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Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Proposed Rules
lotter on DSK11XQN23PROD with PROPOSALS1

obviating the need for extensive changes to existing venting. Consumers routinely make such choices where they deem it appropriate, which reflects an economic decision. This option would accommodate the needs of consumers who are predominantly concerned with loss of usable space or aesthetics 9
because it would obviate the need to make significant changes to the residential or commercial space.
Nothing in EPCA precludes such effects, as long as DOEs standard would not eliminate the appliance of that fuel type entirely, and in this case, maintaining non-condensing and condensing units under a single class of product or equipment would not eliminate the availability of natural gas, propane, or other fuel type models from the U.S.
market.
It bears noting that while EPCA
recognizes that various fuel types exist in the appliance marketplace and provides certain protections, it does not directly address fuel switching or mandate that DOE take regulatory action to preclude such marketplace effects. In certain appropriate cases, Congress set statutory energy conservation standard levels for products, such as consumer water heaters see 42 U.S.C. 6295e1
and consumer boilers see 42 U.S.C.
6295f3, based on fuel type e.g., gas, oil, electricity. EPCA also recognizes differences in fuel type under 42 U.S.C.
6295q1A, which provides for setting separate classes where appliances consume a different kind of energy from that consumed by other covered products within such type or class. Notably, however, ECPAs features provision at 42 U.S.C.
6295o4 does not include fuel type within its ambit. Thus, Congress structured EPCA to recognize fuel-type distinctions and to create a level playing field, while balancing the need for overall energy savings. In historically implementing the Appliance Standards Program, DOE has similarly sought to adhere to a policy of fuel neutrality, where consistent with EPCA. DOE
9 DOE notes that in the January 15, 2021 final interpretive rule, the Department clarified that in discussing aesthetics, it sought to distinguish between purely subjective considerations e.g., even the slightest change in color or shape and physical modifications to a dwelling or business that would be appreciably noticed by the consumer and impact the use of the living or commercial space. In that final interpretive rule, DOE explained that it would limit consideration of performance-related features to the latter group, because a proliferation of product/equipment classes was neither intended nor desired. 86 FR 4776, 47994800. However, in this current proposed interpretive rule, the option to replace a non-condensing, gas-fired appliance with a comparable electric appliance empowers individual consumers to make the choice of when aesthetic concerns warrant such change.

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develops energy conservation standards in compliance with the statutory requirements of EPCA, which does not generally involve cross-class comparisons for standard setting.
Although DOE typically analyzes fuelswitching effects, the agency is generally free to set an appropriate level under the applicable statutory criteria regardless of any ancillary fuelswitching effects. Thus, to the extent the January 15, 2021 final interpretive rule sought to enshrine an agency obligation to prevent fuel-switching, such action was without statutory basis. Moreover, DOE finds the Gas Industry Petitioners arguments about potential fuel switching to be likely overstated for the reasons explained subsequently.
To start, the January 15, 2021 final interpretive rule was misguided in suggesting that any rule that would result in fuel switching violates the fuel neutrality principle, because fuel switching occurs frequently and most certainly in the context of new energy conservation standards. Fuel switching is a natural part of market operation for the subject appliances, and it may occur even in the absence of amended energy conservation standards. Installation costs may influence consumer decisions regarding fuel choice, and at any time, a segment of consumers may choose replacement products that rely on a different fuel source than that of the unit being replaced. With that said, the mere potential for fuel switching should not serve as the basis for establishment of a performance-related feature under EPCA.
The appropriate threshold for when fuel switching violates the fuel neutrality principle requires a degree of fuel switching that is much greater than typically found in DOE energy conservation standards rulemakings.
Given DOEs policy of fuel neutrality and because fuel switching may be impacted by the adoption of standards, when conducting an energy conservation standards rulemaking, the Department routinely accounts for potential fuel switching in its consumer choice model, which is one part of its full suite of analyses. In certain applications, consumers may choose to replace natural gas or propane gas products with electric products that provide the same utility in the face of changed standards. The extent to which consumers might replace natural gas or propane products with electric products is dependent in part on the stringency of the standards.10 See e.g., 81 FR 65720,
6579165793 Sept. 23, 2016. DOE has typically found fuel switching to occur in a small number of cases in any given rulemaking, and based upon currently available information, the Department does not expect that instances of fuel switching would be significantly different for the subject residential furnaces, commercial water heaters, and similarly-situated products or equipment.
For example, DOE notes that it was required by statute in a prior rulemaking to consider differential standards for small furnaces based upon input capacity as a means to address fuel switching. Specifically, under 42 U.S.C.
6295f1B, Congress directed DOE to consider the appropriate standard level to be set for furnaces with an input capacity of less than 45 kBtu/h. In doing so, Congress directed DOE to consider a standard level within a specified range that was not likely to result in a significant shift from gas heating to electric resistance heating with respect to either residential construction or furnace replacement. Id. See also 54 FR
47916 Nov. 17, 1989 final rule adopting energy conservation standards for small furnaces. In the September 2016 Furnace SNOPR, DOE considered the potential for reduction of fuelswitching in proposing the capacitybased standards. 81 FR 65720, 65755
Sept. 23, 2016. Regarding commercial water heaters, DOE initially determined that fuel switching beyond the continuation of historical trends would be unlikely due to differences in operating costs and differences in hot water delivery capacity. 81 FR 34440, 34494 May 31, 2016. Although the Gas Industry Petitioners made vocal arguments to the contrary about fuel switching in support of their petition and in the context of various rulemaking proceedings, they did not provide data to substantiate these claims.
In this case, there is insufficient evidence that fuel switching would be greater than is typically encountered in DOE rulemakings. DOE notes that the incidence of fuel switching for the subject appliances may be mitigated further by the availability of technological solutions such as the ventsharing device discussed previously.
For all of these reasons, DOE does not find potential fuel switching alone to be a basis to support a determination that non-condensing technology and associated venting constitute a performance-related feature.

10 For the trial standard levels evaluated in the September 2016 SNOPR, DOE estimated between 1.5 percent and 16.0 percent of customers would
replace a non-weatherized gas furnace with either a heat pump or an electric furnace, depending on the stringency of the evaluated standard levels.

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