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Federal Register / Vol. 86, No. 247 / Wednesday, December 29, 2021 / Rules and Regulations
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thereto. As 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 combustion or venting, it follows that all furnaces and water heaters provide the same basic utility: Heated air or water.
As discussed previously, utility is not determined through analyzing or making comparisons to considerations that impact installation, or costs that anyone, including the consumer, manufacturer, installer, or utility companies, may bear. Utility is determined through the benefits and usefulness the feature provides to the consumer while interacting with the product. This approach is consistent with EPCAs requirement for a separate and extensive analysis of economic justification for the adoption of any new or amended energy conservation standard see 42 U.S.C. 6295o23;
42 U.S.C. 6313a6AC; 42 U.S.C.
6316a. Moreover, as discussed in the following section, DOE has concluded that this approach is more consistent with the overall purposes of EPCA.
C. Purposes of EPCA
In the August 2021 NOPIR, DOE
tentatively concluded that it gave insufficient weight to other policy arguments in development of the January 2021 Final Interpretive Rule. 86
FR 48049, 48054 August 27, 2021. In particular, DOE expressed concern that 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. Id. citing 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.
On this topic, A.O. Smith commented that the January 2021 Final Interpretive Rule imposes an artificial ceiling on energy efficiency that is well below the maximum improvement that the Department would likely determine is technologically feasible if it followed its longstanding interpretation. The commenter also argued that the January 2021 Final Interpretive Rule would lock in an outdated and inefficient technology with no consumer benefit, an outcome contrary to EPCA. A.O.

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Smith, No. 133 at p. 7 A.O. Smith added that the preservation of noncondensing water heaters at the current minimum efficiency level would freeze the marketplace, reduce innovation, increase regulatory burden, and limit consumer choice. Id. at p. 8
NEEA commented that establishing product classes based on noncondensing technology or venting type would limit innovation and increase the cost of efficiency for both consumers and utility programs. NEEA, No. 137 at p. 3 NEEA further stated that maintaining a single product class for condensing and non-condensing equipment will: 1 Continue to encourage the market to develop lowercost solutions for the small percentage of installations that are challenging; 2
reduce the cost of efficiency for consumers and utility programs, and 3
result in overall cost and energy savings as more condensing equipment is installed. Id.
CEC commented that finalizing the proposal from the August 2021 NOPIR
will ensure that DOE is able to continue to address technological advances that could lower energy costs something which is especially important to lowincome consumers and maintain product utility. CEC, No. 134 at p. 2
The State Attorneys General stated that the January 2021 Final Interpretive Rule unlawfully interpreted EPCAs statutory requirements and improperly constrained DOEs ability to adopt more stringent, updated efficiency standards for residential furnaces, commercial water heaters, and similarly-situated products and equipment. State Attorneys General, No. 136 at p. 2 The State Attorneys General expressed concern that determining what constitutes a feature based solely on product technology, rather than how the consumer interacts with and benefits from a feature, could undermine the entire Appliance Standards Program, and they agreed that 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.
Id. at p. 4
The CA IOUs and ASAP et al.
commented that designating a technology as a feature would hamper DOEs ability to increase standards in response to efficiency improvements, and that the proposed EPCA
interpretation as presented in the August 2021 NOPIR better reflects
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EPCAs intent to increase standards as a means of promoting conservation measures when feasible. CA IOUs, No.
141 at p. 2; ASAP et al., No. 143 at p.
3 In contrast, Bradford White disagreed with the contention that establishing non-condensing technology as a feature would limit technological innovation in the industry. The commenter pointed to condensing gas water heaters as an example, as that technology was nonetheless developed even though previous technologies were far more efficient than DOE and ENERGY STAR
requirements. Bradford White, No. 146
at p. 2
AGA et al. commented that the proposed interpretation is based on a desired policy outcome that fails to adhere to structure Congress enacted into law, and that the proposal does not present a permissible interpretation of the statute. AGA et al., No. 135 at p. 23
These commenters asserted that the separation of the condensing and noncondensing product classes would allow DOE to focus on establishing the maximum feasible efficiency levels for each technology. Id. at p. 19 AGA et al. also asserted that by separating condensing and non-condensing units, DOE could evaluate the cost of increased efficiency for condensing units without considering the increased costs required to retrofit millions of structures. Id. at p. 20 AGA et al.
stated that any effort to promulgate energy conservation standards based on the proposed interpretation would be contrary to EPCA and could not withstand judicial scrutiny. Id.
AHRI stated that separate product classes for condensing and noncondensing products/equipment would not deter technical development or slow the adoption of condensing technologies, but it would protect consumers who do not have the ability change the technology used in their building. AHRI, No. 139 at p. 1 In support of its position that a separate product class would not hinder the movement in the market towards condensing products when feasible, AHRI also commented that existing market data demonstrate a trend towards condensing furnaces where venting does not present a technical problem. Id. at p. 3
GEUAG and APGA et al. asserted that utility and performance would be lessened under the interpretation proposed in the August 2021 NOPIR
and disproportionately affect lowincome consumers, which would be in contradiction with 42 U.S.C.
6295o2Bi. GEUAG, No. 132 at p.
12; APGA et al., No. 140 at p. 6

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