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Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules
adjusts the thermostat or faucet, the user receives the requested heated air or water. There is no noticeable difference to the consumer in access or output based upon the type of technology or venting used by the appliance. As noted previously, this had been DOEs longstanding interpretation of EPCAs features provision in the context of these appliances until the January 15.
2021 final interpretive rule, and for the reasons explained in the following paragraphs, DOE proposes to once again return to an interpretation that different venting methods of natural gas, propane gas, and/or oil-fired furnaces, water heaters, and similarly-situated products or equipment are not features that provide unique utility to consumers independent from such appliances function of providing heated air or water, as applicable.
Furthermore, DOE has tentatively concluded that it gave insufficient weight to other policy arguments in development of the January 15, 2021
final interpretive rule. Most importantly, as explained in prior rulemakings, tying the concept of feature to a specific technology would effectively lock in the currently existing technology as the ceiling for product efficiency and eliminate DOEs ability to address technological advances that could yield significant consumer benefits in the form of lower energy costs while providing the same functionality/utility for the consumer.
81 FR 65720, 65752 Sept. 23, 2016.
Because the statute effectively accords performance-related features a protected status, the Department must take great care when making a features determination. Although DOE
acknowledges that the January 15, 2021
final interpretive rule suggested that making a features determination would not impede innovation and the development of more efficient technologies, after careful reevaluation, the agency has tentatively reached a different conclusion, for the reasons explained in this proposed interpretive rule. DOE is concerned that determining features solely on product technology, rather than on how the consumer interacts with and benefits from the feature, could undermine the Appliance Standards Program as established by EPCA. See id. If DOE is required to maintain separate product classes to preserve less efficient technologies, then future advancements in the energy efficiency of covered products would become largely voluntary, an outcome in conflict with Congresss purposes and goals in enacting EPCA. DOEs proposed
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interpretation would avoid such deleterious outcomes.
Finally, the proposed revised interpretation would maintain consideration of installation costs as part of the extensive analysis of economic justification for the adoption of any new or amended energy conservation standard, as required by EPCA, thereby avoiding what would amount to double-counting of cost considerations as arguably would occur through the January 15, 2021 final interpretive rule. In order for DOE to set an energy conservation standard, EPCA
requires that such standard must be designed to achieve the maximum improvement in energy savings that is technologically feasible and economically justified. The statute further recites seven factors for use when considering economic justification.6 42 U.S.C. 6295o23;
42 U.S.C. 6313a6AC; 42 U.S.C.
6316a DOE again notes that the statutes features provision makes no mention of cost as a relevant consideration. 42 U.S.C. 6295o4; 42
U.S.C. 6313a6BiiiIIaa As required by EPCA, DOE conducts a comprehensive economic analysis as part of each standards rulemaking. In this case, DOE originally considered the additional costs associated with installing condensing residential furnaces and condensing commercial water heaters in the rulemaking proceedings for those appliances that were withdrawn in conjunction with the January 2021 interpretive rule See 81
FR 65720, 6577665783 Sept. 23, 6 Specifically, at 42 U.S.C. 6295o2Bi and with essentially the same language at 42 U.S.C.
6313a6Bii, EPCA provides: In determining whether a standard is economically justified, the Secretary shall, after receiving views and comments furnished with respect to the proposed standard, determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering I the economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard;
II 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 products which are likely to result from the imposition of the standard;
III the total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard;
IV any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard;
V the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;
VI the need for national energy and water conservation; and VII other factors the Secretary considers relevant.

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2016; 81 FR 34440, 3448434485 May 31, 2016 and would do so again in future rulemakings if the interpretation in this proposal were to be finalized.
The Department acknowledges that in its January 2021 final interpretive rule, it extended its view of consumer utility of furnaces and water heaters beyond those appliances primary function of providing heated air or water, giving considerable weight to installation situations that could require the addition of new pipes or venting to the usable space of a home or business, major modifications to a utility room, or encroachment upon an existing window or patio. 86 FR 4776, 4786 Jan. 15, 2021. However, upon further evaluation, DOE realizes that its change in interpretation was unnecessary and arguably beyond what the statute can support, because even if the Department had definitive evidence regarding the extent of difficult or impossible installation situations, loss of usable residential or commercial space, or fuel switching effects, DOE nonetheless had a strong statutorily-based rationale for its historic interpretation, as would support a subsequent return thereto. If consumer utility turns on the laypersons operation and interaction with the product i.e., calling for and enjoying the heated air or water which the appliance in question provides rather than type of venting, then all furnaces and water heaters provide the same basic utility: heated air or water.
While DOE acknowledges that installation of condensing products/
equipment requires modifications to the installed space in some applications e.g., concealing vent pipes that pass through the living space by inclusion in a soffit, such modifications may impact the installation cost and/or complexity, but once installed, they do not impact the users operation and interaction with the appliance. Moreover, the Department understands that there are technological solutions for most difficult installation situations and that consumers also have heating and waterheating options other than installation of a condensing appliance.
Consequently, the agency tentatively finds that the matter essentially boils down to one of cost, which is a topic properly analyzed and adequately addressed under the economic justification provisions of EPCA. DOEs reasoning, which is consistent with the Departments historic interpretation, is discussed in further detail in the paragraphs that follow. However, before turning to that rationale, DOE would add furthermore that it has tentatively concluded that it gave undue weight to
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