WASHINGTON — The Department of Energy (DOE) agreed to withdraw the pending minimum energy conservation standards that include regional standards for residential non-weatherized and mobile home gas furnaces in a settlement filed Friday, Jan. 11, 2013. The settlement agreement is between the DOE and the American Public Gas Association (APGA).

Under terms of the agreement, the Direct Final Rule (DFR) issued in June 2011 and confirmed in October 2011 would be vacated as it relates to energy conservation standards for non-weatherized gas furnaces, including standby and off-mode energy consumption, and remanded to DOE for a full rulemaking. This agreement would also eliminate the May 1, 2013, effective date for compliance with the DFR regarding non-weatherized gas furnaces.

DOE agreed to withdraw the DFR and initiate a traditional notice‐and‐comment rulemaking for new furnace efficiency standards as part of the settlement, which will be effective once the court approves the motion for vacatur. At the date of this article publication, the settlement is still pending the Court's approval.

If the Court accepts the settlement, non-condensing furnaces will remain legal to install in all states until the DOE can write new regulations, and industry stakeholders will have the opportunity to be involved in the creation of future rules.

“While we are disappointed that our consensus agreement, on which our members and staff worked so hard and on, which the Direct Final Rule is based, will not be implemented in its entirety, we understand why the two principal parties of the lawsuit reached a settlement agreement,” said the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) President & CEO Stephen Yurek. “Our member companies will now prepare to implement those parts of the agreement that survived the suit.”

“We have a date for when those parts [weatherized furnaces, central air conditioners and heat pumps] are going into effect, which is Jan. 1. 2015,” said Francis Dietz, vice president of public affairs at AHRI. “Our members are working with DOE and the Federal Trade Commission on labeling and enforcement of the new regional standard scheme.”

Moving forward

Last year the Air Conditioning Contractors of America (ACCA) joined the case as an intervener aligning with the APGA. The APGA challenged the Direct Final Rule in the suit brought in the United States Court of Appeals for the District of Columbia.

"Should the Court accept this settlement, this would be vindication for ACCA and its members," said Paul T. Stalknecht, ACCA president and CEO. “This settlement would restart the rulemaking for furnaces and allow ACCA to participate further in the process and for the DOE to recognize the problems associated with requiring condensing furnaces in the Northern region.”

ACCA intends to participate in the rulemaking process, as it has for the last several rulemakings that have set minimum energy conservation standards for HVAC appliances.

“In the last go around we submitted information on the cost differential between installing a non-condensing furnace vs. installing a condensing furnace,” said Charlie McCrudden, vice president of government relations at ACCA. “And we will reiterate our concerns about the costs of enforcement and will submit those concerns as part of the rulemaking. The consensus agreement proposed regional standards for some product classes of furnaces and central air conditioners, which would have imposed new enforcement responsibilities and liabilities on contractors without consulting them.”

“Another concern we had was the 90% AFUE minimum requirement for residential gas furnaces in the North region,” explained McCrudden. “ACCA members knew that there would be cases where complying with that agreement's AFUE standards may be practically impossible due to the venting and condensate requirements when installing condensing furnaces.”

Another issue ACCA is concerned about is how to enforce these regional standards.  

When asked what would be the ideal enforcement program, McCrudden told CONTRACTOR that it would protect the upstanding contractor from those who would take advantage of the fact that non-compliant equipment is available and cheaper to install while minimizing the record keeping and information disclosure burdens or compliance costs.

“Enforcement is a very complicated issue,” said McCrudden. “There is no Department of Energy ‘police’ to inspect every furnace or air conditioner installation. Permitting is not required in every jurisdiction, and even if it was, many installations occur without the permits being pulled. Unfortunately the DOE doesn't have to figure out an enforcement program until after regional standards are set, so the costs, paperwork, and compliance burdens associated with enforcement are not factored into the decision to create them.”

Moving forward there will be some new issues ACCA will bring to the table during the rulemaking process.  

“The price of natural gas has been declining as more shale gas fields are discovered in the U.S., so the economic analysis, and specifically the payback period for installing a 90% over an 80% furnace, would change,” explained McCrudden. “Second, I think the analysis of the incremental costs to addressing the venting and condensate requirements for condensing furnaces will play a bigger role. And finally, I expect to see more individual homeowners partake in the rulemaking process.”