducted an 

analysis of hearth product lifetimes 

using a combination of data on 

shipments and the hearth product stock 

(see section IV.G) and RECS 2009 data 

on the age of the hearth products in 

homes. The data allowed DOE to 

develop a survival function, which 

provides a range from minimum to 

maximum lifetime, as well as an average 

lifetime. The average lifetime estimated 

for hearth products is 16 years. Chapter 

8 of the NOPR TSD provides further 

details on the methodology and sources 

DOE used to develop hearth product 

lifetimes. DOE requests feedback on the 

lifetime assumptions. This is identified 

as Issue 16 in section VII.E, ‘‘Issues on 

Which DOE Seeks Comment.’’ 

e. Discount Rates 

In the calculation of LCC, DOE 

applies discount rates to estimate the 

present value of future operating costs. 

The discount rate used in the LCC 

analysis represents the rate from an 

individual consumer’s perspective. 

To establish discount rates for 

consumers, DOE’s approach involved 

identifying all relevant household debt 

or asset classes in order to approximate 

a consumer’s opportunity cost of funds 

related to appliance energy cost savings 

and maintenance costs. It estimated the 

average percentage shares of the various 

types of debt and equity by household 

income group using data from the 

Federal Reserve Board’s Survey of 

Consumer Finances (SCF) for 1995, 

1998, 2001, 2004, 2007, and 2010.47

Using the SCF and other sources, DOE 

then developed a distribution of rates 

for each type of debt and asset by 

income group to represent the rates that 

may apply in the year in which 

amended standards would take effect. 

DOE assigned each sample household a 

specific discount rate drawn from one of 

the distributions. The average rate 

across all types of household debt and 

equity and income groups, weighted by 

the shares of each class, is 4.2 percent. 

See chapter 8 in the NOPR TSD for 

further details on the development of 

discount rates for the LCC analysis. 

f. Base-Case Efficiency Distribution 

To estimate the share of consumers 

affected by a potential energy 

conservation standard, DOE’s LCC and 

PBP analysis considers the projected 

distribution (i.e., market shares) of 

product efficiencies that consumers will 

purchase in the first compliance year in 

the base case (i.e., the case without 

amended energy conservation 

standards). 

For each of the hearth product groups, 

DOE estimated current market shares of 

the two pilot system types based on 

model information and manufacturer 

interviews. Because there are no data 

indicating trends in the market shares, 

DOE used the current shares to 

represent the market in 2021 (see Table 

IV.4). 

TABLE IV.4—BASE-CASE EFFICIENCY DISTRIBUTION FOR HEARTH PRODUCT GROUPS IN 2021 

Product group 

Pilot system market share 

Standing pilot 

(percent) 

Intermittent pilot 

(percent) 

Vented Fireplaces, Inserts, Stoves .................................................................................................................. 42% 58% 

Unvented Fireplaces, Inserts, Stoves .............................................................................................................. 88 12 

Vented Gas Log Sets ...................................................................................................................................... 87 13 

Unvented Gas Log Sets .................................................................................................................................. 94 6 

Outdoor ............................................................................................................................................................ 52 48 

For further information on DOE’s 

estimation of the base-case efficiency 

distributions for hearth products, see 

chapter 8 of the NOPR TSD. DOE 

requests feedback on the base-case 

efficiency distribution. This is identified 

as Issue 17 in section VII.E, ‘‘Issues on 

Which DOE Seeks Comment.’’ 

3. Inputs to Payback Period Analysis 

The PBP is the amount of time it takes 

the consumer to recover the additional 

installed cost of more-efficient products, 

compared to baseline products, through 

energy cost savings. The simple PBP 

does not account for changes in 

operating expense over time or the time 

value of money. Payback periods are 

expressed in years. Payback periods that 

exceed the life of the product mean that 

the increase in total installed cost is not 

recovered in reduced operating 

expenses. 

The inputs to the PBP calculation are 

the total installed cost of the product to 

the customer for each efficiency level 

and the average annual operating 

expenditures for each efficiency level. 

The PBP calculation uses the same 

inputs as the LCC analysis, except that 

discount rates are not needed. 

EPCA establishes a rebuttable 

presumption that a standard is 

economically justified if the Secretary 

finds that the additional cost to the 

consumer of purchasing a product 

complying with an energy conservation 

standard level will be less than three 

times the value of the energy (and, as 

applicable, water) savings during the 

first year that the consumer will receive 

as a result of the standard, as calculated 

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48 DOE’s use of spreadsheet models provides 

interested parties with access to the models within 

a familiar context. In addition, the TSD and other 

documentation that DOE provides during the 

rulemaking help explain the models and how to use 

them, and interested parties can review DOE’s 

analyses by changing various input quantities 

within the spreadsheet. 

under the test procedure in place for 

that standard. (42 U.S.C. 

6295(o)(2)(B)(iii)) For each considered 

standard level, DOE determined the 

value of the first year’s energy savings 

by calculating the quantity of those 

savings in accordance with the 

applicable DOE test procedure and 

multiplying that amount by the average 

energy price forecast for the year in 

which compliance with the amended 

standard would be required. 

The results of DOE’s PBP analysis are 

presented in section V.B.1. 

G. Shipments Analysis 

DOE uses forecasts of product 

shipments to calculate the national 

impacts of potential new or amended 

energy conservation standards on 

energy use, NPV, and future 

manufacturer cash flows. Historical data 

indicate that shipments of hearth 

products are very sensitive to overall 

economic activity. Because DOE 

observed a strong correlation between 

housing starts and hearth product 

shipments, it used a 10-year average of 

the ratio of hearth product shipments to 

housing starts, along with the forecasted 

housing starts from AEO 2014, to project 

future hearth product shipments. 

To estimate the impact of the 

considered standard on future hearth 

product shipments, DOE applied the 

same product price elasticity as it has 

used in many previous rulemakings for 

consumer products (see chapter 9 of the 

NOPR TSD). This elasticity relates an 

incremental increase in the price of 

hearth products to a decrease in 

shipments. 

Regarding the potential for consumers 

to switch to other products, DOE 

recognizes that hearth products are 

purchased for the convenience of 

natural gas as a fuel source (as opposed 

to wood) and realistic flame 

characteristics (relative to electricpowered units). For this reason, DOE 

assumed that fuel switching among 

these products due to the imposition of 

the design standard would be negligible. 

DOE requests comment on this 

assumption, and this is identified as 

Issue 18 in Section VII.E, ‘‘Issues on 

Which DOE Seeks Comment.’’ 

DOE requests feedback on the 

methodology for hearth product 

shipment projections. This is identified 

as Issue 19 in section VII.E, ‘‘Issues on 

Which DOE Seeks Comment.’’ For 

details on the shipments analysis, see 

chapter 9 of the NOPR TSD. 

H. National Impact Analysis 

The NIA assesses the national energy 

savings (NES) and the net present value 

(NPV) from a national perspective of 

total consumer costs and savings 

expected to result from new or amended 

energy conservation standards at 

specific efficiency levels. DOE 

determined the NPV and NES for the 

potential standard levels considered for 

the hearth product types analyzed. 

To make the analysis more accessible 

and transparent to all interested parties, 

DOE used a computer spreadsheet 

model (as opposed to probability 

distributions) to calculate the energy 

savings and the national consumer costs 

and savings from each TSL.48 The NIA 

calculations are based on the annual 

energy consumption and total installed 

cost data from the energy use analysis 

and the LCC analysis. In the NIA, DOE 

forecasted the lifetime energy savings, 

energy cost savings, installed product 

costs, and NPV of consumer benefits 

over the lifetime of hearth products sold 

from 2021 through 2050. 

A key component of the NIA is the 

trend in energy efficiency forecasted for 

the base case (without new or amended 

standards) and each of the standards 

cases. Section IV.F.2.f describes how 

DOE developed a base-case energy 

efficiency distribution for hearth 

products for the first full year of 

compliance (2021). DOE projected basecase efficiency assuming a constant 

efficiency distribution over the 30-year 

period. Historical trends of data for this 

product are not available, especially 

regarding the necessary ignition details. 

Therefore, DOE has estimated current 

standing pilot shipments and assumed 

those would be constant during the 30- 

year period starting from compliance 

(2021–2050). 

To estimate the impact that energy 

conservation standards for hearth 

products (i.e., a design requirement) 

may have in the year compliance 

becomes required, DOE used a ‘‘roll-up’’ 

scenario: (1) Products with efficiencies 

in the base case that do not meet a 

potential standard level would ‘‘roll up’’ 

to meet that standard level, and (2) 

products at efficiencies above the 

standard level under consideration 

would not be affected. After the year of 

compliance, all hearth products would 

utilize electronic ignition devices. For 

further details about the NIA efficiency 

distributions, see chapter 10 of the 

NOPR TSD. 

1. National Energy Savings 

To develop the NES, DOE calculates 

annual energy consumption of the 

considered products for the base case 

and then compares that to each 

potential standards case (TSL). DOE 

calculates the annual energy 

consumption for each case using the 

appropriate per-unit annual energy use 

data multiplied by the projected hearth 

product shipments for each year. As 

explained in section IV.E, DOE did not 

include a rebound effect for hearth 

products. 

To estimate the national energy 

savings expected from appliance 

standards, DOE used a multiplicative 

factor to convert site electricity 

consumption (at the home) into primary 

energy consumption (the energy 

required to convert and deliver the site 

electricity). These conversion factors 

account for the energy used at power 

plants to generate electricity. The factors 

vary over time due to changes in 

generation sources (i.e., the power plant 

types projected to provide electricity to 

the country) projected in AEO 2014. The 

factors that DOE developed are marginal 

values, which represent the response of 

the electricity sector to an incremental 

decrease in consumption associated 

with potential appliance standards. 

Cumulative energy savings are the sum 

of the NES for each year over the 

timeframe of the analysis. 

In response to the recommendations 

of a committee on ‘‘Point-of-Use and 

Full-Fuel-Cycle Measurement 

Approaches to Energy Efficiency 

Standards’’ appointed by the National 

Academy of Sciences, DOE announced 

its intention to use full-fuel-cycle (FFC) 

measures of energy use and greenhouse 

gas and other emissions in the national 

impact analyses and emissions analyses 

included in future energy conservation 

standards rulemakings. 76 FR 51281 

(August 18, 2011). After evaluating the 

approaches discussed in the August 18, 

2011 notice, DOE published a statement 

of amended policy in the Federal 

Register in which DOE explained its 

determination that NEMS is the most 

appropriate tool for its FFC analysis and 

its intention to use NEMS for that 

purpose. 77 FR 49701 (August 17, 2012). 

The FFC factors incorporate losses in 

production and delivery in the case of 

natural gas (including fugitive 

emissions) and energy used to produce 

and deliver the fuels used by power 

plants. The approach used for this 

NOPR is described in appendix 10–B of 

the NOPR TSD. 

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49OMB Circular A–4, section E, ‘‘Identifying and 

Measuring Benefits and Costs’’ (Sept. 17, 2003) 

(Available at: http://www.whitehouse.gov/omb/

memoranda/m03–21.html). 

50U.S. Securities and Exchange Commission, 

Annual 10–K Reports (Various Years) (Available at: 

www.sec.gov). 

51Hoovers Inc., Company Profiles, Various 

Companies (Available at: www.hoovers.com/). 

52U.S. Census Bureau, Annual Survey of 

Manufacturers: General Statistics: Statistics for 

Industry Groups and Industries (2011) (Available at: 

http://www.census.gov/manufacturing/asm/

index.html). 

2. Net Present Value of Consumer 

Benefit 

The inputs for determining NPV are: 

(1) Total annual installed cost; (2) total 

annual savings in operating costs; (3) a 

discount factor to calculate the present 

value of costs and savings; (4) present 

value of costs; and (5) present value of 

savings. To develop the national NPV of 

consumer benefits from potential energy 

conservation standards, DOE calculates 

annual operating costs (energy costs and 

repair and maintenance costs) and 

annual installed costs for the base case 

and the standards cases. DOE calculates 

annual energy expenditures from annual 

energy consumption using forecasted 

energy prices in each year. DOE 

calculates annual product expenditures 

by multiplying the price per unit times 

the projected shipments in each year. As 

discussed in section IV.F.1, DOE 

assumed a constant future product price 

trend. 

The aggregate difference each year 

between operating cost savings and 

increased installed costs is the net 

savings. DOE multiplies the net savings 

in future years by a discount factor to 

determine their present value. DOE 

estimates the NPV of consumer benefits 

using both a 3-percent and a 7-percent 

real discount rate, in accordance with 

guidance provided by the Office of 

Management and Budget (OMB) to 

Federal agencies on the development of 

regulatory analysis.49 The 7-percent real 

value is an estimate of the average 

before-tax rate of return to private 

capital in the U.S. economy. It 

approximates the opportunity cost of 

capital, and it is the appropriate 

discount rate whenever the main effect 

of a regulation is to displace or alter the 

use of capital in the private sector. 

Circular A–4 also states that when the 

regulation primarily and directly affects 

private consumption, a lower discount 

rate is appropriate. The 3-percent real 

value represents the ‘‘societal rate of 

time preference,’’ which is the rate at 

which society discounts future 

consumption flows to their present 

value. If one takes the rate that the 

average saver uses to discount future 

consumption as a measure of the social 

rate of time preference, then the real rate 

of return on long-term government debt 

may provide a fair approximation. Over 

the last thirty years, the rate has 

averaged around 3 percent in real terms 

on a pre-tax basis. Energy conservation 

standards for appliances and equipment 

affect both the use of capital and private 

consumption. It is noted that the 

discount rates for the determination of 

NPV are in contrast to the discount rates 

used in the LCC analysis, which are 

designed to reflect a consumer’s 

perspective. 

I. Consumer Subgroup Analysis 

In analyzing the potential impacts of 

new or amended standards on 

consumers, DOE evaluated the impacts 

on identifiable subgroups of consumers 

that may be disproportionately affected 

by a national standard. The purpose of 

a subgroup analysis is to determine the 

extent of any such disproportional 

impacts. For this NOPR, DOE evaluated 

impacts of potential standards on two 

subgroups: (1) Senior households and 

(2) low-income households. The 

subgroup samples were identified from 

RECS 2009 data on income and age of 

household members. DOE used the LCC 

and PBP spreadsheet model to analyze 

the LCC impacts and PBP for those 

particular consumers at the considered 

standard. The consumer subgroup 

results for the hearth products TSL are 

presented in section V.B.1.b of this 

notice and in chapter 11 of the NOPR 

TSD. 

J. Manufacturer Impact Analysis 

1. Overview 

DOE performed a Manufacturer 

Impact Analysis (MIA) to estimate the 

financial impact of an energy 

conservation standard on manufacturers 

of gas hearth products and to calculate 

the potential impact of such standards 

on employment and manufacturing 

capacity. The MIA has both quantitative 

and qualitative aspects. The quantitative 

part of the MIA primarily relies on the 

Government Regulatory Impact Model 

(GRIM), an industry cash-flow model 

with inputs specific to this rulemaking. 

The key GRIM inputs are data on the 

industry cost structure, product costs, 

shipments, and assumptions about 

markups and conversion expenditures. 

The key output is the industry net 

present value (INPV). DOE used the 

GRIM to calculate cash flows using 

standard accounting principles and to 

compare changes in the INPV between 

a base case and each TSL (the standards 

case). The difference in INPV between 

the base case and a standards case 

represents the financial impact of 

energy conservation standards on gas 

hearth product manufacturers. DOE 

used different sets of assumptions 

(markup scenarios) to represent the 

uncertainty surrounding potential 

impacts on prices and manufacturer 

profitability as a result of standards. 

Different sets of assumptions will 

produce a range of INPV results. The 

qualitative part of the MIA addresses the 

proposed standard’s potential impacts 

on manufacturing capacity and industry 

competition, as well as factors such as 

product characteristics, impacts on 

particular subgroups of firms, and 

important market and product trends. 

The complete MIA is outlined in 

chapter 12 of the NOPR TSD. 

DOE conducted the MIA for this 

rulemaking in three phases. In Phase 1 

of the MIA, DOE prepared a profile of 

the gas hearth industry. This industry 

characterization was based on the 

market and technology assessment, 

preliminary manufacturer interviews, 

and publicly-available information. 

Specifically, DOE developed its 

industry profile using a combination of 

sources, including public information, 

such as Securities and Exchange 

Commission (SEC) 10–K reports,50

market research tools (e.g., Hoovers 51), 

corporate annual reports, the U.S. 

Census Bureau’s 2011 Annual Survey of 

Manufacturers (ASM),52 and the 2010 

Energy Conservation Standard Final 

Rule for Residential Water Heaters, 

Direct Heating Equipment, and Pool 

Heaters (75 FR 20112 (April 16, 2010)); 

information obtained through DOE’s 

engineering analysis, life-cycle cost 

analysis, and market and technology 

assessment prepared for this 

rulemaking; and information obtained 

directly from manufacturers through 

interviews. 

As part of Phase 1, DOE conducted 

structured, detailed interviews with a 

representative cross-section of 

manufacturers. During these interviews, 

DOE discussed engineering, 

manufacturing, procurement, and 

financial topics to identify key issues or 

concerns and to inform and validate 

assumptions used in the GRIM. The 

industry profile developed as a result of 

Phase 1 research and interviews 

includes: (1) Further detail on the 

overall market and product 

characteristics; (2) financial parameters 

such as net plant, property, and 

equipment; selling, general and 

administrative (SG&A) expenses; 

research and development (R&D) 

expenses; cost of goods sold; and tax 

rates; and (3) trends in the number of 

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firms, market, and product 

characteristics. 

In Phase 2 of the MIA, DOE prepared 

an industry cash-flow analysis to 

quantify the potential impacts of an 

energy conservation standard on 

manufacturers of gas hearth products. In 

general, energy conservation standards 

can affect manufacturer cash flow in 

three distinct ways: (1) Create a need for 

increased investment; (2) raise 

production costs per unit; and (3) alter 

revenue due to higher per-unit prices 

and/or possible changes in sales 

volumes. To quantify these impacts, 

DOE used the GRIM to perform a cashflow analysis for the gas hearth industry 

using financial values derived during 

Phase 1 and the shipment scenario used 

in the NIA. 

In Phase 3 of the MIA, DOE evaluated 

subgroups of manufacturers that may be 

disproportionately impacted by energy 

conservation standards or that may not 

be represented accurately by the average 

cost assumptions used to develop the 

industry cash-flow analysis. For 

example, small manufacturers, niche 

players, or manufacturers exhibiting a 

cost structure that largely differs from 

the industry average could be more 

negatively affected. DOE identified two 

subgroups for separate impact analyses: 

(1) Manufacturers of gas log sets; and (2) 

small businesses. The subgroup of gas 

log set manufacturers is discussed in 

section V.B.2.d of this notice, ‘‘Impacts 

on Subgroups of Manufacturers,’’ and 

the small manufacturer subgroup is 

discussed in section VI.B, ‘‘Review 

Under the Regulatory Flexibility Act.’’ 

Impacts on both subgroups are also 

addressed in chapter 12 of the NOPR 

TSD. 

2. Government Regulatory Impact Model 

DOE uses the GRIM to quantify 

changes in cash flow due to new 

standards that result in a higher or 

lower industry value. The GRIM uses a 

standard, annual cash-flow analysis 

using standard accounting principles 

that incorporates manufacturer costs, 

markups, shipments, and industry 

financial information as inputs. The 

GRIM models changes in costs, 

distribution of shipments, investments, 

and manufacturer margins that could 

result from a potential energy 

conservation standard. The GRIM 

spreadsheet uses the inputs to arrive at 

a series of annual cash flows, beginning 

in 2014 (the base year of the analysis) 

and continuing to 2050. Manufacturers 

incur capital and product conversion 

costs in the period between the date at 

which the rule is promulgated and the 

compliance date of an amended 

standard. To capture the impacts of 

these expenditures on industry finances, 

the MIA analysis period begins before 

the compliance year. DOE calculated 

INPVs by summing the stream of annual 

discounted cash flows during this 

period. For gas hearth manufacturers, 

DOE used a real discount rate of 8.7 

percent, which was derived from 

industry financial information and then 

modified according to feedback received 

during manufacturer interviews. 

After calculating industry cash flows 

and INPV, DOE compared changes in 

INPV between the base case and the 

standards case. The difference in INPV 

between the base case and the standards 

case represents the financial impact of 

that potential energy conservation 

standard on manufacturers. As 

discussed previously, DOE collected 

information on key GRIM inputs from a 

number of sources, including publiclyavailable data and confidential 

interviews with manufacturers 

(described in the next section). The 

GRIM results are shown in section 

V.B.2. Additional details about the 

GRIM, the discount rate, and other 

financial parameters can be found in 

chapter 12 of the NOPR TSD. 

a. Government Regulatory Impact Model 

Key Inputs 

Manufacturer Production Costs 

Manufacturing a higher-efficiency 

product is typically more expensive 

than manufacturing a baseline product 

due to the use of more complex 

components, which are typically more 

costly than baseline components. The 

changes in the manufacturer production 

costs (MPCs) of the analyzed products 

can affect the revenues, gross margins, 

and cash flow of the industry, making 

these equipment cost data key GRIM 

inputs for DOE’s analysis. 

In the MIA, DOE used the MPCs 

calculated in the engineering analysis, 

as described in section IV.C and further 

detailed in chapter 5 of the NOPR TSD. 

In addition, DOE used information from 

its teardown analysis, described in 

chapter 5 of the TSD, to disaggregate the 

MPCs into material, labor, and overhead 

costs. These costs were shared with 

manufacturers and revised to 

incorporate their feedback. 

Shipments Forecasts 

The GRIM estimates manufacturer 

revenues based on total unit shipment 

forecasts and the distribution of these 

values by product group and ignition 

type. Changes in sales volumes and 

product mix over time can significantly 

affect manufacturer finances. For this 

analysis, the GRIM uses the NIA’s 

annual shipments forecasts derived in 

the shipments analysis for the period 

2014 (the base year) to 2050 (the end 

year of the analysis). The NIA 

shipments forecasts assume price 

elasticity of demand, whereby shipment 

volumes in the standards case decline 

relative to the base case as MPCs rise 

and, in doing so, drive up end-user 

purchase prices. See section IV.G. above 

and chapter 9 of the NOPR TSD for 

additional details. 

Product and Capital Conversion Costs 

An energy conservation standard 

would cause manufacturers to incur 

one-time conversion costs to bring their 

production facilities and product 

designs into compliance. DOE evaluated 

the level of conversion-related 

expenditures that would be needed to 

comply with a design standard 

eliminating standing pilot lights. For the 

MIA, DOE classified these conversion 

costs into two major groups: (1) Product 

conversion costs; and (2) capital 

conversion costs. Product conversion 

costs are one-time investments in 

research, development, testing, 

certification, marketing, and other noncapitalized costs necessary to make 

products comply with an energy 

conservation standard. Capital 

conversion costs are one-time 

investments in property, plant, and 

equipment necessary to adapt or change 

existing production facilities such that 

new compliant product designs can be 

fabricated and assembled. 

To evaluate the level of capital 

conversion expenditures manufacturers 

would likely incur to comply with a 

potential energy conservation standard, 

DOE used manufacturer interviews to 

gather data on the anticipated level of 

capital investment that would be 

required to adapt to a design standard 

eliminating standing pilot lights. Based 

on manufacturer feedback, DOE 

estimated an average capital 

expenditure per manufacturer, which it 

then applied to the entire industry. DOE 

validated manufacturer comments 

through estimates of capital expenditure 

requirements derived from the product 

teardown analysis and engineering 

analysis described in chapter 5 of the 

NOPR TSD. 

DOE assessed the product conversion 

costs by integrating quantitative and 

qualitative data. DOE considered 

feedback from manufacturers regarding 

potential product conversion costs and 

validated those numbers against 

engineering estimates of redesign 

efforts. Manufacturer data were 

aggregated to better reflect the industry 

as a whole and to protect confidential 

information. 

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DOE assumes that all conversionrelated investments occur between the 

year of publication of the final rule and 

the year by which manufacturers must 

comply with the new standard. The 

conversion cost figures used in the 

GRIM can be found in section V.B.2 of 

this notice. For additional information 

on the estimated product and capital 

conversion costs, see chapter 12 of the 

NOPR TSD. 

b. Government Regulatory Impact Model 

Scenarios 

Markup Scenarios 

Manufacturer selling prices (MSPs) 

include direct manufacturing 

production costs (i.e., labor, materials, 

and overhead estimated in DOE’s MPCs) 

and all non-production costs (i.e., 

SG&A, R&D, and interest), along with 

profit. To calculate the MSPs in the 

GRIM, DOE applied non-production 

cost markups to the MPCs estimated in 

the engineering analysis. Modifying 

these markups in the standards case 

yields different sets of impacts on 

manufacturers. For the MIA, DOE 

modeled two standards-case markup 

scenarios to represent the uncertainty 

regarding the potential impacts on 

prices and profitability for 

manufacturers following the 

implementation of potential energy 

conservation standards: (1) A 

preservation of gross margin percentage 

markup scenario; and (2) a preservation 

of per-unit operating profit markup 

scenario. These scenarios lead to 

different markup values that, when 

applied to the inputted MPCs, result in 

varying revenue and cash flow impacts. 

Under the preservation of gross 

margin percentage scenario, DOE 

applied a single uniform ‘‘gross margin 

percentage’’ markup across all efficiency 

levels, which assumes that 

manufacturers would be able to 

maintain the same amount of profit as 

a percentage of revenues at all efficiency 

levels for the product in question. As 

production costs increase with 

efficiency, this scenario implies that the 

absolute dollar markup will increase as 

well. Based on publicly-available 

financial information for manufacturers 

of gas hearth products, as well as 

comments received during manufacturer 

interviews, DOE assumed the average 

non-production cost markup—which 

includes SG&A expenses, R&D 

expenses, interest, and profit—to be 

1.45 for all gas hearth products. 

Because this markup scenario 

assumes that manufacturers would be 

able to maintain their gross margin 

percentage markups as production costs 

increase in response to an energy 

conservation standard, it represents a 

high bound to industry profitability, as 

manufacturers are able to fully pass 

through additional costs due to 

standards to consumers. 

In the preservation of per unit 

operating profit scenario, manufacturer 

markups are set so that operating profit 

one year after the compliance date of the 

energy conservation standard is the 

same as in the base case on a per-unit 

basis. Under this scenario, as the costs 

of production increase under a 

standards case, manufacturers are 

generally required to reduce their 

markups to a level that maintains basecase operating profit per unit. The 

implicit assumption behind this markup 

scenario is that the industry can only 

maintain its operating profit in absolute 

dollars per unit after compliance with 

the new standard is required. Therefore, 

operating margin in percentage terms is 

reduced between the base case and 

standards case. DOE adjusted the 

manufacturer markups in the GRIM at 

each TSL to yield approximately the 

same earnings before interest and taxes 

in the standards case as in the base case. 

This markup scenario represents a low 

bound to industry profitability under an 

energy conservation standard, because 

manufacturers are not able to fully pass 

through to consumers the additional 

costs due to standards. 

c. Manufacturer Interviews 

As part of MIA, DOE discussed the 

potential impacts of an energy 

conservation standard with 

manufacturers of gas hearth products. 

The information gathered during these 

interviews enabled DOE to tailor the 

GRIM to reflect the unique financial 

characteristics of the industry. All 

interviews provided information that 

DOE used to evaluate the impacts of 

potential energy conservation standards 

on manufacturer cash flows, 

manufacturing capacities, and 

employment levels. 

In interviews, DOE asked 

manufacturers to describe their 

concerns with the rulemaking regarding 

gas hearth products. The following 

section highlights manufacturer 

concerns that helped to shape DOE’s 

understanding of potential impacts of an 

energy conservation standard on the 

industry. Manufacturer interviews are 

conducted under non-disclosure 

agreements (NDAs), so DOE does not 

document these discussions in the same 

way that it does public comments in the 

comment summaries. The following 

sections highlight the most significant of 

manufacturers’ statements, although all 

concerns expressed by manufacturers 

were considered in DOE’s analysis. 

Impacts on Profitability 

According to manufacturers, units 

with electronic ignition systems are 

more expensive to manufacture than 

units with standing pilot lights. 

Manufacturers indicated that 

purchasing components for electronic 

ignition systems increases per-unit 

production costs and, by extension, 

raises the retail price of products. 

Manufacturers stated that by driving up 

their cost of goods sold as well as the 

end-user purchase price, a standard 

eliminating standing pilot lights could 

lead to a drop in consumer demand. 

Because gas hearth products are not 

typically purchased exclusively for 

heating purposes but rather are valued 

by customers for their aesthetic appeal, 

manufacturers indicated that higher 

prices could depress demand if 

customers decide the decorative benefit 

of gas hearth products does not merit 

the higher costs. A fall in sales could, 

in turn, impact industry profitability. 

Additionally, manufacturers stated 

that shipments of gas hearth products 

declined significantly over the last 

decade, in part due to the economic 

recession and a related decline in newhome construction. Several 

manufacturers forecast steady or 

declining shipments in future years 

absent an energy conservation standard. 

Those interviewed generally argued that 

if an energy conservation standard 

raises the price of gas hearth products, 

depresses demand, and reduces 

profitability, it could drive 

manufacturers to exit the market. 

Impacts on Industry Competition 

Small manufacturers expressed 

concern that an energy conservation 

standard for gas hearth products could 

alter the competitive dynamics of the 

market, favoring a subset of large 

manufacturers over their small-business 

competitors. Based on economies of 

scale, manufacturers that produce gas 

hearth products at high volumes are 

typically able to source components at 

lower per-unit prices than 

manufacturers that produce at lower 

volumes. In general, manufacturers of 

gas hearth products do not manufacture 

the components used for electronic 

ignition systems in-house. Rather, they 

source them from component suppliers. 

In interviews, manufacturers indicated 

that large manufacturers with high 

production volumes are able to source 

these components at relatively low cost. 

Small manufacturers with lower 

production volumes, in contrast, noted 

that the comparatively high cost they 

would incur to purchase electronic 

ignition system components would 

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53See http://www.epa.gov/climateleadership/

guidance/ghg-emissions.html. 

54U.S. Environmental Protection Agency, 

Compilation of Air Pollutant Emission Factors, AP– 

42, Fifth Edition, Volume I: Stationary Point and 

Area Sources (1998) (Available at: http://

www.epa.gov/ttn/chief/ap42/index.html). 

55 IPCC, 2013: Climate Change 2013: The Physical 

Science Basis. Contribution of Working Group I to 

the Fifth Assessment Report of the 

Intergovernmental Panel on Climate Change 

[Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, 

S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex 

and P.M. Midgley (eds.)]. Cambridge University 

Press, Cambridge, United Kingdom and New York, 

NY, USA. Chapter 8. 

56See North Carolina v. EPA, 550 F.3d 1176 (D.C. 

Cir. 2008); North Carolina v. EPA, 531 F.3d 896 

(D.C. Cir. 2008). 

57See EME Homer City Generation, LP v. EPA, 

696 F.3d 7, 38 (D.C. Cir. 2012), cert. granted, 81 

U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702 

(U.S. June 24, 2013) (No. 12–1182). 

58On April 29, 2014, the U.S. Supreme Court 

reversed the judgment of the D.C. Circuit and 

remanded the case for further proceedings 

consistent with the Supreme Court’s opinion. The 

Supreme Court held in part that EPA’s methodology 

for quantifying emissions that must be eliminated 

in certain States due to their impacts in other 

downwind States was based on a permissible, 

workable, and equitable interpretation of the Clean 

Air Act provision that provides statutory authority 

for CSAPR. See EPA v. EME Homer City Generation, 

No 12–1182, slip op. at 32 (U.S. April 29, 2014). 

Because DOE is using emissions factors based on 

AEO 2014 for today’s NOPR, the NOPR assumes 

that CAIR, not CSAPR, is the regulation in force. 

The difference between CAIR and CSAPR is not 

relevant for the purpose of DOE’s analysis of SO2

emissions. 

exacerbate the pricing advantage of large 

manufacturers and could lead to loss of 

price competitiveness for smaller 

players in the market. 

Impacts on Product Performance 

Multiple manufacturers stated that 

electronic ignition systems represent a 

more complicated and less reliable 

technology than standing pilot lights. 

These manufacturers indicated that 

units with electronic ignition systems 

often require more effort to repair and 

maintain. One manufacturer stated that 

electronic ignition systems account for a 

small fraction of their sales but the vast 

majority of their service calls, and 

several manufacturers suggested higher 

costs of maintaining units with 

electronic ignition systems compared to 

standing pilot lights. Additionally, 

several manufacturers suggested that 

electronic ignition systems are not as 

well suited to cold climates, where 

standing pilot lights may help to 

maintain buoyancy through the flue and 

to prevent condensation from building 

up on glass. 

K. Emissions Analysis 

In the emissions analysis, DOE 

estimated the reduction in emissions of 

carbon dioxide (CO2), nitrogen oxides 

(NOX), sulfur dioxide (SO2), and 

mercury (Hg) from potential amended 

energy conservation standards for 

hearth products. In addition, DOE 

estimated emissions impacts in 

production activities (extracting, 

processing, and transporting fuels). 

These are referred to as ‘‘upstream’’ 

emissions. Together, these emissions 

account for the FFC. In accordance with 

DOE’s FFC Statement of Policy (76 FR 

51281 (Aug. 18, 2011) as amended at 77 

FR 49701 (August 17, 2012)), the FFC 

analysis also includes impacts on 

emissions of methane (CH4) and nitrous 

oxide (N2O), both of which are 

recognized as greenhouse gases. The 

combustion emissions factors and the 

method DOE used to derive upstream 

emissions factors are described in 

chapter 13 of the NOPR TSD. The 

cumulative emissions reduction 

estimated for hearth products is 

presented in section V.B.6. 

Today’s proposed standard would 

reduce use of fuel at the site and slightly 

increase electricity use. DOE accounted 

for the associated reduction in site 

emissions and the upstream emissions 

associated with natural gas use, which 

include fugitive emissions. DOE also 

estimated the change in power sector 

emissions and the upstream emissions 

associated with electricity generation. 

DOE primarily conducted the 

emissions analysis using emissions 

factors for CO2 and most of the other 

gases derived from data in AEO 2014. 

Combustion emissions of CH4 and N2O 

were estimated using emissions 

intensity factors published by the U.S. 

Environmental Protection Agency (EPA) 

in its GHG Emissions Factors Hub.53

Site emissions of CO2 and NOX were 

estimated using emissions intensity 

factors from a separate EPA 

publication.54 DOE developed separate 

emissions factors for site, power sector, 

and upstream emissions. The method 

that DOE used to derive emissions 

factors is described in chapter 13 of the 

NOPR TSD. 

For CH4 and N2O, DOE calculated 

emissions reduction in tons and also in 

terms of units of carbon dioxide 

equivalent (CO2eq). Gases are converted 

to CO2eq by multiplying each ton of the 

greenhouse gas by the gas’s global 

warming potential (GWP) over a 100- 

year time horizon. Based on the Fifth 

Assessment Report of the 

Intergovernmental Panel on Climate 

Change,55 DOE used GWP values of 28 

for CH4 and 265 for N2O. 

EIA prepares the AEO using the 

NEMS. Each annual version of NEMS 

incorporates the projected impacts of 

existing air quality regulations on 

emissions. AEO 2014 generally 

represents current legislation and 

environmental regulations, including 

recent government actions, for which 

implementing regulations were 

available as of October 31, 2013. 

Because the on-site operation of gas 

hearth products requires use of fossil 

fuels and results in emissions of CO2, 

NOX, and SO2 at the sites where these 

appliances are used, DOE also 

accounted for the reduction in these site 

emissions and the associated upstream 

emissions due to potential standards. 

SO2 emissions from affected electric 

generating units (EGUs) are subject to 

nationwide and regional emissions capand-trade programs. Title IV of the 

Clean Air Act sets an annual emissions 

cap on SO2 for affected EGUs in the 48 

contiguous States and the District of 

Columbia (DC). (42 U.S.C. 7651 et seq.) 

SO2 emissions from 28 eastern States 

and DC were also limited under the 

Clean Air Interstate Rule (CAIR; 70 FR 

25162 (May 12, 2005)), which created an 

allowance-based trading program that 

operates along with the Title IV 

program. CAIR was remanded to the 

EPA by the U.S. Court of Appeals for the 

District of Columbia Circuit, but it 

remained in effect.56 In 2011, EPA 

issued a replacement for CAIR, the 

Cross-State Air Pollution Rule (CSAPR). 

76 FR 48208 (August 8, 2011). On 

August 21, 2012, the D.C. Circuit issued 

a decision to vacate CSAPR.57 The court 

ordered EPA to continue administering 

CAIR. The emissions factors used for 

today’s NOPR, which are based on AEO 

2014, assume that CAIR remains a 

binding regulation through 2040.58

The attainment of emissions caps is 

typically flexible among EGUs and is 

enforced through the use of emissions 

allowances and tradable permits. 

Beginning in 2016, however, SO2

emissions will decline significantly as a 

result of the Mercury and Air Toxics 

Standards (MATS) for power plants. 77 

FR 9304 (Feb. 16, 2012). In the final 

MATS rule, EPA established a standard 

for hydrogen chloride as a surrogate for 

acid gas hazardous air pollutants (HAP), 

and also established a standard for SO2

(a non-HAP acid gas) as an alternative 

equivalent surrogate standard for acid 

gas HAP. The same controls are used to 

reduce HAP and non-HAP acid gas; 

thus, SO2 emissions will be reduced as 

a result of the control technologies 

installed on coal-fired power plants to 

comply with the MATS requirements 

for acid gas. AEO 2014 assumes that, in 

order to continue operating, coal plants 

must have either flue gas 

desulfurization or dry sorbent injection 

systems installed by 2016. Both 

technologies, which are used to reduce 

acid gas emissions, also reduce SO2

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59CSAPR also applies to NOX, and it would 

supersede the regulation of NOX under CAIR. As 

stated previously, the current analysis assumes that 

CAIR, not CSAPR, is the regulation in force. The 

difference between CAIR and CSAPR with regard to 

DOE’s analysis of NOX is slight. 

60National Research Council, Hidden Costs of 

Energy: Unpriced Consequences of Energy 

Production and Use, National Academies Press: 

Washington, DC (2009). 

emissions. Under the MATS, emissions 

will be far below the cap established by 

CAIR, so it is likely that the increase in 

electricity demand associated with the 

highest hearth product efficiency levels 

would increase SO2 emissions. 

CAIR established a cap on NOX

emissions in 28 eastern States and the 

District of Columbia.59 Thus, it is 

unlikely that the increase in electricity 

demand associated with the considered 

hearth product standard would increase 

NOX emissions in those States covered 

by CAIR. However, it would be expected 

to slightly increase power sector NOX

emissions in the States not affected by 

the caps, so DOE estimated NOX

emissions increases for these States. As 

shown in section V.B.6, however, the 

decrease in site NOX emissions is much 

larger than the slight increase in power 

sector NOX emissions. 

The MATS limit mercury emissions 

from power plants, but they do not 

include emissions caps and, as such, the 

increase in electricity demand 

associated with the considered hearth 

product standard would be expected to 

slightly increase Hg emissions. DOE 

estimated mercury emissions using 

emissions factors based on AEO 2014, 

which incorporates the MATS. 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

As part of the development of this 

proposed rule, DOE considered the 

estimated monetary benefits from the 

reduced emissions of CO2 and NOX that 

are expected to result from the TSL 

considered. In order to make this 

calculation similar to the calculation of 

the NPV of consumer benefit, DOE 

considered the reduced emissions 

expected to result over the lifetime of 

equipment shipped in the forecast 

period. This section summarizes the 

basis for the monetary values used for 

each of these emissions and presents the 

values considered in this rulemaking. 

For today’s NOPR, DOE is relying on 

a set of values for the social cost of 

carbon (SCC) that was developed by a 

Federal interagency process. A summary 

of the basis for these values is provided 

below, and a more detailed description 

of the methodologies used is provided 

as an appendix to chapter 14 of the 

NOPR TSD. 

1. Social Cost of Carbon 

The SCC is an estimate of the 

monetized damages associated with an 

incremental increase in carbon 

emissions in a given year. It is intended 

to include (but is not limited to) changes 

in net agricultural productivity, human 

health, property damages from 

increased flood risk, and the value of 

ecosystem services. Estimates of the 

SCC are provided in dollars per metric 

ton of carbon dioxide. A domestic SCC 

value is meant to reflect the value of 

damages in the United States resulting 

from a unit change in carbon dioxide 

emissions, while a global SCC value is 

meant to reflect the value of damages 

worldwide. 

Under section 1(b)(6) of Executive 

Order 12866, ‘‘Regulatory Planning and 

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

agencies must, to the extent permitted 

by law, ‘‘assess both the costs and the 

benefits of the intended regulation and, 

recognizing that some costs and benefits 

are difficult to quantify, propose or 

adopt a regulation only upon a reasoned 

determination that the benefits of the 

intended regulation justify its costs.’’ 

The purpose of the SCC estimates 

presented here is to allow agencies to 

incorporate the monetized social 

benefits of reducing CO2 emissions into 

cost-benefit analyses of regulatory 

actions. The estimates are presented 

with an acknowledgement of the many 

uncertainties involved and with a clear 

understanding that they should be 

updated over time to reflect increasing 

knowledge of the science and 

economics of climate impacts. 

As part of the interagency process that 

developed the SCC estimates, technical 

experts from numerous agencies met on 

a regular basis to consider public 

comments, explore the technical 

literature in relevant fields, and discuss 

key model inputs and assumptions. The 

main objective of this process was to 

develop a range of SCC values using a 

defensible set of input assumptions 

grounded in the existing scientific and 

economic literatures. In this way, key 

uncertainties and model differences 

transparently and consistently inform 

the range of SCC estimates used in the 

rulemaking process. 

a. Monetizing Carbon Dioxide Emissions 

When attempting to assess the 

incremental economic impacts of carbon 

dioxide emissions, the analyst faces a 

number of challenges. A recent report 

from the National Research Council 60

points out that any assessment will 

suffer from uncertainty, speculation, 

and lack of information about: (1) 

Future emissions of greenhouse gases; 

(2) the effects of past and future 

emissions on the climate system; (3) the 

impact of changes in climate on the 

physical and biological environment; 

and (4) the translation of these 

environmental impacts into economic 

damages. As a result, any effort to 

quantify and monetize the harms 

associated with climate change will 

raise questions of science, economics, 

and ethics and should be viewed as 

provisional. 

Despite the limits of both 

quantification and monetization, SCC 

estimates can be useful in estimating the 

social benefits of reducing carbon 

dioxide emissions. The agency can 

estimate the benefits from reduced (or 

costs from increased) emissions in any 

future year by multiplying the change in 

emissions in that year by the SCC value 

appropriate for that year. The net 

present value of the benefits can then be 

calculated by multiplying each of these 

future benefits by an appropriate 

discount factor and summing across all 

affected years. 

It is important to emphasize that the 

interagency process is committed to 

updating these estimates as the science 

and economic understanding of climate 

change and its impacts on society 

improves over time. In the meantime, 

the interagency group will continue to 

explore the issues raised by this analysis 

and consider public comments as part of 

the ongoing interagency process. 

b. Development of Social Cost of Carbon 

Values 

In 2009, an interagency process was 

initiated to offer a preliminary 

assessment of how best to quantify the 

benefits from reducing carbon dioxide 

emissions. To ensure consistency in 

how benefits are evaluated across 

agencies, the Administration sought to 

develop a transparent and defensible 

method, specifically designed for the 

rulemaking process, to quantify avoided 

climate change damages from reduced 

CO2 emissions. The interagency group 

did not undertake any original analysis. 

Instead, it combined SCC estimates from 

the existing literature to use as interim 

values until a more comprehensive 

analysis could be conducted. The 

outcome of the preliminary assessment 

by the interagency group was a set of 

five interim values: Global SCC 

estimates for 2007 (in 2006$) of $55, 

$33, $19, $10, and $5 per metric ton of 

CO2. These interim values represented 

the first sustained interagency effort 

within the U.S. government to develop 

an SCC for use in regulatory analysis. 

The results of this preliminary effort 

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61 It is recognized that this calculation for 

domestic values is approximate, provisional, and 

highly speculative. There is no a priori reason why 

domestic benefits should be a constant fraction of 

net global damages over time. 

62Social Cost of Carbon for Regulatory Impact 

Analysis Under Executive Order 12866, Interagency 

Working Group on Social Cost of Carbon, United 

States Government (February 2010) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/

inforeg/for-agencies/Social-Cost-of-Carbon-forRIA.pdf). 

63Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive 

Order 12866, Interagency Working Group on Social 

Cost of Carbon, United States Government (May 

2013; revised November 2013) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/ 

assets/inforeg/technical-update-social-cost-ofcarbon-for-regulator-impact-analysis.pdf). 

were presented in several proposed and 

final rules. 

c. Current Approach and Key 

Assumptions 

After the release of the interim values, 

the interagency group reconvened on a 

regular basis to generate improved SCC 

estimates. Specifically, the group 

considered public comments and 

further explored the technical literature 

in relevant fields. The interagency group 

relied on three integrated assessment 

models commonly used to estimate the 

SCC: The FUND, DICE, and PAGE 

models. These models are frequently 

cited in the peer-reviewed literature and 

were used in the last assessment of the 

Intergovernmental Panel on Climate 

Change (IPCC). Each model was given 

equal weight in the SCC values that 

were developed. 

Each model takes a slightly different 

approach to model how changes in 

emissions result in changes in economic 

damages. A key objective of the 

interagency process was to enable a 

consistent exploration of the three 

models, while respecting the different 

approaches to quantifying damages 

taken by the key modelers in the field. 

An extensive review of the literature 

was conducted to select three sets of 

input parameters for these models: 

Climate sensitivity, socio-economic and 

emissions trajectories, and discount 

rates. A probability distribution for 

climate sensitivity was specified as an 

input into all three models. In addition, 

the interagency group used a range of 

scenarios for the socio-economic 

parameters and a range of values for the 

discount rate. All other model features 

were left unchanged, relying on the 

model developers’ best estimates and 

judgments. 

In 2010, the interagency group 

selected four sets of SCC values for use 

in regulatory analyses. Three sets of 

values are based on the average SCC 

from three integrated assessment 

models, at discount rates of 2.5 percent, 

3 percent, and 5 percent. The fourth set, 

which represents the 95th-percentile 

SCC estimate across all three models at 

a 3-percent discount rate, is included to 

represent higher-than-expected impacts 

from climate change further out in the 

tails of the SCC distribution. The values 

grow in real terms over time. 

Additionally, the interagency group 

determined that a range of values from 

7 percent to 23 percent should be used 

to adjust the global SCC to calculate 

domestic effects, although preference is 

given to consideration of the global 

benefits of reducing CO2 emissions.61

Table IV.5 presents the values in the 

2010 interagency group report,62 which 

is reproduced in appendix 14–A of the 

NOPR TSD. 

TABLE IV.5—ANNUAL SCC VALUES FROM 2010 INTERAGENCY REPORT, 2010–2050 

[In 2007 dollars per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th Percentile 

2010 ................................................................................................................. 4.7 21.4 35.1 64.9 

2015 ................................................................................................................. 5.7 23.8 38.4 72.8 

2020 ................................................................................................................. 6.8 26.3 41.7 80.7 

2025 ................................................................................................................. 8.2 29.6 45.9 90.4 

2030 ................................................................................................................. 9.7 32.8 50.0 100.0 

2035 ................................................................................................................. 11.2 36.0 54.2 109.7 

2040 ................................................................................................................. 12.7 39.2 58.4 119.3 

2045 ................................................................................................................. 14.2 42.1 61.7 127.8 

2049 ................................................................................................................. 15.7 44.9 65.0 136.2 

The SCC values used for today’s 

notice were generated using the most 

recent versions of the three integrated 

assessment models that have been 

published in the peer-reviewed 

literature. Table IV.6 shows the updated 

sets of SCC estimates from the 2013 

interagency update 63 in five-year 

increments from 2010 to 2050. 

Appendix 14–B of the NOPR TSD 

provides the full set of values. The 

central value that emerges is the average 

SCC across models at a 3-percent 

discount rate. However, for purposes of 

capturing the uncertainties involved in 

regulatory impact analysis, the 

interagency group emphasizes the 

importance of including all four sets of 

SCC values. 

TABLE IV.6—ANNUAL SCC VALUES FROM 2013 INTERAGENCY UPDATE, 2010–2050 

[In 2007 dollars per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th Percentile 

2010 ................................................................................................................. 11 32 51 89 

2015 ................................................................................................................. 11 37 57 109 

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64U.S. Office of Management and Budget, Office 

of Information and Regulatory Affairs, 2006 Report 

to Congress on the Costs and Benefits of Federal 

Regulations and Unfunded Mandates on State, 

Local, and Tribal Entities (2006) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/

assets/omb/inforeg/2006_cb/2006_cb_final_

report.pdf). 

TABLE IV.6—ANNUAL SCC VALUES FROM 2013 INTERAGENCY UPDATE, 2010–2050—Continued 

[In 2007 dollars per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th Percentile 

2020 ................................................................................................................. 12 43 64 128 

2025 ................................................................................................................. 14 47 69 143 

2030 ................................................................................................................. 16 52 75 159 

2035 ................................................................................................................. 19 56 80 175 

2040 ................................................................................................................. 21 61 86 191 

2045 ................................................................................................................. 24 66 92 206 

2049 ................................................................................................................. 26 71 97 220 

It is important to recognize that a 

number of key uncertainties remain, and 

that current SCC estimates should be 

treated as provisional and revisable 

since they will evolve with improved 

scientific and economic understanding. 

The interagency group also recognizes 

that the existing models are imperfect 

and incomplete. The National Research 

Council report mentioned previously 

points out that there is tension between 

the goal of producing quantified 

estimates of the economic damages from 

an incremental ton of carbon and the 

limits of existing efforts to model these 

effects. There are a number of analytical 

challenges that are being addressed by 

the research community, including 

research programs housed in many of 

the Federal agencies participating in the 

interagency process to estimate the SCC. 

The interagency group intends to 

periodically review and reconsider 

those estimates to reflect increasing 

knowledge of the science and 

economics of climate impacts, as well as 

improvements in modeling. 

In summary, in considering the 

potential global benefits resulting from 

reduced CO2 emissions, DOE used the 

values from the 2013 interagency report, 

adjusted to 2013$ using the Gross 

Domestic Product price deflator. For 

each of the four SCC cases specified, the 

values used for emissions in 2015 were 

$12.0, $40.5, $62.4, and $119 per metric 

ton avoided (values expressed in 

2013$). DOE derived values after 2050 

using the relevant growth rates for the 

2040–2050 period in the interagency 

update. 

DOE multiplied the CO2 emissions 

reduction estimated for each year by the 

SCC value for that year in each of the 

four cases. To calculate a present value 

of the stream of monetary values, DOE 

discounted the values in each of the 

four cases using the specific discount 

rate that had been used to obtain the 

SCC values in each case. 

2. Valuation of Other Emissions 

Reductions 

As noted previously, DOE has taken 

into account how the considered energy 

conservation standard would reduce site 

NOX emissions nationwide and increase 

power sector NOX emissions in those 22 

States not affected by the CAIR. DOE 

estimated the monetized value of net 

NOX emissions reductions based on 

estimates found in the relevant 

scientific literature. Estimates of 

monetary value for reducing NOX from 

stationary sources range from $476 to 

$4,893 per ton in 2013$.64 DOE 

calculated monetary benefits using a 

medium value for NOX emissions of 

$2,684 per short ton (in 2013$) and real 

discount rates of 3 percent and 7 

percent. 

DOE is evaluating appropriate 

monetization of avoided SO2 and Hg 

emissions in energy conservation 

standards rulemakings. DOE has not 

included monetization of those 

emissions in the current analysis. 

M. Utility Impact Analysis 

The utility impact analysis estimates 

several effects on the power generation 

industry that would result from the 

adoption of new or amended energy 

conservation standards. In the utility 

impact analysis, DOE analyzes the 

changes in installed electrical capacity 

and generation that would result for 

each trial standard level. The analysis is 

based on published output from NEMS, 

which is a public domain, multisectored, partial equilibrium model of 

the U.S. energy sector. Each year, NEMS 

is updated to produce the AEO reference 

case, as well as a number of side cases 

that estimate the economy-wide impacts 

of changes to energy supply and 

demand. DOE uses those published side 

cases that incorporate efficiency-related 

policies to estimate the marginal 

impacts of reduced energy demand on 

the utility sector. The output of this 

analysis is a set of time-dependent 

coefficients that capture the change in 

electricity generation, primary fuel 

consumption, installed capacity and 

power sector emissions due to a unit 

reduction in demand for a given end 

use. These coefficients are multiplied by 

the stream of electricity savings 

calculated in the NIA to provide 

estimates of selected utility impacts of 

new or amended energy conservation 

standards. Chapter 15 of the NOPR TSD 

describes the utility impact analysis in 

further detail. 

N. Employment Impact Analysis 

Employment impacts from new or 

amended energy conservation standards 

include direct and indirect impacts. 

Direct employment impacts are any 

changes in the number of employees of 

manufacturers of the products subject to 

standards; the MIA addresses those 

impacts. Indirect employment impacts 

are changes in national employment 

that occur due to the shift in 

expenditures and capital investment 

caused by the purchase and operation of 

more-efficient appliances. Indirect 

employment impacts from standards 

consist of the jobs created or eliminated 

in the national economy, other than in 

the manufacturing sector being 

regulated, due to: (1) Reduced spending 

by end users on energy; (2) reduced 

spending on new energy supply by the 

utility industry; (3) increased consumer 

spending on the purchase of new 

products; and (4) the effects of those 

three factors throughout the economy. 

One method for assessing the possible 

effects on the demand for labor of such 

shifts in economic activity is to compare 

sector employment statistics developed 

by the Labor Department’s Bureau of 

Labor Statistics (BLS). BLS regularly 

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65See Bureau of Economic Analysis, ‘‘Regional 

Multipliers: A Handbook for the Regional InputOutput Modeling System (RIMS II),’’ U.S. 

Department of Commerce (1992). 

66M.J. Scott, O.V. Livingston, P.J. Balducci, J.M. 

Roop, and R.W. Schultz, ImSET 3.1: Impact of 

Sector Energy Technologies, PNNL–18412, Pacific 

Northwest National Laboratory (2009) (Available at: 

www.pnl.gov/main/publications/external/

technical_reports/PNNL-18412.pdf). 

publishes its estimates of the number of 

jobs per million dollars of economic 

activity in different sectors of the 

economy, as well as the jobs created 

elsewhere in the economy by this same 

economic activity. Data from BLS 

indicate that expenditures in the utility 

sector generally create fewer jobs (both 

directly and indirectly) than 

expenditures in other sectors of the 

economy.65 There are many reasons for 

these differences, including wage 

differences and the fact that the utility 

sector is more capital-intensive and less 

labor-intensive than other sectors. 

Energy conservation standards have the 

effect of reducing consumer utility bills. 

Because reduced consumer 

expenditures for energy likely lead to 

increased expenditures in other sectors 

of the economy, the general effect of 

efficiency standards is to shift economic 

activity from a less labor-intensive 

sector (i.e., the utility sector) to more 

labor-intensive sectors (e.g., the retail 

and service sectors). Thus, based on the 

BLS data alone, DOE believes net 

national employment may increase 

because of shifts in economic activity 

resulting from standards for hearth 

products. 

For the standard considered in this 

NOPR, DOE estimated indirect national 

employment impacts using an input/ 

output model of the U.S. economy 

called Impact of Sector Energy 

Technologies, Version 3.1.1 (ImSET).66

ImSET is a special-purpose version of 

the ‘‘U.S. Benchmark National InputOutput’’ (I–O) model, which was 

designed to estimate the national 

employment and income effects of 

energy-saving technologies. The ImSET 

software includes a computer-based I–O 

model having structural coefficients that 

characterize economic flows among the 

187 sectors. ImSET’s national economic 

I–O structure is based on a 2002 U.S. 

benchmark table, specially aggregated to 

the 187 sectors most relevant to 

industrial, commercial, and residential 

building energy use. DOE notes that 

ImSET is not a general equilibrium 

forecasting model and understands the 

uncertainties involved in projecting 

employment impacts, especially 

changes in the later years of the 

analysis. Because ImSET does not 

incorporate price changes, the 

employment effects predicted by ImSET 

may over-estimate actual job impacts 

over the long run. For the NOPR, DOE 

used ImSET only to estimate short-term 

(through 2026) employment impacts. 

For more details on the employment 

impact analysis, see chapter 16 of the 

NOPR TSD. 

V. Analytical Results and Conclusions 

The following section addresses the 

results from DOE’s analyses with 

respect to a potential energy 

conservation standard for hearth 

products. Additional details regarding 

the analyses conducted by DOE are 

contained in the publicly-available 

NOPR TSD supporting this notice. 

A. Trial Standard Levels 

DOE typically considers multiple 

TSLs for a standards rulemaking. 

However, the hearth products 

rulemaking is proposing a prescriptive 

standard that would disallow the use of 

continuously-burning pilots, thereby 

largely eliminating the standby mode 

energy consumption of these products. 

The analysis is considering an 

established alternative to a standing 

pilot, which is an intermittent pilot. 

Other options that are present in other 

combustion appliances, such as hot 

surface ignition, are virtually nonexistent in the hearth product market 

primarily due to the increased cost and 

additional engineering challenges. 

Therefore, hearth products have only 

one TSL, which reflects a standard that 

would disallow the use of a standing 

pilot. For the purposes of this analysis, 

TSL1 assumes that all covered hearth 

products would use an intermittent 

pilot (see Table V.1). 

TABLE V.1—TRIAL STANDARD LEVEL

FOR HEARTH PRODUCTS

Ignition type TSL 1 

Standing Pilot ....................... 0% 

Intermittent Pilot .................... 100% 

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Individual 

Consumers 

DOE analyzed the economic impacts 

of the proposed rule on hearth products 

consumers by looking at the effect on 

the LCC and the PBP. DOE also 

examined the impacts of potential 

standards on consumer subgroups. 

These analyses are discussed below. 

a. Life-Cycle Cost and Payback Period 

In general, higher-efficiency products 

affect consumers in two ways: (1) 

Purchase price typically increases, and 

(2) annual operating costs typically 

decrease. Inputs used for calculating the 

LCC and PBP include total installed 

costs (i.e., product price plus 

installation costs), and operating costs 

(i.e., annual energy savings, energy 

prices, energy price trends, repair costs, 

and maintenance costs). The LCC 

calculation also uses product lifetime 

and a discount rate. 

Table V.2 shows the LCC and PBP 

results for the considered TSL. The 

simple payback is measured relative to 

the baseline product, and reflects the 

number of years it would take for the 

consumer to recover the increased costs 

of higher-efficiency products as a result 

of operating cost savings. The PBP is an 

economic benefit-cost measure that uses 

benefits and costs without discounting. 

Table V.3 shows the LCC savings 

relative to the base case in the 

compliance year. Additionally, 23 

percent of consumers experience net 

cost because their standing pilot lights 

have relatively low hours of operation, 

and thus achieve modest energy savings 

from using an intermittent pilot 

ignition. 

TABLE V.2—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR HEARTH PRODUCTS

TSL Design 

Average costs 2013$ Simple 

payback 

years 

Average 

lifetime 

Installed cost years First year’s 

operating cost 

Lifetime 

operating cost LCC 

1 .................. Intermittent Pilot .............. $268 $15 $174 $442 2.9 15.0 

Note: The results are calculated assuming that all consumers use products with that design. The simple PBP is measured relative to the baseline product. 

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TABLE V.3—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR HEARTH PRODUCTS

TSL Design 

Life-cycle cost savings 

% of consumers 

that experience 

net cost 

Average 

savings *2013$ 

1 ................................................... Intermittent Pilot ................................................................................ 23% $165 

*The calculation includes households with zero LCC savings (no impact). 

b. Consumer Subgroup Analysis 

In the consumer subgroup analysis, 

DOE estimated the impacts of the 

considered standard on senior-only 

households. The average LCC savings 

and simple PBPs for senior-only 

households are shown in Table V.4. The 

LCC savings are somewhat lower for the 

senior-only subgroup. Chapter 11 of the 

NOPR TSD presents detailed results of 

the consumer subgroup analysis. 

TABLE V.4—COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS WITH ALL CONSUMERS, HEARTH PRODUCTS

TSL 

Average LCC savings 

2013$ 

Simple payback period 

years 

Senior-only All consumers Senior-only All consumers 

1 ............................................................................................... $121 $165 3.5 2.9 

c. Rebuttable Presumption Payback 

Period 

As discussed in section III.G.2, EPCA 

establishes a rebuttable presumption 

that an energy conservation standard is 

economically justified if the increased 

purchase cost for a product that meets 

the standard is less than three times the 

value of the first-year energy savings 

resulting from the standard. 

Accordingly, DOE calculated a 

rebuttable-presumption PBP for the 

proposed hearth products standard 

based on the average energy use and 

costs calculated in the LCC analysis. 

DOE routinely conducts an economic 

analysis that considers the full range of 

impacts to the consumer, manufacturer, 

Nation, and environment, as required by 

EPCA under 42 U.S.C. 6295(o)(2)(B)(i). 

The results of that analysis serve as the 

basis for DOE to definitively evaluate 

the economic justification for a potential 

standard level, thereby supporting or 

rebutting the results of any preliminary 

determination of economic justification. 

Table V.5 shows the rebuttablepresumption PBP for the considered 

TSL for hearth products. 

TABLE V.5—REBUTTABLE-PRESUMPTION PAYBACK PERIODS (YEARS) 

FOR HEARTH PRODUCTS

Product 

Rebuttable 

presumption 

payback 

(years) 

TSL 1 

Hearth Products .............. 2.3 

2. Economic Impacts on Manufacturers 

DOE performed a manufacturer 

impact analysis (MIA) to estimate the 

impact of an energy conservation 

standard on manufacturers of gas hearth 

products. The following section 

describes the expected impacts on 

manufacturers of a ban on standing pilot 

lights. Chapter 12 of the NOPR TSD 

explains the analysis in further detail. 

a. Industry Cash Flow Analysis Results 

Table V.6 and Table V.7 depict a 

range of estimated financial impacts 

(represented by changes in industry net 

present value, or INPV) of an energy 

conservation standard on manufacturers 

of gas hearth products, as well as the 

conversion costs that DOE expects 

manufacturers would incur to comply 

with the standard. 

As discussed in section IV.J.2, DOE 

modeled two different markup scenarios 

to evaluate the range of cash flow 

impacts on the gas hearth industry: (1) 

The preservation of gross margin 

percentage markup scenario; and (2) the 

preservation of per-unit operating profit 

markup scenario. Each of these 

scenarios is discussed immediately 

below. 

To assess the less severe end of the 

range of potential impacts, DOE 

modeled a preservation of gross margin 

percentage markup scenario, in which a 

uniform ‘‘gross margin percentage’’ 

markup is applied. In this scenario, DOE 

assumed that a manufacturer’s absolute 

dollar markup would increase as 

production costs increase in the 

standards case. 

To assess the more severe end of the 

range of potential impacts, DOE 

modeled the preservation of per-unit 

operating profit markup scenario, which 

reflects manufacturer concerns 

surrounding their inability to maintain 

margins as manufacturing production 

costs increase to comply with an energy 

conservation standard. In this scenario, 

as manufacturers incur higher costs of 

goods sold and make the investments 

necessary to produce new standardscompliant products, their percentage 

markup decreases. Operating profit does 

not change in absolute dollars but 

decreases as a percentage of revenue. 

As noted in the MIA methodology 

discussion (see section IV.J.2), in 

addition to markup scenarios, the MPC, 

shipments, and conversion cost 

assumptions also affect INPV results. 

Each of the modeled scenarios results 

in a unique set of cash flows and 

corresponding industry values under an 

energy conservation standard. In the 

following discussion, the INPV results 

refer to the difference in industry value 

between the base case and the standards 

case that results from the sum of 

discounted cash flows from the base 

year 2014 through 2050, the end of the 

analysis period. To provide perspective 

on the short-run cash flow impact, DOE 

includes in the discussion of results a 

comparison of free cash flow between 

the base case and the standards case in 

the year before the standard would take 

effect. This figure provides an 

understanding of the magnitude of the 

required conversion costs relative to the 

cash flow generated by the industry in 

the base case. 

Table V.6 presents estimated financial 

impacts under the preservation of gross 

margin percentage markup scenario, and 

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67U.S. Census Bureau, Annual Survey of 

Manufacturers: General Statistics: Statistics for 

Industry Groups and Industries (2011) (Available at 

http://www.census.gov/manufacturing/asm/

index.html). 

Table V.7 presents impacts under the 

preservation of per-unit operating profit 

markup scenario. Estimated conversion 

costs and free cash flow in the year prior 

to the compliance date of the standard 

do not vary with markup scenario. 

TABLE V.6—MANUFACTURER IMPACT ANALYSIS RESULTS UNDER THE PRESERVATION OF GROSS MARGIN PERCENTAGE

MARKUP SCENARIO

Units Base case Standards case * 

INPV ........................................................................................................................... 2013$M 125.3 125.8 

Change in INPV ......................................................................................................... 2013$M .............................. 0.5 

% .............................. 0.4 

Product Conversion Costs ......................................................................................... 2013$M .............................. 7.8 

Capital Conversion Costs .......................................................................................... 2013$M .............................. 0.9 

Total Conversion Costs ............................................................................................. 2013$M .............................. 8.7 

Free Cash Flow (base case = 2020) ......................................................................... 2013$M 10.9 8.2 

Change in Free Cash Flow ....................................................................................... 2013$M .............................. (2.6 ) 

% .............................. (24.0 ) 

* Parentheses indicate negative values 

TABLE V.7—MANUFACTURER IMPACT ANALYSIS RESULTS UNDER THE PRESERVATION OF PER-UNIT OPERATING PROFIT

MARKUP SCENARIO

Units Base case Standards case * 

INPV ........................................................................................................................... 2013$M 125.3 122.0 

Change in INPV ......................................................................................................... 2013$M .............................. (3.3 ) 

% .............................. (2.6 ) 

Product Conversion Costs ......................................................................................... 2013$M .............................. 7.8 

Capital Conversion Costs .......................................................................................... 2013$M .............................. 0.9 

Total Conversion Costs ............................................................................................. 2013$M .............................. 8.7 

Free Cash Flow (base case = 2020) ......................................................................... 2013$M 10.9 8.2 

Change in Free Cash Flow ....................................................................................... 2013$M .............................. (2.6 ) 

% .............................. (24.0 ) 

DOE estimates the impacts of an 

energy conservation standard on INPV 

to range from ¥$3.3 million to $0.5 

million, or a change of ¥2.6 percent to 

0.4 percent. Industry free cash flow is 

estimated to decrease by $2.6 million, or 

a change of ¥24.0 percent compared to 

the base-case value of $10.9 million in 

the year before the compliance date 

(2020). 

The capital and product conversion 

costs required to bring non-compliant 

models into compliance with standards 

drive the lower-bound negative INPV 

results at this level. To bring all noncompliant products into compliance, 

DOE estimates total industry conversion 

costs of $8.7 million. This estimate 

assumes that all non-compliant models 

(i.e., models with standing pilot lights) 

would be redesigned to accommodate 

electronic ignition systems. This 

represents a conservative assumption, as 

manufacturers may choose to 

discontinue some models with standing 

pilot lights. Models already available 

with the option of electronic ignition 

would not require any one-time 

conversion costs by the manufacturer in 

order to achieve compliance. 

During interviews, some 

manufacturers expressed concern that 

an energy conservation standard could 

pose a significant conversion cost 

burden with regard to labeling 

requirements. Under Canadian law, 

manufacturers must test and label gas 

fireplaces, stoves, and inserts with a 

fireplace efficiency (FE) rating. If a 

Federal energy conservation standard 

mandated an alternative efficiency 

metric for hearth products (e.g., AFUE), 

manufacturers indicated they could be 

required to hold separate SKUs for the 

Canadian and U.S. markets in order to 

comply with each jurisdiction’s 

requirements. However, because the 

proposed standard is a prescriptive 

design requirement and does not 

establish a minimum efficiency rating or 

require products to be labeled with a 

particular efficiency metric, DOE did 

not factor the cost of holding duplicate 

SKUs into its conversion cost model. 

Beyond conversion costs, the change 

in MPCs also impact manufacturer 

financials. The cost to manufacturers of 

producing equipment with electronic 

ignition systems tends to be greater than 

the cost of producing equipment with 

standing pilot lights. A higher per-unit 

manufacturer production cost could, in 

turn, result in a higher per-unit retail 

price to the end user. In interviews, 

manufacturers expressed concerned that 

higher prices could lead to a change in 

industry shipments. The increase in 

MPC and the change in pricing to the 

manufacturer’s first customer are 

reflected in the GRIM and in the INPV 

results. Shipments used in the GRIM are 

consistent with the Shipments Analysis, 

presented in section IV.G, which 

includes assumptions regarding price 

elasticity of demand. 

DOE requests feedback on the 

expected total conversion costs for the 

industry. This is identified as Issue 20 

in section VII.E, ‘‘Issues on Which DOE 

Seeks Comment.’’ 

b. Direct Impacts on Employment 

To quantitatively assess the potential 

impacts of energy conservation 

standards on direct employment in the 

gas hearth industry, DOE used the GRIM 

to estimate the domestic labor 

expenditures and number of employees 

in the base case and the standards case 

from 2014 through 2050. DOE used 

statistical data from the U.S. Census 

Bureau’s 2011 Annual Survey of 

Manufacturers,67 the results of the 

engineering analysis, and interviews 

with manufacturers to determine the 

inputs necessary to calculate industrywide labor expenditures and domestic 

direct employment levels. Labor 

expenditures related to manufacturing 

of the product are a function of the labor 

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intensity of the product, the sales 

volume, and an assumption that wages 

remain fixed in real terms over time. 

The total labor expenditures in each 

year are calculated by multiplying the 

MPCs by the labor percentage of MPCs. 

The total labor expenditures in the 

GRIM were then converted to domestic 

production employment levels by 

dividing production labor expenditures 

by the annual payment per production 

worker (production worker hours times 

the labor rate found in the U.S. Census 

Bureau’s 2011 Annual Survey of 

Manufacturers). The production worker 

estimates in this section only cover 

workers up to the line-supervisor level 

who are directly involved in fabricating 

and assembling a product within an 

original equipment manufacturer (OEM) 

facility. Workers performing services 

that are closely associated with 

production operations, such as materials 

handling tasks using forklifts, are also 

included as production labor. DOE’s 

estimates only account for production 

workers who manufacture the specific 

products covered by this rulemaking. 

The direct employment impacts 

calculated represent a range of potential 

changes in the number of production 

workers resulting from an energy 

conservation standard for hearth 

products, as compared to the base case. 

To estimate an upper bound to 

employment change, DOE assumes all 

domestic manufacturers would continue 

producing the same scope of covered 

products in the U.S. and would not 

move production to foreign countries. 

To estimate a lower bound to 

employment, DOE assumes 

manufacturers would not redesign any 

non-compliant models and that there 

would be a proportionate loss of 

production employment. 

Table V.8 shows the estimated range 

of impacts of a potential energy 

conservation standard on U.S. 

production workers of gas hearth 

products. In the base case, DOE 

estimates that the gas hearth industry 

would employ 1,565 domestic 

production workers in 2021, the first 

full year of compliance. DOE estimates 

that 86 percent of gas hearth products 

sold in the United States are 

manufactured domestically. 

TABLE V.8—POTENTIAL CHANGES IN THE TOTAL NUMBER OF PRODUCTION WORKERS IN THE GAS HEARTH INDUSTRY IN

2021 

Base case Standards case 

Domestic Production Workers in 2021 ........................................................................................................... 1,565 657 to 1,514. 

Potential Changes in Domestic Production Workers in 2021* ....................................................................... .............................. (908) to (51). 

* DOE presents a range of potential employment impacts. Parentheses indicate negative values. 

The less severe end of the range of 

potential employment impacts estimates 

a loss of 51 domestic production jobs in 

2021 in the standards case. This 

assumes manufacturers would continue 

to produce the same scope of covered 

products within the United States. 

However, because the shipment model 

predicts a decline in shipment volumes 

under an energy conservation standard, 

DOE estimates a related reduction in 

labor inputs and employment. 

The more severe end of the range 

represents the maximum decrease in 

total number of U.S. production workers 

that could be expected to result from an 

energy conservation standard. For the 

hearths industry, DOE assumed a worstcase scenario in which all products sold 

with standing pilot lights in the base 

case would be eliminated in the 

standards case and would not be 

replaced by any additional sales of 

compliant products. DOE then assumed 

industry labor requirements would 

shrink in proportion to lost sales 

volumes. The NIA shipments analysis 

forecasts that 58 percent of base-case 

shipments would consist of units with 

standing pilot lights in 2021. Based on 

the worst-case scenario assumptions 

above, DOE modeled a 58-percent 

decline in direct production 

employment. As a result, DOE estimates 

a loss of up to 908 domestic production 

jobs in 2021 resulting from a design 

standard that eliminates standing pilot 

lights. 

This conclusion is independent of any 

conclusions regarding indirect 

employment impacts in the broader 

United States economy, which are 

documented in chapter 15 of the NOPR 

TSD. 

DOE requests comment on the portion 

of the industry’s hearths production 

consisting of units equipped with 

standing pilot lights and on potential 

direct employment impacts resulting 

from a requirement for the elimination 

of standing pilot lights. This is 

identified as Issue 21 in section VII.E, 

‘‘Issues on Which DOE Seeks 

Comment.’’ 

c. Impacts on Manufacturing Capacity 

According to gas hearth 

manufacturers interviewed, a 

requirement eliminating standing pilot 

lights would not likely constrain 

manufacturing production capacity. 

Converting a gas hearth product’s 

ignition system from a standing pilot 

light to an electronic ignition system is 

primarily a matter of purchasing and 

assembling different ignition system 

components. While this may entail 

higher costs for purchased parts and 

changes in assembly, it is not likely to 

impede manufacturers’ capacity to 

continue producing gas hearth 

equipment in line with demand. 

Moreover, several manufacturers stated 

that the higher costs of producing 

equipment with electronic ignition 

systems could lead to a decline in 

demand, potentially leaving them with 

excess production capacity. 

Accordingly, DOE does not believe 

manufacturers will face capacity 

constraints as a result of today’s 

proposed standard. 

d. Impacts on Subgroups of 

Manufacturers 

As discussed above, using average 

cost assumptions to develop an industry 

cash flow estimate is not adequate for 

assessing differential impacts among 

subgroups of manufacturers. Small 

manufacturers, niche players, or 

manufacturers exhibiting a cost 

structure that differs largely from the 

industry average could be affected 

disproportionately. For the hearth 

products industry, DOE used the results 

of the industry characterization to group 

manufacturers exhibiting similar 

characteristics. Specifically, DOE 

identified and separately evaluated the 

impacts of an energy conservation 

standard on two subgroups of 

manufacturers: (1) Manufacturers of gas 

log sets and (2) small business 

manufacturers. 

During interviews, multiple 

manufacturers commented that gas log 

sets represent a distinct market segment 

within the gas hearth industry. These 

manufacturers indicated that gas log sets 

serve a different market niche and face 

different space constraints than other 

gas hearth products. Additionally, gas 

log sets often sell at lower prices than 

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other gas hearth products. As a result, 

an increase in manufacturing costs and, 

by extension, retail price resulting from 

an energy conservation standard could 

have a proportionally greater impact on 

gas log sets relative to other gas hearth 

products. 

Gas log sets are typically designed for 

use in existing wood-burning fireplaces. 

During interviews, manufacturers of gas 

log sets stated that unlike other gas 

hearth products, gas log sets compete 

with wood, coal, and wood/wax logs. 

These alternatives are typically 

inexpensive to purchase, such that 

consumers could feasibly substitute 

away from gas log sets and toward wood 

and/or wood/wax logs if an energy 

conservation standard leads to higher 

prices. According to these 

manufacturers, if design constraints 

specific to gas log sets cause an energy 

conservation standard to alter product 

aesthetics, it could further drive 

consumer product-switching. 

Because gas log sets are designed to fit 

within existing wood-burning 

fireplaces, manufacturers indicated that 

design options for gas log sets are 

constrained by the geometric 

configurations of pre-existing fireplaces. 

Manufacturers stated that electronic 

ignition systems take up more space 

than standing pilot lights and that 

accommodating electronic ignition 

systems inside existing fireplaces could, 

in turn, reduce the size of the gas log 

sets consumers could purchase for their 

fireplaces. Manufacturers also indicated 

that electronic ignition system 

components can be difficult to conceal 

within a gas log set’s design. Unlike 

other gas hearth products, gas log sets 

are not sold as part of a packaged unit, 

leaving manufacturers with limited 

options for obscuring the gas valve, pilot 

assembly, control module, wiring, and 

other components that make up an 

electronic ignition system. As a result, 

these components may be more exposed 

when used with gas log sets compared 

to other gas hearth products. 

Manufacturers also stated that electric 

outlets may not be situated in close 

enough proximity to wood-burning 

fireplaces to enable ready installation of 

units with electronic ignition systems. 

In such cases, the need for extension 

cords could impact the aesthetic appeal 

of products. Alternatively, hiring an 

electrician could raise installation costs 

and potentially deter price-sensitive 

consumers. 

Alongside aesthetic impacts, 

manufacturers expressed concern 

regarding the cost implications of a 

potential ban on standing pilot lights. 

As discussed previously, purchasing 

components for electronic ignition 

systems typically costs manufacturers 

more than purchasing components for 

standing pilot lights. Higher 

manufacturing costs, in turn, lead to 

higher retail prices. To estimate the 

potential difference in cost resulting 

from a requirement eliminating standing 

pilot lights, DOE modeled the 

manufacturer production costs (MPCs) 

for both vented and unvented gas log 

sets using both standing pilot lights and 

electronic ignition systems. DOE 

similarly modeled MPCs for other 

categories of gas hearth products. Table 

V.9 presents the relative increase in 

MPC for products manufactured with 

electronic ignition systems as opposed 

to standing pilot lights. See chapter 5 of 

the TSD for a more detailed discussion 

of how MPCs were calculated. 

TABLE V.9—RELATIVE COST IMPACTS OF CONVERTING GAS LOG SETS FROM STANDING PILOT LIGHTS TO ELECTRONIC

IGNITION SYSTEMS

Product group 

Estimated 

increase in MPC 

of switching 

from standing 

pilot to 

electronic ignition * 

% Increase in 

MPC of ignition 

system 

% Increase in 

overall MPC 

Vented Fireplace/Insert/Stove ................................................................................... $28 56 9 

Unvented Fireplace/Insert/Stove ............................................................................... 32 47 11 

Vented Gas Logs ....................................................................................................... 70 227 37

Unvented Gas Logs ................................................................................................... 56 194 27 

Outdoor ...................................................................................................................... 55 65 26 

* DOE understands that standing pilot ignitions largely use two styles of gas valves: (1) Manual and (2) millivolt. The incremental costs of 

switching from standing pilot lights to electronic ignition systems presented here assume gas fireplaces, inserts, and stoves use standing pilot 

lights with millivolt gas valves while gas log sets and outdoor hearth products use standing pilot lights with manual gas valves. The millivolt gas 

valve uses a thermopile placed in the pilot light to generate a voltage difference, thereby allowing a remote control to be used to turn the burner 

on and off. These valves are larger and more expensive than manual gas valves, which are operated by hand. Based on public comments on 

previous rulemakings and manufacturer interviews, DOE recognizes the importance of space constraints and cost burden associated with control 

systems for gas log sets. For the purposes of analysis, DOE chose to represent gas log sets with standing pilots using manual gas valves. Fireplaces, inserts, and stoves provide more opportunity to package and conceal larger, more complex ignition systems. Accordingly, DOE chose to 

represent the standing pilot variation of this product category with models using millivolt gas valves. 

As the results above indicate, DOE 

estimates that the cost of switching from 

a standing pilot light to an electronic 

ignition system could 

disproportionately impact gas log set 

manufacturers. These results are driven 

by two primary factors. First, the results 

are based on the assumption that gas log 

sets use standing pilot lights with 

manual gas valves, which are smaller 

and less expensive than standing pilot 

lights with millivolt gas valves. Under 

this assumption, the higher cost of 

purchasing electronic ignition system 

components would represent a more 

significant expenditure in absolute 

dollars for manufacturers of gas log sets 

using manual standing pilot lights 

relative to manufacturers of other hearth 

products (e.g. fireplaces, inserts, and 

stoves) using more expensive millivolt 

standing pilot lights. Second, the overall 

cost of manufacturing gas log sets is 

often lower than the overall cost of 

manufacturing other types of gas hearth 

products. This means the same increase 

in MPC in absolute dollars would result 

in a higher proportional increase in 

MPC for gas log sets. Assuming, as 

described above, that manufacturers of 

gas log sets are likely to see a greater 

increase in MPC in absolute dollars 

compared to manufacturers of other 

products, this would imply an even 

greater proportional increase in overall 

MPC of gas log sets. If retail prices scale 

with MPCs, manufacturers indicated 

that demand for gas log sets from pricesensitive consumers could decline and, 

in turn, negatively impact manufacturer 

profitability. 

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68U.S. Office of Management and Budget, 

‘‘Circular A–4: Regulatory Analysis’’ (Sept. 17, 

2003) (Available at: http://www.whitehouse.gov/

omb/circulars_a004_a–4/). 

69Section 325(m) of EPCA requires DOE to review 

its standards at least once every 6 years, and 

requires, for certain products, a 3-year period after 

any new standard is promulgated before 

compliance is required, except that in no case may 

any new standards be required within 6 years of the 

compliance date of the previous standards. While 

adding a 6-year review to the 3-year compliance 

period adds up to 9 years, DOE notes that it may 

undertake reviews at any time within the 6 year 

period and that the 3-year compliance date may 

yield to the 6-year backstop. A 9-year analysis 

period may not be appropriate given the variability 

that occurs in the timing of standards reviews and 

the fact that for some consumer products, the 

compliance period is 5 years rather than 3 years. 

For the small business subgroup 

analysis, DOE applied the small 

business size standards published by 

the Small Business Administration 

(SBA) to determine whether a company 

is considered a small business. 65 FR 

30836, 30848 (May 15, 2000), as 

amended at 65 FR 53533, 53544 (Sept. 

5, 2000) and codified at 13 CFR part 

121. To be categorized as a small 

business, a gas hearth product 

manufacturer and its affiliates may 

employ a maximum of 500 employees. 

This 500-employee threshold includes 

all employees in a business’s parent 

company and any other subsidiaries and 

applies to all hearth products, 

categorized respectively under North 

American Industry Classification 

System (NAICS) code 333414, ‘‘Heating 

Equipment (Except Warm Air Furnaces) 

Manufacturing’’ and NAICS code 

335228, ‘‘Other Major Household 

Appliance Manufacturing.’’ Based on 

this classification, DOE identified at 

least 66 manufacturers that qualify as 

domestic small businesses. 

Small business concerns surrounding 

the proposed standard centered on 

issues of purchasing power and 

economies of scale. During interviews, 

small manufacturers expressed concern 

regarding the impact of eliminating 

standing pilot lights on their ability to 

compete with larger manufacturers. 

Because large manufacturers often 

produce at higher volumes, they may be 

able to source components for electronic 

ignition systems at lower per-unit prices 

than small manufacturers that produce 

at lower volumes. If the per-unit 

production costs increase more for small 

manufacturers than for large 

manufacturers, and if small 

manufacturers are not able to pass costs 

through to price-sensitive consumers, 

they could potentially face reduced 

markups and profits, as well as a 

decline in market share. The impacts on 

small business manufacturers are 

discussed in greater detail in the 

regulatory flexibility analysis, in section 

VI.B of this notice and in chapter 12 of 

the NOPR TSD. 

e. Cumulative Regulatory Burden 

While any one regulation may not 

impose a significant burden on 

manufacturers, the combined effects of 

several recent impending regulations 

may have serious consequences for 

some manufacturers, groups of 

manufacturers, or an entire industry. 

Assessing the impact of a single 

regulation may overlook this cumulative 

regulatory burden. Multiple regulations 

affecting the same manufacturer can 

strain profits and can lead companies to 

abandon product lines or markets with 

lower expected future returns than 

competing products. For these reasons, 

DOE conducts an analysis of cumulative 

regulatory burden as part of its 

rulemakings pertaining to appliance 

efficiency. 

For the cumulative regulatory burden 

analysis, DOE looks at other productspecific Federal regulations that could 

affect gas hearth product manufacturers 

and that will take effect approximately 

three years before or after the 2021 

compliance date of the proposed energy 

conservation standard. In interviews, 

manufacturers cited a Consumer 

Product Safety Commission regulation 

requiring barrier screens on gas hearth 

products. However, this requirement is 

set to take effect in January 2015 and, 

therefore, is not considered in this 

analysis. DOE did not identify any other 

Federally-mandated product-specific 

regulations that will take effect in the 

three years before or after the 2021 

compliance date for this rulemaking 

and, therefore, has not presented any 

other regulations in this analysis of 

cumulative regulatory burden. 

DOE requests comment on productspecific regulations that take effect 

between 2018 and 2024 that would 

contribute to manufacturers’ cumulative 

regulatory burden. DOE requests 

information identifying the specific 

regulations, as well as data quantifying 

the associated cost burden on 

manufacturers. This is identified as 

Issue 22 in section VII.E, ‘‘Issues on 

Which DOE Seeks Comment.’’ 

3. National Impact Analysis 

The shipments projections are a key 

input to the NIA. The base case forecast 

shows shipments of the covered product 

growing from approximately 978,000 in 

2021 to 980,000 in 2050. 

a. Significance of Energy Savings 

DOE projected energy savings for 

hearth products purchased in the 30- 

year period that begins in the first full 

year of anticipated compliance with the 

proposed standard (2021–2050). The 

savings are measured over the entire 

lifetime of products purchased in the 

30-year period. DOE quantified the 

energy savings attributable to the 

considered TSL as the difference in 

energy consumption between the 

standards case and the base case. Table 

V.10 presents the estimated primary and 

FFC energy savings. The approach for 

estimating national energy savings is 

further described in section IV.H.1. 

TABLE V.10—CUMULATIVE NATIONAL PRIMARY AND FFC ENERGY SAVINGS FOR HEARTH PRODUCTS SOLD IN 2021–2050 

Product Energy savings 

Trial standard 

level 

(quads) 

Hearth Products ....................................................................... Primary .................................................................................... 0.62 

Full-Fuel-Cycle ........................................................................ 0.69 

OMB Circular A–4 68 requires 

agencies to present analytical results, 

including separate schedules of the 

monetized benefits and costs that show 

the type and timing of benefits and 

costs. Circular A–4 also directs agencies 

to consider the variability of key 

elements underlying the estimates of 

benefits and costs. For this rulemaking, 

DOE undertook a sensitivity analysis 

using 9, rather than 30, years of product 

shipments. The choice of a 9-year 

period is a proxy for the timeline in 

EPCA for the review of certain energy 

conservation standards and potential 

revision of and compliance with such 

revised standards.69 The review 

timeframe established in EPCA is 

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70OMB Circular A–4, section E (Sept. 17, 2003) 

(Available at: http://www.whitehouse.gov/omb/

circulars_a004_a–4). 

generally not synchronized with the 

product lifetime, product manufacturing 

cycles, or other factors specific to hearth 

products. Thus, such results are 

presented for informational purposes 

only and are not indicative of any 

change in DOE’s analytical 

methodology. The impacts are counted 

over the lifetime of hearth products 

purchased in 2021–2029. Table V.11 

shows the national FFC energy savings 

for this period. 

TABLE V.11—CUMULATIVE NATIONAL

FFC ENERGY SAVINGS FOR THE

TRIAL STANDARD LEVEL FOR

HEARTH PRODUCTS SOLD IN 2021– 

2029 

Product 

Trial standard 

level 

(quads) 

1 

Hearth Products .............. 0.21 

b. Net Present Value of Consumer Costs 

and Benefits 

DOE estimated the cumulative NPV of 

the total costs and savings for 

consumers that would result from the 

TSL considered for hearth products. In 

accordance with OMB’s guidelines on 

regulatory analysis,70 DOE calculated 

the NPV using both a 7-percent and a 3- 

percent real discount rate. Table V.12 

shows the consumer NPV results for the 

TSL considered for hearth products. In 

each case, the impacts cover the lifetime 

of products purchased in 2021–2050. 

TABLE V.12—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR THE TRIAL STANDARD LEVEL FOR HEARTH

PRODUCTS SOLD IN 2021–2050 

Product Discount rate (%) Trial standard 

level 

Product class Discount rate % 

Trial standard 

level 

(billion 2013$) 

Hearth Products ........................................................................................................................................... 3% 3.12 

7% 1.03 

The NPV results based on the 

aforementioned nine-year analytical 

period are presented in Table V.13. The 

impacts are counted over the lifetime of 

products purchased in 2021–2029. As 

mentioned previously, such results are 

presented for informational purposes 

only and are not indicative of any 

change in DOE’s analytical methodology 

or decision criteria. 

TABLE V.13—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR THE TRIAL STANDARD LEVEL FOR HEARTH

PRODUCTS SOLD IN 2021–2029 

Product Discount rate (%) Trial standard 

level 

Product class Discount rate % 

Trial standard 

level 

(billion 2013$) 

Hearth Products ........................................................................................................................................... 3% 1.04 

7% 0.46 

The results presented here reflect the 

use of a flat trend for the price of hearth 

products over the analysis period (see 

section IV.F.1). 

c. Indirect Impacts on Employment 

DOE expects that energy conservation 

standards for heath products would 

reduce energy costs for consumers, with 

the resulting net savings being 

redirected to other forms of economic 

activity. Those shifts in spending and 

economic activity could affect the 

demand for labor. As described in 

section IV.N, DOE used an input/output 

model of the U.S. economy to estimate 

indirect employment impacts of the TSL 

that DOE considered in this rulemaking. 

DOE understands that there are 

uncertainties involved in projecting 

employment impacts, especially 

changes in the later years of the 

analysis. Therefore, DOE generated 

results for near-term time frames (2021 

to 2026), where these uncertainties are 

reduced. 

The results suggest that the proposed 

standard would likely have a negligible 

impact on the net demand for labor in 

the economy. The net change in jobs is 

so small that it would be imperceptible 

in national labor statistics and might be 

offset by other, unanticipated effects on 

employment. Chapter 16 of the NOPR 

TSD presents detailed results regarding 

indirect employment impacts. 

4. Impact on Product Utility or 

Performance 

DOE has tentatively concluded that 

the standard it is proposing in this 

NOPR would not lessen the utility or 

performance of hearth products. 

5. Impact of Any Lessening of 

Competition 

DOE considered any lessening of 

competition that is likely to result from 

the proposed standard. The Attorney 

General determines the impact, if any, 

of any lessening of competition likely to 

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Federal Register / Vol. 80, No. 26 / Monday, February 9, 2015 / Proposed Rules 7119 

result from a proposed standard, and 

transmits such determination in writing 

to the Secretary, together with an 

analysis of the nature and extent of such 

impact. To assist the Attorney General 

in making such determination, DOE has 

provided DOJ with copies of this NOPR 

and the TSD for review. DOE will 

consider DOJ’s comments on the 

proposed rule in preparing the final 

rule, and DOE will publish and respond 

to DOJ’s comments in that document. 

6. Need of the Nation To Conserve 

Energy 

Enhanced energy efficiency, where 

economically justified, improves the 

Nation’s energy security, strengthens the 

economy, and reduces the 

environmental impacts (costs) of energy 

production and use. Energy savings 

from energy conservation standards for 

hearth products covered by this NOPR 

may also produce environmental 

benefits in the form of reduced 

emissions of air pollutants and 

greenhouse gases. Table V.14 provides 

DOE’s estimate of cumulative emissions 

reductions projected to result from the 

TSL considered. The table includes site, 

power sector, and upstream emissions. 

The emissions were calculated using the 

multipliers discussed in section IV.K. 

DOE reports annual emissions 

reductions in chapter 13 of the NOPR 

TSD. 

TABLE V.14—CUMULATIVE EMISSIONS REDUCTION ESTIMATED FOR HEARTH PRODUCTS TRIAL STANDARD LEVEL

Trial standard 

level 

Site and Power Sector Emissions* 

CO2 (million metric tons) ................................................................................................................................................................. 32 .3 

SO2 (thousand tons) ........................................................................................................................................................................ (4 .23) 

NOX (thousand tons) ....................................................................................................................................................................... 49 .2 

Hg (tons) .......................................................................................................................................................................................... (0 .014) 

CH4 (thousand tons) ........................................................................................................................................................................ 0 .28 

N2O (thousand tons) ........................................................................................................................................................................ 0 .01 

Upstream Emissions 

CO2 (million metric tons) ................................................................................................................................................................. 4 .78 

SO2 (thousand tons) ........................................................................................................................................................................ (0 .03) 

NOX (thousand tons) ....................................................................................................................................................................... 75 .8 

Hg (tons) .......................................................................................................................................................................................... (0 .000) 

CH4 (thousand tons) ........................................................................................................................................................................ 485 

N2O (thousand tons) ........................................................................................................................................................................ 0 .01 

Total FFC Emissions 

CO2 (million metric tons) ................................................................................................................................................................. 37 .0 

SO2 (thousand tons) ........................................................................................................................................................................ (4 .26) 

NOX (thousand tons) ....................................................................................................................................................................... 125 

Hg (tons) .......................................................................................................................................................................................... (0 .014) 

CH4 (thousand tons) ........................................................................................................................................................................ 486 

CH4 (thousand tons CO2eq)** ......................................................................................................................................................... 13,595 

N2O (thousand tons) ........................................................................................................................................................................ 0 .01 

N2O (thousand tons CO2eq)** ......................................................................................................................................................... 3 .35 

* Primarily site emissions. 

** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). 

Note: Parentheses indicate negative values. 

As part of the analysis for this 

proposed rule, DOE estimated monetary 

benefits likely to result from the 

reduced emissions of CO2 and NOX that 

DOE estimated for the TSL considered 

for hearth products. As discussed in 

section IV.L, for CO2, DOE used the 

most recent values for the SCC 

developed by an interagency process. 

The four sets of SCC values for CO2

emissions reductions in 2015 resulting 

from that process (expressed in 2013$) 

are represented by $12.0/metric ton (the 

average value from a distribution that 

uses a 5-percent discount rate), $40.5/

metric ton (the average value from a 

distribution that uses a 3-percent 

discount rate), $62.4/metric ton (the 

average value from a distribution that 

uses a 2.5-percent discount rate), and 

$119/metric ton (the 95th-percentile 

value from a distribution that uses a 3- 

percent discount rate). The values for 

later years are higher due to increasing 

damages (emissions-related costs) as the 

projected magnitude of climate change 

increases. 

Table V.15 presents the global value 

of CO2 emissions reductions at the 

considered TSL. DOE calculated a 

present value of the stream of annual 

values using the same discount rate as 

was used in the studies upon which the 

dollar-per-ton values are based. DOE 

calculated domestic values as a range 

from 7 percent to 23 percent of the 

global values, and these results are 

presented in chapter 14 of the NOPR 

TSD. 

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TABLE V.15—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER HEARTH PRODUCTS TSL 

TSL 

SCC Case* 

5% discount rate, 

average 

3% discount rate, 

average 

2.5% discount 

rate, average 

3% discount rate, 

95th percentile 

million 2013$ 

Site and Power Sector Emissions 

1 ....................................................................................................... 196 956 1,535 2,966 

Upstream Emissions 

1 ....................................................................................................... 29 142 228 440 

Total FFC Emissions 

1 ....................................................................................................... 226 1,098 1,763 3,405 

* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119 per metric ton (2013$). The 

values are for CO2 only (i.e., not CO2eq of other greenhouse gases). 

DOE is well aware that scientific and 

economic knowledge about the 

contribution of CO2 and other 

greenhouse gas (GHG) emissions to 

changes in the future global climate and 

the potential resulting damages to the 

world economy continues to evolve 

rapidly. Thus, any value placed on 

reducing CO2 emissions in this 

rulemaking is subject to change. DOE, 

together with other Federal agencies, 

will continue to review various 

methodologies for estimating the 

monetary value of reductions in CO2

and other GHG emissions. This ongoing 

review will consider the comments on 

this subject that are part of the public 

record for this and other rulemakings, as 

well as other methodological 

assumptions and issues. However, 

consistent with DOE’s legal obligations, 

and taking into account the uncertainty 

involved with this particular issue, DOE 

has included in this proposed rule the 

most recent values and analyses 

resulting from the interagency review 

process. 

DOE also estimated a range for the 

cumulative monetary value of the 

economic benefits associated with NOX

emissions reductions anticipated to 

result from the proposed standards for 

hearth products that are the subject of 

this NOPR. The dollar-per-ton values 

that DOE used are discussed in section 

IV.L. Table V.16 presents the 

cumulative present values for NOX

emissions reductions for the considered 

TSL calculated using the average dollarper-ton value—$2,684 (2013$)—and 7- 

percent and 3-percent discount rates. 

DOE seeks comment on the approach 

for estimating monetary benefits 

associated with emissions reductions. 

This is identified as issue 23 in section 

VII.E, ‘‘Issues on Which DOE Seeks 

Comment.’’ 

TABLE V.16—ESTIMATES OF PRESENT

VALUE OF NOX EMISSIONS REDUCTION UNDER THE HEARTH PRODUCTS TSL 

TSL 3% Discount 

rate 

7% Discount 

rate 

million 2013$ 

Site and Power Sector Emissions 

1 ................ 58.0 22.8 

Upstream Emissions 

1 ................ 89.5 35.2 

Total FFC Emissions* 

1 ................ 148 57.9 

* Components may not sum due to 

rounding. 

7. Other Factors 

The Secretary of Energy, in 

determining whether a standard is 

economically justified, may consider 

any other factors that the Secretary 

deems to be relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VI)) No other factors 

were considered in this analysis. 

8. Summary of National Ecnomic 

Impacts 

The NPV of the monetized benefits 

associated with emissions reductions 

can be viewed as a complement to the 

NPV of the consumer savings calculated 

for the new TSL considered in this 

rulemaking. Table V.17 presents the 

NPV values that result from adding the 

estimates of the potential economic 

benefits resulting from reduced CO2 and 

NOX emissions in each of four valuation 

scenarios to the NPV of consumer 

savings calculated for the TSL for hearth 

products considered in this rulemaking, 

at both a 7-percent and a 3-percent 

discount rate. The CO2 values used in 

the columns of each table correspond to 

the four sets of SCC values discussed 

above. 

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Federal Register / Vol. 80, No. 26 / Monday, February 9, 2015 / Proposed Rules 7121 

TABLE V.17—HEARTH PRODUCTS: NET PRESENT VALUE OF CONSUMER SAVINGS COMBINED WITH PRESENT VALUE OF

MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS

TSL 

Consumer NPV at 3% discount rate added with: 

SCC case 

$12.0/metric 

ton CO2* and 

medium value 

for NOX

SCC case 

$40.5/metric 

ton CO2* and 

medium value 

for NOX

SCC case 

$62.4/metric 

ton CO2* and 

medium value 

for NOX

SCC case 

$119/metric 

ton CO2* and 

medium value 

for NOX

Billion 2013$ 

1 ....................................................................................................................... 3.5 4.4 5.0 6.7 

Consumer NPV at 7% discount rate added with: 

TSL 

SCC case 

$12.0/metric 

ton CO2* 

SCC case 

$40.5/metric 

ton CO2* 

SCC case 

$62.4/metric 

ton CO2* 

SCC case 

$119/metric 

ton CO2* 

Billion 2013$ 

1 ....................................................................................................................... 1.3 2.2 2.9 4.5 

* These label values represent the global SCC in 2015, in 2013$. For NOX emissions, each case uses the medium value, which corresponds 

to $2,684 per ton. 

Although adding the value of 

consumer savings to the values of 

emission reductions provides a valuable 

perspective, two issues should be 

considered. First, the national operating 

cost savings are domestic U.S. consumer 

monetary savings that occur as a result 

of market transactions, while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and the SCC are 

performed with different methods that 

use different time frames for analysis. 

The national operating cost savings is 

measured for the lifetime of products 

shipped in 2021–2050. The SCC values, 

on the other hand, reflect the present 

value of future climate-related impacts 

resulting from the emission of one 

metric ton of CO2 in each year; these 

impacts continue well beyond 2100. 

C. Proposed Standard 

When considering proposed 

standards, the new or amended energy 

conservation standards that DOE adopts 

for any type (or class) of covered 

product, including hearth products, 

must be designed to achieve the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. (42 

U.S.C. 6295(o)(2)(A)) As discussed 

previously, in determining whether a 

standard is economically justified, the 

Secretary must determine whether the 

benefits of the standard exceed its 

burdens by, to the greatest extent 

practicable, considering the seven 

statutory factors discussed previously. 

(42 U.S.C. 6295(o)(2)(B)(i)) The new or 

amended standard must also ‘‘result in 

significant conservation of energy.’’ (42 

U.S.C. 6295(o)(3)(B)) 

The tables in this section summarize 

the quantitative analytical results for the 

considered TSL, based on the 

assumptions and methodology 

discussed herein. In addition to the 

quantitative results presented in the 

tables, DOE also considers other 

burdens and benefits that affect 

economic justification. These include 

the impacts on identifiable subgroups of 

consumers who may be 

disproportionately affected by a national 

standard (see section V.B.1.b), and 

impacts on employment. DOE discusses 

the impacts on direct employment in 

hearth products manufacturing in 

section V.B.2.b, and discusses the 

indirect employment impacts in chapter 

16 of the NOPR TSD. 

DOE also notes that the economics 

literature provides a wide-ranging 

discussion of how consumers trade off 

upfront costs and energy savings in the 

absence of government intervention. 

Much of this literature attempts to 

explain why consumers appear to 

undervalue energy efficiency 

improvements. There is evidence that 

consumers undervalue future energy 

savings as a result of: (1) A lack of 

information; (2) a lack of sufficient 

salience of the long-term or aggregate 

benefits; (3) a lack of sufficient savings 

to warrant delaying or altering 

purchases; (4) excessive focus on the 

short term, in the form of inconsistent 

weighting of future energy cost savings 

relative to available returns on other 

investments; (5) computational or other 

difficulties associated with the 

evaluation of relevant tradeoffs; and (6) 

a divergence in incentives (for example, 

renter versus owner or builder versus 

purchaser). Other literature indicates 

that with less than perfect foresight and 

a high degree of uncertainty about the 

future, consumers may trade off at a 

higher than expected rate between 

current consumption and uncertain 

future energy cost savings. This 

undervaluation suggests that regulation 

that promotes energy efficiency can 

produce significant net private gains (as 

well as producing social gains by, for 

example, reducing pollution). 

In DOE’s current regulatory analysis, 

potential changes in the benefits and 

costs of a regulation due to changes in 

consumer purchase decisions are 

included in two ways. First, if 

consumers forego a purchase of a 

product in the standards case, this 

decreases sales for product 

manufacturers and the cost to 

manufacturers is included in the MIA. 

Second, DOE accounts for energy 

savings attributable only to products 

actually used by consumers in the 

standards case; if a standard decreases 

the number of products purchased by 

consumers, this decreases the potential 

energy savings from an energy 

conservation standard. DOE provides 

estimates of changes in the volume of 

product purchases in chapter 9 of the 

NOPR TSD. DOE’s current analysis does 

not explicitly control for heterogeneity 

in consumer preferences, preferences 

across subcategories of products or 

specific features, or consumer price 

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71P.C. Reiss and M.W. White, Household 

Electricity Demand, Revisited, Review of Economic 

Studies (2005) 72, 853–883. 

72Alan Sanstad, Notes on the Economics of 

Household Energy Consumption and Technology 

Choice. Lawrence Berkeley National Laboratory 

(2010) (Available at: http://www1.eere.energy.gov/

buildings/appliance_standards/pdfs/consumer_ee_

theory.pdf (Last accessed May 3, 2013). 

73A metric ton is equivalent to 1.1 short tons. 

Results for emissions other than CO2 are presented 

in short tons. 

sensitivity variation according to 

household income.71

While DOE is not prepared at present 

to provide a fuller quantifiable 

framework for estimating the benefits 

and costs of changes in consumer 

purchase decisions due to an energy 

conservation standard, DOE is 

committed to developing a framework 

that can support empirical quantitative 

tools for improved assessment of the 

consumer welfare impacts of appliance 

standards. DOE has posted a paper that 

discusses the issue of consumer welfare 

impacts of appliance standards and 

potential enhancements to the 

methodology by which these impacts 

are defined and estimated in the 

regulatory process.72 DOE welcomes 

comments on how to more fully assess 

the potential impact of energy 

conservation standards on consumer 

choice and how to quantify this impact 

in its regulatory analysis. 

1. Benefits and Burdens of the Trial 

Standard Level Considered for Hearth 

Products 

Table V.18 and Table V.19 summarize 

the quantitative impacts estimated for 

the potential standard for hearth 

products. The national impacts are 

measured over the lifetime of hearth 

products purchased in the 30-year 

period that begins in the year of 

compliance with the considered 

standard (2021–2050). The energy 

savings, emissions reductions, and 

value of emissions reductions refer to 

FFC results. 

TABLE V.18—SUMMARY OF ANALYTICAL RESULTS FOR HEARTH PRODUCTS: NATIONAL IMPACTS

Category TSL 1 

National FFC Energy Savings (quads) 

0.69. 

NPV of Consumer Benefits (2013$ billion) 

3% discount rate ................ 3.1. 

7% discount rate ................ 1.0. 

Cumulative Emissions Reduction (Total 

FFC Emissions) 

CO2 (million metric tons) ... 37.0. 

SO2 (thousand tons) .......... (4.26). 

NOX (thousand tons) ......... 125. 

TABLE V.18—SUMMARY OF ANALYTICAL RESULTS FOR HEARTH PRODUCTS: NATIONAL IMPACTS—Continued 

Category TSL 1 

Hg (tons) ............................ (0.01). 

CH4 (thousand tons) .......... 486. 

CH4 (thousand tons 

CO2eq) *.

13,595. 

N2O (thousand tons) .......... 0.01. 

N2O (thousand tons 

CO2eq).

3.35. 

Value of Emissions Reduction (Total FFC 

Emissions) 

CO2 (2013$ billion)** ......... 0.226 to 3.405. 

NOX—3% discount rate 

(2013$ million).

148. 

NOX—7% discount rate 

(2013$ million).

57.9. 

* CO2eq is the quantity of CO2 that would 

have the same global warming potential 

(GWP). 

** Range of the economic value of CO2 reductions is based on estimates of the global 

benefit of reduced CO2 emissions. 

Note: Parentheses indicate negative values. 

TABLE V.19—SUMMARY OF ANALYTICAL RESULTS FOR HEARTH PRODUCTS: MANUFACTURER AND CONSUMER IMPACTS

Category TSL 1 

Manufacturer Impacts 

Industry NPV (2013$ million).122–125.8. 

Base Case = $125.3 

Change in Industry NPV 

(2013$ million).

(3.3) to 0.5. 

Change in Industry NPV 

(≠)†.

(2.6) to 0.4. 

Consumer Mean LCC Savings (2013$) 

Hearth Products ................. 165. 

Consumer Simple PBP (years) 

Hearth Products ................. 2.9. 

Consumer LCC Impacts 

Consumers with Net Cost 

(%).

23. 

Note: Parentheses indicate negative values. 

At TSL 1, DOE estimates there would 

be a savings of 0.69 quads of energy, an 

amount DOE considers significant. TSL 

1 has an estimated NPV of consumer 

benefit of $1.03 billion using a 7-percent 

discount rate, and $3.12 billion using a 

3-percent discount rate. 

The cumulative emissions reductions 

at TSL 1 are 37.0 million metric tons 

(Mt) 73 of carbon dioxide (CO2), 486 

thousand tons of methane (CH4), 125 

thousand tons of nitrogen oxides (NOX), 

and 0.01 thousand tons of nitrous oxide 

(N2O). Projected emissions show an 

increase of 4.26 thousand tons of sulfur 

dioxide (SO2) and 0.01 tons of mercury 

(Hg). The increase is due to increased 

electricity use associated with the shift 

to electronic ignition in the subject 

hearth products. The estimated 

monetary value of the CO2 emissions 

reductions at TSL 1 ranges from $0.226 

billion to $3.405 billion. 

At TSL 1, the average LCC savings are 

$165. The simple PBP is 2.9 years. The 

share of consumers experiencing a net 

LCC cost is 23 percent. 

At TSL 1, the projected change in 

INPV ranges from a decrease of $3.3 

million to an increase of $0.5 million. If 

the decrease of $.3.3 million were to 

occur, TSL 1 could result in a net loss 

of up to 2.6 percent of INPV for 

manufacturers of covered hearth 

products. 

The Secretary tentatively concludes 

that, at TSL 1 for hearth products, the 

benefits of energy savings, positive NPV 

of total consumer benefits at a 3-percent 

and 7-percent discount rate, average 

consumer LCC savings, emission 

reductions, and the estimated monetary 

value of the emissions reductions 

outweigh the reduction in industry 

value and the net LCC cost for a small 

number of consumers. Accordingly, the 

Secretary of Energy has tentatively 

concluded that TSL 1 would save a 

significant amount of energy and is 

economically justified. Based upon the 

above considerations, DOE proposes to 

adopt as an energy conservation 

standard the prescriptive design 

requirement that would disallow the use 

of continuously-burning pilots (i.e., 

‘‘standing pilots’’ or ‘‘constant-burning 

pilots’’) in hearth products. 

2. Summary of Benefits and Costs 

(Annualized) of the Proposed Standards 

The benefits and costs of today’s 

proposed standard can also be 

expressed in terms of annualized values. 

The annualized monetary values are the 

sum of: (1) the annualized national 

economic value (expressed in 2013$) of 

the benefits from operating products 

that meet the proposed standards 

(consisting primarily of operating cost 

savings from using less energy, minus 

increases in product purchase costs, 

which is another way of representing 

consumer NPV), and (2) the annualized 

monetary value of the benefits of 

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74To convert the time-series of costs and benefits 

into annualized values, DOE calculated a present 

value in 2014, the year used for discounting the 

NPV of total consumer costs and savings. For the 

benefits, DOE calculated a present value associated 

with each year’s shipments in the year in which the 

shipments occur (2020, 2030, etc.), and then 

discounted the present value from each year to 

2014. The calculation uses discount rates of 3 and 

7 percent for all costs and benefits except for the 

value of CO2 reductions, for which DOE used casespecific discount rates. Using the present value, 

DOE then calculated the fixed annual payment over 

a 30-year period, starting in the compliance year 

that yields the same present value. 

emission reductions, including CO2

emission reductions.74 The value of CO2

reductions, otherwise known as the 

Social Cost of Carbon (SCC), is 

calculated using a range of values per 

metric ton of CO2 developed by a recent 

interagency process. 

Although combining the values of 

operating savings and CO2 emission 

reductions provides a useful 

perspective, two issues should be 

considered. First, the national operating 

savings are domestic U.S. consumer 

monetary savings that occur as a result 

of market transactions, while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and CO2 savings 

are performed with different methods 

that use different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

hearth products shipped in 2021–2050. 

The SCC values, on the other hand, 

reflect the present value of some future 

climate-related impacts resulting from 

the emission of one metric ton of carbon 

dioxide in each year; these impacts 

continue well beyond 2100. 

Estimates of annualized benefits and 

costs of the proposed standards for 

hearth products are shown in Table 

V.20. The results under the primary 

estimate are as follows. Using a 7- 

percent discount rate for benefits and 

costs other than CO2 reduction (for 

which DOE used a 3-percent discount 

rate along with the average SCC series 

that uses a 3-percent discount rate 

($40.5/t in 2015)), the estimated cost of 

the hearth products standards proposed 

in this rule is $61.1 million per year in 

increased equipment costs, while the 

estimated benefits are $186 million per 

year in reduced equipment operating 

costs, $67 million per year in CO2

reductions, and $7.0 million per year in 

reduced NOX emissions. In this case, the 

net benefit would amount to $199 

million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the average SCC 

series that uses a 3-percent discount rate 

($40.5/t in 2015), the estimated cost of 

the hearth products standards proposed 

in this rule is $61.2 million per year in 

increased equipment costs, while the 

estimated benefits are $251 million per 

year in reduced equipment operating 

costs, $67 million per year in CO2

reductions, and $9.0 million per year in 

reduced NOX emissions. In this case, the 

net benefit would amount to $266 

million per year. 

TABLE V.20—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARD

(TSL 1) FOR HEARTH PRODUCTS * 

Discount rate Primary estimate Low net benefits 

estimate 

High net benefits 

estimate 

million 2013$/year 

Benefits 

Consumer Operating Cost Savings ................. 7% .............................

3% .............................

186 ............................

251 ............................

175 ............................

235 ............................

195. 

265. 

CO2 Reduction Monetized Value ($12.0/t 

case)**.

5% ............................. 20 .............................. 20 .............................. 20. 

CO2 Reduction Monetized Value ($40.5/t 

case)**.

3% ............................. 67 .............................. 67 .............................. 67. 

CO2 Reduction Monetized Value ($62.4/t 

case)**.

2.5% .......................... 98 .............................. 98 .............................. 98. 

CO2 Reduction Monetized Value ($119/t 

case)**.

3% ............................. 207 ............................ 207 ............................ 207. 

NOX Reduction Monetized Value (at $2,684/

ton)**.

7% .............................

3% .............................

7.00 ...........................

8.99 ...........................

7.00 ...........................

8.99 ...........................

7.00. 

8.99. 

Total Benefits † ................................................ 7% plus CO2 range ...

7% .............................

212 to 400 .................

260 ............................

202 to 389 .................

249 ............................

222 to 410. 

269. 

3% plus CO2 range ...

3% .............................

280 to 468 .................

327 ............................

264 to 452 .................

311 ............................

294 to 482. 

341. 

Costs 

Consumer Incremental Equipment Costs ........ 7% .............................

3% .............................

61.1 ...........................

61.2 ...........................

61.1 ...........................

61.2 ...........................

61.1 

61.2 

Net Benefits 

Total† ............................................................... 7% plus CO2 range ...

7% .............................

151 to 339 .................

199 ............................

141 to 328 .................

188 ............................

161 to 349 

208 

3% plus CO2 range ...

3% .............................

219 to 407 .................

266 ............................

203 to 390 .................

250 ............................

233 to 420 

280 

* This table presents the annualized costs and benefits associated with hearth products shipped in 2021¥2050. These results include benefits 

to consumers that accrue after 2050 from the products purchased in 2021¥2050. The results account for the incremental variable and fixed 

costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and 

High Benefits Estimates utilize projections of energy prices from the AEO 2014 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. Incremental product costs are the same in each Estimate. 

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** The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC 

from the three integrated assessment models, at discount rates of 2.5, 3, and 5 percent. The fourth set, which represents the 95th percentile 

SCC estimate across all three models at a 3-percent discount rate, is included to represent higher-than-expected impacts from temperature 

change further out in the tails of the SCC distribution. The values in parentheses represent the SCC in 2015. The SCC time series incorporate 

an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with a 3-percent discount rate ($40.5/t in 2015). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values. 

VI. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Orders 

12866 and 13563 

Section 1(b)(1) of Executive Order 

12866, ‘‘Regulatory Planning and 

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

requires each agency to identify the 

problem that it intends to address, 

including, where applicable, the failures 

of private markets or public institutions 

that warrant new agency action, as well 

as to assess the significance of that 

problem. The problems these proposed 

standards address are as follows: 

(1) A lack of consumer information 

and difficulties in analyzing relevant 

information leads some consumers to 

miss opportunities to make costeffective investments in energy 

efficiency. 

(2) In some cases, the benefits of 

more-efficient products are not realized 

due to misaligned incentives between 

purchasers and users. An example of 

such a case is when the product 

purchase decision is made by a building 

contractor or building owner who does 

not pay the energy costs. 

(3) There are external benefits 

resulting from improved energy 

efficiency of hearth products that are 

not captured by the users of such 

products. These benefits include 

externalities related to public health, 

environmental protection, and national 

security that are not reflected in energy 

prices, such as reduced emissions of air 

pollutants and greenhouse gases that 

impact human health and global 

warming. 

In addition, DOE has determined that 

this regulatory action is a ‘‘significant 

regulatory action’’ under section 3(f)(1) 

of Executive Order 12866. Accordingly, 

section 6(a)(3) of the Executive Order 

requires that DOE prepare a regulatory 

impact analysis (RIA) on this rule and 

that the Office of Information and 

Regulatory Affairs (OIRA) in the Office 

of Management and Budget (OMB) 

review this rule. DOE presented to OIRA 

for review the draft rule and other 

documents prepared for this 

rulemaking, including the RIA, and has 

included these documents in the 

rulemaking record. The assessments 

prepared pursuant to Executive Order 

12866 can be found in the technical 

support document for this rulemaking. 

DOE has also reviewed this regulation 

pursuant to Executive Order 13563. 76 

FR 3281 (Jan. 21, 2011). Executive Order 

13563 is supplemental to and explicitly 

reaffirms the principles, structures, and 

definitions governing regulatory review 

established in Executive Order 12866. 

To the extent permitted by law, agencies 

are required by Executive Order 13563 

to: (1) Propose or adopt a regulation 

only upon a reasoned determination 

that its benefits justify its costs 

(recognizing that some benefits and 

costs are difficult to quantify); (2) tailor 

regulations to impose the least burden 

on society, consistent with obtaining 

regulatory objectives, taking into 

account, among other things, and to the 

extent practicable, the costs of 

cumulative regulations; (3) select, in 

choosing among alternative regulatory 

approaches, those approaches that 

maximize net benefits (including 

potential economic, environmental, 

public health and safety, and other 

advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify 

performance objectives, rather than 

specifying the behavior or manner of 

compliance that regulated entities must 

adopt; and (5) identify and assess 

available alternatives to direct 

regulation, including providing 

economic incentives to encourage the 

desired behavior, such as user fees or 

marketable permits, or providing 

information upon which choices can be 

made by the public. 

DOE emphasizes as well that 

Executive Order 13563 requires agencies 

to use the best available techniques to 

quantify anticipated present and future 

benefits and costs as accurately as 

possible. In its guidance, the Office of 

Information and Regulatory Affairs has 

emphasized that such techniques may 

include identifying changing future 

compliance costs that might result from 

technological innovation or anticipated 

behavioral changes. For the reasons 

stated in the preamble, DOE believes 

that this NOPR is consistent with these 

principles, including the requirement 

that, to the extent permitted by law, 

benefits justify costs and that net 

benefits are maximized. 

B. Review Under the Regulatory 

Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of an initial regulatory flexibility 

analysis (IRFA) for any rule that by law 

must be proposed for public comment, 

unless the agency certifies that the rule, 

if promulgated, will not have a 

significant economic impact on a 

substantial number of small entities. As 

required by Executive Order 13272, 

‘‘Proper Consideration of Small Entities 

in Agency Rulemaking,’’ 67 FR 53461 

(August 16, 2002), DOE published 

procedures and policies on February 19, 

2003, to ensure that the potential 

impacts of its rules on small entities are 

properly considered during the 

rulemaking process. 68 FR 7990. DOE 

has made its procedures and policies 

available on the Office of the General 

Counsel’s Web site (http://energy.gov/

gc/office-general-counsel). DOE has 

prepared the following IRFA for the 

products that are the subject of this 

rulemaking. 

For manufacturers of gas hearth 

products, the Small Business 

Administration (SBA) has set a size 

threshold, which defines those entities 

classified as ‘‘small businesses’’ for the 

purposes of the statute. DOE used the 

SBA’s small business size standards to 

determine whether any small entities 

would be subject to the requirements of 

the rule. 65 FR 30836, 30848 (May 15, 

2000), as amended at 65 FR 53533, 

53544 (Sept. 5, 2000) and codified at 13 

CFR part 121. The size standards are 

listed by North American Industry 

Classification System (NAICS) code and 

industry description and are available at 

http://www.sba.gov/sites/default/files/

files/Size_Standards_Table.pdf. 

Manufacturing of heating hearth 

products is classified under NAICS code 

333414, ‘‘Heating Equipment (Except 

Warm Air Furnaces) Manufacturing,’’ 

and manufacturing of decorative hearth 

products is classified under NAICS code 

335228, ‘‘Other Major Household 

Appliance Manufacturing.’’ For both 

NAICS codes, the SBA sets a threshold 

of 500 employees or fewer for an entity 

to be considered a small business. This 

500-employee threshold includes all 

employees in a business’s parent 

company and any other subsidiaries. 

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1. Description and Estimated Number of 

Small Entities Regulated 

a. Methodology for Estimating the 

Number of Small Entities 

DOE reviewed the potential standard 

levels considered in today’s NOPR 

under the provisions of the Regulatory 

Flexibility Act and the procedures and 

policies published on February 19, 

2003. To better assess the potential 

impacts of this rulemaking on small 

entities, DOE conducted a more focused 

inquiry of the companies that could be 

small business manufacturers of 

products covered by this rulemaking. 

During its market survey, DOE used 

publicly-available information to 

identify potential small manufacturers. 

DOE’s research involved industry trade 

association membership directories 

(e.g., HPBA), information from previous 

rulemakings, individual company Web 

sites, and market research tools (e.g., 

Hoover’s reports) to create a list of 

companies that manufacture gas hearth 

products covered by this rulemaking. 

DOE also asked stakeholders and 

industry representatives if they were 

aware of any additional small 

manufacturers during manufacturer 

interviews. DOE reviewed publiclyavailable data and contacted various 

companies on its complete list of 

manufacturers to determine whether 

they met the SBA’s definition of a small 

business manufacturer of gas hearth 

products. DOE screened out companies 

that do not manufacture products 

impacted by this rulemaking, do not 

meet the definition of a ‘‘small 

business,’’ or are foreign owned and 

operated. 

DOE identified 90 potential 

manufacturers of gas hearth products 

sold in the U.S. that would be affected 

by today’s proposal. Of these, DOE 

identified 66 as domestic small business 

manufacturers. DOE contacted a subset 

of small businesses to invite them to 

take part in a manufacturer impact 

analysis interview. Of 25 small 

businesses contacted, DOE was able to 

reach and discuss potential standards 

with five of those entities. DOE also 

obtained information about small 

businesses and potential impacts on 

small businesses while interviewing 

large manufacturers. 

In interviews, small manufacturers 

expressed concern regarding the impact 

of disallowing standing pilot lights on 

their ability to compete with larger 

manufacturers. Manufacturers stated 

that gas hearth products with electronic 

ignition systems cost more to produce 

than gas hearth products with standing 

pilot lights, as the components 

purchased for electronic ignition 

systems tend to be more expensive. 

Since large manufacturers often produce 

at higher volumes, they may be able to 

source components at lower per-unit 

prices than small manufacturers that 

produce at lower volumes. Because 

small manufacturers may not benefit 

from the same economies of scale as 

large manufacturers, an energy 

conservation standard disallowing 

standing pilot lights could 

disproportionately impact their 

production costs and, in turn, the prices 

at which they sell their products. This 

anticipated change in manufacturer 

production costs (MPCs) drove small 

manufacturer concerns surrounding the 

impact of an energy conservation 

standard on their ability to remain 

competitive in the gas hearth market. 

2. Description and Estimate of 

Compliance Requirements 

To evaluate small manufacturers’ 

concerns regarding the competitive 

implications of disallowing standing 

pilot lights, DOE modeled the difference 

in cost small manufacturers might face 

when sourcing components at lower 

volumes. Due to limited available 

information on the relative sales 

volumes of small and large 

manufacturers, DOE selected volumes of 

1,000 units (used to represent small 

manufacturers) and 10,000 units (used 

to represent large manufacturers) for 

each product group analyzed. DOE 

developed its analysis based on the 

engineering teardown analysis and cost 

model, as well as manufacturer feedback 

on the costs of electronic ignition 

systems. 

The table below presents the 

estimated added per-unit cost of an 

electronic ignition system compared to 

a standing pilot system at the two 

representative production volumes 

modeled. As the results indicate, 

manufacturers would likely pay less per 

unit when producing 10,000 units 

versus 1,000 units. Estimated costs 

would be expected to decline further as 

production volumes climb higher. 

TABLE VI.1—ADDED COST OF ELECTRONIC IGNITION SYSTEMS AT REPRESENTATIVE PRODUCTION VOLUMES

Product group Baseline MPC Added cost at 

1,000 units 

Added cost at 

10,000 units 

Vented Fireplace/Insert/Stove ..................................................................................................... $322 $31 $26 

Unvented Fireplace/Insert/Stove ................................................................................................. 281 33 24 

Vented Log Sets .......................................................................................................................... 190 70 58 

Unvented Log Sets ...................................................................................................................... 208 69 51 

Outdoor Hearths .......................................................................................................................... 210 65 42 

DOE’s analysis suggests that 

disallowing standing pilot lights would 

increase the per-unit MPCs of gas hearth 

products by a greater amount for smallvolume producers than for large-volume 

producers. Higher MPCs, in turn, 

typically lead to higher end-user 

purchase prices. If products 

manufactured by small businesses 

cannot compete with products 

manufactured by large businesses at 

lower cost, small businesses could 

potentially experience a decline in 

profits and/or choose to exit the market. 

DOE recognizes that larger 

manufacturers may have a competitive 

advantage due to their size and ability 

to source purchased parts at lower cost. 

If the per-unit cost of products increases 

more for small manufacturers than for 

large manufacturers, and if small 

manufacturers are not able to pass costs 

through to price-sensitive consumers, 

they could potentially face reduced 

markups and profits, as well as a 

decline in market share. Because the 

proposed standard could cause 

competitive concerns for small 

manufacturers, DOE cannot certify that 

the proposed standard would not have 

a significant impact on a substantial 

number of small businesses. 

3. Duplication, Overlap, and Conflict 

With Other Rules and Regulations 

DOE is not aware of any rules or 

regulations that duplicate, overlap, or 

conflict with the rule being considered 

today. 

4. Significant Alternatives to the Rule 

DOE is required by EPCA to establish 

standards that achieve the maximum 

improvement in energy efficiency that is 

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technically feasible and economically 

justified and results in a significant 

conservation of energy. The discussion 

above analyzes impacts on small 

businesses that would result from the 

ban on standing pilot lights that DOE is 

proposing in today’s notice. In addition 

to the ban on standing pilot lights being 

considered, the NOPR TSD includes a 

regulatory impact analysis (RIA) in 

chapter 17. For gas hearth products, the 

RIA discusses the following policy 

alternatives: (1) No change in standard; 

(2) consumer rebates; (3) consumer tax 

credits; (4) manufacturer tax credits; (5) 

voluntary energy efficiency targets; and 

(6) government bulk purchases. While 

these alternatives may mitigate to some 

varying extent the economic impacts on 

small entities compared to the proposed 

standards, DOE does not intend to 

consider these alternatives further 

because in several cases, they would not 

be feasible to implement without 

authority and funding from Congress, 

and in all cases, DOE has determined 

that the site energy savings of these 

alternatives are significantly smaller 

than those that would be expected to 

result from adoption of the proposed 

standard (ranging from approximately 

0.0 percent to 15.9 percent of the site 

energy savings from the proposed 

standard). Accordingly, DOE is 

declining to adopt any of these 

alternatives and is proposing the 

standard set forth in this rulemaking. 

(See chapter 17 of the NOPR TSD for 

further detail on the policy alternatives 

DOE considered.) 

DOE continues to seek input from 

small businesses that would be affected 

by this rulemaking and will consider 

comments received in the development 

of any final rule. 

C. Review Under the Paperwork 

Reduction Act of 1995 

Manufacturers of hearth products 

must certify to DOE that their products 

comply with any applicable energy 

conservation standards. DOE has 

established regulations for the 

certification and recordkeeping 

requirements for all covered consumer 

products and commercial equipment (76 

FR 12422 (March 7, 2011)) and plans to 

establish such regulations for hearth 

products pending the outcome of the 

proposed determination of coverage and 

energy conservation standards 

rulemakings. The collection-ofinformation requirement for the 

certification and recordkeeping is 

subject to review and approval by OMB 

under the Paperwork Reduction Act 

(PRA). DOE will seek OMB approval 

under the PRA in the rulemaking that 

establishes the certification 

requirements for hearth products, which 

will be conducted subsequent to the 

current proceeding if the proposed 

determination is ultimately positive and 

energy conservation standards are 

ultimately adopted. 

Notwithstanding any other provision 

of the law, no person is required to 

respond to, nor shall any person be 

subject to a penalty for failure to comply 

with, a collection of information subject 

to the requirements of the PRA, unless 

that collection of information displays a 

currently valid OMB Control Number. 

D. Review Under the National 

Environmental Policy Act of 1969 

Pursuant to the National 

Environmental Policy Act (NEPA) of 

1969, DOE has determined that the 

proposed rule fits within the category of 

actions included in Categorical 

Exclusion (CX) B5.1 and otherwise 

meets the requirements for application 

of a CX. See 10 CFR part 1021, App. B, 

B5.1(b); 1021.410(b) and Appendix B, 

B(1)–(5). The proposed rule fits within 

the category of actions because it is a 

rulemaking that establishes energy 

conservation standards for consumer 

products or industrial equipment, and 

for which none of the exceptions 

identified in CX B5.1(b) apply. 

Therefore, DOE has made a CX 

determination for this rulemaking, and 

DOE does not need to prepare an 

Environmental Assessment or 

Environmental Impact Statement for 

this proposed rule. DOE’s CX 

determination for this proposed rule is 

available at http://cxnepa.energy.gov/. 

E. Review Under Executive Order 13132 

Executive Order 13132, ‘‘Federalism,’’ 

64 FR 43255 (Aug. 10, 1999), imposes 

certain requirements on Federal 

agencies formulating and implementing 

policies or regulations that preempt 

State law or that have Federalism 

implications. The Executive Order 

requires agencies to examine the 

constitutional and statutory authority 

supporting any action that would limit 

the policymaking discretion of the 

States and to carefully assess the 

necessity for such actions. The 

Executive Order also requires agencies 

to have an accountable process to 

ensure meaningful and timely input by 

State and local officials in the 

development of regulatory policies that 

have Federalism implications. On 

March 14, 2000, DOE published a 

statement of policy describing the 

intergovernmental consultation process 

it will follow in the development of 

such regulations. 65 FR 13735. DOE has 

examined this proposed rule and has 

tentatively determined that it would not 

have a substantial direct effect on the 

States, on the relationship between the 

national government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government. EPCA governs and 

prescribes Federal preemption of State 

regulations as to energy conservation for 

the products that are the subject of this 

proposed rule. States can petition DOE 

for exemption from such preemption to 

the extent, and based on criteria, set 

forth in EPCA. (42 U.S.C. 6297) 

Therefore, no further action is required 

by Executive Order 13132. 

F. Review Under Executive Order 12988 

With respect to the review of existing 

regulations and the promulgation of 

new regulations, section 3(a) of 

Executive Order 12988, ‘‘Civil Justice 

Reform,’’ imposes on Federal agencies 

the general duty to adhere to the 

following requirements: (1) Eliminate 

drafting errors and ambiguity; (2) write 

regulations to minimize litigation; (3) 

provide a clear legal standard for 

affected conduct rather than a general 

standard; and (4) promote simplification 

and burden reduction. 61 FR 4729 (Feb. 

7, 1996). Regarding the review required 

by section 3(a), section 3(b) of Executive 

Order 12988 specifically requires that 

Executive agencies make every 

reasonable effort to ensure that the 

regulation: (1) Clearly specifies the 

preemptive effect, if any; (2) clearly 

specifies any effect on existing Federal 

law or regulation; (3) provides a clear 

legal standard for affected conduct 

while promoting simplification and 

burden reduction; (4) specifies the 

retroactive effect, if any; (5) adequately 

defines key terms; and (6) addresses 

other important issues affecting clarity 

and general draftsmanship under any 

guidelines issued by the Attorney 

General. Section 3(c) of Executive Order 

12988 requires Executive agencies to 

review regulations in light of applicable 

standards in section 3(a) and section 

3(b) to determine whether they are met 

or it is unreasonable to meet one or 

more of them. DOE has completed the 

required review and determined that, to 

the extent permitted by law, this 

proposed rule meets the relevant 

standards of Executive Order 12988. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA) requires 

each Federal agency to assess the effects 

of Federal regulatory actions on State, 

local, and Tribal governments and the 

private sector. Public Law 104–4, sec. 

201 (codified at 2 U.S.C. 1531). For a 

proposed regulatory action likely to 

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result in a rule that may cause the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector of $100 million or more 

in any one year (adjusted annually for 

inflation), section 202 of UMRA requires 

a Federal agency to publish a written 

statement that estimates the resulting 

costs, benefits, and other effects on the 

national economy. (2 U.S.C. 1532(a), (b)) 

The UMRA also requires a Federal 

agency to develop an effective process 

to permit timely input by elected 

officers of State, local, and Tribal 

governments on a proposed ‘‘significant 

intergovernmental mandate,’’ and 

requires an agency plan for giving notice 

and opportunity for timely input to 

potentially affected small governments 

before establishing any requirements 

that might significantly or uniquely 

affect them. On March 18, 1997, DOE 

published a statement of policy on its 

process for intergovernmental 

consultation under UMRA. 62 FR 

12820. DOE’s policy statement is also 

available at http://energy.gov/gc/officegeneral-counsel. 

Although this proposed rule, which 

proposes energy conservation standards 

for hearth products, does not contain a 

Federal intergovernmental mandate, it 

may require expenditures of $100 

million or more on the private sector. 

Specifically, the proposed rule would 

likely result in a final rule that could 

require expenditures of $100 million or 

more, including: (1) Investment in 

research and development and in 

capital expenditures by residential 

hearth product manufacturers in the 

years between the final rule and the 

compliance date for the new standards, 

and (2) incremental additional 

expenditures by consumers to purchase 

higher-efficiency hearth products, 

starting at the compliance date for the 

applicable standard. 

Section 202 of UMRA authorizes a 

Federal agency to respond to the content 

requirements of UMRA in any other 

statement or analysis that accompanies 

the proposed rule. (2 U.S.C. 1532(c)) 

The content requirements of section 

202(b) of UMRA relevant to a private 

sector mandate substantially overlap the 

economic analysis requirements that 

apply under section 325(o) of EPCA and 

Executive Order 12866. The 

SUPPLEMENTARY INFORMATION section of 

the NOPR and the ‘‘Regulatory Impact 

Analysis’’ section of the TSD for this 

proposed rule respond to those 

requirements. 

Under section 205 of UMRA, the 

Department is obligated to identify and 

consider a reasonable number of 

regulatory alternatives before 

promulgating a rule for which a written 

statement under section 202 is required. 

(2 U.S.C. 1535(a)) DOE is required to 

select from those alternatives the most 

cost-effective and least burdensome 

alternative that achieves the objectives 

of the proposed rule unless DOE 

publishes an explanation for doing 

otherwise, or the selection of such an 

alternative is inconsistent with law. 

Pursuant to 42 U.S.C. 6292(a)(20) and 

(b)(1) and 42 U.S.C. 6295(l)(1)–(2) and 

(o), this proposed rule would establish 

amended energy conservation standards 

for hearth products that are designed to 

achieve the maximum improvement in 

energy efficiency that DOE has 

determined to be both technologically 

feasible and economically justified. A 

full discussion of the alternatives 

considered by DOE is presented in the 

‘‘Regulatory Impact Analysis’’ section of 

the TSD for this proposed rule. 

H. Review Under the Treasury and 

General Government Appropriations 

Act, 1999 

Section 654 of the Treasury and 

General Government Appropriations 

Act, 1999 (Pub. L. 105–277) requires 

Federal agencies to issue a Family 

Policymaking Assessment for any rule 

that may affect family well-being. This 

rule would not have any impact on the 

autonomy or integrity of the family as 

an institution. Accordingly, DOE has 

concluded that it is not necessary to 

prepare a Family Policymaking 

Assessment. 

I. Review Under Executive Order 12630 

Pursuant to Executive Order 12630, 

‘‘Governmental Actions and Interference 

with Constitutionally Protected Property 

Rights,’’ 53 FR 8859 (March 15, 1988), 

DOE has determined that this proposed 

rule would not result in any takings that 

might require compensation under the 

Fifth Amendment to the U.S. 

Constitution. 

J. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

Section 515 of the Treasury and 

General Government Appropriations 

Act, 2001 (44 U.S.C. 3516 note) provides 

for Federal agencies to review most 

disseminations of information to the 

public under information quality 

guidelines established by each agency 

pursuant to general guidelines issued by 

OMB. OMB’s guidelines were published 

at 67 FR 8452 (Feb. 22, 2002), and 

DOE’s guidelines were published at 67 

FR 62446 (Oct. 7, 2002). DOE has 

reviewed this NOPR under the OMB 

and DOE guidelines and has concluded 

that it is consistent with applicable 

policies in those guidelines. 

K. Review Under Executive Order 13211 

Executive Order 13211, ‘‘Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use,’’ 66 FR 28355 (May 

22, 2001), requires Federal agencies to 

prepare and submit to OIRA at OMB, a 

Statement of Energy Effects for any 

proposed significant energy action. A 

‘‘significant energy action’’ is defined as 

any action by an agency that 

promulgates or is expected to lead to 

promulgation of a final rule, and that: 

(1) Is a significant regulatory action 

under Executive Order 12866, or any 

successor order; and (2) is likely to have 

a significant adverse effect on the 

supply, distribution, or use of energy, or 

(3) is designated by the Administrator of 

OIRA as a significant energy action. For 

any proposed significant energy action, 

the agency must give a detailed 

statement of any adverse effects on 

energy supply, distribution, or use 

should the proposal be implemented, 

and of reasonable alternatives to the 

action and their expected benefits on 

energy supply, distribution, and use. 

DOE has tentatively concluded that 

this regulatory action, which would 

adopt energy conservation standards for 

hearth products, is not a significant 

energy action because the proposed 

standards are not likely to have a 

significant adverse effect on the supply, 

distribution, or use of energy, nor has it 

been designated as such by the 

Administrator at OIRA. Accordingly, 

DOE has not prepared a Statement of 

Energy Effects on this proposed rule. 

L. Review Under the Information 

Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in 

consultation with the Office of Science 

and Technology Policy (OSTP), issued 

its Final Information Quality Bulletin 

for Peer Review (the Bulletin). 70 FR 

2664 (Jan. 14, 2005). The Bulletin 

establishes that certain scientific 

information shall be peer reviewed by 

qualified specialists before it is 

disseminated by the Federal 

Government, including influential 

scientific information related to agency 

regulatory actions. The purpose of the 

bulletin is to enhance the quality and 

credibility of the Government’s 

scientific information. Under the 

Bulletin, the energy conservation 

standards rulemaking analyses are 

‘‘influential scientific information,’’ 

which the Bulletin defines as ‘‘scientific 

information the agency reasonably can 

determine will have or does have a clear 

and substantial impact on important 

public policies or private sector 

decisions.’’ Id. at 2667. 

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In response to OMB’s Bulletin, DOE 

conducted formal in-progress peer 

reviews of the energy conservation 

standards development process and 

analyses and has prepared a Peer 

Review Report pertaining to the energy 

conservation standards rulemaking 

analyses. Generation of this report 

involved a rigorous, formal, and 

documented evaluation using objective 

criteria and qualified and independent 

reviewers to make a judgment as to the 

technical/scientific/business merit, the 

actual or anticipated results, and the 

productivity and management 

effectiveness of programs and/or 

projects. The ‘‘Energy Conservation 

Standards Rulemaking Peer Review 

Report,’’ dated February 2007, has been 

disseminated and is available at the 

following Web site: 

www1.eere.energy.gov/buildings/

appliance_standards/peer_review.html. 

VII. Public Participation 

A. Attendance at the Public Meeting 

The time, date, and location of the 

public meeting are listed in the DATES

and ADDRESSES sections at the beginning 

of this notice. If you plan to attend the 

public meeting, please notify Ms. 

Brenda Edwards at (202) 586–2945 or 

Brenda.Edwards@ee.doe.gov. As 

explained in the ADDRESSES section, 

foreign nationals visiting DOE 

Headquarters are subject to advance 

security screening procedures. Any 

foreign national wishing to participate 

in the meeting should advise DOE of 

this fact as soon as possible by 

contacting Ms. Brenda Edwards to 

initiate the necessary procedures. 

In addition, you can attend the public 

meeting via webinar. Webinar 

registration information, participant 

instructions, and information about the 

capabilities available to webinar 

participants will be published on DOE’s 

Web site at: http://

www1.eere.energy.gov/buildings/

appliance_standards/

rulemaking.aspx?ruleid=84. Participants 

are responsible for ensuring their 

systems are compatible with the 

webinar software. 

B. Procedure for Submitting Requests To 

Speak and Prepared General Statements 

for Distribution 

Any person who has an interest in the 

topics addressed in this notice, or who 

is representative of a group or class of 

persons that has an interest in these 

issues, may request an opportunity to 

make an oral presentation at the public 

meeting. Such persons may handdeliver requests to speak to the address 

shown in the ADDRESSES section at the 

beginning of this notice between 9:00 

a.m. and 4:00 p.m., Monday through 

Friday, except Federal holidays. 

Requests may also be sent by mail or 

email to: Ms. Brenda Edwards, U.S. 

Department of Energy, Building 

Technologies Office, Mailstop EE–5B, 

1000 Independence Avenue SW., 

Washington, DC 20585–0121, or 

Brenda.Edwards@ee.doe.gov. Persons 

who wish to speak should include with 

their request a computer diskette or CD– 

ROM in WordPerfect, Microsoft Word, 

PDF, or text (ASCII) file format that 

briefly describes the nature of their 

interest in this rulemaking and the 

topics they wish to discuss. Such 

persons should also provide a daytime 

telephone number where they can be 

reached. 

DOE requests persons scheduled to 

make an oral presentation to submit an 

advance copy of their statements at least 

one week before the public meeting. 

DOE may permit persons who cannot 

supply an advance copy of their 

statement to participate, if those persons 

have made advance alternative 

arrangements with the Building 

Technologies Program. As necessary, 

requests to give an oral presentation 

should ask for such alternative 

arrangements. 

C. Conduct of the Public Meeting 

DOE will designate a DOE official to 

preside at the public meeting and may 

also use a professional facilitator to aid 

discussion. The meeting will not be a 

judicial or evidentiary-type public 

hearing, but DOE will conduct it in 

accordance with section 336 of EPCA 

(42 U.S.C. 6306). A court reporter will 

be present to record the proceedings and 

prepare a transcript. DOE reserves the 

right to schedule the order of 

presentations and to establish the 

procedures governing the conduct of the 

public meeting. There shall not be 

discussion of proprietary information, 

costs or prices, market share, or other 

commercial matters regulated by U.S. 

anti-trust laws. After the public meeting, 

interested parties may submit further 

comments on the proceedings, as well 

as on any aspect of the rulemaking, until 

the end of the comment period. 

The public meeting will be conducted 

in an informal, conference style. DOE 

will present summaries of comments 

received before the public meeting, 

allow time for prepared general 

statements by participants, and 

encourage all interested parties to share 

their views on issues affecting this 

rulemaking. Each participant will be 

allowed to make a general statement 

(within time limits determined by DOE), 

before the discussion of specific topics. 

DOE will allow, as time permits, other 

participants to comment briefly on any 

general statements. 

At the end of all prepared statements 

on a topic, DOE will permit participants 

to clarify their statements briefly and 

comment on statements made by others. 

Participants should be prepared to 

answer questions by DOE and by other 

participants concerning these issues. 

DOE representatives may also ask 

questions of participants concerning 

other matters relevant to this 

rulemaking. The official conducting the 

public meeting will accept additional 

comments or questions from those 

attending, as time permits. The 

presiding official will announce any 

further procedural rules or modification 

of the above procedures that may be 

needed for the proper conduct of the 

public meeting. 

A transcript of the public meeting will 

be included in the docket, which can be 

viewed as described in the Docket 

section at the beginning of this notice 

and will be accessible on the DOE Web 

site. In addition, any person may buy a 

copy of the transcript from the 

transcribing reporter. 

D. Submission of Comments 

DOE will accept comments, data, and 

information regarding this proposed 

rule before or after the public meeting, 

but no later than the date provided in 

the DATES section at the beginning of 

this proposed rule. Interested parties 

may submit comments, data, and other 

information using any of the methods 

described in the ADDRESSES section at 

the beginning of this notice. 

Submitting comments via 

www.regulations.gov. The 

www.regulations.gov Web page will 

require you to provide your name and 

contact information. Your contact 

information will be viewable to DOE 

Building Technologies staff only. Your 

contact information will not be publicly 

viewable except for your first and last 

names, organization name (if any), and 

submitter representative name (if any). 

If your comment is not processed 

properly because of technical 

difficulties, DOE will use this 

information to contact you. If DOE 

cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, DOE may not be 

able to consider your comment. 

However, your contact information 

will be publicly viewable if you include 

it in the comment itself or in any 

documents attached to your comment. 

Any information that you do not want 

to be publicly viewable should not be 

included in your comment, nor in any 

document attached to your comment. 

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Federal Register / Vol. 80, No. 26 / Monday, February 9, 2015 / Proposed Rules 7129 

Otherwise, persons viewing comments 

will see only first and last names, 

organization names, correspondence 

containing comments, and any 

documents submitted with the 

comments. 

Do not submit to www.regulations.gov 

information for which disclosure is 

restricted by statute, such as trade 

secrets and commercial or financial 

information (hereinafter referred to as 

Confidential Business Information 

(CBI)). Comments submitted through 

www.regulations.gov cannot be claimed 

as CBI. Comments received through the 

Web site will waive any CBI claims for 

the information submitted. For 

information on submitting CBI, see the 

Confidential Business Information 

section below. 

DOE processes submissions made 

through www.regulations.gov before 

posting. Normally, comments will be 

posted within a few days of being 

submitted. However, if large volumes of 

comments are being processed 

simultaneously, your comment may not 

be viewable for up to several weeks. 

Please keep the comment tracking 

number that www.regulations.gov 

provides after you have successfully 

uploaded your comment. 

Submitting comments via email, hand 

delivery/courier, or mail. Comments and 

documents submitted via email, hand 

delivery, or mail also will be posted to 

www.regulations.gov. If you do not want 

your personal contact information to be 

publicly viewable, do not include it in 

your comment or any accompanying 

documents. Instead, provide your 

contact information in a cover letter. 

Include your first and last names, email 

address, telephone number, and 

optional mailing address. The cover 

letter will not be publicly viewable as 

long as it does not include any 

comments 

Include contact information each time 

you submit comments, data, documents, 

and other information to DOE. If you 

submit via mail or hand delivery/

courier, please provide all items on a 

CD, if feasible, in which case, it is not 

necessary to submit printed copies. No 

telefacsimiles (faxes) will be accepted. 

Comments, data, and other 

information submitted to DOE 

electronically should be provided in 

PDF (preferred), Microsoft Word or 

Excel, WordPerfect, or text (ASCII) file 

format. Provide documents that are not 

secured, that are written in English, and 

that are free of any defects or viruses. 

Documents should not contain special 

characters or any form of encryption 

and, if possible, they should carry the 

electronic signature of the author. 

Campaign form letters. Please submit 

campaign form letters by the originating 

organization in batches of between 50 to 

500 form letters per PDF or as one form 

letter with a list of supporters’ names 

compiled into one or more PDFs. This 

reduces comment processing and 

posting time. 

Confidential Business Information. 

Pursuant to 10 CFR 1004.11, any person 

submitting information that he or she 

believes to be confidential and exempt 

by law from public disclosure should 

submit via email, postal mail, or hand 

delivery/courier two well-marked 

copies: one copy of the document 

marked ‘‘confidential’’ including all the 

information believed to be confidential, 

and one copy of the document marked 

‘‘non-confidential’’ with the information 

believed to be confidential deleted. 

Submit these documents via email or on 

a CD, if feasible. DOE will make its own 

determination about the confidential 

status of the information and treat it 

according to its determination. 

Factors of interest to DOE when 

evaluating requests to treat submitted 

information as confidential include: (1) 

A description of the items; (2) whether 

and why such items are customarily 

treated as confidential within the 

industry; (3) whether the information is 

generally known by or available from 

other sources; (4) whether the 

information has previously been made 

available to others without obligation 

concerning its confidentiality; (5) an 

explanation of the competitive injury to 

the submitting person which would 

result from public disclosure; (6) when 

such information might lose its 

confidential character due to the 

passage of time; and (7) why disclosure 

of the information would be contrary to 

the public interest. 

It is DOE’s policy that all comments 

may be included in the public docket, 

without change and as received, 

including any personal information 

provided in the comments (except 

information deemed to be exempt from 

public disclosure). 

E. Issues on Which DOE Seeks Comment 

Although DOE welcomes comments 

on any aspect of this proposal, DOE is 

particularly interested in receiving 

comments and views of interested 

parties concerning the following issues: 

1. DOE seeks comment on the proposed 

definition for hearth products found in the 

December 2013 NOPD (78 FR 79638) and the 

range of products covered by the proposed 

rule if this definition were applied in the 

final rulemaking. DOE requests comment on 

which products would fall into each of the 

product groups as currently defined (1. 

vented fireplaces/stoves/inserts, 2. unvented 

fireplaces/stoves, inserts, 3. vented gas log 

sets, 4. unvented gas log sets, and 5. outdoor) 

and whether additional clarifying criteria 

should be added to the definition to cover 

intended products. DOE requests comment 

on which hearth products that are ‘‘gas 

appliances that simulate a solid-fueled 

fireplace or presents a flame pattern’’ may by 

the proposed definition be grouped into the 

hearth product category, but may warrant a 

different design standard due to such factors 

as utility of the feature to users. (See section 

III.A.) 

2. DOE seeks input on the assumption that 

should standing pilot ignitions be 

disallowed, electronic intermittent ignitions 

would provide the same level of safety as a 

standing pilot and whether a standing pilot 

provides a means for ensuring that gas is lit 

prior to opening the gas valve and ensuring 

that oxygen levels in a the room remain at 

a safe levels prior to the main burner 

ignition. DOE request comment on whether 

there are any ANSI safety standard 

certification, building code, or other industry 

safety standard that may preclude a 

manufacturer from selling a particular hearth 

product with an electronic intermittent 

ignition. (See section III.B.) 

3. DOE seeks comment on its tentative 

conclusions regarding hearth product 

definitions and categorizations as they 

pertain to active mode energy use. (See 

section III.C and chapter 3 of the TSD.) 

4. DOE seeks comment on its screening 

analysis including any potential impacts on 

product utility or availability. (See section 

III.G.1.d and chapter 4 of the TSD.) 

5. DOE seeks comment on its assumptions 

regarding the electrical energy consumption 

of the ignition module for hearth products. 

(See section III.I and chapter 7 of the TSD). 

6. DOE seeks comment on its list of 

identified technologies for reducing the fuel 

consumption of hearth products. (See section 

IV.A.3 and chapter 3 of the TSD.) 

7. DOE seeks comment on its general 

engineering analysis approach for hearth 

products. (See section IV.C and chapter 5 of 

the TSD.) 

8. DOE seeks comment on the availability 

and applicability of intermittent pilot 

ignition components for hearth products. 

(See section IV.C.1 and chapter 5 of the TSD.) 

9. DOE requests comment on its 

assumption that ignition component costs for 

vented fireplaces, inserts, and stoves are 

equivalent. (See section IV.C.1 and chapter 5 

of the TSD.) 

10. DOE requests comment on the derived 

manufacturer production costs and markups. 

(See sections IV.C.3.e and IV.C.4 and chapter 

5 of the TSD.) 

11. DOE seeks input on the representative 

input capacities (kBtu/h) used to calculate 

the fuel used by the standing pilot for each 

of the five hearth product groups identified 

in the proposal and discussed in Chapter 7 

of the TSD. In particular, the agency seeks 

input on whether the RECS 2009 annual 

space heating energy consumption numbers 

for vented and unvented fireplaces is 

representative of all hearth products and any 

data that would be helpful in estimating the 

energy consumption for the hearth product 

groups identified. DOE also seeks comment 

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on the average on-time per cycle assumption 

of 30 seconds for intermittent pilot ignition 

and any data indicating specific on-time per 

cycle for different product groups to help 

inform the energy use analysis. (See section 

IV.E and chapter 7 of the TSD.) 

12. DOE requests comment on the assumed 

pilot light usage, specifically the percentages 

of consumers who operate their hearth 

product standing pilots year round, for only 

the heating season, only when operating the 

unit, the treatment of LPG units, and the 

treatment of heat input into the space by the 

standing pilot. (See section IV.E and chapter 

7 of the TSD.) 

13. DOE requests comment on the 

assumption to not apply a trend to its 

manufacturer selling price, as well as any 

information that would support the use of 

alternate assumptions. (See section IV.F.1 

and chapter 8 of the TSD.) 

14. DOE requests comment on installation 

and retrofit assumptions regarding electrical 

connections and grounding. (See section 

IV.F.1 and chapter 8 of the TSD.) 

15. DOE requests comment on intermittent 

pilot ignition module repair frequency and 

cost components applied in the life-cycle 

cost and payback period analysis. The agency 

requests input on the use of $142.89 as the 

bare material cost of repair of the intermittent 

pilot compared the bare material cost of a 

standing pilot of $43.72. In addition, the 

agency requests comment on the labor hours 

associated with the repair of both the 

standing pilot and intermittent pilot, which 

were both determined to be 1.50 labor hours 

as referenced in Section 8.2.3.2 of the TSD. 

DOE also requests comment on whether 

consumers may choose to replace the entire 

product as opposed to repair the failed 

ignition device and at what price point 

consumers would make that decision and for 

which hearth products. (See section IV.F.2.c 

and chapter 8 of the TSD.) 

16. DOE requests comment on lifetime 

assumptions applied in the life-cycle cost 

and payback period analysis where DOE 

assumes the minimum lifetime of both the 

hearth product and ignition system to be 5 

years and 1 year, respectively and that for 

purposes of the life-cycle cost analysis that 

any repair costs would be free to the 

consumer during this warranty period. In 

addition, DOE requests comment on the 

product lifetime distribution for hearth 

products that are average are assumed to be 

15 years and for hearth product ignition 

systems are assumed to be 7.3 years as laid 

out in Section 8.2.3.3 of the TSD. DOE 

requests input on lifetime for products 

identified in the five different hearth product 

groups (vented fireplaces, unvented 

fireplaces, vented log sets, unvented log sets, 

and outdoor) that may inform the lifetime 

distribution analysis. (See section IV.F.2.d 

and chapter 8 of the TSD.) 

17. DOE requests comment on the 

estimated base-case efficiency distribution. 

(See section IV.F.2.f and chapter 8 of the 

TSD.) 

18. DOE requests comment on its 

assumption that switching from gas to 

electric hearth products due to the 

imposition of the design standard would be 

negligible. (See section IV.G and chapter 9 of 

the TSD.) 

19. DOE requests comment on DOE’s 

methodology to correlate housing starts with 

hearth products shipments. In addition, DOE 

requests comment on the assumed three-toone ratio between non-HPBA and HPBA 

shipments used to develop the total patio 

heater shipments assumptions. DOE also 

requests comment on the assumed fraction of 

match-lit shipments for each hearth product 

group and the use of the midpoint of the 

HPBA range as representative of the market 

shares of match lit units for each product 

group as represented in Table 9.3.2 of the 

TSD. DOE also requests comment on the 

assumed 0.754 ratio of housing starts to 

hearth products shipments as discussed in 

section 9.5 of the TSD and what percentage 

of these hearth products are connected to 

natural gas pipelines versus homeowners’ 

propane storage tanks. (See section IV.G and 

chapter 9 of the TSD.) 

20. DOE requests comment on expected 

industry capital and product conversion 

costs. For the capital conversion costs, DOE 

requests comment on the determination that 

the design standard would primarily entail a 

component swap, in which manufacturers 

would assemble hearth products using a 

different set of purchased parts for the 

ignition system and that re-tooling or 

reconfiguring production facilities likely 

would be limited. In particular, DOE requests 

comment on the assigned nominal capital 

conversion cost per manufacturer, equivalent 

to $10,000, to account for any one-time 

capital investments and calculated industry 

conversion costs of $0.9 million as discussed 

in Chapter 12.4.6 of the TSD. For the product 

conversion costs, DOE requests comment on 

the conversion cost estimates on the 

assumption that manufacturers would incur 

limited costs related to R&D, testing and 

certification, and development of marketing 

materials in order to bring into compliance 

models not currently offered with the option 

of an electronic ignition system. In particular, 

DOE requests comment on the assumed 

product conversion cost of $10,000 in fixed 

costs per model to arrive at the total industry 

product conversion costs of $7.8 million. 

DOE also requests comment on the number 

of hearth product manufacturers who may 

need to invest in capital equipment, assumed 

to be 90 manufacturers, and the number of 

hearth product models, assumed to be 781 

models, that may need model redesigns in 

order to comply with the proposed standards. 

(See section V.B.2 and chapter 12 of the 

TSD.) 

21. DOE requests comment on potential 

impacts of an energy conservation standard 

on domestic production employment. (See 

section V.B.2 and chapter 12 of the TSD.) 

22. DOE requests comment on productspecific regulations that take effect between 

2018 and 2024 that would contribute to 

manufacturers’ cumulative regulatory 

burden. DOE requests information 

identifying the specific regulations, as well as 

data quantifying the associated cost burden 

on manufacturers. (See section V.B.2 and 

chapter 12 of the TSD.) 

23. DOE requests comment on the 

approach for estimating monetary benefits 

associated with emissions reductions. (See 

section V.B.6 and chapter 14 of the TSD.) 

VIII. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of today’s notice of 

proposed rulemaking. 

List of Subjects in 10 CFR Part 430 

Administrative practice and 

procedure, Confidential business 

information, Energy conservation, 

Household appliances, Imports, 

Intergovernmental relations, Small 

businesses. 

Issued in Washington, DC, on January 28, 

2015. 

David T. Danielson, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

For the reasons set forth in the 

preamble, DOE proposes to amend part 

430 of chapter II, subchapter D, of title 

10 of the Code of Federal Regulations, 

as set forth below: 

PART 430—ENERGY CONSERVATION 

PROGRAM FOR CONSUMER 

PRODUCTS 

■ 1. The authority citation for part 430 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6309; 28 U.S.C. 

2461 note. 

■ 2. Section 430.2 is amended by adding 

the definition of ‘‘Hearth product,’’ in 

alphabetical order, to read as follows: 

§ 430.2 Definitions. 

* * * * * 

Hearth product means a gas-fired 

appliance that simulates a solid-fueled 

fireplace or presents a flame pattern (for 

aesthetics or other purpose) and that 

may provide space heating directly to 

the space in which it is installed. 

* * * * * 

■ 3. Section 430.32 is amended by 

adding paragraph (z) to read as follows: 

§ 430.32 Energy and water conservation 

standards and their compliance dates. 

* * * * * 

(z) Hearth Products. Any hearth 

product manufactured on and after 

[DATE 5 YEARS AFTER PUBLICATION 

OF THE FINAL RULE] shall not be 

equipped with a constant-burning pilot 

light. 

[FR Doc. 2015–02179 Filed 2–6–15; 8:45 am] 

BILLING CODE 6450–01–P 

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