After a regulatory action has been completed, Executive Order 12866 requires agencies 

to identify the substantive changes between the draft submitted to Office of Information 

and Regulatory Affairs (OIRA) for review and the action subsequently announced, and to 

identify those changes made at the suggestion or recommendation of OIRA.
[6450-01-P]

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 notice, DOE 

proposes an energy conservation standard for hearth products following its notice of 

Formatted

1
proposed coverage determination. The notice also announces a public meeting to receive 

comment on the proposed standard and associated analyses and results.

DATES: Meeting: DOE will hold a public meeting on [Day of week, Month, Day, 

Year], from 9:00 a.m. to 4:00 p.m., in Washington, DC. The meeting will also be 

broadcast as a webinar. See section VII, “Public Participation,” for webinar registration 

information, participant instructions, and information about the capabilities available to 

webinar participants. 

Comments: DOE will accept comments, data, and information regarding this 

notice of proposed rulemaking (NOPR) before and after the public meeting, but no later 

than [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE 

FEDERAL REGISTER]. See section VII, “Public Participation,” for details.

ADDRESSES: The public meeting will be held at the U.S. Department of Energy, 

Forrestal Building, Room [NUMBER], 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 

2
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. E-mail: HearthHeatingProd2014STD0036@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.

3
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 e-mail 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 webpage can be found at:[

http://www.regulations.gov/#!docketDetail;D=EERE-2014-BT-STD-0036]. This 

webpage contains a link to the docket for this notice on the www.regulations.gov site. 

The www.regulations.gov webpage 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. 

4
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. E-mail: 

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) 

586-9507. E-mail: 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

5
A. Authority

B. Background

III. General Discussion

A. Scope of Coverage

B. Prescriptive Requirement for Standby Mode

C. Product Classes

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

6
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

7
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

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

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

8
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

9
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

10
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), Pub. L. 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)) 

1

 For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A. 2 All references to EPCA in this document refer to the statute as amended through the American Energy 

Manufacturing Technical Corrections Act (AEMTCA), Pub. L. 112-210 (Dec. 18, 2012).

11

 
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 continuously-burning pilots (i.e., “standing pilots” or “constantburning 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.

Comment [DOE1]: Change recommended by 

OIRA.

Comment [DOE2]: Change recommended by 

OIRA.

12
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, which is 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 

3 The 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). 4 See 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.

Comment [DOE3]: Change recommended by 

OIRA.

Comment [DOE4]: Change recommended by 

OIRA.

Comment [DOE5]: Change recommended by 

OIRA.

13

 
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. 

6

 All monetary values in this document are expressed in 2013 dollars; discounted values are discounted to 

2014 unless explicitly stated otherwise.

7

 A quad is equal to 1015 British thermal units (Btu). 8 The reported savings are net savings after accounting for the slight increase in electricity use resulting 

from the proposed standard.

Comment [DOE6]: Change recommended by 

OIRA.

Comment [DOE7]: Change recommended by 

OIRA (footnote 8).

Comment [DOE8]: Change recommended by 

OIRA.

14

 
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), 

9 A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO2 are presented in short 

tons.

10 The 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. 12 Environmental Protection Agency. EPA GHG calculator (Last Accessed; December 23, 2014)

(Available at: http://www.epa.gov/cleanenergy/energy-resources/calculator.html#results) 13 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 

12866, Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; 

revised November 2013) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbonfor-regulator-impact-analysis.pdf).

Comment [DOE9]: Change recommended by 

OIRA (first sentence of footnote 10).

Comment [DOE10]: Change recommended by 

OIRA (footnote 11).

Comment [DOE11]: Change recommended by 

OIRA (footnote 12).

15

 
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 I.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 1.5536 7

4.1128 3

CO2 Reduction Monetized Value ($12.0/t case)** 0.2226 5

CO2 Reduction Monetized Value ($40.5/t case)** 1.1098 3

CO2 Reduction Monetized Value ($62.4/t case)** 1.8763 2.5

CO2 Reduction Monetized Value ($119/t case)** 3.4405 33 (95th

percentile)

NOX Reduction Monetized Value (at $2,684/ton)** 0.1058 7

0.1148 3

Total Benefits†

2.7693 7

5.4373 3

Costs

Consumer Incremental Installed Costs 0.5505 7

1.0004 3

14 DOE is investigating valuation of avoided Hg and SO2 emissions.

16

 
Total Net Benefits

Including Emissions Reduction Monetized Value† 2.2187 7

4.4369 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 

15 To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 

2014, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE 

calculated a present value associated with each year’s shipments in the year in which the shipments occur 

(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 case-specific 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.

Comment [DOE12]: Change recommended by 

OIRA (changes to columns 2 and 3 of Table I.2).

17

 
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.

18
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% 186 175 195

3% 251 235 265

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% 7.00 7.00 7.00

3% 8.99 8.99 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% 61.1 61.1 61.1

3% 61.2 61.2 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 

19
to the standard, some of which may be incurred in preparation for the rule. The Primary, Low BenefitsNet 

Impacts, and High BenefitsNet 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.

Comment [DOE13]: Change recommended by 

OIRA.

Comment [DOE14]: Change recommended by 

OIRA.

Comment [DOE15]: Change recommended by 

OIRA.

20
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), Pub. L. 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 

likely to exceed 100 kilowatt-hours (or its Btu equivalent) per year.

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

21
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

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), Pub. L. 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, 

22

 
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 

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. 17 As 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.

23

 
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 

24
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 

25
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 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.

26
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.

27
III. General Discussion

A. Scope of Coverage

In the December 2013 NOPD, DOE proposed to adopt a definition of “hearth 

product” as follows:

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.

78 FR 79638, 79640 (Dec. 31, 2013).

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.

28
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 currentlyinstalled 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 

Comment [DOE16]: Change recommended by 

OIRA.

29
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 

30
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 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.” Comment [DOE17]: Change recommended by 

OIRA.

31
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 

32
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 

18 Description of the hearth product groups can be found in chapter 5 of the NOPR TSD. 19 These 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.

33

 
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 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 

34
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) matchlit; (2), constant-burning 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 

20 See section III.I for discussion of electrical standby consumption for hearth products.

35

 
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 

piezo-igniter. 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. 

36
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;

37
(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.

Comment [DOE18]: Change recommended by 

OIRA.

38
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 gas-fired appliance that simulates a solid-fueled fireplace or 

presents a flame pattern. 78 FR 79638, 79640 (Dec. 31, 2013). In the proposed 

definition, DOE 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; 

39
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 23 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 

standard21 in addition to the ANSI Z21.11.2 unvented heater standard.22 Vented products 

21 Latest 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-commercial-heatingequipment-and-air-conditioning/ansi-z2160-2012csa-226-2012/invt/27019512012).

Field Code Changed

Comment [DOE19]: Change recommended by 

OIRA.

40

 
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 standard23 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 

22 Latest version is ANSI Z21.11.2-2013, Gas-fired room heaters, volume II, unvented room heaters 

(Available at: http://shop.csa.ca/en/canada/gas-fired-domestic-and-commercial-heating-equipment-and-airconditioning/ansi-z21112-2013/invt/27017312013). 23 Latest version is ANSI Z21.88-2014, Vented gas fireplace heaters (Available at: 

http://shop.csa.ca/en/canada/gas-fired-domestic-and-commercial-heating-equipment-and-airconditioning/ansi-z2188-2014csa-233-2014/invt/27016252014). 24 Latest version is ANSI Z21.50-2014, Vented gas fireplaces (Available at: 

http://shop.csa.ca/en/canada/gas-fired-domestic-and-commercial-heating-equipment-and-airconditioning/ansi-z2150-2014csa-222-2014-/invt/27020142014).

41

 
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.

42
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 continuouslyburning 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.

43
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 conducted to measure standby mode fuel consumption (which would indicate 

the presence of a continuously-burning 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 

continuously-burning 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

44
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 

45
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 

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.

46

 
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 

47
“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 on 

manufacturers, DOE conducts a manufacturer impact analysis (MIA), as discussed in 

section IV.J. DOE first uses an annual cash-flow approach to determine the quantitative 

impacts. This step includes both a short-term assessment—based on the cost and capital 

requirements during the period between when a regulation is issued and when entities 

must comply with the regulation—and a long-term assessment over a 30-year period. 

The industry-wide impacts analyzed include: (1) 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 

48
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 

49
and repair costs, product lifetime, and consumer discount rates. To account for 

uncertainty and variability in specific inputs, such as product lifetime and discount rate, 

DOE uses a distribution of values, with probabilities attached to each value. For its 

analysis, DOE assumes that consumers will purchase the covered products in the first 

year of compliance with amended standards.

The PBP is the estimated amount of time (in years) it takes consumers to recover 

the increased purchase cost (including installation) of a more-efficient product through 

lower operating costs. DOE calculates the PBP by dividing the change in purchase cost 

due to a more-stringent standard by the change in annual operating cost for the year that 

standards are assumed to take effect.

The LCC savings for the considered 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 

50
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 

Comment [DOE20]: Change recommended by 

OIRA.

51
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 

52
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, 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.

53
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.

54
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 15 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 website: 

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 

Comment [DOE21]: Change recommended by 

OIRA.

Field Code Changed

Comment [DOE22]: Change recommended by 

OIRA.

55
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 widely-known energy forecast 

for the United States. NEMS offers a sophisticated picture of the effect of standards, 

because it accounts for the interactions between the various energy supply and demand 

sectors and 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.

27 For 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/). 

56

 
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,” so in the December 2013 

NOPD, DOE proposed to adopt a definition of “hearth product” as follows:

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.

78 FR 79638, 79640 (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. 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.

57
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

58
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 

59
Issue 36 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 

Comment [DOE23]: Change recommended by 

OIRA.

60
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 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 

61
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. 

62
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 cost-benefit 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 designoption 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 

Formatted: Line spacing: Double

Comment [DOE24]: Change recommended by 

OIRA.

63
regard to the particular design options used to achieve such increases; and (3) the costassessment (or reverse-engineering) 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 design-option approach and the cost-assessment 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 reverseengineering 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 

64
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 47 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 crosssection 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 

Comment [DOE25]: Change recommended by 

OIRA.

65
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 configurations. This is 

identified as Issue 58 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.

 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 

Comment [DOE26]: Change recommended by 

OIRA.

Formatted Table

66
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 69 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 

Comment [DOE27]: Change recommended by 

OIRA.

67
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 battery-powered 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 

68
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 match-lit 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 

69
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 alternative to a 

standing pilot. A match-lit 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 

70
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 

71
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.

72
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 

28 Raw material prices were obtained from American Metals Market (Available at: www.amm.com) (Last 

accessed June 2014). 

73

 
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 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. 

74
DOE requests comments on the proposed mark-up, and this is identified as Issue 710 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 

Comment [DOE28]: Change recommended by 

OIRA.

75
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 710 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 

Comment [DOE29]: Change recommended by 

OIRA.

76
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 springloaded 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

similarly-sized 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. 

77
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, 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:

Comment [DOE30]: Change recommended by 

OIRA.

78
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, Air-Conditioning & Refrigeration 

Distributors International (HARDI) 2013 Profit Report29 to develop wholesaler markups; (2) the Air Conditioning Contractors of America’s (ACCA) 2005 financial analysis 

for the heating, ventilation, air-conditioning, and refrigeration (HVACR) contracting 

industry30 to develop mechanical contractor mark-ups, and (3) U.S. Census Bureau 2007 

Economic Census data31 for the residential and commercial building construction 

industry to develop general contractor mark-ups. 

For wholesalers and contractors, DOE develops baseline and incremental markups based on the product mark-ups 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 

29 Heating, Air Conditioning & Refrigeration Distributors International 2013 Profit Report (Available at: 

http://www.hardinet.org/Profit-Report) (Last accessed April 10, 2013). 30 Air Conditioning Contractors of America (ACCA), Financial Analysis for the HVACR Contracting 

Industry: 2005 (Available at: https://http://www.acca.org/store/product.php?pid=142) (Last accessed April 

10, 2013).

31 U.S. Census Bureau, 2007 Economic Census Data (Available at: http://www.census.gov/econ/)(Last 

accessed April 10, 2013).

79

 
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 

32 Sales 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.

80

 
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 

34 U.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). 35 Hayden, 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). 36 Menkedick, 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).

81

 
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 

37 National Oceanic and Atmospheric Administration, NNDC Climate Data Online (2009) (Available at: 

http://www7.ncdc.noaa.gov/CDO/CDODivisionalSelect.jsp) (Last accessed July 29, 2014).

82

 
length to calculate the number of cycles, and a conservative estimate of 30 seconds ontime 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 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 

Comment [DOE31]: Change recommended by 

OIRA.

83
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 

38 Armstrong 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.cmhcschl.gc.ca/uhtbin/cgisirsi.exe/?ps=Ey6u7UxnJz/CHIC/17510006/60/502/X).)

84

 
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) yearround; (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 

812 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 

39 National Oceanic and Atmospheric Administration, NNDC Climate Data Online (2009) (Available at: 

http://www7.ncdc.noaa.gov/CDO/CDODivisionalSelect.jsp) (Last accessed July 29, 2014).

Comment [DOE32]: Change recommended by 

OIRA.

85

 
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 

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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 more-efficient

products or operate their units efficiently, DOE avoids overstating the 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 

87
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 newly-covered 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.

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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 

40 Series ID: PCU3334143334147 (Available at: http://www.bls.gov/ppi/).

89

 
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 

913 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 1014 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 

41 RS Means Company Inc., RS Means Residential Cost Data (2013) (Available at: 

http://rsmeans.reedconstructiondata.com/).

Comment [DOE33]: Change recommended by 

OIRA.

Comment [DOE34]: Change recommended by 

OIRA.

90

 
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.

42 Available at www.federalreserve.gov/econresdata/scf/scfindex.htm. 43 U.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). 44 U.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). 45 U.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).

91

 
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, 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 1115 in section VII.E, 

“Issues on Which DOE Seeks Comment.”

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.

Comment [DOE35]: Change recommended by 

OIRA.

92

 
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 1216 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 

Comment [DOE36]: Change recommended by 

OIRA.

93
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

47 The 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).

94

 
Standing Pilot Intermittent Pilot

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 1317 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. 

Comment [DOE37]: Change recommended by 

OIRA.

95
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)) 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.

96
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 1918 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 1419 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 

Field Code Changed

Comment [DOE38]: Change recommended by 

OIRA.

Comment [DOE39]: Change recommended by 

OIRA.

97
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 base-case 

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).

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.

98

 
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 

99
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 FullFuel-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.

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 

100
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 

49 OMB 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).

101

 
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.

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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.

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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., Hoovers51),

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 

50 U.S. Securities and Exchange Commission, Annual 10-K Reports (Various Years) (Available at:

www.sec.gov). 51 Hoovers Inc., Company Profiles, Various Companies (Available at: www.hoovers.com/). 52 U.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).

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and development (R&D) expenses; cost of goods sold; and tax rates; and (3) trends in the 

number of 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 cash-flow 

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 cashflow 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. 

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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 publicly-available 

Comment [DOE40]: Change recommended by 

OIRA.

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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 

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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 non-capitalized 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 

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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.

DOE assumes that all conversion-related 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

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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.

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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 base-case 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.

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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 

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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 new-home 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 

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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 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 

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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 

53 See http://www.epa.gov/climateleadership/guidance/ghg-emissions.html. 

115

 
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 

54 U.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.

116

 
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 cap-and-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 (D.C.). (42 U.S.C. 7651 et seq.) SO2 emissions from 28 eastern 

States and D.C. 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 

56 See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 531 F.3d 896 (D.C. 

Cir. 2008).

57 See 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). 58 On 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.

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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 nonHAP 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 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 

59 CSAPR 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.

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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.

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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, 

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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 Council60 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 

60 National Research Council, Hidden Costs of Energy: Unpriced Consequences of Energy Production and 

Use, National Academies Press: Washington, DC (2009).

121

 
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 were 

presented in several proposed and final rules.

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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.

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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

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.

62 Social 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).

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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 peerreviewed literature. Table IV.6 shows the updated sets of SCC estimates from the 2013 

interagency update63 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

63 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 

12866, Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; 

revised November 2013) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbonfor-regulator-impact-analysis.pdf).

125

 
2010 11 32 51 89

2015 11 37 57 109

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 

126
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.

64 U.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).

127

 
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, multi-sectored, 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 timedependent 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 

128
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 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 laborintensive 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 

65 See Bureau of Economic Analysis, “Regional Multipliers: A Handbook for the Regional Input-Output 

Modeling System (RIMS II),” U.S. Department of Commerce (1992).

129

 
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 Input-Output” (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 overestimate 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.

66 M.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). 

130

 
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 non-existent 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%

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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.

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Table V.2 Average LCC and PBP Results by Efficiency Level for Hearth Products

TSL Design

Average Costs 2013$ Simple 

Payback 

years

Average 

Lifetime 

years

Installed 

Cost

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. 

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 Simple Payback Period

2013$ Years

Senior-Only All Consumers Senior-Only All Consumers

1 $121 $165 3.5 2.9

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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 rebuttablepresumption 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.

134
a. Industry Cash Flow Analysis Results 

Table V.6 and Table V.7depict 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 

135
produce new standards-compliant 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 Table V.7 presents impacts under the 

preservation of per-unit operating profit markup scenario. Estimated conversion costs 

136
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 PerUnit 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 

137
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 non-compliant 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 

138
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 1520 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 

Comment [DOE41]: Change recommended by 

OIRA.

139
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 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.

67 U.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).

Formatted: Not Highlight

140

 
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 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. 

141
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 worst-case 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 worstcase 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 1621 in section VII.E, “Issues on Which DOE Seeks Comment.” Comment [DOE42]: Change recommended by 

OIRA.

142
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. 

143
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 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 

144
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.9presents the relative increase in MPC for 

products manufactured with electronic ignition systems as opposed to standing pilot 

145
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 

146
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 price-sensitive consumers 

could decline and, in turn, negatively impact manufacturer profitability. 

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. 

147
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 pricesensitive 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.

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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 productspecific 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 product-specific 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 1722 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.

3.

Comment [DOE43]: Change recommended by 

OIRA.

Comment [DOE44]: Change recommended by 

OIRA.

Formatted: Normal

149
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-468 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 

68 U.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/). 

150

 
standards.69 The review timeframe established in EPCA is 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 

69 Section 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.

70 OMB Circular A-4, section E (Sept. 17, 2003) (Available at: 

http://www.whitehouse.gov/omb/circulars_a004_a-4). 

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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). 

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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.

 

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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 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

154
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 

155
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.

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$

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 

156
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-perton 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 dollar-per-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 1823 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$

Comment [DOE45]: Change recommended by 

OIRA.

157
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 Economic 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.

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 

SCC Case 

$40.5/metric ton 

CO2

* and Medium 

SCC Case 

$62.4/metric ton 

CO2

* and Medium 

SCC Case 

$119/metric ton 

CO2

* and Medium 

158
Value for NOX Value for NOX Value for NOX Value for NOX

Billion 2013$

1 3.5 4.4 5.0 6.7

TSL

Consumer NPV at 7% Discount Rate added with:

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 

159
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 

160
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 sensitivity variation according to 

household income.71

71 P.C. Reiss and M.W. White, Household Electricity Demand, Revisited, Review of Economic Studies

(2005) 72, 853–883.

161

 
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)

72 Alan 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).

162

 
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 

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)

Base Case = $125.3

122-125.8

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 

163
$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 

73 A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO2 are presented in short 

tons.

164

 
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 

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.

74 To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 

2014, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE 

calculated a present value associated with each year’s shipments in the year in which the shipments occur 

(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 case-specific 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.

165

 
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 

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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% 186 175 195

3% 251 235 265

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% 7.00 7.00 7.00

3% 8.99 8.99 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% 61.1 61.1 61.1

3% 61.2 61.2 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 

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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.

** 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 cost-effective 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.

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(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 

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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.

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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 website 

(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 

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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.

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 

websites, 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 publicly-available 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 

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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 

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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

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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 small-volume 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

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DOE is required by EPCA to establish standards that achieve the maximum 

improvement in energy efficiency that is 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 0percent 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.

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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-of-information 

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 

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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 

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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 

179
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. Pub. L. 104-4, sec. 201 (codified at 2 U.S.C. 

1531). For a proposed regulatory action likely to 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/office-general-counsel.

Although this proposed rule, which proposes energy conservation standards for 

hearth products, does not contain a Federal intergovernmental mandate, it may require 

180
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 

181
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 

182
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 

183
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.

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, 

184
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 website at: [INSERT LINK]. 

Participants are responsible for ensuring their systems are compatible with the webinar 

software.

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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 hand-deliver 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.

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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 

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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 website. 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

webpage 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 

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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. 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 website 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. 

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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 

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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 wellmarked copies: one copy of the document marked “confidential” including all the 

information believed to be confidential, and one copy of the document marked “nonconfidential” 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.

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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 its assumption regarding the electrical energy 

consumption of the ignition module for hearth products.

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 

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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.)

2.3.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).

3.6.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.)

Comment [DOE46]: Change recommended by 

OIRA.

Comment [DOE47]: Change recommended by 

OIRA.

Comment [DOE48]: Change recommended by 

OIRA.

Comment [DOE49]: Change recommended by 

OIRA.

Comment [DOE50]: Change recommended by 

OIRA.

193
4.7.DOE seeks comment on its general engineering analysis approach for 

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

5.8.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.)

6.9.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.)

7.10. 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 on the average ontime 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.)

Comment [DOE51]: Change recommended by 

OIRA.

Comment [DOE52]: Change recommended by 

OIRA.

Comment [DOE53]: Change recommended by 

OIRA.

Comment [DOE54]: Change recommended by 

OIRA.

Comment [DOE55]: Change recommended by 

OIRA.

194
8.12. 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.)

9.13. 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.)

10.14. DOE requests comment on installation and retrofit assumptions 

regarding electrical connections and grounding. (See section IV.F.1 and 

chapter 8 of the TSD.)

11. DOE requests comment on ignition module repair. 

12. DOE requests comment on lifetime assumptions.

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 

Comment [DOE56]: Change recommended by 

OIRA.

Comment [DOE57]: Change recommended by 

OIRA.

Comment [DOE58]: Change recommended by 

OIRA.

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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.)

13.17. DOE requests comment on the estimated base-case efficiency 

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

14. DOE requests comment on DOE’s methodology to correlate housing starts 

with hearth products shipments.

15. DOE requests comment on expected industry conversion costs.

Comment [DOE59]: Change recommended by 

OIRA.

Comment [DOE60]: Change recommended by 

OIRA.

Comment [DOE61]: Change recommended by 

OIRA.

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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-to-one 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 

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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.)

16.21. 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.)

17.22. DOE requests comment on product-specific regulations that take 

effect between 2018 and 2024 that would contribute to manufacturers’ 

cumulative regulatory burden. DOE requests information identifying the 

Comment [DOE62]: Change recommended by 

OIRA.

Comment [DOE63]: Change recommended by 

OIRA.

198
specific regulations, as well as data quantifying the associated cost burden 

on manufacturers. (See section V.B.2 and chapter 12 of the TSD.)

18.23. 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.)

19. DOE requests comment on its assumption that fuel switching away from 

hearth products due to the imposition of the design standard would be

negligible. 

VIII. Approval of the Office of the Secretary

The Secretary of Energy has approved publication of today’s notice of proposed 

rulemaking.

Comment [DOE64]: Change recommended by 

OIRA.

Comment [DOE65]: Change recommended by 

OIRA.

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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 

________________________________

David T. Danielson

Assistant Secretary

Energy Efficiency and Renewable Energy

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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, to read 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.

3. Section 430.2 is amended by adding the definition of “Hearth product,” in alphabetical 

order, to read as follows:

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 (y) to read as follows:

§430.32 Energy and water conservation standards and their compliance dates.

* * * * *

(y) 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.

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Formatted: Line spacing: Double

202