Vol. 78 Friday, 

No. 207 October 25, 2013 

Part II 

Department of Energy 

10 CFR Parts 429 and 430 

Energy Conservation Program for Consumer Products: Energy 

Conservation Standards for Residential Furnace Fans; Proposed Rule 

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64068 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

DEPARTMENT OF ENERGY 

10 CFR Parts 429 and 430 

[Docket Number EERE–2010–BT–STD– 

0011] 

RIN 1904–AC22 

Energy Conservation Program for 

Consumer Products: Energy 

Conservation Standards for 

Residential Furnace Fans 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Notice of proposed rulemaking 

and announcement of public meeting. 

SUMMARY: Pursuant to the Energy Policy 

and Conservation Act of 1975 (EPCA), 

as amended, the U.S. Department of 

Energy (DOE) must prescribe energy 

conservation standards for various 

consumer products and certain 

commercial and industrial equipment, 

including residential furnace fans. 

EPCA requires DOE to determine 

whether such standards would be 

technologically feasible and 

economically justified, and would save 

a significant amount of energy. In this 

notice, DOE is proposing new energy 

conservation standards for residential 

furnace fans. The notice also announces 

a public meeting to receive comment on 

these proposed standards and associated 

analyses and results. 

DATES: Meeting: DOE will hold a public 

meeting on Tuesday, December 3, 2013, 

from 9 a.m. to 4 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 

December 24, 2013. See section VII, 

‘‘Public Participation,’’ for details. 

ADDRESSES: The public meeting will be 

held at the U.S. Department of Energy, 

Forrestal Building, Room 8E–089, 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 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 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 

Residential Furnace Fans, and provide 

docket number EE–2010–BT–STD–0011 

and/or regulatory information number 

(RIN) 1904–AC22. Comments may be 

submitted using any of the following 

methods: 

1. Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions for submitting comments. 

2. Email: FurnFans-2010–STD–0011@

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 of 

encryption. 

3. Postal Mail: Ms. Brenda Edwards, 

U.S. Department of Energy, Building 

Technologies Program, Mailstop EE–2J, 

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 Program, 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. 

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 email 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 is available for 

review at www.regulations.gov, 

including Federal Register notices, 

framework documents, public meeting 

attendee lists and transcripts, 

comments, and other supporting 

documents/materials. All documents in 

the docket are listed in the 

www.regulations.gov index. However, 

not all documents listed in the index 

may be publicly available, such as 

information that is exempt from public 

disclosure. 

A link to the docket Web page can be 

found at: http://www1.eere.energy.gov/

buildings/appliance_standards/

rulemaking.aspx/ruleid/41. This Web 

page contains a link to the docket for 

this notice on the www.regulations.gov 

site. The www.regulations.gov Web page 

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. 

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. 

Ron Majette, U.S. Department of Energy, 

Office of Energy Efficiency and 

Renewable Energy, Building 

Technologies Program, EE–2J, 1000 

Independence Avenue SW., 

Washington, DC, 20585–0121. 

Telephone: (202) 586–7935. Email: 

Ronald.Majette@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. Email: 

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 

II. Introduction 

A. Authority 

B. Background 

1. Current Standards 

2. History of Standards Rulemaking for 

Residential Furnace Fans 

III. General Discussion 

A. Test Procedure 

B. Product Classes and Scope of Coverage 

C. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

D. Energy Savings 

1. Determination of Savings 

2. Significance of Savings 

E. Economic Justification 

1. Specific Criteria 

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1For editorial reasons, upon codification in the 

U.S. Code, Part B was redesignated Part A. 

a. Economic Impact on Manufacturers and 

Consumers 

b. Life-Cycle Costs 

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 

IV. Methodology and Discussion 

A. Market and Technology Assessment 

1. Definition and Scope of Coverage 

2. Product Classes 

3. Technology Options 

a. Fan Housing and Airflow Path Design 

Improvements 

b. Inverter Controls for PSC Motors 

c. High-Efficiency Motors 

d. Multi-Stage or Modulating Heating 

Controls 

e. Backward-Inclined Impellers 

B. Screening Analysis 

1. Screened-Out Technologies 

2. Remaining Technologies 

a. High-Efficiency Motors 

b. Backward-Inclined Impellers 

C. Engineering Analysis 

1. Efficiency Levels 

a. Baseline 

b. Percent Reduction in FER 

2. Manufacturer Production Cost (MPC) 

a. Production Volume Impacts on MPC 

b. Inverter-Driven PSC Costs 

c. Furnace Fan Motor MPC 

d. Motor Control Costs 

e. Backward-Inclined Impeller MPC 

D. Markups Analysis 

E. Energy Use Analysis 

F. Life-Cycle Cost and Payback Period 

Analysis 

1. Installed Cost 

2. Operating Costs 

3. Other Inputs 

4. Base-Case Efficiency Distribution 

5. Rebuttable Presumption Payback Period 

G. Shipments Analysis 

H. National Impact Analysis 

1. National Energy Savings Analysis 

2. Net Present Value Analysis 

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 

3. Discussion of Comments 

a. Testing and Certification Burdens 

b. Cumulative Regulatory Burden 

c. Compliance Date and Implementation 

Period 

d. Small Businesses 

e. Conversion Costs 

4. Manufacturer Interviews 

a. Testing and Certification Burdens 

b. Market Size 

c. Cumulative Regulatory Burden 

d. Consumer Confusion 

e. Motors 

K. Emissions Analysis 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

1. Social Cost of Carbon 

a. Monetizing Carbon Dioxide Emissions 

b. Social Cost of Carbon Values Used in 

Past Regulatory Analyses 

c. Current Approach and Key Assumptions 

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 Consumers 

a. Life-Cycle Cost and Payback Period 

b. Consumer Subgroup Analysis 

c. Rebuttable Presumption Payback 

2. Economic Impact on Manufacturers 

a. Industry Cash-Flow Analysis Results 

b. 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 

C. Proposed Standards 

1. Benefits and Burdens of Trial Standard 

Levels Considered for Residential 

Furnace Fans 

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 

Title III, Part B1 of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

the Act), Public Law 94–163 (42 U.S.C. 

6291–6309, as codified), established the 

Energy Conservation Program for 

Consumer Products Other Than 

Automobiles, a program covering most 

major household appliances, including 

the residential furnace fans that are the 

focus of this notice. Pursuant to EPCA, 

any new or amended energy 

conservation standard that DOE 

prescribes for certain products, such as 

residential furnace fans, shall 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)) Furthermore, the new or 

amended standard must result in a 

significant conservation of energy. (42 

U.S.C. 6295(o)(3)(B)) EPCA specifically 

provides that DOE must consider and 

prescribe energy conservation standards 

or energy use standards for electricity 

used for purposes of circulating air 

through duct work (products for which 

DOE has adopted the term ‘‘furnace 

fans’’ as shorthand) not later than 

December 31, 2013. (42 U.S.C. 

6295(f)(4)(D)) 

In accordance with these and other 

statutory provisions discussed in this 

notice, DOE is proposing new energy 

conservation standards for residential 

furnace fans. Table I.1 below presents 

the proposed standards, which 

represent the ‘‘estimated annual 

electrical energy consumption’’ 

normalized by the estimated total 

number of annual operating hours 

(1870) and the airflow in the maximum 

airflow-control setting to produce a fan 

energy rating (FER). These proposed 

standards, if adopted, would apply to all 

products listed in Table I.1 and 

manufactured in, or imported into, the 

United States on or after the date five 

years from the publication of the final 

rule. 

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2A quad is equal to 1015 British thermal units 

(Btu). 

3Projected residential energy use in 2030 in the 

Annual Energy Outlook 2013 is 21.65 quads. 

4 DOE calculates emissions reductions relative to 

the Annual Energy Outlook 2012 (AEO 2012) 

Reference case, which incorporated projected 

effects of all emissions regulations promulgated as 

of January 31, 2012. 

5A metric ton is equivalent to 1.1 short tons. 

Results for emissions other than CO2 are presented 

in short tons. 

6 DOE also estimated CO2 and, for CH4 and N2O, 

CO2 equivalent (CO2eq) emissions that occur 

through 2030. The estimated emissions reductions 

through 2030 are 40 million metric tons CO2, 2.3 

million tons CO2eq for CH4, and 167 thousand tons 

CO2eq for N2O. 

7Technical 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) (Available at: http://www.whitehouse.gov/ 

sites/default/files/omb/inforeg/ 

social_cost_of_carbon_for_ria_2013_update.pdf). 

TABLE I.1—PROPOSED ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL FURNACE FANS

[Compliance Starting Five Years From Final Rule Publication] 

Product class Product class description Proposed standard: 

FER * (W/1000 cfm) 

1 ......................................................... Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG–NC) .......... FER = 0.029 × QMax + 180. 

2 ......................................................... Non-Weatherized, Condensing Gas Furnace Fan (NWG–C) .................... FER = 0.029 × QMax + 196. 

3 ......................................................... Weatherized Non-Condensing Gas Furnace Fan (WG–NC) ..................... FER = 0.029 × QMax + 135. 

4 ......................................................... Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO–NC) ............ FER = 0.051 × QMax + 301. 

5 ......................................................... Non-Weatherized Electric Furnace/Modular Blower Fan (NWEF/NWMB) FER = 0.029 × QMax + 165. 

6 ......................................................... Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace 

Fan (MH–NWGNC).

FER = 0.051 × QMax + 242. 

7 ......................................................... Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan 

(MH–NWG–C).

FER = 0.051 × QMax + 262. 

8 ......................................................... Manufactured Home Electric Furnace/Modular Blower Fan (MH–EF/MB) FER = 0.029 × QMax + 105. 

9 ......................................................... Manufactured Home Weatherized Gas Furnace Fan (MH–WG) ............... Reserved. 

10 ....................................................... Manufactured Home Non-Weatherized Oil Furnace Fan (MH–NWO) ....... Reserved. 

* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the proposed DOE test procedure. 78 FR 19606, 19627 

(April 2, 2013). 

A. Benefits and Costs to Consumers 

Table I.2 presents DOE’s evaluation of 

the economic impacts of the proposed 

standards on consumers of residential 

furnace fans, as measured by the average 

life-cycle cost (LCC) savings and the 

median payback period (PBP). In 

overview, the average LCC savings are 

positive for all product classes. 

TABLE I.2—IMPACTS OF PROPOSED STANDARDS ON CONSUMERS OF RESIDENTIAL FURNACE FANS

Product class Average LCC 

savings (2012$) 

Median payback 

period (years) 

Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG–NC) ........................................................... 474 5.38 

Non-Weatherized, Condensing Gas Furnace Fan (NWG–C) ..................................................................... 371 5.39 

Weatherized Non-Condensing Gas Furnace Fan (WG–NC) ...................................................................... 247 6.39 

Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO–NC) ............................................................. 40 5.49 

Non-Weatherized Electric Furnace/Modular Blower Fan (NWEF/NWMB) ................................................. 185 3.55 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan (MH–NWGNC) ................... 26 3.35 

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan (MH–NWG–C) ........................... 27 2.73 

Manufactured Home Electric Furnace/Modular Blower Fan (MH–EF/MB) ................................................. 78 4.61 

B. Impact on Manufacturers 

The industry net present value (INPV) 

is the sum of the discounted cash flows 

to the industry from the base year 

through the end of the analysis period 

(2013 to 2048). Using a real discount 

rate of 7.8 percent, DOE estimates that 

the INPV for manufacturers of 

residential furnace fans is $252.2 

million in 2012$. Under the proposed 

standards, DOE expects that 

manufacturers may lose up to 21.6 

percent of their INPV, which is 

approximately $54.4 million. Total 

conversion costs incurred by industry 

prior to the compliance date are 

expected to reach $3.1 million. 

C. National Benefits and Costs 

DOE’s analyses indicate that the 

proposed standards would save a 

significant amount of energy. The 

cumulative energy savings for 

residential furnace fan products 

purchased in the 30-year period that 

begins in the first full year of 

compliance with new standards (2019– 

2048) amount to 4.58 quads.2 For 

comparison, the estimated annual 

energy savings in 2030 (0.074 quads) is 

equal to 0.3 percent of total projected 

residential energy use in 2030.3

The cumulative net present value 

(NPV) of total consumer costs and 

savings for the proposed residential 

furnace fan standards in 2012$ ranges 

from $8.51 billion (at a 7-percent 

discount rate) to $26.16 billion (at a 3- 

percent discount rate). This NPV 

expresses the estimated total value of 

future operating-cost savings minus the 

estimated increased product costs for 

residential furnace fans purchased in 

2019–2048, discounted to 2013. 

In addition, the proposed standards 

would have significant environmental 

benefits.4 The energy savings would 

result in cumulative emission 

reductions of 429.8 million metric tons 

(Mt) 5 of carbon dioxide (CO2), 230.9 

thousand tons of nitrogen oxides (NOX), 

313.5 thousand tons of sulfur dioxide 

(SO2), 1.77 tons of mercury (Hg), 913.7 

thousand tons of methane (CH4), and 

5.12 thousand tons of nitrous oxide 

(N2O).6

The value of the CO2 reductions is 

calculated using a range of values per 

metric ton of CO2 (otherwise known as 

the Social Cost of Carbon, or SCC) 

developed by an interagency process. 

For this NOPR, DOE used an updated 

set of SCC values 7 (the derivation of the 

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8 DOE did not monetize Hg or SO2 emission 

reductions for this NOPR because it is currently 

evaluating appropriate valuation of reduction in 

these emissions. 

9 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value in 2013, the present year used for discounting 

the NPV of total consumer costs and savings, for the 

time-series of costs and benefits using discount 

rates of three and seven percent for all costs and 

benefits except for the value of CO2 reductions. For 

the latter, DOE used a range of discount rates, as 

shown in Table I.4. From the present value, DOE 

then calculated the fixed annual payment over a 30- 

year period (2019 through 2048) that yields the 

same present value. The fixed annual payment is 

the annualized value. Although DOE calculated 

annualized values, this does not imply that the 

time-series of cost and benefits from which the 

annualized values were determined is a steady 

stream of payments. 

SCC values is discussed in section IV.L). 

DOE estimates that the present 

monetary value of the CO2 emissions 

reduction is between $2.25 and $35.56 

billion, expressed in 2012$ and 

discounted to 2013. DOE also estimates 

the net present monetary value of the 

NOX emissions reduction, expressed in 

2012$ and discounted to 2013, is $0.109 

billion at a 7-percent discount rate and 

$0.314 billion at a 3-percent discount 

rate.8

Table I.3 summarizes the national 

economic benefits and costs expected to 

result from these proposed standards for 

residential furnace fans. 

TABLE I.3—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF PROPOSED RESIDENTIAL FURNACE FANS

ENERGY CONSERVATION STANDARDS (TSL 4), IN BILLION 2012$ * 

Category Present value 

billion 2012$ 

Discount rate 

(%) 

Benefits: 

Consumer Operating Cost Savings .................................................................................................... 11.6 7 

32.0 3 

CO2 Reduction Monetized Value ($12.9/t case)** ............................................................................. 2.2 5 

CO2 Reduction Monetized Value ($40.8/t case)** ............................................................................. 11.5 3 

CO2 Reduction Monetized Value ($62.2/t case)** ............................................................................. 18.8 2 .5 

CO2 Reduction Monetized Value ($117/t case)** .............................................................................. 35.6 3 

NOX Reduction Monetized Value (at $2,639/ton) .............................................................................. 0.1 7 

0.3 3 

Total Benefits † ............................................................................................................................ 23.2 7 

43.8 3 

Costs: 

Consumer Incremental Installed Costs .............................................................................................. 3.1 7 

5.8 3 

Net Benefits: 

Including CO2 and NOX Reduction Monetized Value ........................................................................ 20.1 7 

38.0 3 

* This table presents the costs and benefits associated with residential furnace fans shipped in 2019–2048. These results include benefits to 

consumers which accrue after 2048 from the products purchased in 2019–2048. 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 2012$, 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 the low and high values used in DOE’s analysis. †Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value in 2015 of $40.8/t. 

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, 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 

residential furnace fans shipped in 

2019–2048. 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. 

The benefits and costs of these 

proposed standards, for products sold in 

2019–2048, 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 standards (consisting 

primarily of operating cost savings from 

using less energy, minus increases in 

equipment 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.9

Estimates of annualized benefits and 

costs of the proposed standards are 

shown in Table I.4. The results under 

the primary estimate are as follows. (All 

monetary values below are expressed in 

2012$.) 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 

SCC series corresponding to a value of 

$40.8/ton in 2015), the cost of the 

residential furnace fan standards 

proposed in this rule is $231 million per 

year in increased equipment costs, 

while the benefits are $872 million per 

year in reduced equipment operating 

costs, $571 million in CO2 reductions, 

and $8.24 million in reduced NOX

emissions. In this case, the net benefit 

amounts to $1,220 million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the SCC series 

corresponding to a value of $40.8/ton in 

2015, the cost of the residential furnace 

fans standards proposed in this rule is 

$290 million per year in increased 

equipment costs, while the benefits are 

$1,585 million per year in reduced 

operating costs, $571 million in CO2

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64072 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

10For editorial reasons, upon codification in the 

U.S. Code, Part B was redesignated Part A. 

11All references to EPCA in this document refer 

to the statute as amended through the American 

Energy Manufacturing Technical Corrections Act, 

Public Law 112–210 (enacted December 18, 2012). 

reductions, and $15.56 million in 

reduced NOX emissions. In this case, the 

net benefit amounts to $1,882 million 

per year. 

TABLE I.4—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR RESIDENTIAL FURNACE FANS (TSL 4), IN

MILLION 2012$ 

Discount rate Primary 

estimate * 

Low net benefits 

estimate 

High net 

benefits 

estimate 

million 2012$/year 

Benefits: 

Consumer Operating Cost Savings ..................................... 7% ............................. 872 ................... 710 ................... 1082. 

3% ............................. 1585 ................. 1264 ................. 2011. 

CO2 Reduction Monetized Value ($12.9/t case) ** .............. 5% ............................. 139 ................... 117 ................... 171. 

CO2 Reduction Monetized Value ($40.8/t case) ** .............. 3% ............................. 571 ................... 477 ................... 702. 

CO2 Reduction Monetized Value ($62.2/t case) ** .............. 2.5% .......................... 877 ................... 732 ................... 1079. 

CO2 Reduction Monetized Value ($117/t case) ** ............... 3% ............................. 1761 ................. 1471 ................. 2167. 

NOX Reduction Monetized Value (at $2,639/ton) ** ............ 7% ............................. 8.24 .................. 6.97 .................. 9.99. 

3% ............................. 15.56 ................ 13.03 ................ 19.09. 

Total Benefits † .............................................................. 7% plus CO2 range ... 1,019 to 2,641 .. 834 to 2,188 ..... 1,263 to 3,259. 

7% ............................. 1,451 ................ 1,194 ................ 1,794. 

3% plus CO2 range ... 1,740 to 3,362 .. 1,394 to 2,748 .. 2,201 to 4,197. 

3% ............................. 2,172 ................ 1,754 ................ 2,732. 

Costs: 

Consumer Incremental Installed Costs ............................... 7% ............................. 231 ................... 273 ................... 201. 

3% ............................. 290 ................... 346 ................... 250. 

Net Benefits: 

Total † ................................................................................... 7% plus CO2 range ... 788 to 2,410 ..... 561 to 1,915 ..... 1,062 to 3,058. 

7% ............................. 1,220 ................ 921 ................... 1,593. 

3% plus CO2 range ... 1,450 to 3,072 .. 1,047 to 2,402 .. 1,951 to 3,947. 

3% ............................. 1,882 ................ 1,407 ................ 2,482. 

* This table presents the annualized costs and benefits associated with residential furnace fans shipped in 2019–2048. These results include 

benefits to consumers which accrue after 2048 from the products purchased in 2019–2048. 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 and housing starts from the AEO 2012 Reference case, Low Estimate, and High 

Estimate, respectively. Incremental product costs reflect a constant product price trend in the Primary Estimate, an increasing price trend in the 

Low Benefits Estimate, and a decreasing price trend in the High Benefits Estimate. 

** The CO2 values represent global values of the SCC, in 2012$, in 2015 under several scenarios. 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 values increase over time. The value for NOX (in 2012$) is the average of the low and 

high values used in DOE’s analysis. †Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value of $40.8/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. 

DOE has tentatively concluded that 

the proposed standards represent the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified, and 

would result in the significant 

conservation of energy. DOE further 

notes that products achieving these 

standard levels are already 

commercially available for at least some, 

if not most, product classes covered by 

this proposal. Based on the analyses 

described above, 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). 

DOE also considered more-stringent 

energy efficiency levels as trial standard 

levels, and is still considering them in 

this rulemaking. However, DOE has 

tentatively concluded that the potential 

burdens of the more-stringent energy 

efficiency levels would outweigh the 

projected benefits. 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 effort, DOE may adopt 

energy efficiency levels presented in 

this notice that are either higher or 

lower than the proposed standards, or 

some combination of level(s) that 

incorporate the proposed standards in 

part. 

II. Introduction 

The following section briefly 

discusses the statutory authority 

underlying this proposal, as well as 

some of the relevant historical 

background related to the establishment 

of standards for residential furnace fans. 

A. Authority 

Title III, Part B10 of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

the Act), Public Law 94–163 (42 U.S.C. 

6291–6309, as codified) established the 

Energy Conservation Program for 

Consumer Products Other Than 

Automobiles, a program covering most 

major household appliances 

(collectively referred to as ‘‘covered 

products’’).11 These include products 

that use electricity for purposes of 

circulating air through duct work, 

hereafter referred to as ‘‘residential 

furnace fans’’ or simply ‘‘furnace fans,’’ 

the subject of this rulemaking. (42 

U.S.C. 6295(f)(4)(D)) 

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Pursuant to EPCA, DOE’s energy 

conservation program for covered 

products consists essentially of four 

parts: (1) Testing; (2) labeling; (3) the 

establishment of 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. Subject to certain criteria and 

conditions, DOE is required by EPCA to 

consider and establish energy 

conservation standards for residential 

furnace fans by December 31, 2013. (42 

U.S.C. 6295(f)(4)(D)) DOE is also 

required to develop test procedures to 

measure the energy efficiency, energy 

use, or estimated annual operating cost 

of each covered product prior to the 

adoption of an energy conservation 

standard. (42 U.S.C. 6295(o)(3)(A) and 

(r)) Manufacturers of covered products 

must use the prescribed DOE test 

procedure as the basis for certifying to 

DOE that their products comply with 

the applicable energy conservation 

standards adopted under EPCA and 

when making representations to the 

public regarding the energy use or 

efficiency of those products. (42 U.S.C. 

6293(c) and 6295(s)) Similarly, DOE 

must use these test procedures to 

determine whether the products comply 

with standards adopted pursuant to 

EPCA. (42 U.S.C. 6295(s)) DOE does not 

currently have a test procedure for 

furnace fans. Accordingly, to fulfill the 

statutory requirements, DOE is 

simultaneously conducting a test 

procedure rulemaking for residential 

furnace fans. DOE published a notice of 

proposed rulemaking (NOPR) in the 

Federal Register for a residential 

furnace fans test procedure on May 15, 

2012. 77 FR 28674. After considering 

public comments, DOE subsequently 

published in the Federal Register a 

supplemental notice of proposed 

rulemaking (SNOPR) on April 2, 2013, 

which contained a revised test 

procedure proposal for furnace fans. 78 

FR 19606. In accordance with the 

statutory requirements outlined in 

EPCA, DOE will establish a test 

procedure for residential furnace fans at 

or before the time it prescribes furnace 

fan energy conservation standards 

Details on the furnace fan test procedure 

rulemaking are available at: http:// 

www1.eere.energy.gov/buildings/ 

appliance_standards/rulemaking.aspx/ 

ruleid/40. 

DOE must follow specific statutory 

criteria for prescribing new or amended 

standards for covered products, 

including residential furnace fans. As 

indicated above, 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 residential furnace 

fans, if no test procedure has been 

established for the product, 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 exceed its burdens 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 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 not prescribe an amended 

or new standard if interested persons 

have established by a preponderance of 

the evidence that the standard is likely 

to result in the unavailability in the 

United States of any covered product 

type (or class) of 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. (See 42 U.S.C. 

6295(o)(2)(B)(iii)) 

Additionally, under 42 U.S.C. 

6295(q)(1), the statute 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 which 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 level, DOE must 

consider such factors as the utility to the 

consumer of the feature and other 

factors 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)). 

Finally, pursuant to the amendments 

contained in the Energy Independence 

and Security Act of 2007 (EISA 2007), 

Public Law 110–140, 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. 

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64074 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

12 In the May 15, 2012 NOPR for the test 

procedure, DOE referred to FER as ‘‘fan efficiency 

rating.’’ However, in the April 2, 2013 test 

procedure SNOPR, DOE proposed to rename the 

metric as ‘‘fan energy rating,’’ thereby keeping the 

same abbreviation (FER). 

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)) The proposed 

furnace fan energy rating metric would 

not account for the electrical energy 

consumption in standby mode and off 

mode, because energy consumption in 

those modes is already fully accounted 

for in the DOE energy conservation 

standards rulemaking for residential 

furnaces and residential central air 

conditioners (CAC) and heat pumps 

(HP). 76 FR 37408 (June 27, 2011); 76 

FR 67037 (Oct. 31, 2011). Manufacturers 

will be required to use the new metrics 

and methods adopted in those 

rulemakings for the purposes of 

certifying to DOE that their products 

comply with the applicable energy 

conservation standards adopted 

pursuant to EPCA and for making 

representations about the efficiency of 

those products. (42 U.S.C. 6293(c); 42 

U.S.C. 6295(s)) 

Background 

1. Current Standards 

Currently, no Federal energy 

conservation standards apply to 

residential furnace fans. 

2. History of Standards Rulemaking for 

Residential Furnace Fans 

Pursuant to 42 U.S.C. 6295(f)(4)(D), 

DOE must consider and prescribe new 

energy conservation standards or energy 

use standards for electricity used for 

purposes of circulating air through duct 

work. DOE has interpreted this statutory 

language to allow regulation of the 

electricity use of any electricallypowered device applied to residential 

central heating, ventilation, and airconditioning (HVAC) systems for the 

purpose of circulating air through duct 

work. 

DOE initiated the current rulemaking 

by issuing an analytical Framework 

Document, ‘‘Rulemaking Framework for 

Furnace Fans’’ (June 1, 2010). DOE then 

published the Notice of Public Meeting 

and Availability of the Framework 

Document for furnace fans in the 

Federal Register on June 3, 2010. 75 FR 

31323. See http://

www1.eere.energy.gov/buildings/

appliance_standards/rulemaking.aspx/

ruleid/41. The Framework Document 

explained the issues, analyses, and 

process that DOE anticipated using to 

develop energy conservation standards 

for residential furnace fans. DOE held a 

public meeting on June 18, 2010 to 

solicit comments from interested parties 

regarding DOE’s analytical approach. 

DOE originally scheduled the comment 

period on the Framework Document to 

close on July 6, 2010, but due to the 

large number and broad scope of 

questions and issues raised, DOE 

subsequently published a notice in the 

Federal Register reopening the 

comment period from July 15, 2010 

until July 27, 2010, to allow additional 

time for interested parties to submit 

comments. 75 FR 41102 (July 15, 2010). 

As a concurrent effort to the 

residential furnace fan energy 

conservation standard rulemaking, DOE 

also initiated a test procedure 

rulemaking for residential furnace fans. 

On May 15, 2012, DOE published a 

notice of proposed rulemaking for the 

test procedure in the Federal Register. 

77 FR 28674. In that NOPR, DOE 

proposed to establish methods to 

measure the performance of covered 

furnace fans and to obtain a value for 

the proposed metric, referred to as the 

‘‘fan efficiency rating’’ (FER).12 DOE 

held the test procedure NOPR public 

meeting on June 15, 2012, and the 

comment period closed on July 30, 

2012. After receiving comments on the 

NOPR alleging significant manufacturer 

burden associated with the proposed 

test procedure, DOE determined that an 

alternative test method should be 

developed. DOE published in the 

Federal Register an SNOPR on April 2, 

2013, which contained its revised test 

procedure proposal and an explanation 

of the changes intended to reduce 

burden. 78 FR 19606. DOE proposed to 

adopt a modified version of the 

alternative test method recommended 

by the Air-Conditioning, Heating, and 

Refrigeration Institute (AHRI) and other 

furnace fan manufacturers to rate the 

electrical energy consumption of 

furnace fans. DOE has tentatively 

concluded that the AHRI-proposed 

method provides a framework for 

accurate and repeatable determinations 

of FER that is comparable to the test 

method previously proposed by DOE, 

but at a significantly reduced test 

burden. As required by EPCA, DOE will 

complete its final rule for residential 

furnace fan test procedures in advance 

of the final rule adopting energy 

conservation standards for those 

products. (42 U.S.C. 6295(o)(3)(A) and 

(r)) 

To further develop the energy 

conservation standards for residential 

furnace fans, DOE gathered additional 

information and performed a 

preliminary technical analysis. This 

process culminated in publication in the 

Federal Register of a Notice of Public 

Meeting and the Availability of the 

Preliminary Technical Support 

Document (TSD) on July 10, 2012. 77 FR 

40530. In that document, DOE requested 

comment on the following matters 

discussed in the TSD: (1) the selected 

product classes; (2) the analytical 

framework, models, and tools that DOE 

is using to evaluate standards; and (3) 

the results of the preliminary analyses 

performed by DOE. Id. DOE also invited 

written comments on these subjects, as 

well as any other relevant issues, and 

announced the availability of the TSD 

on its Web site. Id. at 40530–31. A PDF 

copy of the preliminary TSD is available 

at http://www.regulations.gov/

#!documentDetail;D=EERE-2010-BTSTD-0011-0037. 

The preliminary TSD provided an 

overview of the activities DOE 

undertook in developing potential 

energy conservation standards for 

residential furnace fans, and discussed 

the comments DOE received in response 

to the Framework Document. It also 

described the analytical methodology 

that DOE used and each analysis DOE 

had performed up to that point. These 

analyses were as follows: 

• A market and technology 

assessment addressed the scope of this 

rulemaking, identified the potential 

product classes of residential furnace 

fans, characterized the markets for these 

products, and reviewed techniques and 

approaches for improving their 

efficiency; 

• A screening analysis reviewed 

technology options to improve the 

efficiency of furnace fans, and weighed 

these options against DOE’s four 

prescribed screening criteria; 

• An engineering analysis estimated 

the increase in manufacturer selling 

prices (MSPs) associated with more 

energy-efficient furnace fans; 

• An energy use analysis estimated 

the annual energy use of furnace fans at 

various potential standard levels; 

• A markups analysis converted 

estimated MSPs to consumer-installed 

prices. 

• A life-cycle cost (LCC) analysis 

calculated, at the consumer level, the 

discounted savings in operating costs 

throughout the estimated average life of 

the product, compared to any increase 

in installed costs likely to result directly 

from the adoption of a given standard; 

• A payback period (PBP) analysis 

estimated the amount of time it would 

take consumers to recover the higher 

expense of purchasing more-energyefficient products through lower 

operating costs; 

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13 Details about the derivation of operating hours 

used to calculate FER are found in the test 

procedure NOPR. 77 FR 28674, 28680 (May 15, 

2012). 

14Manufactured home external static pressure is 

much lower than non-manufactured home 

installations because there is no return air duct 

work in manufactured homes. Also, the United 

States Department of Housing and Urban 

Development (HUD) requirements for manufactured 

homes stipulate that the duct work for cooling 

should be set at 0.3 in. w.c. 

• A shipments analysis estimated 

shipments of residential furnace fans 

over the time period examined in the 

analysis (30 years), which were used in 

performing the national impact analysis; 

• A national impact analysis assessed 

the aggregate impacts at the national 

level of potential energy conservation 

standards for residential furnace fans, as 

measured by the net present value of 

total consumer economic impacts and 

national energy savings; and 

• A preliminary manufacturer impact 

analysis took the initial steps in 

evaluating the effects new energy 

conservation standards may have on 

furnace fan manufacturers. 

The nature and function of the 

analyses in this rulemaking, including 

the engineering analysis, energy-use 

characterization, markups to determine 

installed prices, LCC and PBP analyses, 

and national impact analysis, are 

summarized in the July 2012 notice. 77 

FR 40530, 40532–33 (July 10, 2012). 

The preliminary analysis public 

meeting took place on July 27, 2012. At 

this meeting, DOE presented the 

methodologies and results of the 

analyses set forth in the preliminary 

TSD. The numerous comments received 

since publication of the July 2012 

notice, including those received at the 

preliminary analysis public meeting, 

have contributed to DOE’s proposed 

resolution of the issues noted by 

interested parties. 

The submitted comments include a 

joint comment from the American 

Council for an Energy-Efficiency 

Economy (ACEEE), Adjuvant 

Consulting, on behalf of the Northwest 

Energy Efficiency Alliance (NEEA), the 

Appliance Standards Awareness Project 

(ASAP), the National Consumer Law 

Center (NCLC), and the Natural 

Resources Defense Council (NRDC); a 

comment from the Air-Conditioning, 

Heating, and Refrigeration Institute 

(AHRI); a second joint comment from 

California Investor-Owned Utilities (CA 

IOUs) including Pacific Gas and Electric 

Company (PG&E), Southern California 

Edison (SCE), Southern California Gas 

Company, and San Diego Gas and 

Electric (SDGE); a comment from 

Earthjustice; a comment from ebm-papst 

Inc. (ebm-papst); a comment from 

Edison Electric Institute (EEI); and a 

comment from the Northeast Energy 

Efficiency Partnership (NEEP). 

Manufacturers submitting written 

comments included: First Company, 

Goodman Global, Inc. (Goodman), 

Ingersoll Rand, Lennox International, 

Inc. (Lennox), Morrison Products, Inc. 

(Morrison), Mortex Product, Inc. 

(Mortex), National Motor Corporation 

(NMC), and Rheem Manufacturing 

Company (Rheem). Comments made 

during the public meeting by those not 

already listed include the U.S. 

Environmental Protection Agency 

(EPA), the motor manufacturer Regal 

Beloit, and Unico Incorporated. This 

NOPR summarizes and responds to the 

issues raised in these comments. A 

parenthetical reference at the end of a 

quotation or paraphrase provides the 

location of the item in the public record. 

III. General Discussion 

A. Test Procedure 

In the SNOPR for the residential 

furnace fan test procedure published in 

the Federal Register on April 2, 2013 

(78 FR 19606), DOE proposed to adopt 

a modified version of a test method 

recommended by AHRI and supported 

by other furnace fan manufacturers in 

the written comments on the May 2012 

Test Procedure NOPR. (Docket No. 

EERE–2010–BT–TP–0010, AHRI, No. 16 

at p. 3) DOE agrees with AHRI’s 

assessment that its method provides a 

framework for accurate and repeatable 

determinations of FER that is 

comparable to the test method 

previously proposed by DOE, but at a 

significantly reduced test burden. In 

general, the test burden of the AHRI 

method is reduced relative to the test 

procedure originally proposed in the 

NOPR because it: (1) Does not require 

airflow to be measured directly; (2) 

avoids the need to make multiple 

determinations in each airflow-control 

setting because outlet restrictions to 

achieve the specified reference system 

external static pressure (ESP) would be 

set in the maximum airflow-control 

setting and maintained for 

measurements in subsequent airflowcontrol settings; and (3) can be 

conducted using the test setup currently 

required to rate furnace annual fuel 

utilization efficiency (AFUE) for 

compliance with residential furnace 

standards. 

In the April 2, 2013 test procedure 

SNOPR, DOE proposed to incorporate 

by reference the definitions, test setup 

and equipment, and procedures for 

measuring steady-state combustion 

efficiency provisions of American 

National Standards Institute (ANSI)/

American Society of Heating, 

Refrigerating and Air Conditioning 

Engineers (ASHRAE) Standard 103– 

2007, Method of Testing for Annual Fuel 

Utilization Efficiency of Residential 

Central Furnaces and Boilers (ASHRAE 

Standard 103). In addition to these 

provisions, DOE proposed additional 

provisions for apparatuses and 

procedures for measuring throughput 

temperature, external static pressure, 

and furnace fan electrical input power. 

DOE also proposed calculations to 

derive FER based on the results of 

testing for each basic model. 78 FR 

19606, 19608–09 (April 2, 2013). 

In the SNOPR, DOE proposed to 

define ‘‘fan energy rating’’ (FER) as the 

estimated annual electrical energy 

consumption of the furnace fan 

normalized by: (a) the estimated total 

number of annual fan operating hours 

(1,870); 13 and (b) the airflow in the 

maximum airflow-control setting. Id. at 

19608. The estimated annual electrical 

energy consumption, as proposed, is a 

weighted average of the furnace fan 

electrical input power (in Watts) 

measured separately for multiple 

airflow-control settings at different 

external static pressures (ESPs). These 

ESPs are determined by a reference 

system that represents national average 

duct work system characteristics. Id. 

Table III.1 below includes the proposed 

reference system ESP values by 

installation type. 

TABLE III.1—PROPOSED REFERENCE

SYSTEM ESP VALUES BY FURNACE

FAN INSTALLATION TYPE

Installation type 

Weighted 

average 

ESP 

(in. w.c.) 

Units with an internal evaporator 

coil ........................................... 0.50 

Units designed to be paired with 

an evaporator coil ................... 0.65 

Units installed in a manufactured 

homes 14 .................................. 0.30 

The proposed rated airflow-control 

settings correspond to operation in 

cooling mode (which DOE finds is 

predominantly associated with the 

maximum airflow-control setting), 

heating mode, and constant-circulation 

mode. Table III.2 illustrates the airflowcontrol settings that would be rated for 

various product types. 

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TABLE III.2—PROPOSED RATED AIRFLOW-CONTROL SETTINGS BY PRODUCT TYPE

Product type Rated airflow-control setting 1 Rated airflow-control setting 2 Rated airflow-control 

setting 3 

Single-stage Heating ........................... Default constant-circulation ................. Default heat ......................................... Absolute maximum. 

Multi-stage or Modulating Heating ....... Default constant-circulation ................. Default low heat .................................. Absolute maximum. 

As shown in Table III.2, for products 

with single-stage heating, the three 

proposed rated airflow-control settings 

are the default constant-circulation 

setting, the default heating setting, and 

the absolute maximum setting. 78 FR 

19606, 19609 (April 2, 2013). For 

products with multi-stage heating or 

modulating heating, the proposed rated 

airflow-control settings are the default 

constant-circulation setting, the default 

low heating setting, and the absolute 

maximum setting. The absolute lowest 

default airflow-control setting is used to 

represent constant circulation if a 

default constant-circulation setting is 

not specified. DOE proposed to define 

‘‘default airflow-control settings’’ as the 

airflow-control settings specified for 

installed use by the manufacturer in the 

product literature shipped with the 

product in which the furnace fan is 

integrated. Id. Manufacturers typically 

provide detailed instructions for setting 

the default heating airflow-control 

setting to ensure that the product in 

which the furnace fan is integrated 

operates safely. Manufacturer 

installation guides also provide detailed 

instructions regarding compatible 

thermostats and how to wire them to 

achieve the specified default settings. 

In the SNOPR, DOE proposed to 

weight the Watt measurements using 

designated annual operating hours for 

each function (i.e., cooling, heating, and 

constant circulation) that are intended 

to represent national average operation. 

Table III.3 shows the proposed 

estimated national average operating 

hours for each function to be used to 

calculate FER. 

TABLE III.3—ESTIMATED NATIONAL AVERAGE OPERATING HOUR VALUES FOR CALCULATING FER 

Operating mode Variable Single-stage 

(hours) 

Multi-stage or 

modulating 

(hours) 

Heating ......................................... HH (heating hours) ............................................................................ 830 830/HCR (heat capacity ratio). 

Cooling ......................................... CH (cooling hours) ............................................................................ 640 640. 

Constant Circulation ..................... CCH (constant-circulation hours) ...................................................... 400 400. 

Total ...................................... ............................................................................................................ 1,870 (830/HCR) + 1,040. 

The specified operating hours for the 

heating mode for multi-stage heating or 

modulating heating products are 

divided by the heat capacity ratio (HCR) 

to account for variation in time spent in 

this mode associated with turndown of 

heating output. The HCR is the ratio of 

the reduced heat output capacity to 

maximum heat output capacity. The 

proposed FER equation is: 

Where: 

CH = annual furnace fan cooling operating 

hours; 

EMax = furnace fan electrical consumption at 

maximum airflow-control setting 

operating point; 

HH = annual furnace fan heating operating 

hours; 

EHeat = furnace fan electrical consumption at 

the default heating airflow-control 

setting operating point for units with 

single-stage heating or the default lowheating airflow control setting operating 

point for units with multi-stage heating; 

CHH = annual furnace fan constant 

circulation hours; 

ECirc = furnace fan electrical consumption at 

the default constant-circulation airflowcontrol setting operating point (or 

minimum airflow-control setting 

operating point if a default constantcirculation airflow-control setting is not 

specified); 

QMax = airflow at maximum airflow-control 

setting operating point; and 

1000 = constant to put metric in terms of 

watts/1000cfm, which is consistent with 

industry practice. 

The public meeting for the energy 

conservation standards preliminary 

analysis occurred only two months after 

the public meeting for the test 

procedure NOPR. At the time of the 

preliminary analysis meeting, the 

comment period for the test procedure 

NOPR was still open. Consequently, 

many of the written comments and oral 

comments made during the preliminary 

analysis public meeting focused on test 

procedure issues and echoed comments 

in the test procedure rulemaking 

proceeding. While these test procedure 

issues are germane to the regulation of 

residential furnace fans more broadly, 

they are beyond the scope of the present 

energy conservation standards 

rulemaking. Accordingly, DOE 

addressed these test procedure-related 

comments, with detailed responses, in 

the April 2, 2013 test procedure SNOPR. 

Any additional comments made during 

the preliminary analysis relating to the 

test procedure that were not discussed 

in the test procedure SNOPR (i.e., did 

not result in changes to DOE’s proposed 

test procedure) will be addressed in the 

test procedure final rule. 

B. Product Classes and Scope of 

Coverage 

Although the title of 42 U.S.C. 6295(f) 

refers to ‘‘furnaces and boilers,’’ DOE 

notes that 42 U.S.C. 6295(f)(4)(D) was 

written using notably broader language 

than the other provisions within the 


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same section. Specifically, that statutory 

provision directs DOE to ‘‘consider and 

prescribe energy conservation standards 

or energy use standards for electricity 

used for purposes of circulating air 

through duct work.’’ Such language 

could be interpreted as encompassing 

electrically-powered devices used in 

any residential HVAC product to 

circulate air through duct work, not just 

furnaces, and DOE has received 

numerous comments on both sides of 

this issue. At the present time, however, 

DOE is only proposing to cover those 

circulation fans that are used in 

furnaces and modular blowers. DOE is 

using the term ‘‘modular blower’’ to 

refer to HVAC products powered by 

single-phase electricity that comprise an 

encased circulation blower that is 

intended to be the principal aircirculation source for the living space of 

a residence. A modular blower is not 

contained within the same cabinet as a 

residential furnace, CAC, or heat pump. 

Instead, modular blowers are designed 

to be paired with separate residential 

HVAC products that provide heating 

and cooling, typically a separate CAC/ 

HP coil-only unit. DOE finds that 

modular blowers and electric furnaces 

are very similar in design. In many 

cases, the only difference between a 

modular blower and electric furnace is 

the presence of an electric resistance 

heating kit. DOE is aware that some 

modular blower manufacturers offer 

electric resistance heating kits to be 

installed in their modular blower 

models so that the modular blowers can 

be converted to stand-alone electric 

furnaces. In addition, FER values for 

modular blowers can be easily 

calculated using the proposed test 

procedure. DOE proposes to address the 

furnace fans used in modular blowers in 

this rulemaking for these reasons. As a 

result of the extent of the current 

rulemaking, DOE is not addressing 

public comments that pertain to fans in 

other types of HVAC products. 

When evaluating and establishing 

energy conservation standards, DOE 

divides covered products into product 

classes by the type of energy used or by 

capacity or other performance-related 

features that justify a different standard. 

In making a determination whether a 

performance-related feature justifies a 

different standard, DOE must consider 

such factors as the utility to the 

consumer of the feature and other 

factors DOE determines are appropriate. 

(42 U.S.C. 6295(q)) For this rulemaking, 

DOE proposes to differentiate between 

product classes based on internal 

structure and application-specific 

design differences that impact furnace 

fan energy consumption. Details 

regarding how internal structure and 

application-specific design differences 

that impact furnace fan energy 

consumption are included in chapter 3 

of the NOPR technical support 

document (TSD). DOE proposes the 

following product classes for this 

rulemaking. 

• Non-Weatherized, Non-Condensing 

Gas Furnace Fan (NWG–NC) 

• Non-Weatherized, Condensing Gas 

Furnace Fan (NWG–C) 

• Weatherized Non-Condensing Gas 

Furnace Fan (WG–NC) 

• Non-Weatherized, Non-Condensing 

Oil Furnace Fan (NWO–NC) 

• Non-Weatherized Electric Furnace/

Modular Blower Fan (NWEF/NWMB) 

• Manufactured Home NonWeatherized, Non-Condensing Gas 

Furnace Fan (MH–NWG–NC) 

• Manufactured Home NonWeatherized, Condensing Gas 

Furnace Fan (MH–NWG–C) 

• Manufactured Home Electric Furnace/ 

Modular Blower Fan (MH–EF/MB) 

• Manufactured Home Weatherized Gas 

Furnace Fan (MH–WG) 

• Manufactured Home NonWeatherized Oil Furnace Fan (MH– 

NWO). 

Each product class title includes 

descriptors that indicate the 

application-specific design and internal 

structure of its included products. 

‘‘Weatherized’’ and ‘‘non-weatherized’’ 

are descriptors that indicate whether the 

HVAC product is installed outdoors or 

indoors, respectively. Weatherized 

products also include an internal 

evaporator coil, while non-weatherized 

products are not shipped with an 

evaporator coil but may be designed to 

be paired with one. ‘‘Condensing’’ refers 

to the presence of a secondary, 

condensing heat exchanger in addition 

to the primary combustion heat 

exchanger in certain furnaces. The 

presence of an evaporator coil or 

secondary heat exchanger significantly 

impacts the internal structure of an 

HVAC product, and in turn, the energy 

performance of the furnace fan 

integrated in that HVAC product. 

‘‘Manufactured home’’ products meet 

certain design requirements that allow 

them to be installed in manufactured 

homes (e.g., a more compact cabinet 

size). Descriptors for ‘‘gas,’’ ‘‘oil,’’ or 

‘‘electric’’ indicate the type of fuel that 

the HVAC product uses to produce heat, 

which determines the type and 

geometry of the primary heat exchanger 

used in the HVAC product. 

C. Technological Feasibility 

1. General 

In each energy conservation standards 

rulemaking, DOE conducts a screening 

analysis based on information gathered 

on all current technology options 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 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 residential 

furnace fans, 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 TSD. 

2. Maximum Technologically Feasible 

Levels 

When DOE proposes to adopt a new 

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 

efficiency for residential furnace fans, 

using the design parameters for the 

most-efficient products available on the 

market or in working prototypes. The 

max-tech levels that DOE determined 

for this rulemaking are described in 

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15 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. 

section IV.C of this proposed rule and 

in chapter 5 of the NOPR TSD. 

D. 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 

anticipated year of compliance with 

new standards (2019–2048). These 

savings are measured over the entire 

lifetime of products purchased in the 

30-year analysis period.15 DOE 

quantified the energy savings 

attributable to each TSL as the 

difference in energy consumption 

between each standards case and the 

base case. The base case represents a 

projection of energy consumption in the 

absence of mandatory 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 products at the locations 

where they are used. DOE reports 

national energy savings on an annual 

basis in terms of the primary (source) 

energy savings, which is the savings in 

the energy that is used to generate and 

transmit the site energy. To convert site 

energy to primary energy, DOE derived 

annual conversion factors from the 

model used to prepare the Energy 

Information Administration’s (EIA’s) 

Annual Energy Outlook 2012 (AEO 

2012). 

DOE has begun to also estimate 

energy savings using full-fuel-cycle 

metrics. 76 FR 51282 (Aug. 18, 2011), as 

amended at 77 FR 49701 (August 17, 

2012). The full-fuel-cycle (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 

efficiency standards. DOE’s approach is 

based on calculation of an FFC 

multiplier for each of the primary fuels 

used by covered products and 

equipment. For more information on 

FFC energy savings, see section IV.H.1. 

2. Significance of Savings 

As noted above, 42 U.S.C. 

6295(o)(3)(B) prevents DOE from 

adopting a standard for a covered 

product unless such standard would 

result in ‘‘significant’’ energy savings. 

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 this context to be savings that 

were not ‘‘genuinely trivial.’’ The energy 

savings for all of the TSLs considered in 

this rulemaking are nontrivial, and, 

therefore, DOE considers them 

‘‘significant’’ within the meaning of 

section 325 of EPCA. 

E. Economic Justification 

1. Specific Criteria 

As discussed above, 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 new or amended 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 industrywide impacts analyzed include: (1) 

Industry net present value (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 

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, 

as discussed in section IV.N. 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 life-cycle cost (LCC) and payback 

period (PBP) associated with new or 

amended standards. The LCC, which is 

specified separately in EPCA as one of 

the seven factors to be considered in 

determining the economic justification 

for a new or amended standard, 42 

U.S.C. 6295(o)(2)(B)(i)(II), is discussed 

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. 

b. Life-Cycle Costs 

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 

savings for the considered efficiency 

levels are calculated relative to a base 

case that reflects projected market 

trends in the absence of standards. The 

LCC analysis requires a variety of 

inputs, such as product prices, product 

energy consumption, energy prices, 

maintenance and repair costs, product 

lifetime, and consumer discount rates. 

For its analysis, DOE assumes that 

consumers will purchase the considered 

products in the first year of compliance 

with new standards. 

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. 

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. DOE also evaluates the LCC 

impacts of potential standards on 

identifiable subgroups of consumers 

that may be affected disproportionately 

by a national standard. DOE’s LCC 

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 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 

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16For 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 

2003, DOE/EIA–0581(2003) (March, 2003). 

the NIA spreadsheet to project national 

energy savings. 

d. Lessening of Utility or Performance of 

Products 

In establishing classes of products, 

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)) The 

standards proposed in this notice will 

not reduce the utility or performance of 

the products under consideration in this 

rulemaking. 

e. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider any 

lessening of competition that is likely to 

result from standards. It also directs the 

Attorney General of the United States 

(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)(i)(V) and (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 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 

In evaluating the need for national 

energy conservation, DOE notes that the 

energy savings from the proposed 

standards are likely to provide 

improvements to the security and 

reliability of the nation’s energy system. 

(42 U.S.C. 6295(o)(2)(B)(i)(VI)) 

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. 

The proposed 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 reports the emissions 

impacts from each TSL it considered in 

section IV.K of this notice. DOE also 

reports estimates of 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 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 above, 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 

analysis generates values used to 

determine which of the considered 

standard levels meet the three-year 

payback period contemplated under the 

rebuttable presumption test. The 

rebuttable presumption payback 

calculation is discussed in section V.B.1 

of this notice. 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). 

IV. Methodology and Discussion 

This section addresses the analyses 

DOE has performed for this rulemaking 

with regard to residential furnace fans. 

After a brief discussion of the 

spreadsheet tools and models used, 

separate subsections will address each 

component of DOE’s analysis. 

DOE used three spreadsheet tools to 

estimate the impact of this proposed 

standards. The first spreadsheet 

calculates LCCs and payback periods 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 Web 

site: http://www1.eere.energy.gov/

buildings/appliance_standards/

rulemaking.aspx/ruleid/41. 

Additionally, DOE estimated the 

impacts on utilities and the 

environment that would be likely to 

result from potential standards for 

residential furnace fans. DOE used a 

version of EIA’s National Energy 

Modeling System (NEMS) for the utility 

and environmental analyses.16 The 

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 

residential furnace fans rulemaking 

include: (1) A determination of the 

scope of this rulemaking; (2) product 

classes and manufacturers; (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. 

1. Definition and Scope of Coverage 

EPCA provides DOE with the 

authority to consider and prescribe new 

energy conservation standards for 

electricity used to circulate air through 

duct work. (42 U.S.C. 6295(f)(4)(D)) In 

the preliminary analysis, DOE defined a 

‘‘furnace fan’’ as ‘‘any electricallypowered device used in residential, 

central heating, ventilation, and airconditioning (HVAC) systems for the 

purpose of circulating air through duct 

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work.’’ 77 FR 40530, 40532 (July 10, 

2012). DOE considered a typical furnace 

fan as consisting of a fan motor and its 

controls, an impeller, and a housing, all 

of which are components of an HVAC 

product that includes additional 

components, including the cabinet. 

Interested parties disagreed with 

DOE’s approach to set component-level 

regulations, which they warned would 

ignore system effects that could impact 

both fan and system energy 

consumption. CA IOUs suggested that 

‘‘furnace fan’’ be defined as a unit 

consisting of a fan motor, its controls, an 

impeller, shroud, and cabinet that 

houses all of the heat exchange material 

for the furnace. According to CA IOUs, 

their suggested definition would reduce 

ambiguity and ensure that the 

components in HVAC products that 

affect furnace fan energy consumption 

are considered in this rulemaking. (CA 

IOUs, No. 56 at p. 1) Ingersoll Rand 

went further and suggested a systemlevel regulatory approach, where the 

entire duct and furnace system would 

be regulated, maintaining that such 

approach would produce a more useful 

metric to consumers when evaluating 

performance. (Ingersoll Rand, No. 43 at 

p. 42) Conversely, NEEP observed that 

by regulating fan energy use separately, 

the individual efficiency of the 

component is considered when it would 

otherwise be ignored by manufacturers. 

(NEEP, No. 51 at p. 3) Rheem 

commented that some designs require 

higher air velocity to improve heat 

transfer but also require more electrical 

consumption to drive the blower at the 

higher velocity. (Rheem, No. 43 at p. 63) 

Rheem commented that turbulent flow 

is considerably more efficient for heat 

transfer than laminar flow, but more 

energy is required to move turbulent air. 

(Rheem, No. 54 at p. 10) Similarly, 

Lennox and Morrison commented that 

in order to improve heating and cooling 

efficiency, often a second heating coil is 

added, but this also leads to higher 

electrical consumption by the furnace 

fan. (Lennox, No. 43 at p. 64; Morrison, 

No. 43 at p. 64) Ingersoll Rand argued 

that as the efficiency of the furnace fan 

motor increases, it dissipates less heat 

and a furnace consumes more gas to 

compensate and meet house heat load. 

(Ingersoll Rand, No. 43 at p. 66) 

In response, DOE is required by EPCA 

to consider and prescribe new energy 

conservation standards or energy use 

standards for electricity used for 

purposes of circulating air through duct 

work. (42 U.S.C. 6295(f)(4)(D)) Pursuant 

to this statutory mandate, DOE plans to 

establish energy conservation standards 

for circulation fans used in residential 

central HVAC systems. DOE does not 

interpret its authority as including the 

duct work itself. DOE is aware that 

component-level regulations could have 

system-level impacts. Accordingly, DOE 

plans to conduct its analyses and set 

standards in such a way that meets the 

statutory requirements set forth by 

EPCA without ignoring system effects, 

which otherwise might compromise the 

thermal performance of the HVAC 

products that incorporate furnace fans. 

For example, the proposed test 

procedure outlined in the April 2, 2013 

SNOPR specifies that the furnace fan be 

tested as factory-installed in the HVAC 

product, thereby enabling the rating 

metric to account for system effects on 

airflow delivery and, ultimately, energy 

performance. 78 FR 19606, 19612–13. In 

addition, the product class structure 

allows for differentiation of products 

with designs that achieve higher 

thermal efficiency but may have lower 

fan performance, such as condensing 

furnaces. 

The scope of the preliminary analysis 

included furnace fans used in furnaces, 

modular blowers, and hydronic air 

handlers. Even though DOE has 

interpreted its authority as 

encompassing any electrically-powered 

device used in residential HVAC 

products to circulate air through duct 

work, the preliminary analysis scope 

excluded single package central air 

conditioners (CAC) and heat pumps 

(HP) and split-system CAC/HP blowercoil units. At the time of the preliminary 

analysis, DOE determined that it may 

consider these and other such products 

in a future rulemaking as data and 

information to develop credible 

analyses becomes available. 

Efficiency advocates expressed 

concern at the exclusion of packaged 

and split-system CAC products because 

they believe current standards for these 

products do not maximize the 

technologically feasible and 

economically justified energy savings 

for the circulation fans integrated in 

these products. ASAP and Adjuvant 

stated that the metric used for CAC 

products does not accurately represent 

field conditions and requested that they 

be added to the scope. (ASAP, No. 43 

at p. 17; Adjuvant, No. 43 at p. 39) 

Specifically, efficiency advocates found 

that the reference external static 

pressures (ESPs) used to determine the 

seasonal energy efficiency ratio (SEER) 

and heating seasonal performance factor 

(HSPF), which already rate these 

products, did not reflect field-installed 

conditions. (ASAP, No. 43 at p. 38; 

Earthjustice, No. 49 at p. 1) In a joint 

comment from ACEEE, ASAP, NCLC, 

NEEA, and NRDC (hereafter referred to 

as ACEEE, et al.), in addition to a 

comment from CA IOU, efficiency 

advocates and utilities stated that the 

reference ESP of 0.1–0.2 in. w.c. was too 

low when compared to the average field 

ESP of 0.73 in. w.c. identified in the 

TSD. (ACEEE, et al., No. 55 at p. 1; CA 

IOU, No. 56 at p. 2) ACEEE, et al. also 

noted that SEER and HSPF do not 

account for continuous-circulation 

operation which is expected to increase 

as stricter building codes call for tighter 

building envelopes. (ACEEE, et al., No. 

55 at p. 2; CA IOU, No. 56 at p. 3) NEEP 

commented that SEER and HSPF do not 

reward for any efficiency gains made by 

the furnace fan. (NEEP, No. 51 at p. 3) 

By excluding these products from the 

analysis, ACEEE, et al. argued that DOE 

is ignoring a significant fraction of the 

furnace fan market. (ACEEE, et al., No. 

55 at p. 1) 

In contrast, many manufacturers 

believe that the scope of coverage 

presented in the preliminary analysis 

exceeds the statutory authority granted 

to DOE because the statutory language 

for this rulemaking is found in 42 U.S.C 

6295(f) under the title ‘‘Standards for 

furnaces and boilers.’’ Consequently, 

manufacturers stated that DOE should 

not include any non-furnace products 

such as central air conditioners, heat 

pumps, or condensing unit-blower-coil 

combinations. Lennox, Mortex, and 

First Co. explicitly stated that no 

equipment other than residential 

furnaces and boilers should be 

included, as doing so is beyond DOE’s 

statutory authority. (Lennox, No. 47 at 

p. 4; Mortex, No. 59 at p. 1; First Co., 

No. 53 at p. 1) Mortex further stated that 

the electricity used to circulate air 

through duct work is already adequately 

accounted for in existing energy 

efficiency metrics, and that if DOE 

insists on proceeding on new energy 

conservation standards for furnace fans, 

DOE should limit it to residential warm 

air furnaces until there is a change made 

by Congress to include additional 

products. (Mortex, No. 59 at p. 1) 

Goodman and Ingersoll Rand argued 

that packaged equipment and air 

handlers should not be included in the 

scope because the electrical energy 

consumed by these products to circulate 

air through duct work is already 

accounted for in SEER and HSPF. 

(Goodman, No. 50 at p. 7; Ingersoll 

Rand, No. 57 at pp. A–1) Rheem and 

Morrison recommended that hydronic 

air handlers and modular blowers be 

excluded from the scope because these 

products have not been previously 

covered by an energy conservation 

standard and cannot be defined as 

furnaces. (Morrison, No. 43 at p. 94; 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64081 

Morrison, No. 58 at p. 9; Rheem, No. 54 

at p. 2) 

Manufacturers also argued that the 

electricity used to circulate air through 

duct work for warm air furnaces with 

cooling capabilities is already covered 

by SEER. (Goodman, No. 50 at p. 7; 

Mortex, No. 59 at p. 1) Additionally, for 

a residential warm air furnace, Mortex 

stated that Eae already accounts for 

heating-mode-related energy 

consumption, including energy 

consumed by the fan. (Mortex, No. 59 at 

p. 2) Additionally, by including annual 

furnace fan cooling and heating 

electricity consumption in the FER 

metric, central air conditioner and heat 

pumps products will be covered by 

multiple metrics. (Goodman, No. 50 at 

p. 6; Mortex, No. 59 at p. 2) 

As discussed in the furnace fan test 

procedure April 2, 2013 SNOPR, DOE 

notes that, although the title of this 

statutory section refers to ‘‘furnaces and 

boilers,’’ the applicable provision at 42 

U.S.C. 6295(f)(4)(D) was written using 

notably broader language than the other 

provisions within the same section. 78 

FR 19606, 19611. Specifically, that 

statutory provision directs DOE to 

‘‘consider and prescribe energy 

conservation standards or energy use 

standards for electricity used for 

purposes of circulating air through duct 

work.’’ Such language could be 

interpreted as encompassing 

electrically-powered devices used in 

any residential HVAC product to 

circulate air through duct work, not just 

furnaces, and DOE has received 

numerous comments on both sides of 

this issue. At the present time, however, 

DOE is only proposing energy 

conservation standards for those 

circulation fans that are used in 

residential furnaces and modular 

blowers (see discussion below). As a 

result, DOE is not addressing public 

comments that pertain to fans in other 

types of HVAC products. The following 

list describes the furnace fans which 

DOE proposes to address in this 

rulemaking. 

• Products addressed in this 

rulemaking: furnace fans used in 

weatherized and non-weatherized gas 

furnaces, oil furnaces, electric 

furnaces, and modular blowers. 

• Products not addressed in this 

rulemaking: furnace fans used in 

other products, such as split-system 

CAC and heat pump air handlers, 

through-the-wall air handlers, smallduct, high-velocity (SDHV) air 

handlers, energy recovery ventilators 

(ERVs), heat recovery ventilators 

(HRVs), draft inducer fans, exhaust 

fans, or hydronic air handlers. 

DOE is using the term ‘‘modular 

blower’’ to refer to HVAC products 

powered by single-phase electricity that 

comprise an encased circulation blower 

that is intended to be the principal air 

circulation source for the living space of 

a residence. A modular blower is not 

contained within the same cabinet as a 

residential furnace, CAC, or heat pump. 

Instead, modular blowers are designed 

to be paired with separate residential 

HVAC products that provide heating 

and cooling, typically a separate CAC/ 

HP coil-only unit. DOE finds that 

modular blowers and electric furnaces 

are very similar in design. In many 

cases, the only difference between a 

modular blower and electric furnace is 

the presence of an electric resistance 

heating kit. DOE is aware that some 

modular blower manufacturers offer 

electric resistance heating kits to be 

installed in their modular blower 

models so that the modular blowers can 

be converted to stand-alone electric 

furnaces. In addition, FER values for 

modular blowers can be easily 

calculated using the proposed test 

procedure. DOE proposes to address the 

furnace fans used in modular blowers in 

this rulemaking for these reasons. 

After considering available 

information and public comments 

regarding fan operation in cooling 

mode, DOE maintains its proposal to 

account for the electrical consumption 

of furnace fans while performing all 

active mode functions (i.e., heating, 

cooling, and constant circulation). DOE 

recognizes that furnace fans are used not 

just for circulating air through duct 

work during heating operation, but also 

for circulating air during cooling and 

constant-circulation operation. DOE 

anticipates that higher airflow-control 

settings are factory set for cooling 

operation. Therefore, DOE expects that 

the electrical energy consumption of a 

furnace fan is generally higher while 

performing the cooling function. 

Additionally, the design of the fan as 

well as its typical operating 

characteristics (i.e., ESP levels during 

operation in different modes) is directly 

related to the performance requirements 

in cooling mode. DOE is also concerned 

that excluding some functions from 

consideration in rating furnace fan 

performance would incentivize 

manufacturers to design fans that are 

optimized to perform efficiently at the 

selected rating airflow-control settings 

but that are not efficient over the broad 

range of field operating conditions. In 

DOE’s view, in order to obtain a 

complete assessment of overall 

performance and a metric that reflects 

the product’s electrical energy 

consumption during a representative 

average use cycle, the metric must 

account for electrical consumption in a 

set of airflow-control settings that spans 

all active mode functions. This would 

ensure a more accurate accounting of 

the benefits of improved furnace fans. 

DOE is aware that fan electrical 

consumption is accounted for in the 

SEER and HSPF metrics that DOE uses 

for CAC and heat pump products. 

However, DOE does not agree with 

manufacturers’ comments suggesting 

that the electricity used to circulate air 

through duct work is already adequately 

accounted for in existing energy 

efficiency metrics of other covered 

products, particularly the SEER and 

HSPF metrics of CAC/HP. This is 

because SEER and HSPF are used to test 

cooling and heating performance of a 

CAC or heat pump product, whereas 

FER rates airflow performance of a 

furnace fan product. While furnace fan 

airflow performance contributes to 

cooling and heating performance, 

manufacturers can improve SEER and 

HSPF without improving fan 

performance. In short, SEER and HSPFbased standards do not directly regulate 

the efficiency of furnace fans, as 

required by 42 U.S.C. 6295(f)(4)(D). DOE 

recognizes that the energy savings in 

cooling mode from higher-efficiency 

furnace fans used in some higherefficiency CAC and heat pumps is 

already accounted for in the analysis of 

energy conservation standards for those 

products. As a result, DOE conducted its 

analysis in this current rulemaking in 

such a way as to avoid double-counting 

these benefits by excluding furnace fan 

electricity savings that were already 

included in DOE’s analyses for CAC and 

heat pump products. Chapter 7 of the 

NOPR TSD provides a more detailed 

discussion of this issue. 

2. Product Classes 

DOE identified nine key product 

classes in the preliminary analysis, each 

of which was assigned its own 

candidate energy conservation standard 

and baseline FER. DOE identified 

twelve additional product classes that 

represent significantly fewer shipments 

and significantly less overall energy use. 

DOE grouped each non-key product 

class with a key product class to which 

it is closely related in applicationspecific design and internal structure 

(i.e., the primary criteria used to 

differentiate between product classes). 

DOE assigned the analytical results of 

each key product class to the non-key 

product classes with which it is grouped 

because DOE expected the energy use 

and incremental manufacturer 

production costs (MPCs) of improving 

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64082 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

efficiency to be similar within each grouping. Table IV.1 lists the 21 

preliminary analysis product classes. 

TABLE IV.1—PRELIMINARY ANALYSIS PRODUCT CLASSES

Key product class Additional product classes 

Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG–NC). 

Non-weatherized, Condensing Gas Furnace Fan (NWG–C). 

Weatherized Non-Condensing Gas Furnace Fan (WG–NC) ................... Weatherized, Non-Condensing Oil Furnace Fan (WO–NC). 

Weatherized Electric Furnace/Modular Blower Fan (WEF/WMB). 

Manufactured Home Weatherized Gas Furnace Fan (MH–WG). 

Manufactured Home Weatherized Oil Furnace Fan (MH–WO). 

Manufactured Home Weatherized Electric Furnace/Modular Blower Fan 

(MH–WEF/WMB). 

Non-weatherized, Non-Condensing Oil Furnace Fan (NWO–NC) .......... Non-Weatherized, Condensing Oil Furnace Fan (NWO–C). 

Manufactured Home Non-Weatherized Oil Furnace Fan (MH–NWO). 

Non-weatherized Electric Furnace/Modular Blower Fan (NWEF/NWMB) 

Heat/Cool Hydronic Air Handler Fan (HAH–HC) ..................................... Heat-Only Hydronic Air Handler Fan (HAH–H). 

Hydronic Air Handler Fan with Coil (HAH–C). 

Manufactured Home Heat/Cool Hydronic Air Handler Fan (MH–HAH– 

HC). 

Manufactured Home Heat-Only Hydronic Air Handler Fan (MH–HAH– 

H). 

Manufactured Home Hydronic Air Handler Fan with Coil (MH–HAH–C). 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace 

Fan (MH–NWG–NC).

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan 

(MH–NWG–C).

Manufactured Home Electric Furnace/Modular Blower Fan (MH–EF/

MB).

Goodman and Rheem agreed that the 

selected key product classes are an 

accurate representation of the market, 

with Rheem commenting that it 

manufactures six of the nine proposed 

key product classes. (Goodman, No. 50 

at p. 1; Rheem, No. 54 at p. 4) NEEP 

found that the proposed key product 

class structure appropriately allows for 

differentiation of products with higher 

thermal efficiency. (NEEP, No. 51 at p. 

2) Goodman, Rheem, and Ingersoll Rand 

disagreed with DOE’s approach to 

specify additional product classes 

within a key product class, stating that 

shipment data indicates that the 

additional product classes are too small 

to be covered. (Goodman, No. 50 at p. 

1; Ingersoll Rand, No. 57 at pp. A–1; 

Rheem, No. 54 at p. 4) 

Mortex expressed concern that the 

key product classes only represent 

furnace fan products with the most 

shipments and, if the energy 

conservation standards are set 

inappropriately high for these key 

product classes, the additional products 

classes (some of which serve unique 

applications) may also have trouble 

meeting any scaled standards levels 

based thereon. (Mortex, No. 43 at p. 53) 

DOE agrees with Goodman, Rheem, 

and Ingersoll Rand that the additional 

product classes represent products with 

few and in many cases, no shipments. 

Individual discussions with 

manufacturers for the MIA confirm 

DOE’s assumption. Additionally, review 

of the AHRI appliance directory reveals 

that only two of the additional product 

classes have active models listed: (1) 

Manufactured home weatherized gas 

furnace fans (MH–WG) and (2) 

manufactured home non-weatherized 

oil furnace fans (MH–NWO). The 

number of active basic models for MH– 

WG and MH–NWO are 4 and 16, 

respectively. For this reason, DOE 

proposes to eliminate the additional 

product classes except for MH–WG and 

MH–NWO. Due to the limited number 

of basic models for MH–WG and MH– 

NWO, DOE did not have data to directly 

analyze and establish standards for 

these additional product classes. As a 

result, DOE proposes to reserve space to 

establish standards for MH–WG and 

MH–NWO furnace fans in the future as 

sufficient data become available. 

As discussed previously in section 

IV.A.1, DOE proposes to also exclude 

hydronic air handlers from 

consideration in this rulemaking, 

thereby further reducing the number of 

product classes addressed by this 

rulemaking to eight. Table IV.2 includes 

a list of the revised set of product 

classes for residential furnace fans. 

TABLE IV.2—PROPOSED PRODUCT CLASSES FOR RESIDENTIAL FURNACE FANS

Product class 

Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG–NC). 

Non-Weatherized, Condensing Gas Furnace Fan (NWG–C). 

Weatherized Non-Condensing Gas Furnace Fan (WG–NC). 

Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO–NC). 

Non-Weatherized Electric Furnace/Modular Blower Fan (NWEF/NWMB). 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan (MH–NWG–NC). 

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan (MH–NWG–C). 

Manufactured Home Electric Furnace/Modular Blower Fan (MH–EF/MB). 

Manufactured Home Weatherized Gas Furnace Fan (MH–WG). 

Manufactured Home Non-Weatherized Oil Furnace Fan (MH–NWO). 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64083 

17The inlet cone is the opening of the furnace fan 

housing through which return air enters the 

housing. The inlet cone is typically curved inward, 

forming a cone-like shape around the perimeter of 

the opening, to provide a smooth surface to direct 

air from outside the housing to inside the housing 

and into the impeller. 

18Wiegman, Herman, Final Report for the 

Variable Speed Integrated Intelligent HVAC Blower 

(2003) (Available at: http://www.osti.gov/bridge/

servlets/purl/835010-GyvYDi/native/835010.pdf). 

19Walker, I.S, State-of-the-art in Residential and 

Small Commercial Air Handler Performance (2005) 

LBNL 57330 (Available at: http://epb.lbl.gov/

publications/pdf/lbnl-57330plus.pdf). 

3. Technology Options 

In the preliminary analysis, DOE 

considered seven technology options 

that would be expected to improve the 

efficiency of furnace fans: (1) Fan 

housing and airflow path design 

modifications; (2) high-efficiency fan 

motors (in some cases paired with 

multi-stage or modulating heating 

controls); (3) inverter-driven permanentsplit capacitor (PSC) fan motors; (4) 

backward-inclined impellers; (5) 

constant-airflow brushless permanent 

magnet (BPM) motor control relays; (6) 

toroidal transformers; and (7) switching 

mode power supplies. Since that time, 

DOE notes that its proposed scope of 

coverage no longer includes hydronic 

air handlers, the only furnace fan 

product class for which standby mode 

and off mode energy consumption is not 

accounted for in a separate DOE 

rulemaking. Consequently, the standby 

mode and off mode technology options 

(options 5 through 7 in the list above) 

are no longer applicable, because energy 

consumption in those modes is already 

fully accounted for in the DOE energy 

conservation standards rulemaking for 

residential furnaces and residential CAC 

and HP for the remaining proposed 

product classes. 76 FR 37408 (June 27, 

2011); 76 FR 67037 (Oct. 31, 2011). In 

addition, DOE found that multi-staging 

and modulating heating controls can 

also improve FER, so hence DOE 

evaluated multi-staging and modulating 

heating controls as a separate 

technology option for the NOPR. Thus, 

the resultant list of potential technology 

options identified for the NOPR include: 

(1) Fan housing and airflow path design 

modifications; (2) inverter-driven PSC 

fan motors; (3) high-efficiency fan 

motors; (4) multi-staging and 

modulating heating controls; and (5) 

backward-inclined impellers. Each 

identified technology option is 

discussed below and in more detail in 

chapter 3 of the NOPR TSD. 

a. Fan Housing and Airflow Path Design 

Improvements 

The preliminary analysis identified 

fan housing and airflow path design 

modifications as potential technology 

options for improving the energy 

efficiency of furnace fans. Optimizing 

the shape of the inlet cone 17 of the fan 

housing, minimizing gaps between the 

impeller and fan housing inlet, and 

optimizing cut-off location and 

manufacturing tolerances were 

identified as enhancements to a fan 

housing that could improve efficiency. 

Separately, modification of elements in 

the airflow path, such as the heat 

exchanger, could reduce internal static 

pressure and as a result, reduce energy 

consumption. Manufacturer input was 

requested to determine the use and 

practicability of these potential 

technology options. 

ASAP expressed support for DOE’s 

consideration of the aerodynamics of 

furnace fan cabinets in its initial 

analysis of technology options. (ASAP, 

No. 43 at p. 16) In particular, ASAP 

cited a 2003 GE study 18 that quantified 

energy savings produced by modifying 

fan housing as justification for its 

inclusion as an option. (ASAP, No. 43 

at p. 71) ACEEE, et al. also cited a 

Lawrence Berkeley National Laboratory 

(LBNL) study 19 that linked changes in 

efficiency to modifying the clearance 

between fan housing and an air handler 

cabinet wall. (ACEEE, et al., No. 55 at 

p. 2) According to Ingersoll Rand, there 

are proprietary fan housing designs on 

the market that already improve 

mechanical efficiency by 10–20 percent 

at a cost much lower than the cost to 

implement high-efficiency motors or 

make changes to the impeller and its 

tolerances. (Ingersoll Rand, No. 57 at pp. 

A–3) 

DOE is aware of the studies cited by 

ASAP and ACEEE, as well as the 

proprietary housing design mentioned 

by Ingersoll Rand. For the NOPR, DOE 

decided to include fan housing design 

modifications as a technology to be 

evaluated further in the screening 

analysis because of these indications 

that each could improve fan efficiency. 

Many interested parties requested that 

DOE keep airflow path design as a 

technology option. (Unico, No. 43 at p. 

72; EPA, No. 43 at p. 76; ASAP, No. 43 

at p. 77; CA IOU, No. 56 at p. 3; ACEEE, 

et al., No. 55 at p. 2) Manufacturers 

stated that improving airflow path 

design, like modifying fan housing, is 

highly cost-effective when compared to 

other enhancements. (Rheem, No. 43 at 

p. 74; Lennox, No. 43 at p. 74; Adjuvant, 

No. 43 at p. 74) Lennox noted a 10–20 

percent improvement in efficiency 

could be achieved by changing the 

airflow path when evaluated against a 

baseline design coupled with a PSC 

motor. (Lennox, No. 47 at p. 9; 

Morrison, No. 58 at p. 5) However, the 

EPA questioned whether considering 

modified airflow path as a technology 

option was appropriate when DOE plans 

to only regulate the fan itself and not the 

entire air handler. (EPA, No. 43 at p. 62) 

While Morrison agreed that airflow 

path and fan housing design affect 

performance and efficiency, it argued 

that establishing a baseline design (over 

which to determine improvement) 

might be difficult because parameters 

used to select an individual 

manufacturer’s design may have taken 

into account considerations outside the 

scope of the furnace fan rulemaking. 

(Morrison, No. 43 at p. 75) Rheem 

suggested that AHRI should present 

airflow path and fan housing design 

data to the DOE in order to help 

establish the two technology options. 

(Rheem, No. 43 at p. 79) 

Similar to the fan housing design 

modifications, DOE decided to include 

airflow path design as a technology 

option to be evaluated further in the 

screening analysis as a result of these 

claims of potential fan efficiency 

improvement. In response to the 

comment received from the EPA, DOE 

believes including airflow path design is 

appropriate because of its potential to 

impact fan efficiency. Airflow path 

design will impact the proposed rating 

metric, FER, because DOE is proposing 

to test the furnace fan as it is factory 

installed in the HVAC product. As 

discussed previously in section IV.A.1, 

DOE has conducted its NOPR analyses 

in such a way as to meet the statutory 

requirements set forth by EPCA without 

ignoring system effects. Chapter 3 of the 

NOPR TSD provides more technical 

detail regarding fan housing and airflow 

path design modifications and how 

these measures could reduce furnace fan 

energy consumption. 

b. Inverter Controls for PSC Motors 

In the preliminary analysis, DOE 

identified inverter-driven PSC motors as 

a technology option. DOE is aware of a 

series of non-weatherized gas furnaces 

with inverter-driven PSC furnace fan 

motors that was once commercially 

available. DOE has determined that 

inverter controls provide efficiency 

improvement by offering additional 

intermediate airflow-control settings 

and a wider range of airflow-control 

settings (i.e., lower turndown ratio) than 

conventional PSC controls. The 

additional airflow-control settings and 

range enable the furnace fan to better 

match demand. Publically-available 

performance data for the series of 

furnaces using inverter-driven PSCs 

demonstrate that the use of this 

technology results in reduced FER 

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64084 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

20 ‘‘ECM’’ and ‘‘X13’’ refer to the constant-airflow 

and constant torque (respectively) BPM offerings of 

a specific motor manufacturer. Throughout this 

notice, DOE will refer to these technologies using 

generic terms, which are introduced in the list 

above. However, DOE’s summaries of interestedparty submitted comments include the terminology 

used by the interested party when referring to motor 

technologies. 

21A lower turndown ratio can significantly 

improve furnace fan efficiency because fan input 

power has a cubic relationship with airflow. 

22See chapter 3 of the TSD for more details 

regarding fan operation. 

values compared to baseline PSC 

furnace fans. Consequently, DOE 

considered inverter-driven PSCs as a 

technologically feasible option for 

reducing furnace fan energy 

consumption. 

Manufacturers were opposed to listing 

inverter-driven PSCs as a viable 

technology option. Goodman 

commented that there are alternate, 

more cost-effective solutions to reduce 

energy consumption for air-moving 

systems, such as airflow path design. 

(Goodman, No. 50 at p. 2) Ingersoll 

Rand and Morrison commented that the 

small energy savings provided by 

inverter-driven PSCs are not worth the 

added cost and complexity when ECM 

(referred to herein by DOE as a 

‘‘constant-airflow BPM motor’’) 

technology is available at a comparable 

cost and greater efficiency. (Ingersoll 

Rand, No. 57 at pp. A–1; Morrison, No. 

58 at p. 2; Rheem, No. 54 at p. 6) 

Morrison suggested that the motor 

industry was seeking lower-cost 

alternatives to ECM motors, such as 

fractional horsepower switched 

reluctance motors or inverter-driven 

PSCs, but that no low-cost alternative 

currently exists. (Morrison, No. 58 at p. 

2) NMC, a motor manufacturer, went 

further, stating that inverter-driven PSC 

motors using wave chopper controls are 

not typically more efficient than multitap PSC motors and that they are not a 

practical alternative to brushless 

permanent magnet technology. (NMC, 

No. 60 at p. 2) 

DOE recognizes manufacturers’ 

concerns with the cost-effectiveness of 

inverter-driven PSC fan motors. 

However, DOE decided to include 

inverter-driven PSC motors as a 

technology option to be evaluated 

further in the screening analysis due to 

their potential to reduce furnace fan 

energy consumption. DOE evaluates in 

the engineering analysis the costeffectiveness of all energy-saving 

technology options that are not screened 

out. Chapter 3 of the NOPR TSD 

provides a more detailed discussion of 

inverter-driven PSC furnace fan motors. 

c. High-Efficiency Motors 

In the preliminary analysis, DOE 

identified four motor types that are 

typically used in furnace fan assemblies: 

(1) PSC motors; (2) PSC motors that 

have more than 3 airflow-control 

settings and sometimes improved 

materials (hereinafter referred to as 

‘‘improved PSC’’ motors); (3) constanttorque BPM motors (often referred to as 

‘‘X13 motors’’); and (4) constant-airflow 

BPM motors (often referred to as 

‘‘ECMs’’).20 DOE finds that furnace fans 

using high-efficiency motor technology 

options operate more efficiently than 

furnace fans using baseline PSC motors 

by: 

• Functioning more efficiently at a 

given operating condition; 

• Maintaining efficiency throughout 

the expected operating range; and 

• Achieving a lower turndown ratio 21

(i.e., ratio of airflow in lowest setting to 

airflow in highest setting). 

Ingersoll Rand commented that a PSC 

motor will use less energy at higher 

static pressures, while an ECM increases 

energy use as static pressure rises. 

Ingersoll Rand stated that as a result, 

understanding the impact of switching 

to an ECM at higher static pressures may 

confuse the consumer. (Ingersoll Rand, 

No. 43 at p. 67) 

DOE is aware that consumers may be 

confused when BPM motors (referred to 

as ECMs by Ingersoll Rand above) 

consume more energy than PSC motors 

at higher static pressures, because 

consumers expect BPM motors to 

consume less energy than PSC motors 

under the same operating conditions. In 

general, input power to the fan motor 

increases as static pressure increases to 

provide a given airflow (i.e., the fan 

motor has to work harder in the face of 

increased resistance to provide a desired 

amount of air).22 DOE agrees with 

Ingersoll Rand that as static pressure 

increases, input power to a PSC-driven 

furnace fan will decrease, which is 

seemingly contradictory to the principle 

described above. DOE finds that input 

power to a PSC-driven furnace fan 

decreases because the airflow provided 

by the fan decreases as static pressure 

rises (i.e., the fan does not have to work 

as hard in the face of increased 

resistance because the fan is not 

providing as much air). Input power to 

a constant-airflow BPM motor-driven 

furnace fan, on the other hand, will 

increase as static pressure rises because 

the BPM motor-driven fan is designed to 

maintain the desired level of airflow. 

Recognizing that this behavior could 

complicate comparing the relative 

performance of these motor 

technologies, DOE’s proposed rating 

metric, FER, is normalized by airflow to 

result in ratings that are in units of 

watts/cfm. DOE believes that a 

comparison using a watts/cfm metric 

will mitigate confusion by accurately 

reflecting that even though a constantairflow BPM motor is consuming more 

power at higher statics, it is also 

providing more airflow, which is useful 

to the consumer. 

Interested parties recognized the 

benefits provided by constant-torque 

and constant-airflow BPM motors. NMC 

agreed that variable-speed technology is 

useful in furnace fan applications, 

because the airflow settings can be 

adjusted and optimized for a range of 

static pressure levels. (NMC, No. 60 at 

p. 1) NEEP supported DOE’s proposal 

for an efficiency level based on a 

constant-torque ECM as part of the 

furnace fan analysis, given that these 

motors are widely available and less 

expensive than ‘‘full blown’’ ECM 

motors. (NEEP, No. 51 at p. 3) Morrison 

commented that ECM technology offers 

the best cost for performance value. 

(Morrison, No. 58 at p. 2) 

Interested parties agreed that the BPM 

motor variations (i.e., constant-torque 

and constant-airflow) and inverterdriven PSC motors generally have lower 

turndown ratios than a three-speed PSC 

motor. Table IV.3 contains the 

turndown ratio estimates supplied 

publicly by interested parties. 

Manufacturers generally provided 

similar feedback during interviews. 

NMC stated that the turndown ratios 

achieved by ECM technology allow for 

continuous circulation at optimal CFM 

levels, unlike PSC options, which 

cannot achieve low enough CFM. (NMC, 

No. 60 at p. 1) Lennox commented that 

including constant circulation as part of 

FER will penalize PSCs and artificially 

inflate the performance of ECMs. 

(Lennox, No. 47 at p. 9) Ingersoll Rand 

stated that furnace fan turndown ability 

is limited by the physical characteristics 

of the impeller and bearings. (Ingersoll 

Rand, No. 57 at pp. A–2) 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64085 

23A further discussion of multi-stage heating 

controls is found in chapter 3 of the preliminary 

analysis TSD, which can be found at the following 

web address: http://www.regulations.gov/

#!documentDetail;D=EERE-2010-BT-STD-0011- 

0037. 

24Wiegman, Herman, Final Report for the 

Variable Speed Integrated Intelligent HVAC Blower 

(2003) (Available at: http://www.osti.gov/bridge/

servlets/purl/835010-GyvYDi/native/835010.pdf). 

25Walker, I.S., Laboratory Evaluation of 

Residential Furnace Blower Performance (2005) 

(Available at: http://www.escholarship.org/uc/item/ 

7tx9c86s#page-1). 

TABLE IV.3—STAKEHOLDER ESTIMATED FAN MOTOR TURNDOWN RATIOS

Stakeholder PSC Wave chopper 

controller PSC 

Constant-torque 

ECM 

Constantairflow ECM 

NMC (NMC, No. 60 at p. 1) .................................................... 0.45 0.36 0.45 0.20 

Goodman (Goodman, No. 50 at p. 2) ..................................... 0.70–0.75 .............................. 0.40–0.50 0.25–0.35 

Rheem (Rheem, No. 54 at p. 6) .............................................. 0.60 .............................. 0.30 0.20 

Overall, comments regarding highefficiency motor turndown ratio 

validated DOE’s expectation that lower 

turndowns are associated with 

improved PSCs, inverter-driven PSCs, 

and BPM motor variations. These 

motors consume significantly less 

energy over a typical residential furnace 

fan operating range. DOE disagrees with 

Lennox that including constant 

circulation as part of FER would 

‘‘artificially’’ inflate the performance of 

BPM motors compared to PSC motors, 

because DOE concludes that there is 

non-trivial use of this mode by 

consumers. As part of the test procedure 

rulemaking, DOE estimates that on 

average, consumers operate furnace fans 

in constant-circulation mode 400 hours 

annually. This estimate is used to 

weight fan constant-circulation 

electrical energy consumption in FER. 

Excluding this mode from the rating 

metric would underestimate the 

potential efficiency improvements of 

technology options, such as BPM 

motors, that could reduce fan electrical 

consumption while performing this 

function. A detailed discussion of DOE’s 

estimate for national average constantcirculation furnace fan operating hours 

can be found in the test procedure 

NOPR. 77 FR 28674, 28682 (May 15, 

2012). DOE did not revise these 

estimates in the test procedure SNOPR 

published on April 2, 2013. 78 FR 

19606. 

d. Multi-Stage or Modulating Heating 

Controls 

In the preliminary analysis (77 FR 

40530 (July 10, 2012)), DOE identified 

two-stage and modulating heating 

controls (hereinafter collectively 

referred to as ‘‘multi-stage’’ controls) as 

a method of reducing residential furnace 

fan energy consumption. Multi-stage 

furnaces typically operate at lower heat 

input rates and, in turn, a lower airflowcontrol setting for extended periods of 

time compared to single-stage furnaces 

to heat a residence.23 Due to the cubic 

relationship between fan input power 

and airflow, operating at the reduced 

airflow-control setting reduces overall 

fan electrical energy consumption for 

heating despite the extended hours. In 

the preliminary analysis, DOE analyzed 

multi-staging controls paired with use of 

a constant-airflow BPM fan motor as one 

technology option, because DOE found 

the two to be almost exclusively used 

together in commercially-available 

products. 

ASAP, ACEEE, NCLC, NRDC, and 

NEEA encouraged DOE to consider X13- 

level motors applied with multi-stage 

furnace controls as a technology option. 

ACEEE et al. added that they expect an 

X13-level motor paired with multi-stage 

furnace controls to operate at a lower 

speed (corresponding to the lower 

burner output) in heating mode for a 

greater number of hours compared to an 

X13-level motor applied with singlestage furnace controls. According to 

ACEEE et al., the net effect of operating 

at a lower speed for a greater number of 

hours could be electricity savings, 

because motor power decreases with the 

cube of the speed. (ACEEE et al., No. 55 

at p. 3) Rheem commented that it does 

use modulating furnace controls with 

PSC and X13 motors, not just ECM 

motors. (Rheem, No. 43 at p. 81) During 

interviews, other manufacturers also 

commented that multi-stage heating 

controls can be and are used regardless 

of motor type. 

Based on comments from Rheem and 

other manufacturers, DOE recognizes 

that multi-stage controls can be paired 

with other motor types, not just 

constant-airflow BPM motors. DOE 

agrees with ACEEE et al. that 

implementing multi-stage heating 

controls independent of motor type 

could result in residential furnace fan 

efficiency improvements. Consequently, 

DOE has decided to de-couple multistaging controls from the constantairflow BPM motor technology option. 

Accordingly, DOE has evaluated multistaging controls as a separate technology 

option for the NOPR. 

e. Backward-Inclined Impellers 

DOE determined in the preliminary 

analysis that using backward-inclined 

impellers could lead to possible 

residential furnace fan energy savings. 

Although limited commercial data 

regarding backward-inclined impeller 

performance were available, DOE cited 

research by General Electric that 

showed large improvements in 

efficiency were achievable under certain 

operating conditions.24

Morrison disagreed with the DOE’s 

findings, stating that literature indicates 

there are varying degrees of performance 

improvement when backward-inclined 

impellers are used in place of forwardcurved impellers. (Morrison, No. 43 at 

p. 132) Specifically, Morrison cited an 

LBNL study 25 where a furnace with a 

backward-inclined impeller exhibited 

no efficiency gains compared to a low 

efficiency forward-curved impeller. 

(Morrison, No. 58 at p. 3) According to 

Morrison, limitations on operating 

speed also make it necessary to couple 

backward-inclined impellers with highefficiency motors. (Morrison, No. 58 at 

p. 2) Other commenters asserted that the 

optimal range of operation for 

backward-inclined impellers may fall 

outside that of typical residential 

furnace fan use. (SCE, No. 43 at p. 59; 

Ingersoll Rand, No. 57 at p. A–3; EEI, 

No. 60 at p. 2; CA IOU, No. 56 at p. 4) 

CA IOU testing showed that backwardinclined impellers are more sensitive to 

external static pressures, which could 

also limit their use. (CA IOU, No. 56 at 

p. 4) Rheem stated that improved 

efficiency of backward-inclined 

impellers is often achieved at mid-flow 

rates and high static levels. (Rheem, No. 

54 at p. 7) Rheem commented that 

research by the replacement part 

manufacturer (Lau) reveals that 

backward-inclined impellers, at 

diameters typically used in residential 

applications, offer no significant 

efficiency improvements. (Rheem, No. 

43 at p. 132) 

Ebm-papst, a company that provides 

custom air-movement products, offered 

a diverging opinion from most 

manufacturers regarding the energysaving potential of backward-inclined 

impellers. That company retrofitted 

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several HVAC products with furnace fan 

assemblies that incorporated backwardinclined impellers without increasing 

cabinet size and tested them. Depending 

on the application and the external 

static pressure load (typically 0.5 in.w.c. 

to 1 in.w.c.), ebm-papst found that the 

backward-inclined impeller achieved 

input power reductions from 15–30 

percent. (ebm-papst Inc., No. 52 at p. 1) 

Ebm-papst did note that for backwardinclined impellers to match the 

performance of forward-curved 

impellers without increasing impeller 

dimensions, fan speed must increase. 

However, ebm-papst did not anticipate 

that this would be an obstacle to 

implementation using available motor 

technologies. (ebm-papst Inc., No. 52 at 

p. 1) 

DOE recognizes that backwardinclined impellers may not be more 

efficient than forward-curved impellers 

under all operating conditions and that 

there may be considerable constraints to 

implementation. However, the GE 

prototype and ebm-papst prototype both 

demonstrate that significant energy 

consumption reduction is achievable at 

some points within the range of 

residential furnace fan operation. For 

this reason, DOE has included 

backward-inclined impellers as a 

technology option to be evaluated 

further in the screening analysis, where 

DOE investigates any other concerns 

regarding the use of a technology 

option, such as the practicability to 

manufacture or impacts on reliability, 

utility, and safety 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. 

Technologies that are not incorporated 

in commercial products or in working 

prototypes will not be considered 

further. 

2. Practicability to manufacture, 

install, and service. If it is determined 

that mass production and reliable 

installation and servicing of a 

technology in commercial products 

could not be achieved on the scale 

necessary to serve the relevant market at 

the time of the compliance date of the 

standard, then that technology will not 

be considered further. 

3. Impacts on product utility or 

product availability. If it is determined 

that a technology would have significant 

adverse impact on the utility of the 

product to significant subgroups of 

consumers or would result in the 

unavailability of any covered 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 be considered 

further. 

4. Adverse impacts on health or 

safety. If it is determined that a 

technology would have significant 

adverse impacts on health or safety, it 

will not be considered further. 

(10 CFR part 430, subpart C, appendix 

A, 4(a)(4) and 5(b)) 

In sum, if DOE determines that a 

technology, or a combination of 

technologies, fails to meet one or more 

of the above four criteria, it will be 

screened out from further consideration 

in the engineering analysis. The reasons 

for eliminating any technology are 

discussed below. 

The subsequent sections include 

comments from interested parties 

pertinent to the screening criteria, 

DOE’s evaluation of each technology 

option against the screening analysis 

criteria, and whether DOE determined 

that a technology option should be 

excluded (‘‘screened out’’) based on the 

screening criteria. 

1. Screened-Out Technologies 

DOE screened out fan housing and 

airflow path design improvements in 

the preliminary analysis. DOE had little 

quantitative data to correlate specific 

fan housing alterations with efficiency 

improvements. Additionally, DOE 

anticipated that any improvements to 

airflow path design that would result in 

fan efficiency improvement would 

require an increase in furnace fan 

cabinet size or negatively impact heat 

exchanger performance, thereby 

compromising the practicability to 

manufacture or reducing utility to 

consumers. 

Interested parties stated many 

concerns associated with modifying 

airflow path designs to reduce 

residential furnace fan electrical energy 

consumption. Morrison provided an 

example illustrating the tradeoffs in 

thermal performance of selecting an 

airflow path that enhances fan 

performance. Specifically, Morrison 

stated that, ‘‘a 90%+ efficient furnace 

will have higher pressure drop through 

the furnace than a similarly sized 80%+ 

efficient furnace because of the added 

heat transfer surface area.’’ (Morrison, 

No. 58 at p. 5) Conversely, 

manufacturers noted that higher SEER 

requirements call for increased central 

air conditioner or heat pump indoor coil 

size, leaving reduced space for other 

HVAC system components. Having to 

decrease the size of the fan due to these 

additional regulations could also make 

the furnace fan less efficient. (Morrison, 

No. 43 at p. 62) Mortex and Morrison 

also commented that the primary 

concern when selecting an airflow path 

design is usually safety or impact on 

heat transfer, not efficiency. (Mortex, 

No. 43 at p. 135; Morrison, No. 58 at p. 

5) AHRI and Rheem outlined all of the 

possible housing design modifications 

that would affect airflow path design, 

including housing shape, distance 

between components, size of duct 

openings, and motor mounting. (AHRI, 

No. 48 at p. 3; Rheem, No. 54 at p. 9) 

AHRI emphasized that some 

modifications could improve or 

decrease efficiency, but all would 

require an increase in product size and, 

thus, manufacturing costs. (AHRI, No. 

48 at p. 3) During manufacturer 

interviews, many manufacturers 

reiterated or echoed that airflow path 

design modifications would likely 

require increasing HVAC product size. 

Manufacturers explained that increasing 

HVAC products size would have 

adverse impacts on practicability to 

install and consumer utility, because the 

furnace fan market is predominantly a 

replacement market. Installing HVAC 

products that are larger in size 

compared to the products they are 

purchased to replace would likely 

present issues, mainly significant 

increases in installation costs or 

minimizing product availability to 

consumers. 

DOE did not receive or find additional 

quantitative data that shows a 

measurable increase in fan efficiency as 

a result of a specific fan housing or 

airflow path design modification. Even 

after individual discussion with 

manufacturers, DOE was not able to 

identify a case where fan housing or 

airflow path design modifications could 

lead to potential fan energy savings 

without increasing the size of the HVAC 

product in which the furnace fan is used 

or compromising thermal performance 

or safety. In response to Morrison’s 

comment, DOE assumes that the ‘‘added 

heat transfer surface area’’ in the 90%+ 

efficient furnace that Morrison refers to 

is the secondary heat exchanger 

typically used in condensing furnaces. 

DOE is aware of the impacts on thermal 

efficiency and furnace fan performance 

of the additional heat exchanger in 

condensing furnaces. As discussed in 

section III.B, DOE accounted for these 

impacts in its criteria for differentiating 

product classes. The 90%+ furnace 

(condensing) and 80%+ furnace (noncondensing) that Morrison refers to 

would not be in the same product class 

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according to DOE’s proposed product 

classes. In addition, DOE concurs with 

manufacturers’ observations that an 

increase in envelope size would 

adversely impact practicability to 

manufacture and install, as well as 

product utility. Accordingly, DOE has 

decided to screen out fan housing and 

airflow path design modifications until 

quantitative data become available to 

show that a fan housing or airflow path 

design modification results in improved 

fan efficiency without increasing HVAC 

product size or compromising thermal 

performance or safety. 

2. Remaining Technologies 

Through a review of each technology, 

DOE found that all of the other 

identified technologies met all four 

screening criteria to be examined further 

in DOE’s analysis. In summary, DOE did 

not screen out the following technology 

options: (1) Inverter-driven PSC fan 

motors; (2) high-efficiency fan motors; 

(3) multi-stage heating controls; and (4) 

backward-inclined impellers. DOE 

understands that all of these technology 

options are technologically feasible, 

given that the evaluated technologies 

are being used (or have been used) in 

commercially-available products or 

working prototypes. These technologies 

all incorporate materials and 

components that are commercially 

available in today’s supply markets for 

the residential furnace fans that are the 

subject of this NOPR. Therefore, DOE 

believes all of the efficiency levels 

evaluated in this notice are 

technologically feasible. For additional 

details, please see chapter 4 of the 

NOPR TSD. 

DOE finds that all of the remaining 

technology options also meet the other 

screening criteria (i.e., practicable to 

manufacture, install, and service and do 

not result in adverse impacts on 

consumer utility, product availability, 

health, or safety). Interested parties, 

however, voiced concerns regarding 

these screening criteria as they apply to 

BPM fan motors and backward-inclined 

impellers. DOE addresses these 

concerns in the sections immediately 

below. DOE did not receive public 

comments relevant to the screening 

analysis criteria for the other remaining 

technology options. 

a. High-Efficiency Motors 

AHRI stated that there are a limited 

number of ECM motor suppliers to 

furnace fan manufacturers. (AHRI, No. 

48 at p. 2) Lennox commented that the 

technology is proprietary and 

dominated by a single motor 

manufacturer. Lennox added that 

industry competition is adversely 

affected as a result. (Lennox, No. 47 at 

p. 6) AHRI and Lennox noted that 

furnace fan manufacturers already have 

difficulties securing an adequate supply, 

so mandating ECM use would impact 

product availability. (Lennox, No. 47 at 

p. 8; AHRI, No. 48 at p. 2) AHRI and 

Mortex stated that no alternative ECM 

exists at the scale of Regal Beloit ECMs 

and that limiting PSC applicability 

would reduce product flexibility. 

(AHRI, No. 48 at p. 2; Mortex, No. 43 

at p. 129) Both Goodman and Ingersoll 

Rand do not expect that a technology 

with better or equivalent performance to 

brushless permanent magnet motors 

will be available at a reasonable cost in 

the next decade. (Goodman, No. 50 at p. 

2; Ingersoll Rand, No. 57 at pp. A–2) 

Regal Beloit disagreed with 

residential furnace fan manufacturers, 

claiming that there is more than just a 

single motor manufacturer offering ECM 

technology. (Regal Beloit, No. 43 at p. 

130) NMC concurred with Regal Beloit, 

stating that it too sells brushless 

permanent magnet motors in high 

volumes to furnace fan manufacturers. 

(NMC, No. 60 at p. 2) NMC supported 

DOE’s assumption that after 

implementation of furnace fan 

efficiency standards, brushless 

permanent magnet motor technologies 

will become increasingly available over 

time. (NMC, No. 60 at p. 2) Ingersoll 

Rand confirmed that brushless DC 

motors are an ECM alternative available 

from several suppliers, although prices 

vary. (Ingersoll Rand, No. 57 at pp. 

A–2) Although Rheem commented that 

they have applied brushless DC motors 

produced by more than just a single 

vendor, their current designs and 

production processes have been 

developed to be specifically paired with 

Regal Beloit products. (Rheem, No. 54 at 

p. 7) DOE discovered during interviews 

with manufacturers that there are 

multiple suppliers of BPM motors. DOE 

also found further evidence that some 

manufacturers purchase BPM motors 

from multiple suppliers. EEI stated that 

the expiration of Regal Beloit ECM 

patents around 2020 may increase the 

availability of this motor type while 

decreasing cost. (EEI, No. 43 at p. 127) 

In the preliminary analysis, DOE 

requested comment as to whether 

manufacturers could alternatively 

develop BPM motor controls in-house 

when using high-efficiency motors from 

other, non-Regal Beloit, suppliers. 

Currently, Regal Beloit offers BPM 

motors packaged with controls. 

Manufacturers may buy BPM motors 

that are not pre-packaged with controls 

from a supplier other than Regal Beloit, 

and develop their own controls. DOE 

anticipated that if furnace fan 

manufacturers had the ability to develop 

controls independently of Regal Beloit, 

this might drive down costs as well as 

dependency on a single manufacturer. 

Most furnace fan manufacturers 

claimed that development of in-house 

controls for BPM motors is not an 

option. For example, Rheem uses 

General Electric and Regal Beloit 

software tools to program motors and 

does not currently have the capability to 

design motor controls without this tool. 

(Rheem, No. 54 at p. 6) Lennox and 

Morrison noted that having to design, 

build, and test motor controls would 

increase burden for large manufacturers 

and be prohibitively expensive to small 

manufacturers, neither of which have 

the expertise to develop these types of 

complex controls internally. (Lennox, 

No. 47 at p. 6; Morrison, No. 58 at p. 2) 

Lennox was also fearful that ECM 

suppliers might find motor control 

development an attempt to develop a 

replacement product and cut ties with 

furnace fan manufacturers. (Lennox, No. 

47 at p. 7) 

NMC confirmed that many U.S. motor 

suppliers bring in equipment from a fan 

manufacturer and develop unique ECM 

controls tailored to the manufacturer. 

(NMC, No. 43 at p. 128) 

While DOE recognizes that Regal 

Beloit possesses a number of patents in 

the BPM motor space, other motor 

manufacturers (e.g., Broad Ocean or 

NMC) also offer BPM models. 

Additionally, DOE is aware that in years 

past, residential furnace fans paired 

with constant-airflow BPM motors 

accounted for 30 percent of the market. 

While DOE estimates that constantairflow BPM motors represent only 

10–15 percent of the current furnace fan 

market, the manufacturing capability to 

meet BPM motor demand exists. Thus, 

DOE has tentatively concluded that 

BPM motor technology is currently 

available from more than one source 

and will become increasingly available 

to residential furnace fan manufacturers. 

Some fan manufacturers expressed 

concern that high-efficiency motor 

reliance on rare earth metals would 

impact supply. However, DOE is aware 

of high-efficiency motors that do not 

contain rare earth materials. DOE is also 

confident, after manufacturer 

discussions, that if BPM motors are 

adopted as a means to meet a future 

residential furnace fan energy 

conservation standard, manufacturers 

would have a number of cost- and 

performance-competitive suppliers from 

which to choose who have available, or 

could rapidly develop, control systems 

independently of the motor 

manufacturer. 

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b. Backward-Inclined Impellers 

According to Rheem, backwardinclined impellers must have larger 

diameter and operate at higher speed 

than forward-curve impellors in order to 

attain equivalent performance (i.e., flow 

and pressure rise). (Rheem, No. 54 at p. 

7) Goodman asserted that a 40–50 

percent increase in diameter would be 

necessary for backward-inclined 

impellers to outperform their forwardcurved counterparts. (Goodman, No. 50 

at p. 2) According to AHRI, an impeller 

diameter increase would lead to an 

increase in overall product size, a 

change which may not be possible 

without redesigning the product. (AHRI, 

No. 48 p. 2) Morrison and Rheem argued 

that the larger evaporator coil size 

required to meet higher SEER 

requirements already limits the space 

available for furnaces, so an increase in 

product size due to backward-inclined 

impellers would severely restrict 

product application. (Morrison, No. 58 

at p. 3; Rheem, No. 54 at p. 7) Ingersoll 

Rand stated that when used with 

backward-inclined impellers, motors 

typically operate at twice the RPM of 

forward-curved impellers for the same 

air delivery and static pressure. 

(Ingersoll Rand, No. 57 at pp. A–3) 

However, ebm-papst stated that they 

retrofitted existing equipment with 

backward-curved impellers, which only 

required making minor changes to the 

airflow path within the equipment. 

Ebm-papst also stated that it tested the 

retrofitted products, which achieved 

reductions of input power to the furnace 

fan in the range of 15–30 percent, 

depending on the specific equipment 

and the external static pressure 

(typically tested at 0.5 in.w.c. and 1.0 

in.w.c.). (ebm-papst, No. 52 at p. 1) 

AHRI and Rheem were also concerned 

with the potential impacts that 

backward-inclined impellers could have 

on heat exchanger temperatures. AHRI 

and Rheem stated that the air 

distribution out of a blower housing 

with a forward-curved wheel is 

maximum at the outside edges of the 

wheel and decreases at the center of the 

wheel. The air distribution out of a 

blower housing with a backwardinclined wheel is maximum at the 

center of the wheel and tapers off at the 

outside edges. The modified air 

distribution out of the blower housing 

would require assessment of heat 

exchanger temperatures for reliability 

and safety, as temperature limits 

operation. (AHRI, No. 48 at p. 2; Rheem, 

No. 54 at p. 8) 

Some commenters also argued that 

backward-inclined impellers may affect 

furnace fan utility, because the noise 

produced by this impeller type may 

limit product application. Utilities have 

claimed that a backward-inclined 

impeller, in combination with increased 

fan motor speeds to achieve higher 

efficiency, leads to amplified noise 

levels. (EEI, No. 60 at p. 3; SCE, No. 43 

at p. 59) However, during its testing of 

HVAC products retrofitted with a 

backward-inclined impeller, ebm-papst 

expressed a contrary view, observing 

that noise levels produced by the 

backward-inclined impeller were not 

significantly different from forwardcurved impellers. (ebm-papst Inc., No. 

52 at p. 1) 

DOE finds that there are multiple 

approaches to implementing backwardinclined impellers to reduce furnace fan 

energy consumption. DOE recognizes 

that one approach is to use a backwardinclined impeller that is larger than a 

standard forward-curved impeller, 

which may lead to larger HVAC 

products. Another approach is to pair 

the backward-inclined impeller with a 

motor that operates at increased RPM. 

Ebm-papst tests show a significant 

potential to reduce fan electrical energy 

consumption for a backward-inclined 

impeller assembly that uses existing 

motor technology at higher RPMs and is 

implemented in existing HVAC 

products (i.e., no increase in product 

size required). Ebm-papst does not 

believe that achieving higher RPMs with 

existing motor technology is an obstacle 

for implementing this technology. DOE 

believes that this prototype represents a 

backward-inclined implementation 

approach that could achieve fan energy 

savings while avoiding the negative 

impacts listed by manufacturers. 

Consequently, DOE decided not to 

screen out the backward-inclined 

impeller technology option. 

C. Engineering Analysis 

In the engineering analysis 

(corresponding to chapter 5 of the NOPR 

TSD), DOE establishes the relationship 

between the manufacturer selling price 

(MSP) and improved residential furnace 

fan efficiency. This relationship serves 

as the basis for cost-benefit calculations 

for individual consumers, 

manufacturers, and the Nation. DOE 

typically structures the engineering 

analysis using one of three approaches: 

(1) Design option; (2) efficiency level; or 

(3) reverse engineering (or costassessment). The design-option 

approach involves adding the estimated 

cost and efficiency of various efficiencyimproving design changes to the 

baseline to model different levels of 

efficiency. The efficiency-level 

approach uses estimates of cost and 

efficiency at discrete levels of efficiency 

from publicly-available information, 

and information gathered in 

manufacturer interviews that is 

supplemented and verified through 

technology reviews. The reverse 

engineering approach involves testing 

products for efficiency and determining 

cost from a detailed bill of materials 

derived from reverse engineering 

representative products. The efficiency 

values range from that of a least-efficient 

furnace fan sold today (i.e., the baseline) 

to the maximum technologically feasible 

efficiency level. For each efficiency 

level examined, DOE determines the 

MSP; this relationship is referred to as 

a cost-efficiency curve. 

1. Efficiency Levels 

In this rulemaking, DOE used an 

efficiency-level approach in conjunction 

with a design-option approach to 

identify incremental improvements in 

efficiency for each product class. An 

efficiency-level approach enabled DOE 

to identify incremental improvements in 

efficiency for efficiency-improving 

technologies that furnace fan 

manufacturers already incorporate in 

commercially-available models. A 

design-option approach enabled DOE to 

model incremental improvements in 

efficiency for technologies that are not 

commercially available in residential 

furnace fan applications. In combination 

with these approaches, DOE used a costassessment approach to determine the 

manufacturing production cost (MPC) at 

each efficiency level identified for 

analysis. This methodology estimates 

the incremental cost of increasing 

product efficiency. When analyzing the 

cost of each efficiency level, the MPC is 

not for the entire HVAC product, 

because furnace fans are a component of 

the HVAC product in which they are 

integrated. The MPC includes costs only 

for the components of the HVAC 

product that impact FER. 

a. Baseline 

During the preliminary analysis, DOE 

selected baseline units typical of the 

least-efficient furnace fans used in 

commercially-available, residential 

HVAC models that have a large number 

of annual shipments. This sets the 

starting point for analyzing potential 

technologies that provide energy 

efficiency improvements. Additional 

details on the selection of baseline units 

may be found in chapter 5 of the NOPR 

TSD. DOE compared the FER at higher 

energy efficiency levels to the FER of 

the baseline unit and compared baseline 

MPCs to the MPCs at higher efficiency 

levels. 

DOE reviewed FER values that it 

calculated using test data and 

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26Publically available at: http://

www.regulations.gov/# !documentDetail;D=EERE2010-BT-STD-0011-0054. 

performance information from publiclyavailable product literature to determine baseline FER ratings. Table IV.4 

presents the baseline FER values 

identified in the preliminary analysis 

for each product class. 

TABLE IV.4—PRELIMINARY ANALYSIS BASELINE FER 

Product class FER 

(W/1000 cfm) 

Non-Weatherized, Non-condensing Gas Furnace Fan ............................................................................................. 380 

Non-Weatherized, Condensing Gas Furnace Fan .................................................................................................... 393 

Weatherized, Non-Condensing Gas Furnace Fan .................................................................................................... 333 

Non-Weatherized, Non-Condensing Oil Furnace Fan .............................................................................................. 333 

Electric Furnace/Modular Blower Fan ....................................................................................................................... 312 

Manufactured Home Non-weatherized, Non-condensing Gas Furnace Fan ............................................................ 295 

Manufactured Home Non-weatherized, Condensing Gas Furnace Fan ................................................................... 319 

Manufactured Home Electric Furnace/Modular Blower Fan ..................................................................................... 243 

Manufacturers asserted that the 

baseline FER values presented in the 

preliminary analysis were not 

representative of the furnace fans in the 

least-efficient residential HVAC models 

offered for sale today. Specifically, 

manufacturers stated that nonweatherized, non-condensing gas 

furnaces should be assigned a baseline 

FER of 451 instead of 380 and that nonweatherized, condensing gas furnaces 

should have an FER of 494 rather than 

393. (AHRI, No. 48 at p. 5; Morrison, 

No. 58 at p. 6; Goodman, No. 50 at p. 

5) Rheem also doubted that the 

difference in efficiency between noncondensing and condensing gas 

furnaces was only 13 points, a FER of 

380 versus 393, as presented in the 

DOE’s preliminary analysis. (Rheem, 

No. 43 at p. 96) Mortex calculated that 

their manufactured home, nonweatherized, non-condensing gas 

furnace had an FER of 420, not 295 as 

suggested by the DOE. Mortex also 

stated that published data used to 

calculate FER values were generated 

using ASHRAE Standard 103, not 

AMCA Standard 210, and that 

calculating FER based on published data 

may not be the best approach. (Mortex, 

No. 59 at p. 3; Mortex, No. 43 at p. 25) 

In contrast, Ingersoll Rand stated that 

the baseline FER presented in the 

preliminary analysis was consistent 

with the figures presented in AHRI 

Standard 210/240. (Ingersoll Rand, No. 

57 at pp. A–7) Unico emphasized that 

the DOE should consider the broad 

range of designs fitting the ‘‘baseline’’ 

definition, lest the selected FER only be 

achievable by one manufacturer’s 

design. (Unico, No. 43 at p. 79) Mortex 

disagreed with the DOE’s key product 

approach, arguing that the selected 

product classes will have huge variation 

in efficiency (i.e., baseline FER). 

(Mortex, No. 43 at p. 50) Manufacturers 

also provided additional baseline FER 

estimates during manufacturer 

interviews. 

Some manufacturers also requested 

that DOE alter FER to better reflect unit 

capacity. Goodman suggested that DOE 

should consider using only one metric 

for all furnace fan capacities falling 

within the residential range (< 130 

kBtuh) after making adjustments to the 

metric to include higher capacity units. 

(Goodman, No. 50 at p. 2) Alternatively, 

Mortex recommended that DOE should 

set maximum FER values for subproduct classes based on cooling 

capacity and cabinet size. (Mortex, No. 

59 at p. 3) Similarly, AHRI stated that 

residential furnace fans having a 5-ton 

capacity also have higher FERs and 

recommended that DOE adjust baseline 

FER values to include the largestcapacity fan within a product class. 

(AHRI, No. 48 at p. 2) Rheem calculated 

FER for 19 models of gas-fired furnaces 

that used the same blower housing 

design, and it found that FER was 

generally not dependent on capacity. A 

graphic summary of Rheem’s results are 

available in the written comment that 

Rheem submitted.26 (Rheem, No. 54 at 

p. 5). 

DOE evaluated the feedback it 

received and used the data provided by 

interested parties to generate new FER 

values and to revise its baseline, 

intermediate efficiency levels, and maxtech FER estimates. DOE’s revisions 

included FER results for furnace fan 

models that span the capacity range of 

residential products. After reviewing all 

of the available FER values based on 

new data, DOE concluded that FER can 

best be represented as a linear function 

of airflow capacity (i.e., a first constant 

added to airflow multiplied by a second 

constant). The slope characterizes the 

change in FER for each unit of airflow 

capacity increase, and the y-intercept 

represents where the FER line intersects 

the y-axis (where airflow capacity is 

theoretically zero). DOE proposes to use 

such linear functions to represent FER 

for the different efficiency levels of the 

different product classes. A more 

detailed description of the analysis and 

the methodology DOE used to generate 

FER equations for each efficiency level 

can be found in chapter 5 of the NOPR 

TSD. 

Table IV.5 shows the revised FER 

baseline efficiency levels estimates that 

DOE used for the NOPR. 

TABLE IV.5—NOPR BASELINE FER ESTIMATES

Product class FER* 

(W/1000 cfm) 

Non-Weatherized, Non-condensing Gas Furnace Fan .............................................................................................. FER = 0.057 × QMax + 362 . 

Non-Weatherized, Condensing Gas Furnace Fan ..................................................................................................... FER = 0.057 × QMax + 395. 

Weatherized Non-Condensing Gas Furnace Fan ...................................................................................................... FER = 0.057 × QMax + 271. 

Non-Weatherized, Non-Condensing Oil Furnace Fan ................................................................................................ FER = 0.057 × QMax + 336. 

Electric Furnace/Modular Blower Fan ......................................................................................................................... FER = 0.057 × QMax + 331. 

Manufactured Home Non-weatherized, Non-condensing Gas Furnace Fan ............................................................. FER = 0.057 × QMax + 271. 

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64090 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

27Fitzpatrick and Murray, Residential HVAC 

Electronically Commutated Motor Retrofit Report 

(2012) (Available at: http://www.advancedenergy.

org/ci/services/testing/files/Residential%20HVAC

%20Electronically%20Commutated%20Motor%20

Retrofit%20Final%20Report.pdf). 

TABLE IV.5—NOPR BASELINE FER ESTIMATES—Continued 

Product class FER* 

(W/1000 cfm) 

Manufactured Home Non-weatherized, Condensing Gas Furnace Fan .................................................................... FER = 0.057 × QMax + 293. 

Manufactured Home Electric Furnace/Modular Blower Fan ....................................................................................... FER = 0.057 × QMax + 211. 

Manufactured Home Weatherized Gas Furnace Fan ................................................................................................. Reserved. 

Manufactured Home Non-Weatherized Oil Furnace Fan ........................................................................................... Reserved. 

* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the proposed DOE test procedure. 78 FR 19606, 19627 

(April 2, 2013). 

b. Percent Reduction in FER 

For the preliminary analysis, DOE 

determined average FER reductions for 

each efficiency level for a subset of key 

product classes and applied these 

reductions to all product classes. DOE 

found from manufacturer feedback and 

its review of publically-available 

product literature that manufacturers 

use similar furnace fan components and 

follow a similar technology path to 

improving efficiency across all product 

classes. DOE does not expect the 

percent reduction in FER associated 

with each design option, whether 

commercially available or prototype, to 

differ across product classes as a result. 

Table IV.6 includes DOE’s preliminary 

analysis estimates for the percent 

reduction in FER from baseline for each 

efficiency level. 

TABLE IV.6—PRELIMINARY ANALYSIS ESTIMATES FOR PERCENT REDUCTION IN FER FROM BASELINE FOR EACH

EFFICIENCY LEVEL

Efficiency level 

(EL) Design option 

Percent reduction 

in FER from 

baseline 

1 ........................ Improved PSC ................................................................................................................................................ 2 

2 ........................ Inverter-Driven PSC ....................................................................................................................................... 10 

3 ........................ Constant-Torque BPM Motor ......................................................................................................................... 45 

4 ........................ Constant-Airflow BPM Motor + Multi-Staging ................................................................................................ 59 

5 ........................ Premium Constant-Airflow BPM Motor + Multi-Staging + Backward-Inclined Impeller ................................. * 63 

* DOE estimates that implementing a backward-inclined impeller at EL 5 results in a 10% reduction in FER from EL 4. This is equivalent to a 

reduction of 4% percent of the baseline FER. The total percent reduction in FER from baseline for EL 5 includes the 59% reduction from EL 4 

and the 4% net reduction of the backward-inclined impeller for a total percent reduction of 63% from baseline. 

Interested parties questioned DOE’s 

estimates for the FER reduction for highefficiency motors. NMC commented that 

the company offers a special highefficiency PSC motor line called PEP®

that can achieve 10 points of efficiency 

improvement over standard PSC motors 

rather than 1.6-percent improvement 

shown in the preliminary analysis. 

(NMC, No. 60 at p. 1) Other interested 

parties provided similar estimates for 

improved PSC motors during 

manufacturer interviews. Unico noted 

that the high-efficiency BPM motor 

technology options in the Engineering 

Analysis (constant-torque or constantair-flow BPM) do not improve fan 

efficiency as much as DOE’s percent 

reduction in FER estimates suggest. 

(Unico, No. 43 at p. 109) Lennox 

suggested that a more accurate estimate 

of reduction in FER resulting from PSC 

to X13 motor conversions would be 30 

percent as opposed to the 45 percent 

presented in the preliminary analysis. 

(Lennox, No. 47 at p. 2) Goodman 

provided a reference to a report from 

Advanced Energy of North Carolina 27

that stated that replacing PSC motors 

with full-ECM motors results in a 51- 

percent reduction in full-load efficiency. 

(Goodman, No. 50 at p. 3) Goodman 

would expect that the reduction in FER 

for X13 and ECM conversions be lower 

than presented in the preliminary 

analysis such as 35–50 percent for X13s 

and 45–50 percent for ECM. (Goodman, 

No. 50 at p. 5) 

DOE reviewed its estimates of percent 

reduction in FER from baseline for each 

efficiency level based on interested 

party feedback. In addition to the 

comments presented above, interested 

parties also provided FER values for 

higher-efficiency products in 

manufacturer interviews. DOE used 

these data to revise its percent reduction 

estimates. Table IV.7 shows DOE’s 

revised estimates for the percent 

reduction in FER for each efficiency 

level that DOE used in the NOPR 

analyses. For a given product class, DOE 

applied the percent reductions below to 

both the slope and y-intercept of the 

baseline FER equation to generate FER 

equations to represent each efficiency 

level above baseline. 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64091 

28High-volume and low-volume product classes 

are discussed further in chapter 5 of the NOPR TSD. 

29High-volume and low-volume product classes 

are discussed further in chapter 5 of the NOPR TSD. 

TABLE IV.7—NOPR ESTIMATES FOR PERCENT REDUCTION IN FER FROM BASELINE FOR EACH EFFICIENCY LEVEL

Efficiency level 

(EL) Design option 

Percent reduction 

in FER from 

baseline 

1 ........................ Improved PSC ................................................................................................................................................ 10 

2 ........................ Inverter-Driven PSC ....................................................................................................................................... 25 

3 ........................ Constant-Torque BPM Motor ......................................................................................................................... 42 

4 ........................ Constant-Torque BPM Motor and Multi-Staging ............................................................................................ 50 

5 ........................ Constant-Airflow BPM Motor and Multi-Staging ............................................................................................ 53 

6 ........................ Premium Constant-Airflow BPM Motor and Multi-Staging + Backward-Inclined Impeller ............................. * 57 

* DOE estimates that implementing a backward-inclined impeller at EL 6 results in a 10% reduction in FER from EL 5. This is equivalent to a 

4% percent reduction in FER from baseline. The total percent reduction in FER from baseline for EL 6 includes the 53% reduction from EL 5 and 

the 4% net reduction from the backward-inclined impeller for a total percent reduction of 57% from baseline. 

DOE believes that these revised 

estimates are consistent with the 

comments received from interested 

parties. Note that EL 4 in the table above 

is a newly proposed efficiency level. As 

discussed in section IV.A.3, DOE 

analyzed multi-staging as a separate 

technology option. For the NOPR, DOE 

also has evaluated a separate efficiency 

level representing applying multistaging to a furnace fans with a 

constant-torque BPM motor. DOE 

recognizes that the percent reduction in 

FER for inverter-driven PSC increased 

considerably. However, since the 

baseline FER values increased for the 

NOPR, DOE believes that the percent 

reductions cannot directly be compared 

to those proposed in the preliminary 

analysis. DOE notes that the cited 

reductions may not appear to be fully 

consistent with stakeholder comments 

in part because they are FER reductions 

rather than reductions in full-load 

electrical efficiency. DOE expects that 

FER reductions may be significantly 

higher than full-load input power 

reductions, especially for efficiency 

levels based on use of BPM motors, 

because FER includes electrical energy 

consumption at reduced operating 

modes, for which these motors achieve 

much greater power reduction than PSC 

designs. 

2. Manufacturer Production Cost (MPC) 

In the preliminary analysis, DOE 

estimated the manufacturer production 

cost associated with each efficiency 

level to characterize the cost-efficiency 

relationship of improving furnace fan 

performance. The MPC estimates are not 

for the entire HVAC product because 

furnace fans are a component of the 

HVAC product in which they are 

integrated. The MPC estimates includes 

costs only for the components of the 

HVAC product that impact FER, which 

DOE considered to be the: 

• Fan motor and integrated controls; 

• Primary control board (PCB); 

• Multi-staging components; 

• Impeller; 

• Fan housing; and 

• Components used to direct or guide 

airflow. 

DOE separated the proposed product 

classes into high-volume and lowvolume product classes and generated 

high-volume and low-volume MPC 

estimates to account for the increased 

purchasing power of high-volume 

manufacturers.28

a. Production Volume Impacts on MPC 

Morrison stated that DOE’s 

assumption that large manufacturers 

have the same purchasing power across 

product types, even when those 

products are low volume, may or may 

not be true, because low-volume 

products may run through different 

processes. (Morrison, No. 43 at p. 118) 

Rheem stated that, in some cases, it uses 

the same blower system in low-volume 

products that it uses in high-volume 

products. (Rheem, No. 43 at p. 118) 

Unico commented that it uses different 

manufacturing processes than those 

presented in DOE’s analysis and 

recommended that a different metric 

should be used to evaluate technologies 

that differ by process. (Unico, No. 43 at 

p. 122) Mortex stated that the motor 

costs for smaller manufacturers can be 

15–20 percent greater than for large 

manufacturers because they do not, as 

stated by NEMA, benefit from 

economies of scale. (Mortex, No. 59 at 

p. 3; NEMA, No. 43 at p. 113) 

DOE recognizes that high-volume 

manufacturers may use different 

processes to manufacture low-volume 

products than to manufacture highvolume products. However, DOE finds 

that 94 percent of the MPC for furnace 

fans is attributed to materials (including 

purchased parts like fan motors), which 

are not impacted by process differences. 

DOE’s estimates also already account for 

process differences between 

manufacturers for high-volume and lowvolume products. The products that 

DOE evaluated to support calculation of 

MPC included furnace fans from various 

manufacturers, including both highvolume and low-volume models. 

Observed process differences are 

reflected in the bills of materials for 

those products. DOE agrees with Mortex 

that low-volume manufacturers 

experience higher costs for materials, 

such as motors. DOE believes that its 

approach to distinguish between highvolume and low-volume product classes 

accounts for the expected difference in 

MPC between high-volume and lowvolume product classes.29

b. Inverter-Driven PSC Costs 

In the preliminary analysis, DOE 

estimated that the MPC of inverter 

control for a PSC motor is $10–$12, 

depending on production volume. 

Ingersoll Rand stated that an inverter 

cannot be added to a PSC for only $10– 

$12. (Ingersoll Rand, No. 57 at pp. A– 

7) NMC also questioned the validity of 

the inverter controller cost estimate, 

stating that the cost of an inverter driven 

controller is significantly higher than 

$12, unless DOE is erroneously equating 

inverters to wave chopper technology, 

which is far less efficient. (NMC, No. 60 

at p. 1) 

DOE’s preliminary analysis estimate 

for the MPC of an inverter-driven PSC 

was indeed based on a wave chopper 

drive. DOE finds that more 

sophisticated and costly inverters are 

required to achieve the efficiencies 

reflected in DOE’s analysis. 

Consequently, DOE has adjusted its cost 

estimate for PSC inverter technology. 

DOE gathered more information about 

the cost of inverters that are suited for 

improving furnace fan efficiency. In 

addition to receiving cost estimates 

during manufacturer interviews, DOE 

also reviewed its cost estimates for 

inverter drives used in other residential 

applications, such as clothes washers. 

DOE finds that $30 for high-volume 

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64092 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

30Evergreen is a constant-airflow BPM motor that 

is meant to be installed as an on-site replacement 

of outdated PSC motors. 

31The constant-airflow BPM motors that DOE 

analyzed for EL 5 and EL 6 cannot be used with 

the same primary controls for a PSC motor. See 

chapter 3 and chapter 5 of the NOPR TSD. 

products and $42.29 for low-volume 

products are better estimates of the MPC 

for inverters used to drive PSC furnace 

fan motors. Accordingly, DOE has 

updated these values for the NOPR. 

c. Furnace Fan Motor MPC 

Manufacturers stated that DOE 

underestimated the incremental MPC to 

implement high-efficiency motors in 

HVAC products, other than oil furnaces. 

(Rheem, No. 54 at p. 10) Most 

manufacturers stated that the cost 

increase to switch from PSCs to moreefficient motor technologies was at least 

twice that of the DOE’s estimate. 

(Lennox, No. 43 at p. 23, 113 and No. 

47 at p. 1; Mortex, No. 43 at p. 25; 

Rheem, No. 43 at p. 112; Goodman, No. 

50 at p. 3) AHRI and Morrison claimed 

incremental costs associated with an 

X13 motor should be $60, instead of the 

$22.73 reported by DOE and in the case 

of ECMs, $133 instead of the $91.95 

reported by DOE. (AHRI, No. 48 at p. 6; 

Morrison, No. 58 at p. 6) Nidec, a motor 

manufacturer, commented that DOE 

should directly contact motor suppliers 

to confirm motor prices. (NMC, No. 43 

at p. 112) Regal Beloit requested DOE 

review its assumption on motor 

horsepower range to explain why 

Rheem and other manufacturers claim 

their motors cost twice what is shown 

in DOE’s preliminary analysis. (Regal 

Beloit, No. 52 at p. 242) DOE received 

additional feedback regarding its 

estimated motor prices during NOPRphase manufacturer interviews. 

Based upon the input received from 

interested parties, DOE adjusted its 

motor cost estimates. In general, DOE 

increased its estimates by approximately 

10 to 15 percent, which is consistent 

with the feedback DOE received. Details 

regarding DOE’s revised motor MPC 

estimates are provided in chapter 5 of 

the NOPR TSD. 

d. Motor Control Costs 

In the preliminary analysis, DOE 

estimated that the MPC of the primary 

control board (PCB) increases with each 

conversion to a more-efficient motor 

type (i.e., from PSC to constant-torque 

BPM motor and from constant-torque to 

constant-airflow BPM motor). Both 

Lennox and Goodman confirmed that 

higher-efficiency motors require more 

sophisticated and costly controls. These 

manufacturers stated that control costs 

for an X13 motor application increase 

from 50–100 percent, as compared to 

controls for PSC motors. (Lennox, No. 

47 at p. 8; Goodman, No. 50 at p. 2) 

Rheem stated that the controls of one of 

its modulating furnace models that uses 

a variable speed furnace fan are costly, 

although no quantified estimate was 

provided. (Rheem, No. 54 at p. 7) Rheem 

also responded that Regal Beloit’s 

Evergreen 30 motors, which are designed 

as replacements for PSCs, may be used 

with the same primary controls 

developed for the original PSC motor.31

(Rheem, No. 54 at p. 7) Ingersoll Rand 

stated that boards supporting 

modulating motors and communication 

are the most costly. (Ingersoll Rand, No. 

57 at pp. A–2) DOE also received 

feedback regarding the cost of the PCBs 

associated with each motor type during 

manufacturer interviews. In general, 

manufacturers commented that the 

PCBs used with constant-torque BPM 

motors are more costly. However, other 

manufacturer interview participants 

stated that the MPC of the PCB used 

with these motors should be equivalent 

or even less expensive than the PCBs 

used with PSC motors. 

DOE agrees with interested parties 

that the MPC of the PCB needed for a 

constant-airflow BPM motor is higher 

than for the PCB paired with a PSC 

motor. DOE maintained this assumption 

for the NOPR. DOE estimates that the 

MPC of a PCB paired with a constantairflow BPM motor is roughly twice as 

much as for a PCB paired with a 

constant-torque BPM motor or PSC. 

DOE also agrees with the interested 

parties that stated that the MPC for a 

PCB paired with a constant-torque BPM 

motor is equivalent to that of a PCB 

needed for a PSC motor. DOE revised its 

analysis to reflect this assumption in the 

NOPR as a result. 

e. Backward-Inclined Impeller MPC 

Interested parties commented that 

DOE’s preliminary analysis estimate for 

the incremental MPC associated with 

implementing a backward-inclined 

impeller, in combination with a 

premium constant-airflow BPM motor 

and multi-staging, is too low. (AHRI, 

No. 48 at p. 2; Ingersoll Rand, No. 57 at 

p. 2) Morrison and AHRI commented 

that tighter tolerances and increased 

impeller diameter lead to increased 

material costs, as well as increased costs 

associated with motor mount structure 

and reverse forming fabrication 

processes. (AHRI, No. 48 at p. 3; 

Morrison, No. 43 at p. 120) Rheem and 

Morrison stated that the dimensional 

clearance for a backward-inclined 

impeller would be 0.04–0.05 inches 

instead of 0.24–0.5 for a forward-curved 

impeller. (Rheem, No. 54 at p. 8; 

Morrison, No. 58 at p. 3) This increase 

in product size and tolerance could lead 

to increased production costs. Ingersoll 

Rand, Morrison, and Rheem all cited 

increased material, assembly controls, 

reverse forming processes, and the 

strengthening of motor mounting 

systems (necessary at increased motor 

speeds) as potential costs associated 

with backward-inclined impellers. 

(Ingersoll Rand, No. 57 at pp. A–3; 

Morrison, No. 58 at p. 4; Rheem, No. 54 

at p. 8) 

DOE reviewed its manufacturer 

production cost estimates for the 

backward-inclined impeller technology 

option based on interested party 

comments. During manufacturer 

interviews, some manufacturers 

reiterated or echoed that DOE’s 

estimated MPC for backward-inclined 

impellers is too low, but they did not 

provide quantification of the total MPC 

of backward-inclined impellers or the 

incremental MPC associated with the 

changes needed to implement them. 

Other manufacturers did quantify the 

MPC of backward-inclined impeller 

solutions and their estimates were 

consistent with DOE’s preliminary 

analysis estimate. Consequently, DOE 

did not modify its preliminary analysis 

estimated MPC for backward-inclined 

impellers. 

D. Markups Analysis 

DOE uses manufacturer-to-consumer 

markups to convert the manufacturer 

selling price estimates from the 

engineering analysis to consumer prices, 

which are then used in the LCC and PBP 

analysis and in the manufacturer impact 

analysis. Before developing markups, 

DOE defines key market participants 

and identifies distribution channels. 

Generally, the furnace distribution 

chain (which is relevant to the 

residential furnace fan distribution 

chain) includes distributors, dealers, 

general contractors, mechanical 

contractors, installers, and builders. For 

the markups analysis, DOE combined 

mechanical contractors, dealers, and 

installers in a single category labeled 

‘‘mechanical contractors,’’ because these 

terms are used interchangeably by the 

industry. Because builders serve the 

same function in the HVAC market as 

general contractors, DOE included 

builders in the ‘‘general contractors’’ 

category. 

In the preliminary analysis, DOE used 

the same distribution channels for 

furnace fans as it used for furnaces in 

the recent energy conservation 

standards rulemaking for those 

products. 76 FR 37408, 37464 (June 27, 

2011). DOE believes that this is an 

appropriate approach, because the vast 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64093 

32Energy Information Administration, 2009 

Residential Energy Consumption Survey (Available 

at: http://www.eia.doe.gov/emeu/recs). 

33See http://www.eia.gov/consumption/

residential/data/2009/. 

34See http://www.census.gov/housing/ahs/data/

national.html. 

35See http://www.census.gov/popest/. 

majority of the furnace fans covered in 

this rulemaking is a component of a 

furnace. Manufactured housing furnace 

fans in new construction have a separate 

distribution channel in which the 

furnace (and fan) go directly from the 

furnace manufacturer to the producer of 

manufactured homes. 

In the preliminary analysis, DOE 

requested comment on whether the 

market for replacement fans is large 

enough to merit a separate distribution 

channel, and, if so, what would be an 

appropriate assumption for its market 

share. Goodman expressed their belief 

that there is no market for replacing 

and/or upgrading only the furnace fan 

component of the furnace. (Goodman, 

No. 50 at p. 3) Goodman and AHRI 

commented that they are opposed to 

field replacements and retrofits of 

motors and blowers because such 

practices could have product safety 

implications. (Goodman, No. 50 at p. 3; 

AHRI, No. 48 at p. 4) In contrast, Nidec 

recommended that DOE should consider 

a distribution channel for replacing 

furnace fans in already installed 

equipment. (Nidec, No. 60 at pp. 2–3) 

DOE has tentatively concluded that 

there is insufficient evidence of a 

replacement market for furnace fans. 

DOE develops baseline and 

incremental markups to transform the 

manufacturer selling price into a 

consumer product price. DOE uses the 

baseline markups, which cover all of a 

distributor’s or contractor’s costs, to 

determine the sales price of baseline 

models. Incremental markups are 

separate coefficients that DOE applies to 

reflect the incremental cost of higherefficiency models. 

AHRI and Morrison voiced concerns 

with DOE’s approach to incremental 

markups. (AHRI, No. 48 at p. 6; 

Morrison, No. 58, at p. 7) These 

commenters stated that while the 

concept of profits constrained to the 

long-run cost of capital is a basic tenet 

of microeconomics, it has not been 

validated empirically and that there are 

enough exceptions and alternative 

concepts to question the use of that 

concept in a normative manner. AHRI 

also stated that DOE’s basic theoretical 

framework requires that the relevant 

industry must be highly competitive, 

and AHRI believes that there are reasons 

to question this assumption in the 

context of residential furnace fans. 

Goodman concurred with the concerns 

noted by AHRI in regards to the 

markups analysis. (Goodman, No. 50 at 

p. 5) 

DOE acknowledges that detailed 

information on actual distributor and 

contractor practices would be helpful in 

evaluating their markups on furnaces. 

However, DOE finds it implausible that 

profit per unit would increase in the 

medium and long run if the cost of 

goods sold increases due to efficiency 

standards. Thus, in the absence of 

evidence to the contrary, DOE continues 

to assume that markups would decline 

slightly, leaving profit unchanged, and, 

thus, it uses lower markups on 

incremental costs of higher-efficiency 

products. Regarding the competitiveness 

of the HVAC distribution industry and 

the HVAC contractor industry, DOE 

does not have any empirical measures of 

competitiveness, but its impression, 

based on experience with these 

industries, is that there is sufficient 

competition to validate DOE’s 

assumptions with respect to the 

difficulty of distributors and contractors 

increasing profits as a result of 

standards. 

AHRI and Morrison disagreed with 

DOE’s prediction that margins should be 

going up over time as equipment prices 

decrease. (AHRI, No. 48 at p. 6; 

Morrison, No. 58, at p. 7) DOE did not 

project a decrease in furnace fan prices 

in the preliminary analysis, and the 

markups are assumed to remain the 

same over time. 

Lennox believes that DOE’s claim that 

incremental costs will be discounted on 

markups through the distribution chain 

by approximately 50 percent 

understates the amount of increased 

costs that manufacturers will seek to 

pass through to consumers. (Lennox, 

No. 47 at p. 1) DOE does not apply a 

separate markup on the incremental 

manufacturer selling price. DOE 

assumes that manufacturers will be able 

to pass on the full incremental costs of 

higher-efficiency furnace fans. 

Morrison stated that the markups 

analysis does not accurately calculate 

the costs for installers/contractors. 

Morrison noted that with increase in 

efficiency standards, there will be added 

labor and an associated cost to assure 

the buyer of the efficiency gains; the 

added labor of installation and 

commissioning is not included in the 

markups analysis, and, thus, the final 

markup is too small. (Morrison, No. 58, 

at p. 6) In response, the labor for 

installation and commissioning, 

including specific costs for higherefficiency furnace fans, is included in 

the LCC and PBP analysis, as DOE 

assumes that this cost is not part of the 

consumer cost of the furnace itself. 

E. Energy Use Analysis 

The purpose of the energy use 

analysis is to determine the annual 

energy consumption of residential 

furnace fans in representative U.S. 

homes and to assess the energy savings 

potential of increased furnace fan 

efficiency. In general, DOE estimated 

the annual energy consumption of 

furnace fans at specified energy 

efficiency levels across a range of 

climate zones. The annual energy 

consumption includes the electricity 

use by the fan, as well as the change in 

natural gas, liquid petroleum gas (LPG), 

electricity, or oil use for heat production 

as result of the change in the amount of 

useful heat provided to the conditioned 

space as a result of the furnace fan. The 

annual energy consumption of furnace 

fans is used in subsequent analyses, 

including the LCC and PBP analysis and 

the national impact analysis. 

DOE used the existing DOE test 

procedures for furnaces and air 

conditioners to estimate heating and 

cooling mode operating hours for the 

furnace fan. The power consumption of 

the furnace fan is determined using the 

individual sample housing unit 

operating conditions (the pressure and 

airflow) at which a particular furnace 

fan will operate when performing 

heating, cooling, and constantcirculation functions. The methodology 

and the data are fully described in 

chapter 7 of the NOPR TSD. 

DOE used the Energy Information 

Administration’s (EIA) Residential 

Energy Consumption Survey (RECS) 32

to establish a sample of households 

using furnace fans for each furnace fan 

product class. RECS data provide 

information on the age of furnaces with 

furnace fans, as well as heating and 

cooling energy use in each household. 

The survey also includes household 

characteristics such as the physical 

characteristics of housing units, 

household demographics, information 

about other heating and cooling 

products, fuels used, energy 

consumption and expenditures, and 

other relevant data. DOE uses the 

household samples not only to 

determine furnace fan annual energy 

consumption, but also as the basis for 

conducting the LCC and PBP analysis. 

For the NOPR, DOE used RECS 

2009 33 heating and cooling energy use 

data to determine heating and cooling 

operating hours. DOE used data from 

RECS 2009, American Housing Survey 

(AHS) 2011,34 and the Census Bureau 35

to project household weights in 2019, 

which is the anticipated compliance 

date of any new energy efficiency 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

64094 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

36Provided in CEE, No. 22 at pp. 1–2. 37Pigg, S., ‘‘Electricity Use by New Furnaces: A 

Wisconsin Field Study’’ (October 2003) (Available 

at http://www.doa.state.wi.us/

docview.asp?docid=1812). 

standard for residential furnace fans. 

These adjustments account for housing 

market changes since 2009, as well as 

for projected product and demographic 

changes. 

The power consumption (and overall 

efficiency) of a furnace fan depends on 

the speed at which the motor operates, 

the external static pressure difference 

across the fan, and the airflow through 

the fan. To calculate furnace fan 

electricity consumption, DOE 

determined the operating conditions 

(the pressure and airflow) at which a 

particular furnace fan will operate in 

each RECS housing unit when 

performing heating, cooling, and 

constant-circulation functions. 

DOE gathered field data from 

available studies and research reports to 

determine an appropriate distribution of 

external static pressure (ESP) values. 

DOE compiled over 1,300 field ESP 

measurements from several studies that 

included furnace fans in single-family 

and manufactured homes in different 

regions of the country. The average ESP 

value in the cooling operating mode 

from these studies results in an average 

0.65 in. wc for single-family households 

and 0.30 in. wc for manufactured 

homes. 

DOE determined furnace fan 

operating hours in heating mode by 

calculating the furnace burner operating 

hours and adjusting them for delay 

times between burner and fan operation. 

Burner operating hours are a function of 

annual house heating load, furnace 

efficiency, and furnace input capacity. 

EEI stated that DOE should take into 

consideration the impact of morestringent building energy codes when 

estimating energy use baselines and 

projected energy savings. (EEI, No. 65 at 

p. 4) In response, DOE’s analysis 

accounts for the likelihood that, 

compared to recently-built homes in the 

RECS sample, new homes in the year of 

compliance will have both a lower 

heating load per square foot and more 

square footage using the building shell 

efficiency index from AEO 2012. 

In the preliminary analysis, to 

estimate use of constant circulation in 

the sample homes, DOE evaluated the 

available studies, which include a 2010 

survey in Minnesota 36 and a 2003 

Wisconsin field monitoring of 

residential furnaces.37 DOE did not use 

these data directly, however, because it 

believes they are not representative of 

consumer practices for the U.S. as a 

whole. In these northern States, many 

homes have low air infiltration, and 

there is a high awareness of indoor air 

quality issues, which could lead to 

significant use of constant circulation. 

To develop appropriate assumptions for 

other regions, DOE modified the data 

from these States using information 

from manufacturer product literature 

(which suggests very little use in humid 

climates) and consideration of climate 

conditions in other regions. 

Several parties stated that DOE 

overestimated the use of constantcirculation mode, thereby overcounting 

the energy savings from higherefficiency furnace fans. AHRI 

commented that continuous circulation 

is used significantly less than estimated 

in DOE’s technical support document. 

In particular, AHRI pointed out that 

DOE’s estimate of constant-circulation 

hours is based on surveys taken in only 

two States—Wisconsin and Minnesota— 

where there is high occurrence of indoor 

air quality issues that make use of the 

continuous fan feature more likely. To 

overcome this perceived deficiency, 

AHRI recommended a study of constantcirculation hours in areas of the country 

that do not have high occurrences of 

indoor air quality issues, leading to an 

allocation that is more representative of 

behavior in the U.S. (AHRI, No. 48 at p. 

4) Ingersoll Rand also stated that 

Wisconsin is not a good representation 

of the full national population, noting 

that DOE partially acknowledges this by 

assuming that the North is different 

from the South in terms of the use of 

constant circulation. (Ingersoll Rand 

Residential Solutions, No. 57, at p. 8) 

Goodman concurred that the values 

proposed for constant-circulation hours 

are unrealistically high. Based on 

Goodman’s experience, the commenter 

stated that a more typical value for the 

percentage of U.S. households that use 

the fan in constant-circulation mode 

would likely be in the low single digits. 

(Goodman, No. 50 at p. 3) Morrison also 

stated that allocation of a large 

percentage of furnace fan time in the 

circulatory mode (21 percent of total 

time) is excessive. (Morrison, No. 58, at 

p. 7) 

In contrast, CA IOUs stated that 

constant-circulation mode on the air 

handler is a primary means for 

mechanical ventilation of homes. CA 

IOUs argued that as States increasingly 

adopt building codes that call for more 

airtight building envelopes, the need for 

mechanical ventilation increases as 

natural ventilation decreases. Based 

upon this reasoning, CA IOUs stated 

that 400 hours per year in constantcirculation mode (approximately the 

average that DOE estimated for nonweatherized gas furnace fans) would be 

a conservative estimate. (CA IOU’s, No. 

56, at p. 3) NEEA stated that based on 

recent trends in ventilation and in the 

sales of filtration systems, there is a 

substantial increase in the use of 

constant circulation, especially in new 

home construction. (Transcript, No. 43 

at p. 193) 

DOE acknowledges that it would be 

desirable to have additional data on the 

use of constant circulation in other parts 

of the country, but DOE was not able to 

conduct a study as suggested by AHRI 

for the NOPR analysis, nor did any 

commenter provide such data. DOE 

concurs with the CA IOUs that the use 

of constant circulation may increase in 

new homes. For the NOPR, DOE used 

the same assumptions for use of 

constant circulation as it did in the 

preliminary analysis, which are also 

used in the proposed DOE test 

procedure for furnace fans. 77 FR 28674 

(May 15, 2012). The shares of homes 

using the various constant-circulation 

modes are presented in Table IV.8. 

However, DOE also performed a 

sensitivity analysis to estimate the effect 

on the LCC results if it assumed half as 

much use of constant circulation. These 

results are discussed in section V.B.1 of 

this notice. 

TABLE IV.8—CONSTANT-CIRCULATION PROPOSED TEST PROCEDURE ASSUMPTIONS USED FOR NOPR ANALYSIS

Constant-circulation fan use 

Assumed 

average 

number of 

hours 

Estimated 

share of 

homes in north 

and south-hot 

dry regions 

(percent) 

Estimated 

share of 

homes in 

south-hot 

humid region 

(percent) 

No constant fan ........................................................................................................................... 0 84 97 

Year-round ................................................................................................................................... 7290 7 1 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64095 

38State of Wisconsin, Public Service Commission 

of Wisconsin, Focus on Energy Evaluation 

Semiannual Report, Final (April 8, 2009) (Available 

at: http://www.focusonenergy.com/files/document_

management_system/evaluation/emcfurnaceimpact

assessment_evaluationreport.pdf). 

TABLE IV.8—CONSTANT-CIRCULATION PROPOSED TEST PROCEDURE ASSUMPTIONS USED FOR NOPR ANALYSIS— 

Continued 

Constant-circulation fan use 

Assumed 

average 

number of 

hours 

Estimated 

share of 

homes in north 

and south-hot 

dry regions 

(percent) 

Estimated 

share of 

homes in 

south-hot 

humid region 

(percent) 

During heating season ................................................................................................................. 1097 2 0.4 

During cooling season ................................................................................................................. 541 2 0.4 

Other (some constant fan) ........................................................................................................... 365 5 1 

Total ...................................................................................................................................... ........................ 100 100 

Commenting on the preliminary 

analysis, EEI stated that DOE should 

balance fan energy savings with the 

potential for additional fuel use of the 

HVAC product. (EEI, No. 65 at p. 3) 

With improved fan efficiency, there may 

be less heat from the motor, which 

means that the heating system needs to 

operate more and the cooling system 

needs to operate less. In response, DOE 

did account for the effect of improved 

furnace fan efficiency on the heating 

and cooling load of the sample homes. 

Goodman noted that DOE’s assumptions 

are technically correct with regard to the 

effect on heating or cooling 

requirements from the change in fan 

energy consumption, and the 

adjustments appear to be appropriate. 

(Goodman, No. 50 at p. 4) 

In the preliminary analysis, DOE 

recognized that the energy savings in 

cooling mode from higher-efficiency 

furnace fans used in some higherefficiency CAC and heat pumps was 

already accounted for in the analysis 

related to the energy conservation 

standards for those products. To avoid 

double-counting, the analysis for 

furnace fans does not include furnace 

fan electricity savings that were counted 

in DOE’s analysis for CAC and heat 

pump products. 

AHRI and Morrison commented that 

the LCC analysis includes furnace fan 

operating hours and furnace fan power 

operation in the cooling mode in the 

total energy consumption calculation. 

AHRI and Morrison noted that regulated 

metrics such as SEER and Heating 

Seasonal Performance Factor (HSPF) 

already address fan energy consumption 

in air conditioners and heat pumps 

respectively. (AHRI, No. 48 at p. 6; 

Morrison, No. 58, at p. 8) Morrison 

commented that including this energy 

savings for this standard would result in 

the savings being counted under two 

regulatory standards. Mortex 

commented that: (1) The electricity used 

to circulate air in the summer is already 

being accounted for as part of the SEER 

metric for central air conditioners and 

heat pumps; (2) in the winter, the EAE

metric for furnaces accounts for all 

electricity being used, including by the 

furnace fan; and (3) for heat pumps, the 

electricity used to circulate air is 

accounted for in the winter heating 

mode by the HSPF metric. (Mortex, No. 

59, at pp. 1–2) Ingersoll Rand stated that 

heating and cooling should not be 

combined, as it does not accurately 

portray the cooling performance for all 

possible capacities and duplicates the 

furnace fan inclusion in the SEER 

determination. (Ingersoll Rand 

Residential Solutions, No. 57, at p. 1) 

The standards for CAC and heat pump 

products that will be effective in 2015 

do not require a furnace with BPM 

motor-driven fan. However, DOE’s 

rulemaking analysis for CAC and heat 

pump products included savings from 

those households purchasing a CAC or 

heat pump at SEER 15 or above, that 

would need to have an BPM motordriven fan in their furnace to achieve 

that efficiency level. The base-case 

efficiency distribution of fans used in 

the current analysis includes the 

presence of those BMP motor-driven 

fans in homes with the higher-efficiency 

CAC or heat pumps. Because the energy 

savings from the considered fan 

efficiency levels are measured relative 

to the base-case efficiencies, any savings 

reported here for furnace fans are over 

and above those counted in the CAC 

and heat pump rulemaking. 

Recognizing the possibility of 

consumers using higher-efficiency 

furnace fans more than baseline furnace 

fans, DOE included a rebound effect in 

its preliminary analysis. DOE used a 

2009 program evaluation report from 

Wisconsin 38 to estimate the extent to 

which increased use of constant 

circulation under a standard requiring 

ECM furnace fans is likely to cancel out 

some of the savings from such a fan. 

Commenters presented differing 

views on the likelihood of a rebound 

effect for furnace fans. Rheem believes 

that the Wisconsin study is reasonable 

in its estimate of the fraction of 

households that may switch to 

continuous circulation use under a 

standard requiring ECM furnace fans. 

(Rheem, No. 54, at p. 13) Goodman does 

not believe there has been a significant 

shift in terms of increased usage of 

continuous fan with customers that 

have an ECM product versus an X13 

product versus a PSC product. 

(Goodman, No. 50 at p. 4) Ingersoll 

Rand commented that if there were any 

comfort basis for the use of continuous 

fan mode, more use might lead to a 

lower heating set-point and a higher 

cooling set-point, offsetting the added 

energy consumption for continuous fan. 

Ingersoll Rand commented that the 

rebound effect, if it exists, is uncertain 

in direction and magnitude and should 

be deleted from the analysis. (Ingersoll 

Rand Residential Solutions, No. 57, at 

p. 8) 

DOE acknowledges that the 

magnitude of a rebound effect for 

furnace fans across the country is 

uncertain. However, because there is 

some evidence for the existence of a 

rebound effect, DOE prefers to include 

such an effect rather than risk 

overstating the energy savings from 

higher-efficiency furnace fans. The 

specific assumptions are described in 

chapter 7 of the NOPR TSD. 

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 energy conservation standards 

on individual consumers usually 

involves a reduction in operating cost 

and an increase in purchase cost. DOE 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

64096 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

39See: http://www1.eere.energy.gov/buildings/

appliance_standards/commercial/sem_finalrule_

tsd.html. 

40RS Means Company Inc., RS Means Residential 

Cost Data (2012). 

41RS Means Company Inc., Facilities 

Maintenance & Repair Cost Data (2012). 

uses the following two metrics to 

measure consumer impacts: 

• Life-cycle cost (LCC) 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 

(equipment manufacturer selling price, 

distribution chain markups, sales tax 

and installation cost), 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 product. 

• Payback period (PBP) 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 first-year operating costs. 

DOE analyzed the net effect of 

potential residential furnace fan 

standards on consumers by calculating 

the LCC and PBP for each efficiency 

level for each sample household. DOE 

performed the LCC and PBP analyses 

using a spreadsheet model combined 

with Crystal Ball (a commerciallyavailable software program used to 

conduct stochastic analysis using Monte 

Carlo simulation and probability 

distributions) to account for uncertainty 

and variability among the input 

variables (e.g., energy prices, 

installation costs, 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 

efficiency level. Each Monte Carlo 

simulation consists of 10,000 LCC and 

PBP calculations. The model performs 

each calculation 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 points showing the range 

of LCC savings and PBPs for a given 

efficiency level relative to the base-case 

efficiency forecast. The results of DOE’s 

LCC and PBP analysis are summarized 

in section IV.F and described in detail 

in chapter 8 of the NOPR TSD. 

1. Installed Cost 

The installed cost at each efficiency 

level is based on the MSP, distribution 

chain markups, sales tax, and 

installation cost. 

In the preliminary analysis, DOE 

found that the historic real (i.e., adjusted 

for inflation) producer price index (PPI) 

for integral horsepower electric motors 

has been relatively flat except for the 

last few years, and elected to use prices 

held constant at the 2011 level as the 

default price assumption to project 

future motor (and furnace fan) prices. 

Goodman commented that specifically 

looking at fractional motor (i.e., the type 

used in furnace fans) instead of integral 

horsepower motors would provide a 

better comparison for furnace fans, and 

that prices of such motors will not 

remain flat, but will continue to grow in 

the trend from the last five years. 

(Goodman, No. 50 at p. 5) 

For the NOPR, DOE evaluated the 

historic real PPI of fractional 

horsepower electric motors instead of 

integral horsepower electric motors. 

DOE found that this index has been 

decreasing except for the last few years, 

when it started to increase. Given the 

uncertainty about whether the recent 

trend will continue or instead revert to 

the historical mean, for the NOPR, DOE 

elected to continue using constant 

prices at the most recent level as the 

default price assumption to project 

future prices of furnace fans. Appendix 

10–C of the NOPR TSD describes the 

historic PPI data. 

In the preliminary analysis, DOE 

assumed that a fraction of ECM furnace 

fan installations will require up to an 

hour of extra labor. Goodman 

commented that based on its 

experience, at least two hours of extra 

labor will be required in the majority of 

ECM furnace fan installations. It notes 

this is particularly true in light of the 

fact that many regulatory authorities, 

such as California Energy Commission 

via Title 24, are requiring more 

verification of proper airflow, which 

may be more challenging with advanced 

technologies such as ECM motors. 

(Goodman, No. 50 at p. 5) 

For the NOPR, DOE modified its 

approach and assumed that up to two 

hours of extra labor will be required for 

all ECM furnace fan installations. 

Details of the updated approach are 

available in chapter 8 of the NOPR TSD. 

2. Operating Costs 

In the preliminary analysis, DOE used 

the same maintenance costs for furnace 

fans at different efficiency levels. To 

estimate rates of fan motor failure, DOE 

developed a distribution of fan motor 

lifetime (expressed in operating hours) 

by motor size using data developed for 

DOE’s small electric motors final rule 

(75 FR 10874 (March 9, 2010)).39 DOE 

then paired these data with the 

calculated number of annual operating 

hours for each sample furnace, 

including constant circulation for some 

of the homes. Replacement motor costs 

were based on costs developed in the 

engineering analysis, and the labor time 

and costs were based on RS Means 

data.40 41 DOE had no information 

indicating the extent to which 

consumers would replace a fan PSC 

motor with an ECM, so it assumed that 

when replacement is necessary, 

consumers replace the failed motor with 

the same type of motor. 

Nidec estimated that three percent of 

the motors operating the furnace fan fail 

each year. (Nidec, No. 60 at pp. 2–3) 

DOE agrees that the fan motor may fail 

and included motor replacement in the 

LCC and PBP analysis. 

AHRI, Goodman, and Rheem 

commented that higher-efficiency 

motors have increased failure rates. 

AHRI and Rheem noted that the failure 

rate for a high-efficiency motor is 

typically higher than the failure rate of 

a PSC motor, because the electronics 

added to a high-efficiency motor 

introduce new failure modes associated 

with the life of electronic controls in 

damp, very cold, and very hot 

conditions. (AHRI, No. 48 at p. 6; 

Rheem, No. 54, at p. 14) Goodman 

commented that generally, more 

complex motors contain more 

components that can potentially break, 

which is true of the additional controls 

in X13 and ECM technologies. The 

commenter recommended that DOE 

estimate that service requirements will 

be 20 to 50 percent greater for higherefficiency motors and related controls, 

and that the cost of such service will be 

more for X13 and ECM than for PSC 

motors. Goodman also suggested that 

DOE should use a reduced lifetime (by 

five to ten percent) for X13 and ECM 

furnace fan motors, as PSC motor 

technologies are very mature and X13 

and ECM are relatively young. 

(Goodman, No. 50 at p. 6) 

DOE agrees that the electronics of 

higher-efficiency motors are likely to 

have increased failure rates. For the 

NOPR, DOE included repair to 

electronics for PSC motors with 

controls, constant-torque BPM motors, 

and especially constant-airflow BPM 

motors. DOE added an extra cost for the 

cases that require control updates for 

these efficiency levels. DOE also applied 

an additional labor hour to account for 

cases when it is necessary to replace the 

motors for the constant-torque BPM and 

constant-airflow BPM efficiency levels. 

See chapter 8 of the NOPR TSD for 

further details. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64097 

42Available at: http://www1.eere.energy.gov/

buildings/appliance_standards/residential/

residential_furnaces_central_ac_hp_direct_final_

rule_tsd.html. 

43 DOE used the AHRI Directory of Certified 

Furnace Equipment (Available at: http://

www.ahridirectory.org/ahridirectory/pages/

home.aspx) as well as manufacturer product 

literature. 

DOE did not have a firm basis for 

quantifying the degree to which 

constant-torque BPM motors and 

constant-airflow BPM motors have a 

shorter lifetime than PSC motors. 

Although DOE used the same motor 

lifetime for each fan efficiency level in 

terms of total operating hours, the 

lifetime in terms of years is lower for 

constant-torque BPM and constantairflow BPM motors, because they are 

more frequently used in multi-stage 

heating mode. In addition, DOE 

included additional labor hours to 

repair constant-torque BPM and 

constant-airflow BPM motors, as well as 

higher equipment cost for the BPM 

motors. Thus, on average, consumers 

with constant-torque BPM motors or 

constant-airflow BPM motors have 

higher life-cycle repair costs. 

Goodman commented that DOE 

excluded annual repair and 

maintenance costs from its payback 

analyses, and it believes those 

annualized costs should be included. 

(Goodman, No. 50 at p. 6) In response, 

DOE’s rulemaking analysis, and this 

NOPR, use a simple payback period, 

which does not account for changes in 

operating expense over time. This 

payback period is the amount of time it 

takes the consumer to recover the 

additional installed cost of moreefficient products, compared to baseline 

products, through energy cost savings. 

Repair costs are generally most 

significant in the later years of a 

product’s lifetime. Thus, they are not 

necessarily relevant to the payback 

periods that consumers actually 

experience. 

3. Other Inputs 

DOE modeled furnace fan lifetime 

based on the distribution of furnace 

lifetimes developed for the recent 

energy conservation standards 

rulemaking for furnaces.42 76 FR 37408, 

37476–77 (June 27, 2011). DOE used the 

same lifetime for furnace fans at 

different efficiency levels because there 

are no data that indicate variation of 

lifetime with efficiency. However, DOE 

modeled fan motor failure and 

replacement as a repair cost that affects 

a certain percentage of furnace fans, as 

discussed above. Ingersoll Rand 

commented that there should be no 

reason for an electric furnace to have a 

shorter lifetime than a fossil-fueled 

furnace. (Ingersoll Rand Residential 

Solutions, No. 57, at p. 9) For the NOPR 

analysis, DOE assumed that the lifetime 

for the fans installed in electric furnaces 

and gas furnaces is the same. 

DOE used the same distribution of 

discount rates for furnace fans as it used 

in the recent energy conservation 

standards rulemaking for furnaces. For 

replacement furnaces, the average rate is 

5.0 percent. 

4. Base-Case Efficiency Distribution 

To estimate the share of consumers 

that would be affected by an energy 

conservation standard at a particular 

efficiency level, DOE’s LCC and PBP 

analysis considers the projected 

distribution (i.e., market shares) of 

product efficiencies in the first 

compliance year under the base case 

(i.e., the case without new or amended 

energy conservation standards). For the 

preliminary analysis, DOE found very 

limited data with which to estimate 

either current shares or recent trends. 

DOE requested comments on its 

estimate of the base-case efficiency 

distribution of furnace fans in 2019, as 

well as data that might support use of 

different assumptions. 

Several parties commented that DOE’s 

estimates of constant-torque BPM motor 

and constant-airflow BPM motor market 

growth seem overly optimistic. Ingersoll 

Rand commented that DOE 

overestimated the future market share of 

these motors. (Ingersoll Rand 

Residential Solutions, No. 57, at p. 2) 

Lennox stated that the preliminary 

TSD’s market growth assumptions are 

overstated for both constant-torque and 

variable-speed (ECM) motors. Lennox 

believes other factors increased 

adoption of higher-efficiency products 

between 2009 and 2011, namely, that 

was the period when a $1,500 Federal 

tax credit was available for furnaces 

with an AFUE rate of 95 percent or 

more. (Lennox, No. 47 at p. 2) Morrison 

commented that the projections for ECM 

market penetration are based on 

information from 2010 that presents an 

overly positive picture for the growth 

absent incentives. It stated that the 

market share of ECM motors has fallen 

in 2012 and will likely remain around 

that level without additional incentives, 

although it noted that regional furnace 

and air conditioner standards would 

likely increase market penetration of 

ECM and X13 motors. (Morrison, No. 58 

at p. 8) AHRI and Morrison conceded 

that DOE’s regional standards for central 

air conditioners, heat pumps and 

furnaces may slightly increase the usage 

of ECM and X13 motors, but such an 

increase would still not match DOE’s 

projected ECM market share. (AHRI, No. 

48 at p. 4; Morrison, No. 58 at p. 8) 

Rheem presented a forecast from its 

procurement group that shows the share 

of variable-speed motors declining to 

the 20–25 percent range in 2012 and 

remaining at that level in 2013. (Rheem, 

No. 54, at p. 13) EEI stated that DOE 

should take into consideration the 

impact of tax incentives for the 

purchase of energy-efficient heating and 

cooling equipment when estimating 

energy use baselines and projected 

energy savings. (EEI, No. 65 at p. 4) 

AHRI included a chart showing a 

declining trend in the usage of ECM and 

X13 motors after the expiration of the 

Federal tax credits. (AHRI, No. 48 at p. 

4) 

AHRI commented that current trends 

suggest that the ECM and X13 market 

shares will be 25–30 percent and 10–15 

percent respectively by 2019, assuming 

there are no further tax credit incentives 

in coming years. (AHRI, No. 48 at p. 4) 

Goodman commented that DOE’s 

assumed market shares for X13 and 

ECM fans are significantly higher than 

Goodman’s estimates, and that recent 

values are probably skewed as a result 

of Federal tax credits. Goodman 

estimates that about 70 percent of 

shipments in 2019 are expected to be 

PSC, and ECM motors are likely to be 

twice the volume of X13 motors (i.e., 20 

percent ECM and 10 percent X13). 

(Goodman, No. 50 at p. 4) 

For the NOPR, DOE reviewed the 

information provided by the 

manufacturers and modified its estimate 

of market shares in 2019. The NOPR 

analysis assumes that the combined 

market share of constant-torque BPM 

fans and constant-airflow BPM fans will 

be 35 percent in 2019. The shares are 13 

percent for constant-torque BPM fans 

and 22 percent for constant-airflow BPM 

fans. DOE estimated separate shares for 

replacement and new home 

applications. 

The market shares of efficiency levels 

within the constant-torque BPM motor 

and constant-airflow BPM motor 

categories were derived from AHRI data 

on number of models.43 No such data 

were available for the PSC fan efficiency 

levels, so DOE used the number of 

models it tested or could measure using 

product literature to estimate that 40 

percent of shipments are at the baseline 

level and 60 percent are improved PSC 

fans. There are currently no models of 

PSC with a controls design, so DOE 

assumed zero market share for such 

units. The details of DOE’s approach are 

described in chapter 8 of the NOPR 

TSD. 

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44Available at: http://www.census.gov/const/

www/charindex.html. 

5. Rebuttable Presumption Payback 

Period 

As discussed in section III.E.2, EPCA 

provides that a rebuttable presumption 

is established 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. (42 U.S.C. 

6295(o)(2)(B)(i)) The calculation of this 

so-called rebuttable presumption 

payback period uses the same inputs as 

the calculation of the regular PBP for 

each sample household, but it uses 

average values instead of distributions, 

and the derivation of energy 

consumption and savings only uses the 

parameters specified by the proposed 

DOE test procedure for furnace fans 

rather than the method applied in the 

energy use analysis (described in 

section IV.E), which considers the 

characteristics of each sample 

household. 

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 discussed 

above. 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). 

G. Shipments Analysis 

DOE uses forecasts of product 

shipments to calculate the national 

impacts of standards on energy use, 

NPV, and future manufacturer cash 

flows. DOE develops shipment 

projections based on historical data and 

an analysis of key market drivers for 

each product. 

The vast majority of furnace fans are 

shipped installed in furnaces, so DOE 

estimated furnace fan shipments by 

projecting furnace shipments in three 

market segments: (1) Replacements; (2) 

new housing; and (3) new owners in 

buildings that did not previously have 

a central furnace. 

To project furnace replacement 

shipments, DOE developed retirement 

functions for furnaces from the lifetime 

estimates and applied them to the 

existing products in the housing stock. 

The existing stock of products is tracked 

by vintage and developed from 

historical shipments data. The 

shipments analysis uses a distribution 

of furnace lifetimes to estimate furnace 

replacement shipments. 

To project shipments to the new 

housing market, DOE utilized projected 

new housing construction and historic 

saturation rates of various furnace and 

cooling product types in new housing. 

DOE used AEO 2012 for projections of 

new housing. Furnace saturation rates 

in new housing are provided by the U.S. 

Census Bureau’s Characteristics of New 

Housing.44

DOE also included a small market 

segment consisting of households that 

become ‘‘new owners’’ of a gas furnace. 

This segment consists of households 

that have central air conditioning and 

non-central heating or central air 

conditioning and electric heating and 

choose to install a gas furnace. 

Several parties stated that DOE’s 

shipments estimates appear to be too 

high. (AHRI, No. 48 at p. 5; Goodman, 

No. 50 at p. 6; Rheem, No. 54, at p. 15; 

Ingersoll Rand Residential Solutions, 

No. 57, at p. 2; Morrison, No. 58 at p. 

6) Goodman stated that DOE projects 

growth from approximately 3 million 

units in 2011 to more than 4 million in 

2020, whereas Goodman estimates about 

3.7 million units in 2020, or less if new 

energy conservation standards affect 

sales. (Goodman, No. 50 at p. 6) AHRI, 

Morrison, and Rheem stated that prior 

to 2006, the demand for large homes 

with multiple furnace systems was more 

common than it is today, and it is not 

clear that the demand for homes with 

multiple furnace systems can be 

projected into the future. These 

commenters also argued that the 

shipment projections do not show an 

echo effect loss in replacement sales for 

the drop in furnace sales in 2009–2013. 

(AHRI, No. 48 at p. 5; Morrison, No. 58 

at p. 6; Rheem, No. 54 at p. 15) EEI 

stated that DOE’s projected shipments of 

furnace fans do not appear consistent 

with other estimates of furnace 

shipments that EEI has observed. (EEI, 

No. 65 at p. 4) Lennox noted that DOE 

has projected significant market growth 

starting in 2012 and continuing forward, 

which does not appear to be supported 

by recent sales figures. (Lennox, No. 47 

at p. 2) 

For the NOPR, DOE utilized more 

recent historical shipments data for gasfired and oil-fired furnaces, which show 

a decline in 2012. DOE also reviewed 

and modified its projection of furnace 

shipments. The new projection 

(depicted in chapter 9 of the NOPR 

TSD) shows a lower level of 

replacement shipments in the 2025–30 

period, which is a consequence (i.e., an 

echo) of the decline in historical 

shipments in 2007–2009. The NOPR 

projection for 2020 shows total 

shipments of 3.7 million, which is the 

same as the 3.7 million estimated by 

Goodman. 

Regarding the comment from AHRI, 

Morrison, and Rheem, DOE’s 

methodology does not presume that past 

demand for homes with multiple 

furnace systems will continue in the 

future. However, it does assume that 

furnaces installed in the past will be 

replaced, so the installation of multiple 

furnaces in the past would contribute to 

future growth in shipments. 

In the preliminary analysis, DOE 

considered whether standards that 

require more-efficient furnace fans 

would have an impact on furnace 

shipments. Lennox stated that an 

overly-stringent standard for furnace 

fans would bring further increased costs 

to consumers, beyond the added 

product cost from tightened AFUE 

standards for furnaces, venting and 

drainage for condensing furnaces 

(required in northern States by regional 

standards), and standby mode and off 

mode power regulations. Lennox stated 

that higher purchase prices cause 

consumers to defer purchases, repair 

existing furnaces, and/or find lessefficient, higher-polluting alternate 

sources of heat. (Lennox, No. 47 at p. 3) 

Goodman commented that it would 

expect reduction in furnace sales after 

implementation of a new furnace fan 

standard, since many consumers will 

choose to repair instead of replacing 

products currently in their home, 

thereby avoiding the need to pay the 

initial cost of a more expensive, higherefficiency product. (Goodman, No. 50 at 

p. 6) Morrison also commented that 

higher upfront costs could lead to 

consumer switching to less-efficient 

products and push consumers to repair 

rather than replace units. (Morrison, No. 

58, at p. 9) 

DOE agrees that it is reasonable to 

expect that energy conservation 

standards for residential furnace fans 

that result in higher furnace prices 

would have some dampening effect on 

sales. Some consumers might choose to 

repair their existing furnace rather than 

purchase a new one, or perhaps install 

an alternative space heating product. To 

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45Available at: http://www1.eere.energy.gov/

buildings/appliance_standards/residential/

residential_furnaces_central_ac_hp_direct_final_

rule_tsd.html. 

estimate the impact on shipments of the 

price increase for the considered 

efficiency levels, DOE used the relative 

price elasticity approach that was 

applied in the 2011 furnace standards 

rulemaking.45 76 FR 37408, 37483 (June 

27, 2011). This approach also gives 

some weight to the operating cost 

savings from higher-efficiency products. 

Chapter 9 in the NOPR TSD describes 

the method applied. 

H. National Impact Analysis 

The NIA assesses the NES and the 

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 determined the 

NPV and NES for the potential standard 

levels considered for the furnace fan 

product classes analyzed. To make the 

analysis more accessible and 

transparent to all interested parties, 

DOE prepared a computer spreadsheet 

that uses typical values (as opposed to 

probability distributions) as inputs. To 

assess the effect of input uncertainty on 

NES and NPV results, DOE has 

developed its spreadsheet model to 

conduct sensitivity analyses by running 

scenarios on specific input variables. 

Analyzing impacts of potential energy 

conservation standards for residential 

furnace fans requires comparing 

projections of U.S. energy consumption 

with new or amended energy 

conservation standards against 

projections of energy consumption 

without the standards. The forecasts 

include projections of annual appliance 

shipments, the annual energy 

consumption of new appliances, and the 

purchase price of new appliances. 

A key component of DOE’s NIA 

analysis is the energy efficiencies 

projected over time for the base case 

(without new standards) and each of the 

standards cases. The projected 

efficiencies represent the annual 

shipment-weighted energy efficiency of 

the products under consideration during 

the shipments projection period (i.e., 

from the assumed compliance date of a 

new standard to 30 years after 

compliance is required). 

In the preliminary analysis, DOE 

derived a growth rate in the market 

share of ECM fans by extrapolating the 

trend from 2005, when the ECM share 

was 10 percent, to 2010, when it was 

approximately 30 percent. In so doing, 

DOE considered the favorable costeffectiveness of ECM fans and assumed 

that their market share would peak and 

level off at 79 percent. 

AHRI and Rheem stated that DOE’s 

assumption that the market share for 

furnace fans with ECM technology will 

increase to 75 percent is not supported 

by the industry data, especially since 

the Federal residential tax credits have 

expired. (AHRI, No. 48 at p 5; Rheem, 

No. 54, at p. 15) Goodman also stated 

that a 75 percent peak market 

penetration of ECM motors as estimated 

by DOE seems high. Goodman estimates 

a value in the range of 40–50 percent by 

mid-century. (Goodman, No. 50 at p. 4) 

For the NOPR, DOE reviewed the 

information provided by the 

manufacturers and modified its estimate 

of the long-run trend in market shares 

of constant-torque BPM and constantairflow BPM motor furnace fans. The 

NOPR analysis assumes a long-run trend 

that results in market share of the 

constant-torque BPM and constantairflow BPM furnace fans reaching 45 

percent in 2048. 

For the preliminary analysis, DOE 

used a ‘‘roll up’’ scenario for estimating 

the impacts of the potential energy 

conservation standards for residential 

furnace fans. Under the ‘‘roll-up’’ 

scenario, DOE assumes: (1) product 

efficiencies in the base case that do not 

meet the standard level under 

consideration would ‘‘roll-up’’ to meet 

the new standard level; and (2) product 

efficiencies above the standard level 

under consideration would not be 

affected. To be consistent with the 

assumption regarding base-case 

efficiency after the compliance year, 

DOE assumed that for each standards 

case, the efficiency distribution in each 

product class remains unchanged after 

2019. DOE used the same approach for 

the NOPR. 

1. National Energy Savings Analysis 

The national energy savings analysis 

involves a comparison of national 

energy consumption of the considered 

products in each potential standards 

case (TSL) with consumption in the 

base case with no new or amended 

energy conservation standards. DOE 

calculated the national energy 

consumption by multiplying the 

number of units (stock) of each product 

(by vintage or age) by the unit energy 

consumption (also by vintage). Vintage 

represents the age of the product. DOE 

calculated annual NES based on the 

difference in national energy 

consumption for the base case (without 

new efficiency standards) and for each 

higher efficiency standard. DOE 

estimated energy consumption and 

savings based on site energy and 

converted the electricity consumption 

and savings to primary energy using 

annual conversion factors derived from 

the AEO 2012 version of the NEMS. 

Cumulative energy savings are the sum 

of the NES for each year over the 

timeframe of the analysis. 

DOE has historically presented NES 

in terms of primary energy savings. 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 Science, 

DOE announced its intention to use fullfuel-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). While DOE stated in that notice 

that it intended to use the Greenhouse 

Gases, Regulated Emissions, and Energy 

Use in Transportation (GREET) model to 

conduct the analysis, it also said it 

would review alternative methods, 

including the use of EIA’s National 

Energy Modeling System (NEMS). After 

evaluating both models and 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 a more 

appropriate tool for this specific use. 77 

FR 49701 (August 17, 2012). Therefore, 

DOE is using NEMS model to conduct 

FFC analyses. 

Goodman questioned the introduction 

of FFC measures of energy use. It noted 

that, under 42 U.S.C. 6291(4), ‘‘energy 

use’’ is defined as ‘‘the quantity of 

energy directly consumed by a 

consumer product at point of use . . .’’ 

(Goodman, No. 50 at p. 4) 

The definition of ‘‘energy use’’ cited 

by Goodman is intended to apply at the 

product level. This is apparent from the 

complete definition: ‘‘The term ‘energy 

use’ means the quantity of energy 

directly consumed by a consumer 

product at point of use, determined in 

accordance with test procedures under 

section 6293 of this title.’’ (42 U.S.C. 

6291(4)) The law also requires DOE, in 

determining the 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)) 

The term ‘‘energy’’ means electricity or 

fossil fuels. (42 U.S.C. 6291(3)) The FFC 

metric provides a more complete 

accounting of the fossil fuels saved by 

standards, and its use is in keeping with 

DOE’s statutory authority. The approach 

used to derive FFC multipliers for this 

NOPR is described in appendix 10–B of 

the NOPR TSD. DOE requests comment 

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64100 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

46OMB Circular A–4 (Sept. 17, 2003), section E, 

‘‘Identifying and Measuring Benefits and Costs.’’ 

47U.S. Securities and Exchange Commission, 

Annual 10–K Reports (Various Years) (Available at: 

http://sec.gov). 

48U.S.Census Bureau, Annual Survey of 

Manufacturers: General Statistics: Statistics for 

Industry Groups and Industries (Available at: 

http://factfinder2.census.gov/faces/nav/jsf/pages/

searchresults.xhtml?refresh=t). 

49Hoovers Inc. Company Profiles (Various 

Companies) (Available at: http://

www.hoovers.com). 

on the FCC multipliers and the 

assumptions made to derive the 

multipliers. 

2. Net Present Value Analysis 

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. DOE calculated net savings 

each year as the difference between the 

base case and each standards case in 

terms of total savings in operating costs 

versus total increases in installed costs. 

DOE calculated savings over the lifetime 

of products shipped in the forecast 

period. DOE calculated NPV as the 

difference between the present value of 

operating cost savings and the present 

value of total installed costs. DOE used 

a discount factor based on real discount 

rates of 3 and 7 percent to discount 

future costs and savings to present 

values. 

For the NPV analysis, DOE calculates 

increases in total installed costs as the 

difference in total installed cost between 

the base case and standards case (i.e., 

once the standards take effect). 

DOE assumed no change in 

residential furnace fan prices over the 

2019¥2048 period. In addition, DOE 

conducted a sensitivity analysis using 

alternative price trends, specifically one 

in which prices decline over time, and 

another in which prices rise. These 

price trends are described in appendix 

10–C of the NOPR TSD. 

DOE expresses savings in operating 

costs as decreases associated with the 

lower energy consumption of products 

bought in the standards case compared 

to the base efficiency case. Total savings 

in operating costs are the product of 

savings per unit and the number of units 

of each vintage that survive in a given 

year. 

DOE estimates the NPV of consumer 

benefits using both a 3-percent and a 7- 

percent real discount rate. DOE uses 

these discount rates in accordance with 

guidance provided by the Office of 

Management and Budget (OMB) to 

Federal agencies on the development of 

regulatory analysis.46 The NPV results 

for the residential furnace fan TSLs are 

presented in section V.B.3 of this notice. 

I. Consumer Subgroup Analysis 

In the NOPR stage of a rulemaking, 

DOE conducts a consumer subgroup 

analysis. A consumer subgroup 

comprises a subset of the population 

that may be affected disproportionately 

by new or revised energy conservation 

standards (e.g., low-income consumers, 

seniors). 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-only households 

and (2) low-income households. DOE 

identified these households in the RECS 

sample and used the LCC spreadsheet 

model to estimate the impacts of the 

considered efficiency levels on these 

subgroups. The consumer subgroup 

results for the residential furnace fan 

TSLs are presented in section V.B.1 of 

this notice. 

J. Manufacturer Impact Analysis 

1. Overview 

DOE performed an MIA to estimate 

the financial impact of new energy 

conservation standards on 

manufacturers of residential furnace 

fans 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). Different sets of 

assumptions (markup scenarios) will 

produce different results. The 

qualitative part of the MIA addresses 

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. 

For this rulemaking, DOE considers 

the ‘‘furnace fan industry’’ to consist of 

manufacturers who assemble furnace 

fans as a component of the HVAC 

products addressed in this rulemaking. 

DOE conducted the MIA for this 

rulemaking in three phases. In Phase 1 

of the MIA, DOE prepared a profile of 

the residential furnace fans industry 

that includes a top-down cost analysis 

of manufacturers used to derive 

preliminary financial inputs for the 

GRIM (e.g., sales, general, and 

administration (SG&A) expenses; 

research and development (R&D) 

expenses; and tax rates). DOE used 

public sources of information, including 

company SEC 10–K filings,47 corporate 

annual reports, the U.S. Census 

Bureau’s Economic Census,48 and 

Hoover’s reports.49

In Phase 2 of the MIA, DOE prepared 

an industry cash-flow analysis to 

quantify the potential impacts of a new 

energy conservation standard. 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 possible changes in sales volumes. 

In Phase 3 of the MIA, DOE 

conducted structured, detailed 

interviews with a representative crosssection of manufacturers. During these 

interviews, DOE discussed engineering, 

manufacturing, procurement, and 

financial topics to validate assumptions 

used in the GRIM and to identify key 

issues or concerns. See section IV.J.4 for 

a description of the key issues 

manufacturers raised during the 

interviews. 

Additionally, in Phase 3, DOE 

evaluated subgroups of manufacturers 

that may be disproportionately 

impacted by new standards or that may 

not be accurately represented by the 

average cost assumptions used to 

develop the industry cash-flow 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 one subgroup (i.e., small 

manufacturers) for a separate impact 

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 under North American 

Industry Classification System (NAICS) 

code 333415, ‘‘Air-Conditioning and 

Warm Air Heating Equipment and 

Commercial and Industrial Refrigeration 

Equipment Manufacturing,’’ a 

residential furnace fan manufacturer 

and its affiliates may employ a 

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maximum of 750 employees. The 750- 

employee threshold includes all 

employees in a business’s parent 

company and any other subsidiaries. 

Based on this classification, DOE 

identified at least 14 residential furnace 

fan manufacturers that qualify as small 

businesses. The residential furnace fan 

small manufacturer subgroup is 

discussed in chapter 12 of the NOPR 

TSD and in section V.B.2.d of this 

notice. 

2. Government Regulatory Impact Model 

DOE uses the GRIM to quantify the 

changes in cash flow due to new 

standards that result in a higher or 

lower industry value. The GRIM 

analysis uses a standard, annual cashflow analysis 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 new energy conservation 

standards. The GRIM spreadsheet uses 

the inputs to arrive at a series of annual 

cash flows, beginning in 2013 (the base 

year of the analysis) and continuing to 

2048. DOE calculated INPVs by 

summing the stream of annual 

discounted cash flows during this 

period. For residential furnace fan 

manufacturers, DOE used a real 

discount rate of 7.8 percent, which was 

derived from industry financials and 

then modified according to feedback 

received during manufacturer 

interviews. 

The GRIM calculates cash flows using 

standard accounting principles and 

compares changes in INPV between a 

base case and each standards case. The 

difference in INPV between the base 

case and a standards case represents the 

financial impact of the new energy 

conservation standard on 

manufacturers. As discussed previously, 

DOE collected this information on the 

critical GRIM inputs from a number of 

sources, including publicly-available 

data and interviews with a number of 

manufacturers (described in the next 

section). The GRIM results are shown in 

section V.B.2.a. 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 MPCs of the analyzed 

products can affect the revenues, gross 

margins, and cash flow of the industry, 

making these product cost data key 

GRIM inputs for DOE’s analysis. 

In the MIA, DOE used the MPCs for 

each considered efficiency level 

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. To calculate the MPCs for 

equipment above the baseline, DOE 

added the incremental material, labor, 

and overhead costs from the engineering 

cost-efficiency curves to the baseline 

MPCs. These cost breakdowns and 

product markups were validated and 

revised with manufacturers during 

manufacturer interviews. 

Shipments Forecast 

The GRIM estimates manufacturer 

revenues based on total unit shipment 

forecasts and the distribution of these 

values by efficiency level. Changes in 

sales volumes and efficiency mix over 

time can significantly affect 

manufacturer finances. For this analysis, 

the GRIM uses the NIA’s annual 

shipment forecasts derived from the 

shipments analysis from 2013 (the base 

year) to 2048 (the end year of the 

analysis period). See chapter 9 of the 

NOPR TSD for additional details. 

For the standards-case shipment 

forecast, the GRIM uses the NIA 

standards-case shipment forecasts. DOE 

assumes a new efficiency distribution in 

the standards case, in which product 

efficiencies in the base case that did not 

meet the standard under consideration 

would ‘‘roll up’’ to meet the new 

standard in the year that compliance is 

required. 

Product and Capital Conversion Costs 

New energy conservation standards 

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 each considered efficiency 

level in each product class. 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, 

marketing, and other non-capitalized 

costs necessary to make product designs 

comply with the new 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 product designs can be fabricated 

and assembled. 

To evaluate the level of capital 

conversion expenditures manufacturers 

would likely incur to comply with new 

energy conservation standards, DOE 

used manufacturer interviews to gather 

data on the anticipated level of capital 

investment that would be required at 

each efficiency level. 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 

TSD. 

DOE assessed the product conversion 

costs at each considered efficiency level 

by integrating data from quantitative 

and qualitative sources. DOE considered 

market-share-weighted feedback 

regarding the potential costs of each 

efficiency level from multiple 

manufacturers to determine conversion 

costs such as R&D expenditures and 

certification costs. Manufacturer data 

were aggregated to better reflect the 

industry as a whole and to protect 

confidential information. 

In general, 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 investment figures 

used in the GRIM can be found in 

section IV.J.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 

Shipment Scenarios 

In the NIA, DOE modeled shipments 

with a roll-up scenario to represent 

possible standards-case efficiency 

distributions for the years beginning 

2019 (the year that compliance with 

new standards is proposed to be 

required) through 2048 (the end of the 

analysis period). The roll-up scenario 

represents the case in which all 

shipments in the base case that do not 

meet the new standard would roll up to 

meet the new standard level, with the 

efficiency of products already at the 

new standard level remaining 

unchanged. Consumers in the base case 

who purchase products above the 

standard level are not affected as they 

are assumed to continue to purchase the 

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same product in the standards case. See 

chapter 9 of the NOPR TSD for more 

information. 

Markup Scenarios 

As discussed above, MSPs include 

direct manufacturing production costs 

(i.e., labor, materials, and overhead 

estimated in DOE’s MPCs) and all nonproduction 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 for each product class and 

efficiency level. 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 new energy 

conservation standards: (1) a 

preservation of gross margin percentage 

markup scenario; and (2) a preservation 

of operating profit markup scenario. 

These scenarios lead to different 

markups 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 within a product class. 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 residential furnace fans and 

comments from manufacturer 

interviews, DOE assumed the nonproduction cost markup—which 

includes SG&A expenses, R&D 

expenses, interest, and profit—to be the 

following for each residential furnace 

fan product class: 

TABLE IV.9—MANUFACTURER MARKUP

BY RESIDENTIAL FURNACE FAN

PRODUCT CLASS

Product class Markup 

NWG–NC .............................. 1.30 

NWG–C ................................ 1.31 

WG–NC ................................ 1.27 

NWO–NC .............................. 1.35 

EF/MB ................................... 1.19 

MH–NWG–NC ...................... 1.25 

MH–NWG–C ......................... 1.25 

TABLE IV.9—MANUFACTURER MARKUP

BY RESIDENTIAL FURNACE FAN

PRODUCT CLASS—Continued 

Product class Markup 

MH–EF/MB ........................... 1.15 

Because this markup scenario 

assumes that manufacturers would be 

able to maintain their gross margin 

percentage markups as production costs 

increase in response to a new energy 

conservation standard, it represents a 

high bound to industry profitability. 

In the preservation of operating profit 

scenario, manufacturer markups are set 

so that operating profit one year after 

the compliance date of the new energy 

conservation standard is the same as in 

the base case. 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 basecase operating profit. The implicit 

assumption behind this markup 

scenario is that the industry can only 

maintain its operating profit in absolute 

dollars after compliance with the new 

standard is required. Therefore, 

operating margin in percentage terms is 

squeezed (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 a 

new energy conservation standard. 

3. Discussion of Comments 

During the preliminary analysis 

public meeting, interested parties 

commented on the assumptions and 

results of the preliminary analysis TSD. 

Oral and written comments addressed 

several topics, including testing and 

certification burdens, cumulative 

regulatory burdens, compliance date, 

impacts on small businesses, and 

conversion costs. 

a. Testing and Certification Burdens 

Manufacturers expressed concerns 

about the potential testing and 

certification burdens that may be 

associated with a new furnace fan 

energy conservation standard. Ingersoll 

Rand commented that the rulemaking 

would result in additional burden from 

testing, certification, and compliance, 

leading to an increased cost for 

consumers. (Ingersoll Rand, No. 57 at p. 

2) Rheem stated that, in the past, there 

has been no requirement for 

manufacturers to test and report furnace 

airflow data according to any industry 

or governmental standard. In addition, 

Rheem added that there have been no 

certification requirements that require 

the testing of multiple samples. 

Therefore, Rheem concluded that it is 

not reasonable to assume that 

manufacturers already have the data 

available to rate hundreds of current 

furnace models. For companies like 

Rheem, which have a large number of 

basic models, the commenter lamented 

that compliance with new testing 

requirements would create a significant 

burden. (Rheem, No. 54 at p. 3) In order 

to relieve some of the testing burden, 

Mortex recommended that DOE should 

allow manufacturers to use Alternative 

Efficiency Determination Methods 

(AEDMs). (Mortex, No. 43 at p. 25) 

Mortex also recommended that DOE 

should use an alternative test procedure 

that is integrated with AFUE testing so 

that all models do not have to be tested 

separately under the residential furnace 

fan test procedure. (Mortex, No. 59 at p. 

3) Manufacturers were also concerned 

that the time needed to certify all their 

products would reduce investment in 

innovative technologies, because fewer 

resources would be available for R&D. 

(Rheem, No. 54 at p. 16) 

DOE recognizes the concerns that 

manufacturers have regarding test 

burden. As discussed in section III.A, 

DOE proposed in the April 2, 2013 test 

procedure SNOPR to adopt a modified 

version of an alternative test method 

recommended by AHRI and other 

furnace fan manufacturers that aligns 

the residential furnace fan test 

procedure with the DOE test procedure 

for residential furnaces to significantly 

reduce burden on industry. 78 FR 

19606. DOE also estimated the capital 

expenditure, time to test, and cost to test 

according to the proposed residential 

furnace fan test procedure in the 

SNOPR. DOE found that the proposed 

test procedure would not result in 

significant capital expenditures for 

manufacturers, because they would not 

have to acquire or use any test 

equipment beyond the equipment 

already used to conduct the test method 

specified in the DOE residential furnace 

test procedure (i.e., the AFUE test 

setup). DOE also found that the time to 

conduct a single furnace fan test 

according to its proposed furnace fan 

test procedure would be less than 3 

hours and cost less than one percent of 

the manufacturer selling price of the 

product into which the furnace fan is 

integrated. Consequently, DOE does not 

find that testing furnace fans according 

to this proposed test procedure would 

be unduly burdensome. Id. at 19619–21 

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b. Cumulative Regulatory Burden 

Interested parties expressed concern 

over the cumulative regulatory burden 

that would result from a residential 

furnace fan energy conservation 

standard. Morrison commented that the 

energy conservation standards that 

already apply to residential HVAC 

products, in combination with a 

standard for furnace fans, would 

significantly increase manufacturer 

burden. (Morrison, No. 43 at p. 23) Both 

AHRI and Morrison stated that DOE’s 

current estimation of the incremental 

cost of testing furnace fans (at less than 

2 percent of the manufacturer selling 

price) does not account for the 

additional burden placed on furnace 

manufacturers that must now also 

certify standby mode and off mode 

energy consumption, along with AFUE. 

(AHRI, No. 48 at p. 7; Morrison, No. 58 

at p. 10) Furthermore, Morrison 

commented that several of the 

manufacturers who are impacted by this 

residential furnace fans rulemaking face 

even greater cumulative regulatory 

burden, because they also produce other 

products regulated by DOE. (Morrison, 

No. 58 at p. 10) 

Instead of creating a set of residential 

furnace fan standards through a separate 

energy conservation rulemaking, 

manufacturers and efficiency experts 

advocated for combining all furnacerelated standards into one rulemaking or 

to have only one metric for all furnacerelated products. CA IOU recommended 

that DOE should, in future iterations of 

furnace-related standards, combine 

CAC/HP, furnaces, and furnace fans into 

a single rulemaking, given their 

interrelated performance and energy 

consumption. (CA IOU, No. 56 at p. 2) 

Morrison and Rheem were also 

concerned that the cost of certifying 

furnace fan efficiency ratings would 

increase upfront costs for consumers 

and therefore lead them to choose lessefficient products (e.g., space heaters) or 

repair HVAC units instead of replacing 

them. (Morrison, No. 58 at p. 9; Rheem, 

No. 54 at p. 16) Furthermore, Morrison 

believes a single combined metric 

would prevent consumer confusion that 

can arise from having multiple metrics 

assigned to a single product, and 

Morrison opined that such approach 

would also reduce the regulatory burden 

imposed on manufacturers. (Morrison, 

No. 43 at p. 24) 

DOE realizes that the cumulative 

effect of multiple regulations on an 

industry may significantly increase the 

burden faced by manufacturers that 

need to comply with regulations and 

testing requirements from different 

organizations and levels of government. 

DOE takes into account the cumulative 

cost of multiple regulations on 

manufacturers in the cumulative 

regulatory burden section of its analysis. 

Additionally, DOE considers the 

cumulative regulatory burden as part of 

its decision process in setting proposed 

standards. Further information on 

cumulative regulatory burden can be 

found in section V.B.2.e of this notice 

and in chapter 12 of the NOPR TSD. 

c. Compliance Date and Implementation 

Period 

Efficiency advocates expressed 

support for a compliance date sooner 

than five years after publication of the 

final rule, because it would result in 

additional energy savings. Earthjustice 

commented that EPCA does not 

mandate a lead time of five years for 

furnace fans because furnace fans are 

not listed in section 325(m) (42 U.S.C. 

6295(m)(4)(A)(ii)) as a product to which 

a 5-year lead time applies. (Earthjustice, 

No. 49 at p. 2) In a joint comment 

(hereinafter referred to as the joint 

comment), the Appliance Standards 

Awareness Project, American Council 

for an Energy-Efficient Economy, 

National Consumer Law Center, Natural 

Resources Defense Council, and 

Northwest Energy Efficiency Alliance 

encouraged DOE to consider a 

compliance date three years after 

publication of the final rule. According 

to the joint commenters, a three-year 

lead time for manufacturers is feasible, 

because the efficiency levels that DOE 

evaluated for the preliminary analysis 

are based on technologies that are 

already widely employed in current 

HVAC products—namely ECM and X13 

motors. (ACEEE, et al., No. 55 at p. 3) 

NEEP also recommended a compliance 

date three years after publication of the 

final rule. (NEEP, No. 51 at p. 3) 

However, according to Goodman, 

EPCA mandates a lead time of greater 

than five years. Goodman commented 

that EPCA prohibits a manufacturer 

from being forced to apply new 

standards to a product that has had 

other new standards applied to it within 

a 6-year period. (42 U.S.C. 

6295(m)(4)(B)) Therefore, the earliest 

effective date for new energy 

conservation standards for residential 

furnace fans, pursuant to EPCA, would 

be January 1, 2021 because a new AFUE 

standard will become effective on May 

1, 2013 and a new SEER/HSPF standard 

will become effective January 1, 2015. 

(Goodman, No. 50 at p. 8) 

In response to these comments 

regarding the appropriate compliance 

date for residential furnace fan 

standards, DOE agrees with the joint 

commenters’ observation that under 42 

U.S.C. 6295(m)(4)(A)(ii), EPCA does not 

specify furnace fans as a product with 

a 5-year lead time. DOE does not agree 

with Goodman’s interpretation of 42 

U.S.C. 6295(m)(4) as prohibiting a 

compliance date prior to January 2021. 

DOE has tentatively concluded that 42 

U.S.C. 6295(m)(4) is only applicable to 

amendments to existing standards, and 

residential furnace fans are covered 

products that have not been previously 

regulated. Furnace fans are explicitly 

addressed only at 42 U.S.C. 

6295(f)(4)(D), which does not specify 

any compliance dates. Therefore, since 

EPCA does not mandate a specific lead 

time for furnace fans, DOE considered 

the actions required by manufacturers to 

comply with the proposed standard to 

determine an appropriate lead-time. 

During manufacturer interviews, DOE 

found that standards would result in 

manufacturers’ extending R&D beyond 

the furnace fan assembly to understand 

the impacts on the design and 

performance of the furnace or modular 

blower in which the furnace fan is 

integrated. To comply with the 

proposed standard, manufacturers may 

have to alter not only the designs and 

fabrication processes for the furnace fan 

assembly, but also for the furnace or 

modular blower into which the furnace 

fan is integrated. Similar products that 

require similar actions for compliance 

typically have lead times of five years. 

For these reasons, DOE selected a 5-year 

compliance date. 

d. Small Businesses 

DOE received comments regarding its 

analysis of small businesses. Mortex 

formally requested that DOE prepare a 

regulatory flexibility analysis since it 

believes that DOE has not certified that 

the amendments in the test procedure 

proposed rule do not have a significant 

economic impact on a substantial 

number of small entities. (Mortex, No. 

59 at p. 3) During the preliminary 

analysis public meeting, Unico asked 

whether small manufacturers will be 

included in DOE’s cost-benefit analysis. 

(Unico, No. 43 at p. 56) However, 

Ingersoll Rand is concerned that DOE 

limits the manufacturer analysis to only 

small manufacturers. (Ingersoll Rand, 

No. 57 at p. 2) 

For the manufacturer impact analysis, 

DOE determined the impact of a new 

standard on the entire residential 

furnace fans industry, including 

manufacturers of all sizes. However, 

DOE also evaluated subgroups of 

manufacturers that may be 

disproportionately impacted by new 

standards. For this rulemaking, DOE 

identified small businesses as a 

subgroup and discusses the impacts on 

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64104 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

50 DOE did reach out to a number of residential 

oil-fired furnace manufacturers, but most declined 

to be interviewed. However, DOE notes that fan 

assemblies and the processes by which they are 

fabricated do not change significantly across 

furnace type. 

this subgroup in the initial regulatory 

flexibility analysis, which can be found 

in section VI.B of this notice. DOE’s 

decision to prepare a regulatory 

flexibility analysis for the residential 

furnace fans standards rulemaking 

NOPR is separate from its decision to 

not prepare a regulatory flexibility 

analysis for the residential furnace fans 

test procedures NOPR. DOE did 

previously certify to SBA that its 

proposed test procedure for residential 

furnace fans would not have a 

significant economic impact on a 

substantial number of small entities. 

e. Conversion Costs 

Several manufacturers expressed 

concern as to the capital conversion 

costs that may be associated with a new 

standard. Rheem stated that stringent 

standards may require significant 

capital conversion costs and that this is 

a key issue for the MIA. (Rheem, No. 54 

at p. 16) Morrison expressed a similar 

concern, stating that manufacturers may 

incur significant capital conversion 

costs at ‘‘overly burdensome’’ regulation 

levels. (Morrison, No. 58 at p. 9) 

DOE acknowledges manufacturers’ 

concerns regarding capital conversion 

costs and carefully took this matter into 

account in developing its proposal. 

During manufacturer interviews, DOE 

requested information about potential 

conversion costs at each efficiency level 

for each product class. DOE evaluated 

the information gathered during the 

interviews, as well as data from the 

engineering analysis, to determine 

capital conversion costs. Conversion 

costs are discussed in detail in section 

V.B.2.a of this notice and in chapter 12 

of the TSD. 

4. Manufacturer Interviews 

DOE considers the manufacturer of 

the HVAC product in which the 

residential furnace fan is integrated to 

be the furnace fan manufacturer. DOE is 

aware that HVAC product 

manufacturers purchase many of the 

components in the furnace fan assembly 

(e.g., the motor and impeller) from 

separate component manufacturers. 

However, the HVAC product 

manufacturer determines the design 

requirements, selects the purchased 

components based on these 

requirements, and performs the final 

assembly and integration of the fan 

assembly into the HVAC product. For 

these reasons, DOE considers the HVAC 

product manufacturer to be the furnace 

fan manufacturer. Accordingly, DOE 

interviewed manufacturers representing 

approximately 90 percent of residential 

gas furnace and central air conditioner 

sales, approximately 15 percent of 

residential oil furnace sales, 50 over 85 

percent of electric furnace/modular 

blower sales, and approximately 90 

percent of manufactured home furnace 

sales. These interviews were in addition 

to those DOE conducted as part of the 

engineering analysis. The information 

gathered during these interviews 

enabled DOE to tailor the GRIM to 

reflect the unique financial 

characteristics of the residential furnace 

fan industry. All interviews provided 

information that DOE used to evaluate 

the impacts of potential new energy 

conservation standards on manufacturer 

cash flows, manufacturing capacities, 

and employment levels. 

During the manufacturer interviews, 

DOE asked manufacturers to describe 

their major concerns about this 

rulemaking. The following sections 

describe the most significant issues 

identified by manufacturers. DOE also 

considered all other concerns expressed 

by manufacturers in its analyses. 

However, 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 and DOE’s 

responses throughout the rest of this 

notice. 

a. Testing and Certification Burdens 

All interviewed manufacturers 

expressed concerns about testing and 

certification burdens. In particular, 

manufacturers were concerned about 

the additional time required to test 

products for compliance with the new 

standard. Because the test procedure 

proposed in the May 15, 2012 furnace 

fan test procedure NOPR (77 FR 28674) 

is different from testing methods that 

are currently being used for residential 

furnaces, manufacturers argued that a 

significant amount of time would need 

to be invested. Some manufacturers 

suggested that the testing burden could 

be reduced if the testing for FER could 

be coordinated with testing for AFUE. In 

general, manufacturers were more 

concerned about the additional time and 

labor required to conduct the testing 

rather than the cost of testing equipment 

and stations, which were expected to be 

minimal. 

As explained in section IV.K.3.a, DOE 

recognizes the concerns that 

manufacturers have regarding test 

burden and has issued a test procedure 

SNOPR that would align the proposed 

residential furnace fan test procedure 

with the DOE test procedure for 

residential furnaces, thereby reducing 

the burden on manufacturers. 78 FR 

19606 (April 2, 2013). 

b. Market Size 

During interviews, manufacturers 

raised concerns about the potential of 

new furnace fan energy conservations 

standards to cause the residential 

furnace fan market to contract. 

Manufacturers claimed that an increase 

in overall product costs, resulting from 

component changes or increased test 

burden, would lead to a reduced volume 

of furnace sales. They stated that higher 

costs could drive consumers to purchase 

refurbished or repaired units instead of 

new products. Higher costs might also 

push consumers towards using 

alternative heating technologies (e.g., 

space heaters or radiant heat) which 

may be less efficient. One manufacturer 

also noted that the market for residential 

furnace fan products has already shrunk 

6–7 percent and is expected to have 

slow growth over the next few years. 

Given that manufacturers expect slow or 

no growth in the near future for most of 

the product classes even without new 

energy conservation standards, the 

addition of new standards could lead to 

further market contraction. 

Although the production costs for 

furnace fans are estimated to increase 

with higher efficiency levels, DOE does 

not expect overall shipments of furnaces 

to decrease due to an increase in 

standards. On the contrary, based on the 

shipments analysis, total shipments for 

the furnace fan industry are not 

expected to decrease in the years 

following the standards compliance 

year. Chapter 9 of the NOPR TSD 

provides more information on shipment 

estimates during the analysis period. 

c. Cumulative Regulatory Burden 

DOE identified a number of 

cumulative regulations that may affect 

residential furnace fan manufacturers. 

Interviewed manufacturers mentioned 

the following regulations as potentially 

having an impact and contributing to 

burden: (1) DOE Energy Conservation 

Standards for Furnaces and Central Air 

Conditioners and Heat Pumps; (2) DOE’s 

Certification, Compliance, and 

Enforcement rulemaking; (3) DOE’s 

Alternative Efficiency Determination 

Methods and Alternate Rating Methods 

rulemaking; (4) EPA’s phaseout of 

Hydrochlorofluorocarbons (HCFCs); (5) 

EPA’s Energy Star program; (6) State 

regulations such as California Title 24; 

(7) the South Coast Air Quality 

Management District Rule 1111; (8) 

Canadian energy efficiency regulations; 

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51Forster, P., V. Ramaswamy, P. Artaxo, T. 

Berntsen, R. Betts, D. W. Fahey, J. Haywood, J. 

Lean, D.C. Lowe, G. Myhre, J. Nganga, R. Prinn, G. 

Raga, M. Schulz and R. Van Dorland. 2007: Changes 

in Atmospheric Constituents and in Radiative 

Forcing. In Climate Change 2007: The Physical 

Science Basis. Contribution of Working Group I to 

the Fourth Assessment Report of the 

Intergovernmental Panel on Climate Change. S. 

Solomon, D. Qin, M. Manning, Z. Chen, M. 

Marquis, K. B. Averyt, M.Tignor and H. L. Miller, 

Editors. 2007. Cambridge University Press, 

Cambridge, United Kingdom and New York, NY, 

USA. p. 212. 

52CAIR was remanded to the U.S. Environmental 

Protection Agency (EPA) by the U.S. Court of 

Appeals for the District of Columbia Circuit (D.C. 

Continued 

and (9) ASHRAE Standard 90.1. Some 

manufacturers indicated that the largest 

portion of their research and 

development budget goes toward 

meeting the various DOE standards. One 

manufacturer also recommended that 

DOE standards should be spread apart 

by at least five year periods so that 

manufacturers can allocate appropriate 

time to meet standards and develop new 

products. 

DOE also asked manufacturers under 

what circumstances they would be able 

to coordinate expenditures related to 

other regulations. Manufacturers 

emphasized the benefits of having fewer 

metrics to evaluate and limiting the 

scope of coverage for residential furnace 

fans to strictly those units housed in 

furnaces. In addition, manufacturers 

requested that DOE consider 

harmonizing with international 

standards to lessen the cumulative 

burden. Manufacturers also requested 

that the compliance date for some 

standards be pushed out to allow 

enough time for product development 

and limit stranded assets. 

DOE recognizes and takes into 

account the cumulative cost of multiple 

regulations on manufacturers in the 

cumulative regulatory burden section of 

its analysis. Further information on 

cumulative regulatory burden can be 

found in section V.B.2.e of this notice 

and in chapter 12 of the NOPR TSD. 

d. Consumer Confusion 

In addition to the regulatory burden 

imposed by multiple standards, 

manufacturers were concerned with 

issues arising from multiple metrics that 

all apply to a single product. Furnaces 

alone already have energy efficiency 

rating metrics for AFUE and standby 

power, so with an additional FER 

metric, furnaces would be labeled with 

three different metrics. Manufacturers 

stated during interviews that three 

metrics are too many for a single 

product, and that consumers who use 

these rating metrics to evaluate and 

compare product performance may get 

confused if multiple metrics are labeled 

on one furnace. Manufacturers 

recommended that DOE should focus on 

the thermal performance of the furnace 

and not the fan energy consumption, 

which is a small fraction of a furnace’s 

overall energy use. 

In response, DOE is required by EPCA 

to consider and establish energy 

conservation standards for residential 

furnace fans by December 31, 2013. (42 

U.S.C. 6295(f)(4)(D)) DOE is also 

required to develop test procedures to 

measure the energy efficiency, energy 

use, or estimated annual operating cost 

of each covered product prior to the 

adoption of an energy conservation 

standard. (42 U.S.C. 6295(o)(3)(A) and 

(r)) Pursuant to these statutory 

requirements in EPCA, DOE proposes 

new energy conservation standards in 

this notice, based on its proposed rating 

metric (FER). DOE requests comment 

and information on the potential for 

significant consumer confusion 

regarding the FER metric for residential 

furnace fans. 

e. Motors 

Manufacturers questioned the use of 

X13 and ECM motors as a design option 

to improve furnace fan efficiency. As 

these motors employ more complex 

controls and have higher maintenance 

costs than PSC motors, it was suggested 

that long-term reliability may be an 

issue. Manufacturers expect that the 

number of warranty claims, as well as 

warranty-associated costs, would 

increase if use of X13s and ECMs 

increased. X13s and ECMs are also 

more-expensive components that would 

increase the initial cost of the products 

in which they are used. Since these 

motors would increase product price 

but reduce reliability, manufacturers 

anticipate more consumers seeking to 

repair or refurbish existing products 

rather than purchase new ones. 

Furthermore, manufacturers may face 

challenges in obtaining a sufficient 

supply of motors due to the potential 

supply limitations of ECMs. 

DOE recognizes the concerns that 

manufacturers have about the reliability 

of ECM motors. However, DOE did not 

receive sufficient quantitative data from 

manufacturers regarding the failure rates 

and number of warranty claims for the 

different motor types to make any firm 

conclusions about their reliability. 

Consequently, DOE retained X13 and 

ECM motors as a design option for 

consideration. 

K. Emissions Analysis 

In the emissions analysis, DOE 

estimates the reduction in power sector 

emissions of carbon dioxide (CO2), 

nitrogen oxides (NOX), sulfur dioxide 

(SO2), and mercury (Hg) from potential 

energy conservation standards for the 

considered products. In addition to 

estimating impacts of standards on 

power sector emissions, DOE estimated 

emissions impacts in production 

activities (extracting, processing, and 

transporting fuels) that provide the 

energy inputs to power plants. These are 

referred to as ‘‘upstream’’ emissions. 

Together, these emissions account for 

the full-fuel-cycle. In accordance with 

DOE’s FFC Statement of Policy (76 FR 

51281 (August 18, 2011)), this FFC 

analysis also includes impacts on 

emissions of methane (CH4) and nitrous 

oxide (N2O), both of which are 

recognized as greenhouse gases. 

DOE conducted the emissions 

analysis using emissions factors that 

were derived from data in EIA’s AEO 

2012, supplemented by data from other 

sources. DOE developed separate 

emissions factors for power sector 

emissions and upstream emissions. For 

residential furnace fans, DOE also 

calculated site and upstream emissions 

from the additional use of natural gas 

associated with some of the efficiency 

levels. 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 the tons of the 

gas by the gas’s global warming 

potential (GWP) over a 100-year time 

horizon. Based on the Fourth 

Assessment Report of the 

Intergovernmental Panel on Climate 

Change,51 DOE used GWP values of 25 

for CH4 and 298 for N2O. 

EIA prepares the Annual Energy 

Outlook using NEMS. Each annual 

version of NEMS incorporates the 

projected impacts of existing air quality 

regulations on emissions. AEO 2012 

generally represents current legislation 

and environmental regulations, 

including recent government actions, for 

which implementing regulations were 

available as of December 31, 2011. 

SO2 emissions from affected electric 

generating units (EGUs) are subject to 

nationwide and regional emissions capand-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.). 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 allowancebased trading program that operates 

along with the Title IV program.52 On 

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Circuit) but it remained in effect. 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). 

53See EME Homer City Generation, LP v. EPA, 

696 F.3d 7, 38 (D.C. Cir. 2012) cert. granted, 81 

USLW 3567 (U.S. Jun. 24 2013) (No. 12–1182). 

54This is because SO2 emissions will be well 

below the cap under either rule, such that 

emissions reductions will be realized to the same 

extent; the caps on NOX emissions in the 22 states 

regulated under both rules will have the same effect 

such that reductions in electricity generation from 

efficiency standards would result in little change in 

NOX levels (as explained further below). 

July 6, 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, and ordered EPA to continue 

administering CAIR.53

AEO 2012 had been finalized prior to 

CSAPR being vacated. The AEO 2012 

emissions factors used for this NOPR 

assume the implementation of CSAPR. 

As a result, for the purpose of 

calculating emissions reductions of SO2

and NOX in this NOPR, DOE refers to 

impacts under CSAPR even though 

CSAPR is not currently in effect. This 

should not alter the accuracy of DOE’s 

projections, however, because DOE 

expects that the impacts of energy 

conservation standards on SO2 and NOX

emissions would be similar regardless of 

whether CAIR or CSAPR are in effect.54

The attainment of emissions caps is 

typically flexible among EGUs and is 

enforced through the use of emissions 

allowances and tradable permits. Under 

existing EPA regulations, any excess 

SO2 emissions allowances resulting 

from the lower electricity demand 

caused by the adoption of an energy 

conservation standard could be used to 

permit offsetting increases in SO2

emissions by any regulated EGU. In past 

rulemakings, DOE recognized that there 

was uncertainty about the effects of 

efficiency standards on SO2 emissions 

covered by the existing cap-and-trade 

system, but it concluded that negligible 

reductions in power sector SO2

emissions would occur as a result of 

standards. 

Beginning in 2015, however, SO2

emissions will fall as a result of the 

Mercury and Air Toxics Standards 

(MATS) for power plants, which were 

announced by EPA on December 21, 

2011. 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 non-HAP 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 2012 

assumes that, in order to continue 

operating, coal plants must have either 

flue gas desulfurization or dry sorbent 

injection systems installed by 2015. 

Both technologies, which are used to 

reduce acid gas emissions, also reduce 

SO2 emissions. Under the MATS, NEMS 

shows a reduction in SO2 emissions 

when electricity demand decreases (e.g., 

as a result of energy efficiency 

standards). Emissions will be far below 

the cap established by CSAPR, so it is 

unlikely that excess SO2 emissions 

allowances resulting from the lower 

electricity demand would be needed or 

used to permit offsetting increases in 

SO2 emissions by any regulated EGU. 

Therefore, DOE believes that efficiency 

standards will reduce SO2 emissions in 

2015 and beyond. 

CSAPR established a cap on NOX

emissions in 28 eastern States and the 

District of Columbia. Energy 

conservation standards are expected to 

have little effect on NOX emissions in 

those States covered by CSAPR because 

excess NOX emissions allowances 

resulting from the lower electricity 

demand could be used to permit 

offsetting increases in NOX emissions. 

However, standards would be expected 

to reduce NOX emissions in the States 

not affected by the caps, so DOE 

estimated NOX emissions reductions 

from the potential standards considered 

in this NOPR for these States where 

emissions are not capped. 

The MATS limit mercury emissions 

from power plants, but they do not 

include emissions caps, and, as such, 

DOE’s energy conservation standards 

would likely reduce Hg emissions. For 

this rulemaking, DOE estimated 

mercury emissions reduction using 

emissions factors based on AEO 2012, 

which incorporates the MATS. 

Power plants may emit particulates 

from the smoke stack, which are known 

as direct particulate matter (PM) 

emissions. NEMS does not account for 

direct p.m. emissions from power 

plants. DOE is investigating the 

possibility of using other methods to 

estimate reduction in p.m. emissions 

due to standards. The great majority of 

ambient p.m. associated with power 

plants is in the form of secondary 

sulfates and nitrates, which are 

produced at a significant distance from 

power plants by complex atmospheric 

chemical reactions that often involve 

the gaseous emissions of power plants, 

mainly SO2 and NOX. The monetary 

benefits that DOE estimates for 

reductions in SO2 and NOX emissions 

resulting from standards are in fact 

primarily related to the health benefits 

of reduced ambient PM. 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

As part of the development of this 

NOPR, DOE considered the estimated 

monetary benefits from the reduced 

emissions of CO2 and NOX that are 

expected to result from each of the 

considered efficiency levels. 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 products shipped in the 

forecast period for each efficiency level. 

This section summarizes the basis for 

the monetary values used for CO2 and 

NOX emissions and presents the values 

considered in this rulemaking. 

For this NOPR, DOE is relying on a set 

of values for the social cost of carbon 

(SCC) that was developed by an 

interagency process. A summary of the 

basis for those 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. 

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 costbenefit analyses of regulatory actions 

that have small, or ‘‘marginal,’’ impacts 

on cumulative global emissions. The 

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55See Average Fuel Economy Standards 

Passenger Cars and Light Trucks Model Year 2011, 

74 FR 14196 (March 30, 2009) (Final Rule); Final 

Environmental Impact Statement Corporate Average 

Fuel Economy Standards, Passenger Cars and Light 

Trucks, Model Years 2011–2015 at 3–90 (Oct. 2008) 

(Available at: http://www.nhtsa.gov/fuel-economy) 

(Last accessed December 2012). 

56See Average Fuel Economy Standards, 

Passenger Cars and Light Trucks, Model Years 

2011–2015, 73 FR 24352 (May 2, 2008) (Proposed 

Rule); Draft Environmental Impact Statement 

Corporate Average Fuel Economy Standards, 

Passenger Cars and Light Trucks, Model Years 

2011–2015 at 3–58 (June 2008) (Available at: 

http://www.nhtsa.gov/fuel-economy) (Last accessed 

December 2012). 

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, 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 serious challenges. A recent 

report from the National Research 

Council 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 serious questions of science, 

economics, and ethics and should be 

viewed as provisional. 

Despite the serious limits of both 

quantification and monetization, SCC 

estimates can be useful in estimating the 

social benefits of reducing carbon 

dioxide emissions. Most Federal 

regulatory actions can be expected to 

have marginal impacts on global 

emissions. For such policies, the agency 

can estimate the benefits from reduced 

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 the future benefits by an 

appropriate discount factor and 

summing across all affected years. This 

approach assumes that the marginal 

damages from increased emissions are 

constant for small departures from the 

baseline emissions path, an 

approximation that is reasonable for 

policies that have effects on emissions 

that are small relative to cumulative 

global carbon dioxide emissions. For 

policies that have a large (non-marginal) 

impact on global cumulative emissions, 

there is a separate question of whether 

the SCC is an appropriate tool for 

calculating the benefits of reduced 

emissions. This concern is not 

applicable to this rulemaking, however. 

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. Social Cost of Carbon Values Used in 

Past Regulatory Analyses 

Economic analyses for Federal 

regulations have used a wide range of 

values to estimate the benefits 

associated with reducing carbon dioxide 

emissions. In the final model year 2011 

CAFE rule, the U.S. Department of 

Transportation (DOT) used both a 

‘‘domestic’’ SCC value of $2 per metric 

ton of CO2 and a ‘‘global’’ SCC value of 

$33 per metric ton of CO2 for 2007 

emission reductions (in 2007$), 

increasing both values at 2.4 percent per 

year. DOT also included a sensitivity 

analysis at $80 per metric ton of CO2.55

A 2008 regulation proposed by DOT 

assumed a domestic SCC value of $7 per 

metric ton of CO2 (in 2006$) for 2011 

emission reductions (with a range of 

$0¥$14 for sensitivity analysis), also 

increasing at 2.4 percent per year.56 A 

regulation for packaged terminal air 

conditioners and packaged terminal 

heat pumps finalized by DOE in October 

of 2008 used a domestic SCC range of 

$0 to $20 per metric ton CO2 for 2007 

emission reductions (in 2007$). 73 FR 

58772, 58814 (Oct. 7, 2008). In addition, 

EPA’s 2008 Advance Notice of Proposed 

Rulemaking on Regulating Greenhouse 

Gas Emissions Under the Clean Air Act 

identified what it described as ‘‘very 

preliminary’’ SCC estimates subject to 

revision. 73 FR 44354 (July 30, 2008). 

EPA’s global mean values were $68 and 

$40 per metric ton CO2 for discount 

rates of approximately 2 percent and 3 

percent, respectively (in 2006$ for 2007 

emissions). 

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. 

c. Current Approach and Key 

Assumptions 

Since 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 peerreviewed literature and were used in the 

last assessment of the Intergovernmental 

Panel on Climate Change. 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 

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57Social Cost of Carbon for Regulatory Impact 

Analysis Under Executive Order 12866. Interagency 

Working Group on Social Cost of Carbon, United 

States Government, February 2010. http://

www.whitehouse.gov/sites/default/files/omb/

inforeg/for-agencies/Social-Cost-of-Carbon-forRIA.pdf. 58Technical 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. http://www.whitehouse.gov/sites/default/

files/omb/inforeg/social_cost_of_carbon_for_ria_

2013_update.pdf. 

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. 

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. 

Table IV.10 presents the values in the 

2010 interagency group report,57 which 

is reproduced in appendix 14–A of the 

NOPR TSD. 

TABLE IV.10—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 

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 

2050 ................................................................................................................. 15.7 44.9 65.0 136.2 

The SCC values used for this notice 

were generated using the most recent 

versions of the three integrated 

assessment models that have been 

published in the peer-reviewed 

literature.58 Table IV.11 shows the 

updated sets of SCC estimates in fiveyear increments from 2010 to 2050. 

Appendix 14–B of the NOPR TSD 

provides the full set of SCC estimates, 

as well as the 2013 report from the 

interagency group. The central value 

that emerges is the average SCC across 

models at the 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.11—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 

2010 ................................................................................................................. 11 33 52 90 

2015 ................................................................................................................. 12 38 58 109 

2020 ................................................................................................................. 12 43 65 129 

2025 ................................................................................................................. 14 48 70 144 

2030 ................................................................................................................. 16 52 76 159 

2035 ................................................................................................................. 19 57 81 176 

2040 ................................................................................................................. 21 62 87 192 

2045 ................................................................................................................. 24 66 92 206 

2050 ................................................................................................................. 27 71 98 221 

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 above 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. 

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59U.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). 

60OMB, Circular A–4: Regulatory Analysis (Sept. 

17, 2003). 

61 DOE/EIA approves use of the name NEMS to 

describe only an official version of the model 

without any modification to code or data. Because 

this analysis entails some minor code modifications 

and the model is run under various policy scenarios 

that are variations on DOE/EIA assumptions, DOE 

refers to it by the name ‘‘NEMS–BT’’ (‘‘BT’’ is DOE’s 

Building Technologies Program, under whose aegis 

this work has been performed). 

62OMB Circular A–4 (Sept. 17, 2003), p. 38. 

There are a number of concerns and 

problems that should be 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 2012$ using the Gross 

Domestic Product price deflator. For 

each of the four cases specified, the 

values used for emissions in 2015 were 

$12.9, $40.8, $62.2, and $117 per metric 

ton avoided (values expressed in 

2012$). 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. 

AHRI agreed that the monetization of 

emission reductions is an important 

factor to consider, but it stated that DOE 

has no statutory responsibility to 

establish a monetary value for potential 

environmental benefits of appliance and 

equipment standards. It added that there 

is currently no consensus on any single 

estimate of the value of CO2 emissions, 

and, therefore, DOE should not indulge 

in speculation to determine a value 

when it has no statutory obligation to do 

so. (AHRI, No. 48 at p. 7) 

In response, it is noted that EPCA 

directs DOE to achieve the maximum 

improvement in energy efficiency that is 

technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A)) DOE determines whether 

a standard is economically justified by 

considering, to the greatest extent 

practicable, a number of factors. (42 

U.S.C. 6295(o)(2)(B)(i)(I)–(VII)) Among 

these factors is ‘‘other factors the 

Secretary [of Energy] considers 

relevant.’’ The Secretary considers the 

economic benefits that may accrue to 

society from reduction of CO2 emissions 

a relevant factor. DOE further notes that 

the incorporation of environmental 

externalities, such as damage from 

climate change, is a well-established 

principle in cost-benefit analysis by 

Federal agencies. DOE acknowledges 

that the value to place on a ton of 

avoided CO2 emissions in future years is 

very uncertain, and for this reason it 

uses a wide range of monetary values 

(from $12.9 per ton to $117 per ton for 

emissions avoided in 2015). 

AHRI also stated that DOE should not 

allow evaluation of environmental 

impacts to negate or make moot what 

has always been, and should remain, the 

core analysis in appliance and 

equipment standards rulemakings: The 

consumer payback period and life-cycle 

cost analysis. (AHRI, No. 48 at p. 7) In 

response, DOE notes that environmental 

and other impacts associated with 

reduced emissions are but one of the 

factors that DOE considers in 

determining whether a standard is 

economically justified. 

2. Valuation of Other Emissions 

Reductions 

DOE investigated the potential 

monetary benefit of reduced NOX

emissions from the potential standards 

it considered. As noted above, DOE has 

taken into account how new energy 

conservation standards would reduce 

NOX emissions in those 22 States not 

affected by the CSAPR. DOE estimated 

the monetized value of NOX emissions 

reductions resulting from each of the 

TSLs considered for this NOPR based on 

estimates found in the relevant 

scientific literature. Available estimates 

suggest a wide range of benefit per ton 

values for NOX from stationary sources, 

ranging from $468 to $4,809 per ton in 

2012$.59 DOE calculated the monetary 

benefits from NOX reductions using an 

average benefit per ton value for NOX

and discount rates of 3 percent and 7 

percent.60

DOE did not monetize Hg or SO2

emission reductions for this NOPR 

because it is currently evaluating 

appropriate valuation of reduction in 

these emissions. 

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 electric installed capacity 

and generation that result for each trial 

standard level. The utility impact 

analysis uses a variant of NEMS, which 

is a public domain, multi-sectored, 

partial equilibrium model of the U.S. 

energy sector. DOE uses a variant of this 

model, referred to as NEMS–BT,61 to 

account for selected utility impacts of 

new or amended energy conservation 

standards. DOE’s analysis consists of a 

comparison between model results for 

the most recent AEO Reference Case and 

for cases in which energy use is 

decremented to reflect the impact of 

potential standards. The energy savings 

inputs associated with each TSL come 

from the NIA. Chapter 15 of the NOPR 

TSD describes the utility impact 

analysis in further detail. 

NEEP recommended estimating the 

value of capacity reduction due to 

appliance standards as part of the 

NOPR, because reducing the need for 

electricity capacity is an important 

benefit that minimum efficiency 

standards bring to the country and 

various regions. Noting that the NOPR 

provides estimates of the expected 

reduction in electricity capacity due to 

residential furnace fan standards, NEEP 

urged the Department to also include a 

financial benefit estimate associated 

with these capacity reductions. (NEEP, 

No. 51 at p. 3) 

For the NOPR, DOE used NEMS–BT, 

along with EIA data on the capital cost 

of various power plant types, to estimate 

the reduction in national expenditures 

for electricity generating capacity due to 

potential residential furnace fan 

standards. The method used and the 

results are described in chapter 15 of the 

NOPR TSD. 

DOE is evaluating whether parts of 

the cost reduction are a transfer and 

thus, according to guidance provided by 

OMB to Federal agencies, should not be 

included in the estimates of the benefits 

and costs of a regulation.62 Transfer 

payments are monetary payments from 

one group to another that do not affect 

total resources available to society (i.e., 

exchanges that neither decrease nor 

increase total welfare). Benefits occur 

when savings to consumers result from 

real savings to producers, which 

increases societal benefits. Cost savings 

from reduced or delayed capital 

expenditure on power plants are a 

benefit, and not a transfer, to the extent 

that the reduced expenditure provides 

savings to both producers and 

consumers without affecting other 

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63Although delayed investment implies a savings 

in total cost, the savings may be less than the 

savings in capital cost because the delay may also 

cause increases in other costs. For example, if the 

delayed investment was the replacement of an 

existing facility with a larger, more-efficient facility, 

the increased cost of operating the old facility 

during the period of delay might offset much of the 

savings from delayed investment. That the project 

was delayed is evidence that doing so decreased 

overall cost, but it does not indicate that the 

decrease was equal to the entire savings in capital 

cost. 

64See Bureau of Economic Analysis, ‘‘Regional 

Multipliers: A User Handbook for the Regional 

Input-Output Modeling System (RIMS II),’’ U.S. 

Department of Commerce (1992). 

65 J.M. Roop, M.J. Scott, 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/PNNL18412.pdf). 

groups. There would be a transfer to the 

extent that the delayed construction 

caused some other group (e.g., 

equipment suppliers or landowners who 

might have assets committed to the 

projects) to realize a lower return on 

those assets. DOE is evaluating these 

issues to determine the extent to which 

the cost savings from delayed capital 

expenditure on power plants are a 

benefit to society.63

EEI stated that as part of its analysis 

on the potential impact of new 

residential furnace fan efficiency 

standards on utilities, DOE should 

consider the impacts of increased 

demands on gas and oil systems, 

especially during peak fossil fuel 

demand days. (EEI, No. 65 at p. 2) In 

response, DOE has tentatively 

concluded that the increase in gas and 

oil use associated with higher furnace 

fan efficiency levels is expected to be 

very small in the context of overall gas 

and oil demand, and as such, DOE 

believes that the impact on gas and oil 

systems would be insignificant. 

EEI stated that with respect to electric 

utilities, DOE should ensure that it does 

not overestimate the potential for 

residential furnace fan energy 

conservation standards to reduce peak 

load demand. According to EEI, the vast 

majority of electric utilities in the U.S. 

reach peak demand during the summer 

air conditioning season. (EEI, No. 65 at 

p. 2) In response, DOE’s analysis with 

NEMS uses a demand load shape that 

approximates the daily and seasonal 

load of residential furnace fans. Thus, 

the resulting estimates of changes in 

generating capacity due to higher 

residential furnace fan efficiency are 

reasonable. 

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 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 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.64 There are many reasons for 

these differences, including wage 

differences and the fact that the utility 

sector is more capital-intensive and less 

labor-intensive 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 on the 

BLS data alone, DOE believes net 

national employment may increase 

because of shifts in economic activity 

resulting from energy conservation 

standards for residential furnace fans. 

For the standard levels 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).65

ImSET is a special-purpose version of 

the ‘‘U.S. Benchmark National InputOutput’’ (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 over-estimate actual job impacts 

over the long run. For the NOPR, DOE 

used ImSET only to estimate short-term 

(2019 and 2024) employment impacts. 

For more details on the employment 

impact analysis, see chapter 16 of the 

NOPR TSD. 

V. Analytical Results and Conclusions 

This section addresses the results 

from DOE’s analyses with respect to 

potential energy conservation standards 

for residential furnace fans. It addresses 

the TSLs examined by DOE, the 

projected impacts of each of these levels 

if adopted as energy conservation 

standards for furnace fans, and the 

proposed standard levels that DOE sets 

forth in this NOPR. Additional details 

regarding DOE’s analyses are contained 

in the TSD supporting this notice. 

A. Trial Standard Levels 

DOE developed trial standard levels 

(TSLs) that combine efficiency levels for 

each product class of residential furnace 

fans. Table V.1 presents the efficiency 

levels for each product class in each 

TSL. TSL 6 consists of the max-tech 

efficiency levels. TSL 5 consists of those 

efficiency levels that provide the 

maximum NPV using a 7-percent 

discount rate (see section V.B.3 for NPV 

results). TSL 4 consists of those 

efficiency levels that provide the highest 

NPV using a 7-percent discount rate, 

and that also result in a higher 

percentage of consumers that receive an 

LCC benefit than experience an LCC loss 

(see section V.B.1 for LCC results). TSL 

3 uses efficiency level 3 for all product 

classes. TSL 2 consists of efficiency 

levels that are the same as TSL 3 for 

non-weatherized gas furnace fans, 

weatherized gas furnace fans, and 

electric furnace fans, but are at 

efficiency level 1 for oil-fired furnace 

fans and manufactured home furnace 

fans. TSL 1 consists of the most 

common efficiency levels in the current 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64111 

market. In summary, Table V.1 presents 

the six TSLs which DOE has identified 

for residential furnace fans, including 

the efficiency level associated with each 

TSL, the technology options anticipated 

to achieve those levels, and the 

expected resulting percentage reduction 

in FER from the baseline corresponding 

to each efficiency level. 

TABLE V.1—TRIAL STANDARD LEVELS FOR RESIDENTIAL FURNACE FANS

Product class 

Trial standard levels 

(Efficiency Level)* 

1 2 3 4 5 6 

Non-Weatherized, Non-Condensing Gas Furnace Fan .......................... 1 3 3 4 4 6 

Non-weatherized, Condensing Gas Furnace Fan ................................... 1 3 3 4 4 6 

Weatherized Non-Condensing Gas Furnace Fan ................................... 1 3 3 4 4 6 

Non-Weatherized, Non-Condensing Oil Furnace Fan ............................. 1 1 3 1 3 6 

Non-weatherized Electric Furnace/Modular Blower Fan ......................... 1 3 3 4 4 6 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace 

Fan ....................................................................................................... 1 1 3 1 3 6 

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan 1 1 3 1 3 6 

Manufactured Home Electric Furnace/Modular Blower Fan ................... 1 1 3 4 4 6 

* Efficiency level (EL) 1 = Improved PSC (12 percent). (For each EL, the percentages given refer to percent reduction in FER from the baseline 

level.) EL 2 = Inverter-driven PSC (25 percent). EL 3 = Constant-torque BPM motor (38 percent). EL 4 = Constant-torque BPM motor + MultiStaging (51 percent). EL 5 = Constant-airflow BPM motor (57 percent). EL 6 = Constant-airflow BPM motor + Multi-Staging (61 percent). 

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Consumers 

a. Life-Cycle Cost and Payback Period 

To evaluate the economic impact of 

the considered efficiency levels on 

consumers, DOE conducted an LCC 

analysis for each efficiency level. Moreefficient residential furnace fans would 

affect these consumers in two ways: (1) 

Annual operating expense would 

decrease; and (2) purchase price would 

increase. Inputs used for calculating the 

LCC include total installed costs (i.e., 

equipment price plus installation costs), 

operating expenses (i.e., energy costs, 

repair costs, and maintenance costs), 

product lifetime, and discount rates. 

The output of the LCC model is a 

mean LCC savings (or cost) for each 

product class, relative to the base case 

efficiency distribution for residential 

furnace fans. The LCC analysis also 

provides information on the percentage 

of consumers for whom an increase in 

the minimum efficiency standard would 

have a positive impact (net benefit), a 

negative impact (net cost), or no impact. 

DOE also performed a PBP analysis as 

part of the LCC analysis. The PBP is the 

number of years it would take for the 

consumer to recover the increased costs 

of higher-efficiency products as a result 

of energy savings based on the operating 

cost savings. The PBP is an economic 

benefit-cost measure that uses benefits 

and costs without discounting. Chapter 

8 of the NOPR TSD provides detailed 

information on the LCC and PBP 

analyses. 

DOE’s LCC and PBP analyses provide 

five key outputs for each efficiency level 

above the baseline, as reported in Table 

V.2 through Table V.9 for the 

considered TSLs. (Results for all 

efficiency levels are reported in chapter 

8 of the NOPR TSD.) These outputs 

include the proportion of residential 

furnace fan purchases in which the 

purchase of a furnace fan compliant 

with the new energy conservation 

standard creates a net LCC increase, no 

impact, or a net LCC savings for the 

consumer. Another output is the average 

LCC savings from standards-compliant 

products, as well as the median PBP for 

the consumer investment in standardscompliant products. Savings are 

measured relative to the base case 

efficiency distribution (see section 

IV.F.4), not the baseline efficiency level. 

TABLE V.2—LCC AND PBP RESULTS FOR NON-WEATHERIZED, NON-CONDENSING GAS FURNACE FANS

Efficiency level TSL 

Life-cycle cost 

2012$ 

Life-cycle cost savings 

Median 

payback 

Period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2012$ 

% of Consumers that experience 

Net cost No impact Net benefit 

Baseline ...................... .................. $343 $2,146 $2,489 $0 0 100 0 ..................

1 ................................. 1 354 1,943 2,297 64 2 68 30 1.34 

2 ................................. .................. 403 1,649 2,052 253 25 25 50 3.98 

3 ................................. 2, 3 414 1,389 1,803 442 18 25 57 2.69 

4 ................................. 4, 5 496 1,273 1,769 474 33 14 53 5.38 

5 ................................. .................. 662 1,333 1,995 275 53 12 35 11.53 

6 ................................. 6 697 1,260 1,957 313 58 0 42 11.20 

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TABLE V.3—LCC AND PBP RESULTS FOR NON-WEATHERIZED, CONDENSING GAS FURNACE FANS

Efficiency level TSL 

Life-cycle cost 

2012$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2012$ 

% of Consumers that experience 

Net cost No impact Net benefit 

Baseline ...................... .................. $339 $2,259 $2,598 $0 0 100 0 ..................

1 ................................. 1 351 2,066 2,417 49 1 75 24 1.35 

2 ................................. .................. 398 1,775 2,173 203 21 41 38 4.13 

3 ................................. 2, 3 408 1,506 1,914 361 10 41 49 2.73 

4 ................................. 4, 5 490 1,414 1,904 371 24 34 42 5.39 

5 ................................. .................. 658 1,488 2,146 199 45 29 27 11.73 

6 ................................. 6 692 1,415 2,107 238 57 0 43 11.03 

TABLE V.4—LCC AND PBP RESULTS FOR WEATHERIZED, NON-CONDENSING GAS FURNACE FANS

Efficiency level TSL 

Life-cycle cost 

2012$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2012$ 

% of Consumers that experience 

Net cost No impact Net benefit 

Baseline ...................... .................. $329 $1,944 $2,273 $0 0 100 0 ..................

1 ................................. 1 340 1,759 2,099 35 0 81 18 1.27 

2 ................................. .................. 387 1,549 1,936 104 13 56 31 4.94 

3 ................................. 2, 3 397 1,276 1,673 228 7 56 37 2.65 

4 ................................. 4, 5 476 1,170 1,645 247 25 33 41 6.39 

5 ................................. .................. 636 1,290 1,926 39 51 27 22 15.53 

6 ................................. 6 670 1,228 1,898 67 63 0 37 13.32 

TABLE V.5—LCC AND PBP RESULTS FOR NON-WEATHERIZED, NON-CONDENSING OIL FURNACE FANS

Efficiency level TSL 

Life-cycle cost 

2012$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2012$ 

% of Consumers that experience 

Net cost No impact Net benefit 

Baseline ...................... .................. $387 $2,540 $2,927 $0 0 100 0 ..................

1 ................................. 1, 2, 4 404 2,389 2,794 40 12 71 18 5.49 

2 ................................. .................. 470 2,042 2,512 245 46 28 26 12.33 

3 ................................. 3, 5 482 1,896 2,378 344 43 28 29 6.97 

4 ................................. .................. 570 1,833 2,402 326 49 28 23 12.07 

5 ................................. .................. 798 1,887 2,685 120 58 28 14 27.47 

6 ................................. 6 833 1,840 2,673 132 79 0 21 25.41 

TABLE V.6—LCC AND PBP RESULTS FOR NON-WEATHERIZED ELECTRIC FURNACE/MODULAR BLOWER FANS

Efficiency level TSL 

Life-cycle cost 

2012$ 

Life-Cycle Cost Savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2012$ 

% of Consumers that experience 

Net cost No impact Net benefit 

Baseline ...................... .................. $241 $1,198 $1,439 $0 0 100 0 ..................

1 ................................. 1 252 1,100 1,352 21 5 73 21 2.39 

2 ................................. .................. 295 954 1,249 84 28 37 34 6.16 

3 ................................. 2, 3 294 830 1,124 160 20 37 42 3.15 

4 ................................. 4, 5 315 771 1,086 185 27 25 48 3.55 

5 ................................. .................. 450 855 1,305 18 52 25 23 12.83 

6 ................................. 6 482 824 1,306 17 68 0 32 13.45 

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66Non-weatherized gas furnace fans account for 

the vast majority of furnace fans used in constantcirculation mode. 

TABLE V.7—LCC AND PBP RESULTS FOR MANUFACTURED HOME NON-WEATHERIZED, NON-CONDENSING GAS FURNACE

FANS

Efficiency level TSL 

Life-cycle cost 

2012$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2012$ 

% of Consumers that experience 

Net cost No impact Net benefit 

Baseline ...................... .................. $254 $1,144 $1,398 $0 0 100 0 ..................

1 ................................. 1, 2, 4 265 1,070 1,335 26 13 56 32 3.35 

2 ................................. .................. 310 955 1,265 97 62 0 38 10.74 

3 ................................. 3, 5 315 901 1,216 146 58 0 42 7.02 

4 ................................. .................. 391 876 1,267 95 70 0 30 13.10 

5 ................................. .................. 537 927 1,464 (102) 85 0 15 26.22 

6 ................................. 6 569 909 1,478 (116) 85 0 15 26.73 

*Parentheses indicate negative values. 

TABLE V.8—LCC AND PBP RESULTS FOR MANUFACTURED HOME NON-WEATHERIZED, CONDENSING GAS FURNACE FANS

Efficiency level TSL 

Life-cycle cost 

2012$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2012$ 

% of Consumers that experience 

Net cost No impact Net benefit 

Baseline ...................... .................. $271 $1,355 $1,626 $0 0 100 0 ..................

1 ................................. 1, 2, 4 282 1,261 1,543 27 7 68 26 2.73 

2 ................................. .................. 326 1,123 1,449 96 43 29 28 10.47 

3 ................................. 3, 5 334 1,039 1,373 152 38 29 32 6.46 

4 ................................. .................. 410 1,005 1,416 111 68 4 27 14.82 

5 ................................. .................. 564 1,053 1,618 (82) 82 4 14 34.31 

6 ................................. 6 597 1,025 1,622 (86) 84 0 16 32.23 

* Parentheses indicate negative values. 

TABLE V.9—LCC AND PBP RESULTS FOR MANUFACTURED HOME ELECTRIC FURNACE/MODULAR BLOWER FAN

Efficiency level TSL 

Life-cycle cost 

2012$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2012$* 

% of Consumers that experience 

Net cost No impact Net benefit 

Baseline ...................... .................. $192 $663 $855 $0 0 100 0 ..................

1 ................................. 1, 2 202 608 810 14 8 71 21 2.49 

2 ................................. .................. 243 561 804 20 37 38 25 9.99 

3 ................................. 3 241 499 739 64 28 38 34 4.35 

4 ................................. 4, 5 259 464 723 78 34 26 40 4.61 

5 ................................. .................. 382 539 921 (70) 59 26 15 16.75 

6 ................................. 6 412 525 937 (86) 82 0 18 17.11 

* Parentheses indicate negative values. 

The results in the above tables reflect 

the assumptions for use of constant 

circulation in the proposed DOE test 

procedure for furnace fans. As discussed 

in section IV.E, DOE also performed a 

sensitivity analysis for non-weatherized 

gas furnace fans to estimate the effect on 

the LCC results if it assumed half as 

much use of continuous circulation.66

Under this revised assumption, for nonweatherized, non-condensing gas 

furnace fans, the average LCC savings 

decline somewhat in the sensitivity 

analysis, and the share of consumers 

that experience an LCC benefit declines 

slightly (see Table V.10). The same 

changes occur for non-weatherized, 

condensing gas furnace fans, but the 

magnitude of the effect is somewhat 

larger than for non-condensing gas 

furnace fans (see Table V.11). 

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64114 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

TABLE V.10—LCC AND PBP RESULTS FOR NON-WEATHERIZED, NON-CONDENSING GAS FURNACE FANS UNDER

ALTERNATIVE CONSTANT-CIRCULATION SCENARIOS

Efficiency level TSL 

Constant-circulation scenario 

Current test procedure assumptions Half of current test procedure assumptions 

Average 

LCC savings 2012$ 

% of Consumers that experience Average 

LCC savings 2012$ 

% of Consumers that experience 

Net cost No impact Net benefit Net cost No impact Net benefit 

1 ................................. 1 64 2 68 30 59 2 68 29 

2 ................................. .................. 253 25 25 50 189 27 25 48 

3 ................................. 2, 3 442 18 25 57 362 19 25 56 

4 ................................. 4, 5 474 33 14 53 376 34 14 51 

5 ................................. .................. 275 53 12 35 173 55 12 33 

6 ................................. 6 313 58 0 42 204 60 0 40 

TABLE V.11—LCC AND PBP RESULTS FOR NON-WEATHERIZED, CONDENSING GAS FURNACE FANS UNDER ALTERNATIVE

CONSTANT-CIRCULATION SCENARIOS

Efficiency level TSL 

Constant-circulation scenario 

Current test procedure assumptions Half of current test procedure assumptions 

Average 

LCC savings 2012$ 

% of Consumers that experience Average 

LCC savings 2012$ 

% of Consumers that experience 

Net cost No impact Net benefit Net cost No impact Net benefit 

1 ................................. 1 49 1 75 24 41 1 75 24 

2 ................................. .................. 203 21 41 38 127 22 41 37 

3 ................................. 2, 3 361 10 41 49 266 11 41 48 

4 ................................. 4, 5 371 24 34 42 256 25 34 40 

5 ................................. .................. 199 45 29 27 78 47 29 24 

6 ................................. 6 238 57 0 43 107 60 0 40 

b. Consumer Subgroup Analysis 

DOE estimated the impacts of the 

considered efficiency levels (TSLs) on 

the following consumer subgroups: (1) 

Senior-only households; and (2) lowincome households. The results of the 

consumer subgroup analysis indicate 

that for residential furnace fans, senioronly households and low-income 

households experience lower average 

LCC savings and longer payback periods 

than consumers overall, with the 

difference being larger for low-income 

households. The difference between the 

two subgroups and all consumers is 

larger for non-weatherized, noncondensing gas furnace fans (see Table 

V.12) than for non-weatherized, 

condensing gas furnace fans (see Table 

V.13). Chapter 11 of the NOPR TSD 

provides more detailed discussion on 

the consumer subgroup analysis and 

results for the other product classes. 

TABLE V.12—COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS WITH ALL CONSUMERS, NON-WEATHERIZED, NONCONDENSING GAS FURNACE FANS

Efficiency level 

Average life-cycle cost savings 

2012$ 

Median payback period 

years 

TSL Senior-only Low income All consumers All consumers Senior-only Low-income 

1 ................................... 1 47 35 64 1.8 2.1 1.3 

2 ................................... ........................ 200 123 253 5.4 6.3 4.0 

3 ................................... 2, 3 344 232 442 3.7 3.8 2.7 

4 ................................... 4, 5 343 206 474 7.2 7.8 5.4 

5 ................................... ........................ 142 7 275 15.6 17.2 11.5 

6 ................................... 6 164 14 313 15.3 16.5 11.2 

TABLE V.13—COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS WITH ALL CONSUMERS, NON-WEATHERIZED, 

CONDENSING GAS FURNACE FANS

Efficiency Level 

Average life-cycle cost savings 

2012$ 

Median payback period 

years 

TSL Senior-only Low-income All consumers Senior-only Low-income All consumers 

1 ................................... 1 41 32 49 1.6 2.2 1.4 

2 ................................... ........................ 173 129 203 5.1 6.6 4.1 

3 ................................... 2, 3 313 245 361 3.2 4.0 2.7 

4 ................................... 4, 5 301 212 371 6.6 8.5 5.4 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64115 

TABLE V.13—COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS WITH ALL CONSUMERS, NON-WEATHERIZED, 

CONDENSING GAS FURNACE FANS—Continued 

Efficiency Level 

Average life-cycle cost savings 

2012$ 

Median payback period 

years 

TSL Senior-only Low-income All consumers Senior-only Low-income All consumers 

5 ................................... ........................ 121 35 199 14.5 18.3 11.7 

6 ................................... 6 151 52 238 12.2 16.4 11.0 

c. Rebuttable Presumption Payback 

As discussed in section IV.F.5, EPCA 

provides a rebuttable presumption that, 

in essence, 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. 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. 

For comparison with the more detailed 

analytical results, DOE calculated a 

rebuttable presumption payback period 

for each TSL. Table V.14 shows the 

rebuttable presumption payback periods 

for the residential furnace fans product 

classes. 

TABLE V.14—REBUTTABLE PRESUMPTION PAYBACK PERIODS FOR RESIDENTIAL FURNACE FAN PRODUCT CLASSES

Product class 

Rebuttable presumption payback 

years 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Non-Weatherized, Non-Condensing Gas Furnace Fan .......................... 1.13 1.65 1.65 3.08 3.08 6.21 

Non-weatherized, Condensing Gas Furnace Fan ................................... 1.06 1.49 1.49 2.82 2.82 5.72 

Weatherized Non-Condensing Gas Furnace Fan ................................... 1.41 2.02 2.02 3.78 3.78 7.62 

Non-Weatherized, Non-Condensing Oil Furnace Fan ............................. 1.84 1.84 2.46 1.84 2.46 8.16 

Non-weatherized Electric Furnace/Modular Blower Fan ......................... 1.14 1.60 1.60 1.80 1.80 4.97 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace 

Fan ....................................................................................................... 1.33 1.33 1.91 1.33 1.91 7.26 

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan 1.25 1.25 1.79 1.25 1.79 6.85 

Manufactured Home Electric Furnace/Modular Blower Fan ................... 1.51 1.51 2.13 2.39 2.39 6.59 

2. Economic Impact on Manufacturers 

As noted above, DOE performed an 

MIA to estimate the impact of new 

energy conservation standards on 

manufacturers of residential furnace 

fans. The following section describes 

the expected impacts on manufacturers 

at each considered TSL. Chapter 12 of 

the NOPR TSD explains the analysis in 

further detail. 

a. Industry Cash-Flow Analysis Results 

Table V.15 and Table V.16 depict the 

financial impacts (represented by 

changes in INPV) of new energy 

standards on manufacturers of 

residential furnace fans, as well as the 

conversion costs that DOE expects 

manufacturers would incur for all 

product classes at each TSL. To evaluate 

the range of cash flow impacts on the 

residential furnace fans industry, DOE 

modeled two different mark-up 

scenarios using different assumptions 

that correspond to the range of 

anticipated market responses to 

potential new energy conservation 

standards: (1) The preservation of gross 

margin percentage; and (2) the 

preservation of operating profit. Each of 

these scenarios is discussed 

immediately below. 

To assess the lower (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 across all potential 

efficiency levels. 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 higher (more severe) end 

of the range of potential impacts, DOE 

modeled the preservation of operating 

profit markup scenario, which assumes 

that manufacturers would be able to 

earn the same operating margin in 

absolute dollars in the standards case as 

in the base case. In this scenario, while 

manufacturers make the necessary 

investments required to convert their 

facilities to produce new standardscompliant products, operating profit 

does not change in absolute dollars and 

decreases as a percentage of revenue. 

The set of results below shows 

potential INPV impacts for residential 

furnace fan manufacturers; Table V.15 

reflects the lower bound of impacts, and 

Table V.16 represents the upper bound. 

Each of the modeled scenarios results 

in a unique set of cash flows and 

corresponding industry values at each 

TSL. In the following discussion, the 

INPV results refer to the difference in 

industry value between the base case 

and each standards case that results 

from the sum of discounted cash flows 

from the base year 2013 through 2048, 

the end of the analysis period. To 

provide perspective on the short-run 

cash flow impact, DOE includes in the 

discussion of the results below a 

comparison of free cash flow between 

the base case and the standards case at 

each TSL in the year before new 

standards 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. 

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64116 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

TABLE V.15—MANUFACTURER IMPACT ANALYSIS FOR RESIDENTIAL FURNACE FANS—PRESERVATION OF GROSS MARGIN

PERCENTAGE MARKUP SCENARIO * 

Units Base case 

Trial standard level 

1 2 3 4 5 6 

INPV ...................... 2012$ Millions ...... 252.2 252.9 265.7 265.1 286.0 286.5 310.4 

Change in INPV .... 2012$ Millions ...... .................... 0.7 13.5 12.9 33.8 34.2 58.2 

(%) ........................ .................... 0.3 5.3 5.1 13.4 13.6 23.1 

Product Conversion 

Costs.

2012$ Millions ...... .................... 1.1 2.8 2.9 3.1 3.2 9.3 

Capital Conversion 

Costs.

2012$ Millions ...... .................... .................... .................... .................... .................... .................... 155.0 

Total Conversion 

Costs.

2012$ Millions ...... .................... 1.1 2.8 2.9 3.1 3.2 164.3 

Free Cash Flow .... 2012$ Millions ...... 12.12 11.78 11.28 11.25 11.17 11.15 (60.44) 

Free Cash Flow 

(change from 

Base Case).

% .......................... 0.0 (2.82) (6.94) (7.21) (7.85) (8.02) (598.66) 

* Values in parentheses are negative values. 

TABLE V.16—MANUFACTURER IMPACT ANALYSIS FOR RESIDENTIAL FURNACE FANS—PRESERVATION OF OPERATING

PROFIT MARKUP SCENARIO* 

Units Base case 

Trial standard level 

1 2 3 4 5 6 

INPV ...................... 2012$ Millions ...... 252.2 249.2 225.5 223.6 197.8 196.7 82.1 

Change in INPV .... 2012$ Millions ...... .................... (3.0) (26.7) (28.6) (54.4) (55.5) (170.1) 

(%) ........................ .................... (1.2) (10.6) (11.3) (21.6) (22.0) (67.5) 

Product Conversion 

Costs.

2012$ Millions ...... .................... 1.1 2.8 2.9 3.1 3.2 9.3 

Capital Conversion 

Costs.

2012$ Millions ...... .................... .................... .................... .................... .................... .................... 155.0 

Total Conversion 

Costs.

2012$ Millions ...... .................... 1.1 2.8 2.9 3.1 3.2 164.3 

Free Cash Flow .... 2012$ Millions ...... 12.12 11.78 11.28 11.25 11.17 11.15 (60.44) 

Free Cash Flow 

(change from 

Base Case).

% .......................... 0.0 (2.82) (6.94) (7.21) (7.85) (8.02) (598.66) 

* Values in parentheses are negative values. 

TSL 1 represents the most common 

efficiency levels in the current market 

for all product classes. At TSL 1, DOE 

estimates impacts on INPV for 

residential furnace fan manufacturers to 

range from ¥$3.0 million to $0.7 

million, or a change in INPV of ¥1.2 

percent to 0.3 percent. At this potential 

standard level, industry free cash flow 

is estimated to decrease by 

approximately 2.8 percent to $11.78 

million, compared to the base-case 

value of $12.12 million in the year 

before the compliance date (2018). 

DOE anticipates no capital conversion 

costs at TSL 1, because manufacturers 

would be able to use a different motor 

type without making significant changes 

to their manufacturing equipment or 

production processes. DOE anticipates 

minor product conversion costs 

associated with redesigning products 

that are currently below the proposed 

efficiency level and updating product 

literature. 

TSL 2 represents EL 1 for the oil and 

manufactured home product classes, 

and EL 3 for all other product classes. 

At TSL 2, DOE estimates impacts on 

INPV for residential furnace fan 

manufacturers to range from ¥$26.7 

million to $13.5 million, or a change in 

INPV of ¥10.6 percent to 5.3 percent. 

At this potential standard level, 

industry free cash flow is estimated to 

decrease by approximately 6.9 percent 

to $11.28 million, compared to the basecase value of $12.12 million in the year 

before the compliance date (2018). 

DOE anticipates no capital conversion 

costs at TSL 2, because manufacturers 

would be able to use a different motor 

type without making significant changes 

to their manufacturing equipment or 

production processes. DOE anticipates 

product conversion costs at TSL 2 to be 

higher than those at TSL 1, because 

more products in the market (with the 

exception of oil furnaces and 

manufactured housing products) would 

need to be redesigned in order to meet 

the higher proposed efficiency levels. 

Additional product literature would 

also need to be updated for the 

redesigned products. 

TSL 3 represents EL 3 for all product 

classes. At TSL 3, DOE estimates 

impacts on INPV for residential furnace 

fan manufacturers to range from ¥$28.6 

million to $12.9 million, or a change in 

INPV of ¥11.3 percent to 5.1 percent. 

At this potential standard level, 

industry free cash flow is estimated to 

decrease by approximately 7.2 percent 

to $11.25 million, compared to the basecase value of $12.12 million in the year 

before the compliance date (2018). 

DOE anticipates no capital conversion 

costs at TSL 3, because manufacturers 

would be able to use a different motor 

type without making significant changes 

to their manufacturing equipment or 

production processes. DOE anticipates 

product conversion costs at TSL 3 to be 

slightly higher than those at TSL 2 

because more manufactured housing 

products in the market would need to be 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64117 

67 ‘‘Annual Survey of Manufactures (ASM),’’ U.S. 

Census Bureau (2011) (Available at: http://

www.census.gov/manufacturing/asm/). 

redesigned in order to meet the higher 

proposed efficiency levels. Additional 

product literature would also need to be 

updated for the redesigned products. 

TSL 4 represents the efficiency levels 

that provide the highest NPV using a 7- 

percent discount rate, and that also 

result in a higher percentage of 

consumers receiving an LCC benefit 

rather than an LCC loss. At TSL 4, DOE 

estimates impacts on INPV for 

residential furnace fan manufacturers to 

range from ¥$54.4 million to $33.8 

million, or a change in INPV of ¥21.6 

percent to 13.4 percent. At this potential 

standard level, industry free cash flow 

is estimated to decrease by 

approximately 7.9 percent to $11.17 

million, compared to the base-case 

value of $12.12 million in the year 

before the compliance date (2018). 

DOE anticipates no capital conversion 

costs at TSL 4, because manufacturers 

would be able to use a different motor 

type without making significant changes 

to their manufacturing equipment or 

production processes. DOE anticipates 

product conversion costs at TSL 4 to be 

higher than those at TSL 3, because 

more products in the market (with the 

exception of oil furnaces) would need to 

be redesigned in order to meet the 

higher proposed efficiency levels. 

Additional product literature would 

also need to be updated for the 

redesigned products. 

TSL 5 represents the efficiency levels 

that provide the maximum NPV using a 

7-percent discount rate. At TSL 5, DOE 

estimates impacts on INPV for 

residential furnace fan manufacturers to 

range from ¥$55.5 million to $34.2 

million, or a change in INPV of ¥22.0 

percent to 13.6 percent. At this potential 

standard level, industry free cash flow 

is estimated to decrease by 

approximately 8.0 percent to $11.15 

million, compared to the base-case 

value of $12.12 million in the year 

before the compliance date (2018). 

DOE anticipates no capital conversion 

costs at TSL 5, because manufacturers 

would be able to use a different motor 

type without making significant changes 

to their manufacturing equipment or 

production processes. DOE anticipates 

product conversion costs at TSL 5 to be 

slightly higher than those at TSL 4, 

because more oil furnaces and 

manufactured housing electric furnaces 

in the market would need to be 

redesigned in order to meet the higher 

proposed efficiency levels. Additional 

product literature would also need to be 

updated for the redesigned products. 

TSL 6 represents the max-tech 

efficiency level for all product classes. 

At TSL 6, DOE estimates impacts on 

INPV for residential furnace fan 

manufacturers to range from ¥$170.1 

million to $58.2 million, or a change in 

INPV of ¥67.5 percent to 23.1 percent. 

At this potential standard level, 

industry free cash flow is estimated to 

decrease by approximately 598.7 

percent to ¥$60.44 million, compared 

to the base-case value of $12.12 million 

in the year before the compliance date 

(2018). 

DOE anticipates very high capital 

conversion costs at TSL 6 because 

manufacturers would need to make 

significant changes to their 

manufacturing equipment and 

production processes in order to 

accommodate the use of backwardinclined impellers. This design option 

would require modifying, or potentially 

eliminating, current fan housings. DOE 

also anticipates high product conversion 

costs to develop new designs with 

backward-inclined impellers for all their 

products. Some manufacturers may also 

have stranded assets from specialized 

machines for building fan housing that 

can no longer be used. 

b. Impacts on Employment 

To quantitatively assess the impacts 

of energy conservation standards on 

direct employment in the residential 

furnace fan industry, DOE used the 

GRIM to estimate the domestic labor 

expenditures and number of employees 

in the base case and at each TSL from 

2013 through 2048. DOE used statistical 

data from the U.S. Census Bureau’s 2011 

Annual Survey of Manufacturers 

(ASM),67 the results of the engineering 

analysis, and interviews with 

manufacturers to determine the inputs 

necessary to calculate industry-wide 

labor expenditures and domestic 

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 ASM). The estimates of 

production workers in this section cover 

workers, including line-supervisors who 

are directly involved in fabricating and 

assembling a product within the 

manufacturing 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 total direct employment impacts 

calculated in the GRIM are the sum of 

the changes in the number of 

production workers resulting from the 

new energy conservation standards for 

residential furnace fans, as compared to 

the base case. 

For residential furnace fans, DOE does 

not expect significant changes in 

domestic employment levels from 

baseline to EL 5. One manufacturer 

commented during interviews that 

employment may be affected if their 

profit margins decreased due to a new 

standard, in which case consideration 

may be given to moving production 

facilities to another country, but 

changes in employment due to 

standards are generally not a major 

concern for manufacturers of residential 

furnace fans, because all efficiency 

levels from baseline to EL 5 can be 

achieved by substituting a higherefficiency component for an existing 

component. DOE found during 

manufacturer interviews that the 

assembly processes for integrating the 

higher-efficiency components do not 

differ significantly from those used for 

existing components. For instance, 

manufacturers design their housings 

and motor mounts to be compatible 

with all motor types. Consequently, no 

additional labor is required to integrate 

higher-efficiency motors and controls to 

reach EL 1 through EL 3, and labor costs 

will be equivalent to the baseline at 

those levels. The same is true for 

integration of components that enable 

multi-stage heating capabilities (in 

addition to higher-efficiency motors) to 

reach EL 4 and EL 5. 

The only standard level at which 

significant changes in employment 

would possibly be expected to occur is 

at EL6, the max-tech level. At EL 6, DOE 

estimates increases in labor costs 

because backwards-inclined impeller 

assemblies are heavier and require more 

robust mounting approaches than are 

currently used for forward-curved 

impeller assemblies. The alternate 

mounting approaches needed to 

integrate backward-inclined impeller 

assemblies could require manufacturers 

to modify their current assembly 

processes, resulting in increased labor. 

However, DOE received limited 

feedback from manufacturers regarding 

the labor required to produce furnace 

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64118 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

68 DOE notes that the American Public Gas 

Association (APGA) brought a lawsuit challenging 

the energy conservation standards pertaining to 

non-weatherized gas furnaces, and that lawsuit is 

currently pending before the U.S. Court of Appeals 

for the District of Columbia Circuit (D.C. Circuit). 

There is also a settlement agreement before the 

Court regarding this matter. On May 1, 2013, the 

D.C. Circuit granted a motion requesting a stay of 

the May 1, 2013 compliance date for nonweatherized gas furnaces. In its order, the Court 

stayed the compliance deadline for six months 

following the issuance of any opinion by the Court 

in this case upholding the standards. 

fans with backward-curved impellers, 

because they generally do not have any 

experience in working with this design 

option. 

DOE notes that the employment 

impacts discussed here are independent 

of the indirect employment impacts to 

the broader U.S. economy, which are 

documented in chapter 15 of the NOPR 

TSD. 

c. Impacts on Manufacturing Capacity 

According to the residential furnace 

fan manufacturers interviewed, the new 

energy conservation standards proposed 

in this NOPR would not significantly 

affect manufacturers’ production 

capacities. Some manufacturers 

mentioned that capacity could 

potentially be impacted by additional 

testing requirements and bottlenecks 

with sourcing if motor suppliers cannot 

keep up with demand, but concerns 

were not generally expressed about 

manufacturing capacity until max-tech 

levels. Thus, at the proposed TSL, DOE 

believes manufacturers would be able to 

maintain manufacturing capacity levels 

and continue to meet market demand 

under new energy conservation 

standards. 

d. Impacts on Subgroups of 

Manufacturers 

Small manufacturers, niche 

equipment manufacturers, and 

manufacturers exhibiting a cost 

structure substantially different from the 

industry average could be affected 

disproportionately. As discussed in 

section IV.J using average cost 

assumptions developed for an industry 

cash-flow estimate is inadequate to 

assess differential impacts among 

manufacturer subgroups. 

For the residential furnace fans 

industry, DOE identified and evaluated 

the impact of new energy conservation 

standards on one subgroup, specifically 

small manufacturers. The SBA defines a 

‘‘small business’’ as having 750 

employees or less for NAICS 333415, 

‘‘Air-Conditioning and Warm Air 

Heating Equipment and Commercial 

and Industrial Refrigeration Equipment 

Manufacturing.’’ Based on this 

definition, DOE identified 14 

manufacturers in the residential furnace 

fans industry that qualify as small 

businesses. For a discussion of the 

impacts on the small manufacturer 

subgroup, see the regulatory flexibility 

analysis in section VI.B of this notice 

and 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 

recent or 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. In addition to energy 

conservation standards, other 

regulations can significantly affect 

manufacturers’ financial operations. 

Multiple regulations affecting the same 

manufacturer can strain profits and 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. 

During previous stages of this 

rulemaking, DOE identified a number of 

requirements in addition to new energy 

conservation standards for residential 

furnace fans. The following section 

briefly summarizes those identified 

regulatory requirements and addresses 

comments DOE received with respect to 

cumulative regulatory burden, as well as 

other key related concerns that 

manufacturers raised during interviews. 

DOE Certification, Compliance, and 

Enforcement (CC&E) Rule 

This notice proposes CC&E 

requirements for residential furnace 

fans. In addition, the April 2, 2013 test 

procedure SNOPR included proposed 

sampling requirements for CC&E testing 

of residential furnace fans that mandate 

that, unless otherwise specified, a 

minimum of two units need to be tested 

for each basic model. 78 FR 19606, 

19625. 

Manufacturers indicated during 

interviews that the regulatory burden 

from certification and compliance 

testing is one of the biggest problems 

they face. One manufacturer stated that 

it could potentially shut down the 

industry due to the large number of 

basic models that need to be tested. DOE 

recognizes that the CC&E requirements 

contribute to cumulative regulatory 

burden. However, for the reasons 

discussed in section IV.J.3, DOE does 

not find that testing furnace fans 

according to its proposed test procedure 

would be unduly burdensome. 

DOE Energy Conservation Standards for 

Furnaces and Central Air Conditioners 

and Heat Pumps 

On June 27, 2011, DOE published a 

direct final rule in the Federal Register 

to amend the energy conservation 

standards for residential furnaces, 

central air conditioners, and heat pumps 

(the ‘‘HVAC rule’’). 76 FR 37408. In 

addition to setting a base national 

standard, the June 27, 2011 direct final 

rule also implemented regional standard 

levels, where the minimum efficiency 

level for a product is determined by the 

geographic region in which it is sold. 

(DOE subsequently confirmed adoption 

of these standards through publication 

of a notice of effective date and 

compliance dates for this rulemaking in 

the Federal Register on October 31, 

2011. 76 FR 67037.) Compliance with 

these standards was required on May 1, 

2013 for non-weatherized furnaces and 

will be required on January 1, 2015 for 

weatherized furnaces, central air 

conditioners, and heat pumps.68

Since furnace fan manufacturers are 

also manufacturers of the HVAC 

product in which the furnace fan is 

used, furnace fan manufacturers are 

subject to the amended energy 

conservation standards for residential 

furnaces, central air conditioners, and 

heat pumps. At the minimum energy 

efficiency levels selected for the direct 

final rule, DOE estimated that the total 

industry investment required to meet 

the amended energy conservation 

standards would be $28 million (in 

2009$). At the minimum energy 

efficiency levels selected for this notice 

of proposed rulemaking, DOE estimates 

that the total industry investment would 

be $3.1 million. Manufacturers of 

furnace fans face product conversion 

costs related to standards for furnace 

fans, as well as product and capital 

conversion costs related to standards for 

residential furnaces, central air 

conditioners, and heat pumps. 

The direct final rule for energy 

conservation standards for residential 

furnaces, central air conditioners, and 

heat pumps includes standards for 

energy efficiency as well as standards 

for standby mode and off mode energy 

consumption. DOE has completed a test 

procedure final rule for standby mode 

and off mode energy consumption in 

residential furnaces. 77 FR 76831 (Dec. 

31, 2012). DOE is also preparing a test 

procedure for standby mode and off 

mode energy consumption in residential 

central air conditioners and heat pumps. 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64119 

69See Arkema v. EPA, 618 F.3d 1 (D.C. Cir. 2010). 

70Air Handlers—June 2010, Natural Resources 

Canada (Available at: http://oee.nrcan.gc.ca/

regulations/bulletins/14551) (Last accessed May 6, 

2013). 

71Regulatory Update—November 2011, Natural 

Resources Canada (Available at: http://oee.nrcan.gc.

ca/regulations/bulletins/17839) (Last accessed May 

6, 2013). 72Building Energy Efficiency Program, California 

Energy Commission (Available at: http://www.

energy.ca.gov/title24/) (Last accessed May 6, 2013). 

73South Coast AQMD List of Current Rules, 

California Environmental Protection Agency Air 

Resouorces Board (Available at: http://www.arb.ca.

gov/drdb/sc/cur.htm) (Last accessed May 6, 2013). 

74See https://aqmd.gov/hb/attachments/2011- 

2015/2013Mar/2013-Mar1-019.pdf. 

EPA Phaseout of 

Hydrochlorofluorocarbons (HCFCs) 

The U.S. is obligated under the 

Montreal Protocol to limit production 

and consumption of HCFCs through 

incremental reductions, culminating in 

a complete phaseout of HCFCs by 2030. 

On December 15, 2009, EPA published 

the ‘‘2010 HCFC Allocation Rule,’’ 

which allocates production and 

consumption allowances for HCFC–22 

for each year between 2010 and 2014. 74 

FR 66412. On January 4. 2012, EPA 

published the ‘‘2012 HCFC Allocation 

Proposed Rule,’’ which proposes to lift 

the regulatory ban on the production 

and consumption of HCFC–22 

(following a court decision 69 in August 

2010 to vacate a portion of the ‘‘2010 

HCFC Allocation Rule’’) by establishing 

company-by-company HCFC–22 

baselines and allocating allowances for 

2012–2014. 77 FR 237. 

HCFC–22, which is also known as R– 

22, is a popular refrigerant that is 

commonly used in air-conditioning 

products. Manufacturers of residential 

furnace fans who also manufacture 

residential central air conditioners must 

comply with the allowances established 

by the allocation rule, thereby facing a 

cumulative regulatory burden. 

EPA ENERGY STAR 

During interviews, some 

manufacturers stated that ENERGY 

STAR specifications for residential 

furnaces, central air conditioners, and 

heat pumps would be a source of 

cumulative regulatory burden. ENERGY 

STAR specifications are as follows: 

TABLE V.17—ENERGY STAR SPECIFICATIONS FOR HVAC PRODUCTS THAT USE FURNACE FANS

Gas Furnaces .......................................... Rating of 90% AFUE or greater for U.S. South gas furnaces. 

Rating of 95% AFUE or greater for U.S. North gas furnaces. 

Less than or equal to 2.0% furnace fan efficiency.* 

Oil Furnaces ............................................ Rating of 85% AFUE or greater. 

Less than or equal to 2.0% furnace fan efficiency.* 

Air-Source Heat Pumps ........................... >= 8.2 HSPF/>=14.5 SEER/>=12 EER for split systems. 

>= 8.0 HSPF/>=14 SEER/>=11 EER for single-package equipment. 

Central Air Conditioners .......................... >=14.5 SEER/>=12 EER for split systems. 

>=14 SEER/>=11 EER for single-package equipment. 

* Furnace fan efficiency in this context is furnace fan electrical consumption as a percentage of total furnace energy consumption in heating 

mode. 

DOE realizes that the cumulative 

effect of several regulations on an 

industry may significantly increase the 

burden faced by manufacturers that 

need to comply with multiple 

regulations and certification programs 

from different organizations and levels 

of government. However, DOE notes 

that certain standards, such as ENERGY 

STAR, are optional for manufacturers. 

Furthermore, for certain products listed 

in the table above, ENERGY STAR 

standards are equivalent to the 

standards set in DOE’s June 27, 2011 

direct final rule for energy conservation 

standards for residential furnaces, 

central air conditioners, and heat 

pumps. 

Canadian Energy Efficiency Regulations 

In June 2010, the Office of Energy 

Efficiency of National Resources Canada 

(NRCan) published a bulletin to 

announce the proposal of new 

electricity reporting requirements for air 

handlers used in residential central 

heating and cooling systems that are 

imported into Canada for sale or lease.70

In November 2011, NRCan published a 

regulatory update which stated that 

NRCan intends to apply reporting 

requirements to only air handlers used 

in residential gas furnaces, and that 

requirements for air handlers used in 

other heating and cooling systems 

would be expanded in a future 

regulatory amendment. 71 In this 

update, NRCan proposed to use 

Canadian Standards Association (CSA) 

C823–11 (Performance of air handlers in 

residential space conditioning systems) 

as the test method for determining 

efficiency. Consequently, manufacturers 

of furnace fans used in residential gas 

furnaces may face additional reporting 

requirements if they sell their products 

in Canada. 

California Title 24 

Title 24, Part 6, of the California Code 

of Regulations includes building energy 

efficiency standards for residential and 

nonresidential buildings. The California 

Energy Commission (CEC) published 

new standards in 2008, which became 

effective January 1, 2010, that include 

watts per cubic foot per minute (W/

CFM) limits for fans used in central, 

residential HVAC systems.72

ASHRAE Standard 90.1 

ASHRAE Standard 90.1, ‘‘Energy 

Standard for Buildings Except Low-Rise 

Residential Buildings,’’ sets minimum 

efficiency standards for buildings, 

except low-rise residential buildings. 

On May 16, 2012, DOE published the 

final rule in the Federal Register for 

Energy Conservation Standards and Test 

Procedures for Commercial Heating, 

Air-Conditioning, and Water-Heating 

Equipment, through which DOE 

adopted the efficiency levels specified 

in ASHRAE Standard 90.1–2010. 77 FR 

28928. 

Included in the ASHRAE standards 

are minimum efficiency levels for 

commercial heating, air-conditioning, 

and water-heating equipment. Several 

manufacturers of residential furnace 

fans also manufacture this equipment. 

Low-NOX Requirements 

Rule 1111 of the South Coast Air 

Quality Management District (AQMD) 

currently requires residential furnaces 

installed in the District to meet a NOX

emission limit of 40 nanograms per 

joule (ng/J) of heat output.73 The 

development of this rule is an ongoing 

process to evaluate low-NOX

technologies for combustion equipment. 

In 1983, the rule was amended to limit 

applicability to furnaces with a heat 

input of less than 175,000 Btu per hour, 

or for combination heating and cooling 

units, a cooling rate of less than 65,000 

Btu per hour.74 However, the rule was 

again amended in 2009 to establish a 

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64120 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

75See http://www.arb.ca.gov/DRDB/SC/

CURHTML/R1111.pdf. 

new limit of 14 ng/J for non-condensing, 

condensing, weatherized, and mobile 

home furnaces, with the following 

compliance schedule: 75

TABLE V.18—LOW NOX COMPLIANCE

SCHEDULE

Compliance date Furnace type 

Oct 1, 2014 ............... Condensing Furnace. 

Oct 1, 2015 ............... Non-condensing Furnace. 

Oct 1, 2016 ............... Weatherized Furnace. 

Oct 1, 2018 ............... Mobile Home Furnace. 

The Proposed Amended Rule (PAR) 

1111 affects manufacturers, distributors, 

wholesalers, builders, and installers of 

residential furnaces. AHRI indicates 

that, although there are currently no 

manufacturers of fan-type gas-fired 

residential furnaces within the AQMD 

jurisdiction, some of these 

manufacturers do sell and distribute 

products installed in this District. 

PAR 1111 also provides 

manufacturers with an alternative 

compliance option. For any furnace 

type, a manufacturer may request a 

delayed compliance date of up to three 

years if they submit a plan and pay an 

emission mitigation fee. 

DOE discusses these and other 

requirements, and includes the full 

details of the cumulative regulatory 

burden analysis, in chapter 12 of the 

NOPR TSD. DOE also discusses the 

impacts on the small manufacturer 

subgroup in the regulatory flexibility 

analysis in section VI.B of this NOPR. 

3. National Impact Analysis 

a. Significance of Energy Savings 

For each TSL, DOE projected energy 

savings for residential furnace fans 

purchased in the 30-year period that 

begins in the first full year of 

compliance with amended standards 

(2019–2048). The savings are measured 

over the entire lifetime of products 

purchased in the 30-year period. DOE 

quantified the energy savings 

attributable to each TSL as the 

difference in energy consumption 

between each standards case and the 

base case. Table V.19 presents the 

estimated primary energy savings for 

each considered TSL, and Table V.20 

presents the estimated FFC energy 

savings for each considered TSL. The 

energy savings in the tables below are 

net savings that reflect the subtraction of 

the additional gas or oil used by the 

furnace associated with higherefficiency furnace fans. With improved 

fan efficiency, there is less heat from the 

motor, which means that the furnace 

needs to operate more. The approach for 

estimating national energy savings is 

further described in section IV.H.1. 

The difference between primary 

energy savings and FFC energy savings 

for all TSLs is small (less than 1%), 

because the upstream energy savings 

associated with the electricity savings 

are partially (or fully, for TSL 2 and 3) 

offset by the upstream energy use from 

the additional gas or oil used by the 

furnace due to higher-efficiency furnace 

fans. The ranking of TSLs is not 

impacted by the use of FFC energy 

savings. 

TABLE V.19—CUMULATIVE NATIONAL PRIMARY ENERGY SAVINGS FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2048 

Product class 

Trial standard level 

quads 

1 2 3 4 5 6 

Non-Weatherized, Non-Condensing Gas Furnace Fan .......................... 0.254 1.021 1.021 1.861 1.861 2.404 

Non-weatherized, Condensing Gas Furnace Fan ................................... 0.276 0.877 0.877 2.003 2.003 2.793 

Weatherized Non-Condensing Gas Furnace Fan ................................... 0.032 0.138 0.138 0.264 0.264 0.338 

Non-Weatherized, Non-Condensing Oil Furnace Fan ............................. 0.005 0.005 0.025 0.005 0.025 0.051 

Non-weatherized Electric Furnace/Modular Blower Fan ......................... 0.042 0.202 0.202 0.357 0.357 0.451 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace 

Fan ....................................................................................................... 0.010 0.010 0.039 0.010 0.039 0.089 

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan 0.002 0.002 0.008 0.002 0.008 0.022 

Manufactured Home Electric Furnace/Modular Blower Fan ................... 0.009 0.009 0.034 0.060 0.060 0.073 

Total—All Classes ..................................................................... 0.631 2.265 2.344 4.562 4.617 6.221 

Note: Components may not sum to total due to rounding. 

TABLE V.20—CUMULATIVE NATIONAL FULL-FUEL-CYCLE ENERGY SAVINGS FOR TRIAL STANDARD LEVELS FOR

RESIDENTIAL FURNACE FANS SOLD IN 2019–2048 

Product class 

Trial standard level 

quads 

1 2 3 4 5 6 

Non-Weatherized, Non-Condensing Gas Furnace Fan .......................... 0.256 1.021 1.021 1.870 1.870 2.421 

Non-Weatherized, Condensing Gas Furnace Fan .................................. 0.277 0.866 0.866 2.005 2.005 2.802 

Weatherized Non-Condensing Gas Furnace Fan ................................... 0.032 0.138 0.138 0.266 0.266 0.340 

Non-Weatherized, Non-Condensing Oil Furnace Fan ............................. 0.005 0.005 0.024 0.005 0.024 0.050 

Non-Weatherized Electric Furnace/Modular Blower Fan ........................ 0.042 0.202 0.202 0.357 0.357 0.452 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace 

Fan ....................................................................................................... 0.010 0.010 0.039 0.010 0.039 0.089 

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan 0.002 0.002 0.008 0.002 0.008 0.022 

Manufactured Home Electric Furnace/Modular Blower Fan ................... 0.010 0.010 0.034 0.061 0.061 0.074 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64121 

76U.S. Office of Management and Budget, 

‘‘Circular A–4: Regulatory Analysis’’ (Sept. 17, 

2003) (Last accessed September 17, 2013 from 

http://www.whitehouse.gov/omb/circulars_a004_a4/). 

77EPCA requires DOE to review its energy 

conservation 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. (42 

U.S.C. 6295(m)) 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. 

78OMB Circular A–4, section E (Sept. 17, 2003) 

(Available at: http://www.whitehouse.gov/omb/

circulars_a004_a-4). 

TABLE V.20—CUMULATIVE NATIONAL FULL-FUEL-CYCLE ENERGY SAVINGS FOR TRIAL STANDARD LEVELS FOR

RESIDENTIAL FURNACE FANS SOLD IN 2019–2048—Continued 

Product class 

Trial standard level 

quads 

1 2 3 4 5 6 

Total—All Classes ............................................................................ 0.635 2.254 2.332 4.576 4.629 6.250 

NOTE: Components may not sum to total due to rounding. 

OMB Circular A–4 76 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 standards.77 We would note that 

the review timeframe established in 

EPCA generally does not overlap with 

the product lifetime, product 

manufacturing cycles, or other factors 

specific to residential furnace fans. 

Thus, such results are presented for 

informational purposes only and are not 

indicative of any change in DOE’s 

analytical methodology. The NES 

results based on a 9-year analytical 

period are presented in Table V.21. The 

impacts are counted over the lifetime of 

products purchased in 2019–2027. 

TABLE V.21—CUMULATIVE NATIONAL PRIMARY ENERGY SAVINGS FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2027 

Product class 

Trial standard level 

quads 

1 2 3 4 5 6 

Non-Weatherized, Non-Condensing Gas Furnace Fan .......................... 0.085 0.348 0.348 0.642 0.642 0.846 

Non-Weatherized, Condensing Gas Furnace Fan .................................. 0.076 0.239 0.239 0.545 0.545 0.755 

Weatherized Non-Condensing Gas Furnace Fan ................................... 0.010 0.046 0.046 0.086 0.086 0.111 

Non-Weatherized, Non-Condensing Oil Furnace Fan ............................. 0.002 0.002 0.009 0.002 0.009 0.021 

Non-Weatherized Electric Furnace/Modular Blower Fan ........................ 0.012 0.058 0.058 0.102 0.102 0.130 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace 

Fan ....................................................................................................... 0.003 0.003 0.013 0.003 0.013 0.030 

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan 0.001 0.001 0.002 0.001 0.002 0.006 

Manufactured Home Electric Furnace/Modular Blower Fan ................... 0.003 0.003 0.012 0.020 0.020 0.025 

Total—All Classes ............................................................................ 0.193 0.700 0.727 1.402 1.421 1.924 

Note: Components may not sum to total due to rounding. 

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 

TSLs considered for residential furnace 

fans. In accordance with OMB’s 

guidelines on regulatory analysis,78

DOE calculated NPV using both a 7- 

percent and a 3-percent real discount 

rate. Table V.22 shows the consumer 

NPV results for each TSL considered for 

residential furnace fans. In each case, 

the impacts cover the lifetime of 

products purchased in 2019–2048. 

TABLE V.22—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFIT FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2048 

Product class Discount rate 

% 

Trial standard level 

Billion 2012$ * 

1 2 3 4 5 6 

Non-Weatherized, Non-Condensing Gas Furnace 

Fan ......................................................................... 3 1.46 9.86 9.86 11.09 11.09 8.28 

Non-Weatherized, Condensing Gas Furnace Fan .... ........................ 1.49 11.16 11.16 12.23 12.23 9.20 

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64122 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

TABLE V.22—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFIT FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2048—Continued 

Product class Discount rate 

% 

Trial standard level 

Billion 2012$ * 

1 2 3 4 5 6 

Weatherized Non-Condensing Gas Furnace Fan ..... ........................ 0.17 1.12 1.12 1.30 1.30 0.49 

Non-Weatherized, Non-Condensing Oil Furnace Fan ........................ 0.02 0.02 0.19 0.02 0.19 0.10 

Non-Weatherized Electric Furnace/Modular Blower 

Fan ......................................................................... ........................ 0.15 1.05 1.05 1.29 1.29 0.12 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan ..................................... ........................ 0.04 0.04 0.25 0.04 0.25 (0.06 ) 

Manufactured Home Non-Weatherized, Condensing 

Gas Furnace Fan ................................................... ........................ 0.01 0.01 0.05 0.01 0.05 (0.02 ) 

Manufactured Home Electric Furnace/Modular Blower Fan ..................................................................... ........................ 0.03 0.03 0.13 0.17 0.17 (0.17 ) 

Total—All Classes .............................................. ........................ 3.37 23.30 23.81 26.16 26.57 17.95 

Non-Weatherized, Non-Condensing Gas Furnace 

Fan ......................................................................... 7 0.53 3.52 3.52 3.71 3.71 1.98 

Non-Weatherized, Condensing Gas Furnace Fan .... ........................ 0.51 3.78 3.78 3.91 3.91 2.11 

Weatherized Non-Condensing Gas Furnace Fan ..... ........................ 0.06 0.39 0.39 0.41 0.41 (0.01 ) 

Non-Weatherized, Non-Condensing Oil Furnace Fan ........................ 0.01 0.01 0.07 0.01 0.07 0.01 

Non-Weatherized Electric Furnace/Modular Blower 

Fan ......................................................................... ........................ 0.05 0.33 0.33 0.40 0.40 (0.20 ) 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan ..................................... ........................ 0.02 0.02 0.08 0.02 0.08 (0.09 ) 

Manufactured Home Non-Weatherized, Condensing 

Gas Furnace Fan ................................................... ........................ 0.00 0.00 0.02 0.00 0.02 (0.02 ) 

Manufactured Home Electric Furnace/Modular Blower Fan ..................................................................... ........................ 0.01 0.01 0.04 0.05 0.05 (0.13 ) 

Total—All Classes .............................................. ........................ 1.19 8.07 8.23 8.51 8.64 3.65 

* Numbers in parentheses indicate negative NPV. 

The NPV results based on the 

aforementioned 9-year analytical period 

are presented in Table V.23. The 

impacts are counted over the lifetime of 

products purchased in 2019–2027. As 

mentioned previously, this information 

is presented for informational purposes 

only and is not indicative of any change 

in DOE’s analytical methodology or 

decision criteria. 

TABLE V.23—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFIT FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2027 

Product class Discount rate 

% 

Trial standard level 

Billion 2012$ * 

1 2 3 4 5 6 

Non-Weatherized, Non-Condensing Gas Furnace 

Fan ......................................................................... 3 0.63 4.32 4.32 4.88 4.88 3.75 

Non-Weatherized, Condensing Gas Furnace Fan .... ........................ 0.55 4.11 4.11 4.51 4.51 3.51 

Weatherized Non-Condensing Gas Furnace Fan ..... ........................ 0.07 0.48 0.48 0.56 0.56 0.27 

Non-Weatherized, Non-Condensing Oil Furnace Fan ........................ 0.01 0.01 0.09 0.01 0.09 0.07 

Non-Weatherized Electric Furnace/Modular Blower 

Fan ......................................................................... ........................ 0.05 0.39 0.39 0.48 0.48 0.04 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan ..................................... ........................ 0.02 0.02 0.11 0.02 0.11 (0.01 ) 

Manufactured Home Non-Weatherized, Condensing 

Gas Furnace Fan ................................................... ........................ 0.00 0.00 0.02 0.00 0.02 0.00 

Manufactured Home Electric Furnace/Modular Blower Fan ..................................................................... ........................ 0.01 0.01 0.06 0.07 0.07 (0.07 ) 

Total—All Classes ...................................................... ........................ 1.35 9.36 9.59 10.53 10.72 7.55 

Non-Weatherized, Non-Condensing Gas Furnace 

Fan ......................................................................... 7 0.29 1.98 1.98 2.09 2.09 1.17 

Non-Weatherized, Condensing Gas Furnace Fan .... ........................ 0.26 1.87 1.87 1.94 1.94 1.11 

Weatherized Non-Condensing Gas Furnace Fan ..... ........................ 0.03 0.22 0.22 0.23 0.23 0.02 

Non-Weatherized, Non-Condensing Oil Furnace Fan ........................ 0.00 0.00 0.04 0.00 0.04 0.02 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64123 

TABLE V.23—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFIT FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2027—Continued 

Product class Discount rate 

% 

Trial standard level 

Billion 2012$ * 

1 2 3 4 5 6 

Non-Weatherized Electric Furnace/Modular Blower 

Fan ......................................................................... ........................ 0.02 0.17 0.17 0.20 0.20 (0.10 ) 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan ..................................... ........................ 0.01 0.01 0.05 0.01 0.05 (0.05 ) 

Manufactured Home Non-Weatherized, Condensing 

Gas Furnace Fan ................................................... ........................ 0.00 0.00 0.01 0.00 0.01 (0.01 ) 

Manufactured Home Electric Furnace/Modular Blower Fan ..................................................................... ........................ 0.01 0.01 0.02 0.03 0.03 (0.07 ) 

Total—All Classes .............................................. ........................ 0.63 4.26 4.35 4.50 4.58 2.09 

* Numbers in parentheses indicate negative NPV. 

As noted in section IV.H.2, DOE 

assumed no change in residential 

furnace fan prices over the 2019–2048 

period. In addition, DOE conducted a 

sensitivity analysis using alternative 

price trends: One in which prices 

decline over time, and one in which 

prices increase over time. These price 

trends, and the NPV results from the 

associated sensitivity cases, are 

described in Appendix 10–C of the 

NOPR TSD. 

c. Indirect Impacts on Employment 

DOE expects energy conservation 

standards for residential furnace fans to 

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 

TSLs 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 (2019 

and 2024), where these uncertainties are 

reduced. 

The results suggest that the proposed 

standards would be likely to have 

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 

more detailed results about anticipated 

indirect employment impacts. 

4. Impact on Product Utility or 

Performance 

DOE has tentatively concluded that 

the standards it is proposing in this 

NOPR would not lessen the utility or 

performance of residential furnace fans. 

5. Impact of Any Lessening of 

Competition 

DOE has also considered any 

lessening of competition that is likely to 

result from new and amended 

standards. 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. 

(42 U.S.C. 6295(o)(2)(B)(i)(V) and (ii)) 

To assist the Attorney General in 

making such a determination, DOE has 

provided DOJ with copies of this notice 

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 

An improvement in the energy 

efficiency of the products subject to this 

rule is likely to improve the security of 

the nation’s energy system by reducing 

overall demand for energy. Reduction in 

the growth of electricity demand 

resulting from energy conservation 

standards may also improve the 

reliability of the electricity system. 

Reductions in national electric 

generating capacity estimated for each 

considered TSL are reported in chapter 

15 of the NOPR TSD. 

Energy savings from standards for the 

residential furnace fan products covered 

in this NOPR could also produce 

environmental benefits in the form of 

reduced emissions of air pollutants and 

greenhouse gases associated with 

electricity production. Table V.24 

provides DOE’s estimate of cumulative 

emissions reductions projected to result 

from the TSLs considered in this 

rulemaking. The table includes both 

power sector emissions and upstream 

emissions. The emissions were 

calculated using the multipliers 

discussed in section IV.K. DOE reports 

annual emissions reductions for each 

TSL in chapter 13 of the NOPR TSD. 

As discussed in section IV.K, DOE did 

not include NOX emissions reduction 

from power plants in States subject to 

CSAPR, because an energy conservation 

standard would not affect the overall 

level of NOX emissions in those States 

due to the emissions caps mandated by 

CSAPR. For SO2, projected emissions 

will be far below the cap established by 

CSAPR, so it is unlikely that excess SO2

emissions allowances resulting from the 

lower electricity demand would be 

needed or used to permit offsetting 

increases in SO2 emissions by any 

regulated EGU. Therefore, DOE believes 

that efficiency standards will reduce 

SO2 emissions. 

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64124 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

TABLE V.24—CUMULATIVE EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR RESIDENTIAL FURNACE FANS

TSL 

1 2 3 4 5 6 

Primary Energy Emissions * 

CO2 (million metric tons) .......................... 57.12 214.17 221.76 416.41 421.74 563.75 

SO2 (thousand tons) ................................ 31.17 117.04 121.28 227.23 230.23 307.77 

NOX (thousand tons) ............................... 30.66 122.38 126.31 227.18 229.86 303.72 

Hg (tons) .................................................. 0.24 0.95 0.98 1.76 1.79 2.36 

N2O (thousand tons) ................................ 0.67 2.65 2.75 4.96 5.03 6.66 

CH4 (thousand tons) ................................ 4.65 18.24 18.91 34.24 34.72 46.01 

Upstream Emissions 

CO2 (million metric tons) .......................... 1.88 5.99 6.11 13.37 13.42 18.50 

SO2 (thousand tons) ................................ 12.18 38.30 39.17 86.23 86.63 119.61 

NOX (thousand tons) ............................... 0.50 2.00 2.04 3.72 3.75 4.95 

Hg (tons) .................................................. 0.00 0.00 0.00 0.01 0.01 0.01 

N2O (thousand tons) ................................ 0.02 0.09 0.09 0.16 0.17 0.22 

CH4 (thousand tons) ................................ 127.91 352.80 365.71 879.41 887.59 1249.3 

Total Emissions 

CO2 (million metric tons) .......................... 59.01 220.16 227.87 429.78 435.16 582.25 

SO2 (thousand tons) ................................ 43.36 155.34 160.44 313.46 316.86 427.38 

NOX (thousand tons) ............................... 31.16 124.38 128.35 230.90 233.60 308.67 

Hg (tons) .................................................. 0.24 0.95 0.99 1.77 1.80 2.38 

N2O (thousand tons) ................................ 0.70 2.74 2.84 5.12 5.19 6.88 

N2O thousand tons CO2eq** .................... 207.2 816.0 845.0 1527.0 1547.7 2049.3 

CH4 (thousand tons) ................................ 132.56 371.04 384.62 913.65 922.31 1295.3 

CH4 million tons CO2eq** ........................ 3.314 9.276 9.616 22.84 23.06 32.38 

* Includes emissions from additional gas use associated with more-efficient furnace fans. 

** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). 

As part of the analysis for this NOPR, 

DOE estimated monetary benefits likely 

to result from the reduced emissions of 

CO2 and NOX estimated for each of the 

TSLs considered for residential furnace 

fans. As discussed in section IV.L, for 

CO2, DOE used four sets of values for 

the SCC developed by an interagency 

process. 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 represents 

the 95th-percentile SCC estimate across 

all three models at a 3-percent discount 

rate. The SCC values for CO2 emissions 

reductions in 2015, expressed in 2012$, 

are $12.9/ton, $40.8/ton, $62.2/ton, and 

$117/ton. The values for later years are 

higher due to increasing damages as the 

magnitude of projected climate change 

increases. Table V.25 presents the global 

value of CO2 emissions reductions at 

each TSL. 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.25—GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR RESIDENTIAL

FURNACE FANS

TSL 

SCC Case * 

Million 2012$ 

5% discount 

rate, average 

3% discount 

rate, average 

2.5% discount 

rate, average 

3% discount 

rate, 95th 

percentile 

Primary Energy Emissions ** 

1 ....................................................................................................................... 298.5 1531.1 2498.9 4724.6 

2 ....................................................................................................................... 1121.1 5746.8 9377.5 17732.7 

3 ....................................................................................................................... 1161.1 5951.3 9710.9 18363.5 

4 ....................................................................................................................... 2177.1 11165.3 18221.5 34451.9 

5 ....................................................................................................................... 2205.1 11308.6 18455.1 34893.8 

6 ....................................................................................................................... 2943.6 15103.4 24651.6 46603.0 

Upstream Emissions 

1 ....................................................................................................................... 9.9 50.5 82.4 155.9 

2 ....................................................................................................................... 31.3 160.5 261.9 495.0 

3 ....................................................................................................................... 32.0 163.9 267.5 505.7 

4 ....................................................................................................................... 70.0 358.6 585.1 1106.2 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64125 

TABLE V.25—GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR RESIDENTIAL

FURNACE FANS—Continued 

TSL 

SCC Case * 

Million 2012$ 

5% discount 

rate, average 

3% discount 

rate, average 

2.5% discount 

rate, average 

3% discount 

rate, 95th 

percentile 

5 ....................................................................................................................... 70.3 360.1 587.6 1110.8 

6 ....................................................................................................................... 97.0 496.6 810.1 1531.5 

Total Emissions 

1 ....................................................................................................................... 308.3 1581.7 2581.3 4880.5 

2 ....................................................................................................................... 1152.4 5907.3 9639.4 18227.7 

3 ....................................................................................................................... 1193.1 6115.2 9978.5 18869.2 

4 ....................................................................................................................... 2247.2 11524.0 18806.6 35558.1 

5 ....................................................................................................................... 2275.5 11668.7 19042.7 36004.6 

6 ....................................................................................................................... 3040.6 15599.9 25461.7 48134.5 

* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.9, $40.8, $62.2, and $117 per metric ton (2012$). The 

values are for CO2 only (i.e., not CO2eq of other greenhouse gases). 

** Includes site emissions from additional use of natural gas associated with more-efficient furnace fans. 

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 in this 

rulemaking on reducing CO2 emissions 

is subject 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 NOPR 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 standards for the residential 

furnace fan products that are the subject 

of this NOPR. The dollar-per-ton values 

that DOE used are discussed in section 

IV.L. Table V.26 presents the present 

value of cumulative NOX emissions 

reductions for each TSL calculated 

using the average dollar-per-ton values 

and 7-percent and 3-percent discount 

rates. 

TABLE V.26—PRESENT VALUE OF

NOX EMISSIONS REDUCTION FOR

POTENTIAL STANDARDS FOR RESIDENTIAL FURNACE FANS

TSL 

million 2012$ 

3% Discount 

rate 

7% Discount 

Rate 

Power Sector and Site Emissions * 

1 ................ 31.0 10.7 

2 ................ 116.4 40.0 

3 ................ 120.7 41.4 

4 ................ 226.2 77.8 

5 ................ 229.2 78.8 

6 ................ 306.1 105.3 

Upstream Emissions 

1 ................ 12.4 4.4 

2 ................ 39.0 13.9 

3 ................ 39.9 14.3 

4 ................ 88.0 31.6 

5 ................ 88.4 31.7 

6 ................ 122.3 44.0 

Total Emissions ** 

1 ................ 43.4 15.1 

2 ................ 155.4 53.9 

3 ................ 160.5 55.7 

4 ................ 314.2 109.4 

5 ................ 317.6 110.6 

TABLE V.26—PRESENT VALUE OF

NOX EMISSIONS REDUCTION FOR

POTENTIAL STANDARDS FOR RESIDENTIAL FURNACE FANS—Continued 

TSL 

million 2012$ 

3% Discount 

rate 

7% Discount 

Rate 

6 ................ 428.3 149.3 

* Includes site emissions from additional use 

of natural gas associated with more-efficient 

furnace fans. 

** Components may not sum to total due to 

rounding. 

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 each TSL considered in this 

rulemaking. Table V.27 presents the 

NPV values that result from adding the 

estimates of the potential economic 

benefits resulting from reduced fullfuel-cycle CO2 and NOX emissions in 

each of four valuation scenarios to the 

NPV of consumer savings calculated for 

each TSL 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 scenarios for the valuation of 

CO2 emission reductions discussed 

above. 

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64126 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

TABLE V.27—POTENTIAL STANDARDS FOR RESIDENTIAL FURNACE FANS: 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 

$12.9/metric 

ton CO2* and 

Low Value for 

NOX ** 

SCC Case 

$40.8/metric 

ton CO2* and 

Medium Value 

for NOX ** 

SCC Case 

$62.2/metric 

ton CO2* and 

Medium Value 

for NOX ** 

SCC Case 

$117/metric 

ton CO2* and 

High Value for 

NOX ** 

billion 2012$ 

1 ....................................................................................................................... 3.7 5.0 6.0 8.3 

2 ....................................................................................................................... 24.5 29.4 33.1 41.8 

3 ....................................................................................................................... 25.0 30.1 34.0 43.0 

4 ....................................................................................................................... 28.5 38.0 45.3 62.3 

5 ....................................................................................................................... 28.9 38.6 45.9 63.2 

6 ....................................................................................................................... 21.1 34.0 43.8 66.9 

Consumer NPV at 7% Discount Rate added with: 

TSL SCC Case 

$12.9/metric 

ton CO2* and 

Low Value for 

NOX ** 

SCC Case 

$40.8/metric 

ton CO2* and 

Medium Value 

for NOX ** 

SCC Case 

$62.2/metric 

ton CO2* and 

Medium Value 

for NOX ** 

SCC Case 

$117/metric 

ton CO2* and 

High Value for 

NOX ** 

billion 2012$ 

1 ....................................................................................................................... 1.5 2.8 3.8 6.1 

2 ....................................................................................................................... 9.2 14.0 17.8 26.4 

3 ....................................................................................................................... 9.4 14.4 18.3 27.2 

4 ....................................................................................................................... 10.8 20.1 27.4 44.3 

5 ....................................................................................................................... 10.9 20.4 27.8 44.8 

6 ....................................................................................................................... 6.7 19.4 29.3 52.1 

* These label values represent the global SCC in 2015, in 2012$. 

** Low Value corresponds to $468 per ton of NOX emissions. Medium Value corresponds to $2,639 per ton, and High Value corresponds to 

$4,809 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 quite different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

products shipped in 2019–2048. The 

SCC values, on the other hand, reflect 

the present value of future climaterelated impacts resulting from the 

emission of one metric ton of CO2 in 

each year. Because of the long residence 

time of CO2 in the atmosphere, these 

impacts continue well beyond 2100. 

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. 

C. Proposed Standards 

When considering proposed 

standards, the new or amended energy 

conservation standard that DOE adopts 

for any type (or class) of covered 

product shall be designed to achieve the 

maximum improvement in energy 

efficiency that the Secretary determines 

is technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A)) In determining whether a 

standard is economically justified, the 

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)) 

For this NOPR, DOE considered the 

impacts of standards at each TSL, 

beginning with the maximum 

technologically feasible level, to 

determine whether that level was 

economically justified. Where the maxtech level was not justified, DOE then 

considered the next most efficient level 

and undertook the same evaluation until 

it reached the highest efficiency level 

that is both technologically feasible and 

economically justified and saves a 

significant amount of energy. 

To aid the reader in understanding 

the benefits and/or burdens of each TSL, 

tables in this section summarize the 

quantitative analytical results for each 

TSL, based on the assumptions and 

methodology discussed herein. The 

efficiency levels contained in each TSL 

are described in section V.A. 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, and impacts on employment. 

Section V.B.1.b presents the estimated 

impacts of each TSL for these 

subgroups. DOE discusses the impacts 

on direct employment in residential 

furnace fan manufacturing in section 

V.B.2.b, and discusses the indirect 

employment impacts in section V.B.3.c. 

DOE also notes that the economics 

literature provides a wide-ranging 

discussion of how consumers trade off 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64127 

79P.C. Reiss and M.W. White. Household 

Electricity Demand, Revisited. Review of Economic 

Studies (2005) 72, 853–883. 

80Alan 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). 

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 

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 (Reiss and White, 

2005).79

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.80 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 Trial 

Standard Levels Considered for 

Residential Furnace Fans 

Table V.28 through Table V.30 

summarize the quantitative impacts 

estimated for each TSL for residential 

furnace fans. The national impacts are 

measured over the lifetime of furnace 

fans purchased in the 30-year period 

that begins in the first full year of 

compliance with amended standards 

(2019–2048). The energy savings, 

emissions reductions, and value of 

emissions reductions refer to full-fuelcycle results. Results that refer to 

primary energy savings are presented in 

chapter 10 of the NOPR TSD. 

TABLE V.28—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL FURNACE FAN STANDARDS: NATIONAL IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

National Full-Fuel-Cycle Energy Savings quads 

0.635 2.254 2.332 4.576 4.629 6.250 

NPV of Consumer Benefits 2012$ billion 

3% discount rate .............. 3.37 23.30 23.81 26.16 26.57 17.95 

7% discount rate .............. 1.19 8.07 8.23 8.51 8.64 3.65 

Cumulative Emissions Reduction (Total FFC Emissions) 

CO2 million metric tons .... 59.01 220.2 227.9 429.8 435.2 582.3 

SO2 thousand tons ........... 43.36 155.3 160.4 313.5 316.9 427.4 

NOX thousand tons .......... 31.16 124.4 128.4 230.9 233.6 308.7 

Hg tons ............................. 0.24 0.95 0.99 1.77 1.80 2.38 

N2O thousand tons .......... 0.70 2.74 2.84 5.12 5.19 6.88 

N2O thousand tons 

CO2eq* ......................... 207.2 816.0 845.0 1527.0 1547.7 2049.3 

CH4 thousand tons ........... 132.6 371.0 384.6 913.7 922.3 1295 

CH4 million tons CO2eq* .. 3.314 9.276 9.616 22.84 23.06 32.38 

Value of Emissions Reduction (Total FFC Emissions) 2012$ billion 

CO2 ** ............................... 0.308 to 4.880 1.152 to 18.23 1.193 to 18.87 2.247 to 35.56 2.275 to 36.01 3.041 to 48.13 

NOX—3% discount rate ... 0.043 0.155 0.161 0.314 0.318 0.428 

NOX—7% discount rate ... 0.015 0.054 0.056 0.109 0.111 0.149 

* 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 interagency estimates of the global benefit of reduced CO2 emissions. 

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64128 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

TABLE V.29—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL FURNACE FAN STANDARDS: MANUFACTURER AND

AVERAGE OR MEDIAN CONSUMER IMPACTS* 

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Manufacturer Impacts 

Industry NPV 2012$ million ................................ (3.0) to 0.7 (26.7) to 13.5 (28.6) to 12.9 (54.4) to 33.8 (55.5) to 34.2 (170.1) to 58.2 

Industry NPV % change .. (1.2) to 0.3 (10.6) to 5.3 (11.3) to 5.1 (21.6) to 13.4 (22.0) to 13.6 (67.5) to 23.1 

Consumer Average LCC Savings 2012$ 

Non-Weatherized, NonCondensing Gas Furnace Fan ...................... $64 $442 $442 $474 $474 $313 

Non-Weatherized, Condensing Gas Furnace 

Fan ............................... 49 361 361 371 371 238 

Weatherized Non-Condensing Gas Furnace 

Fan ............................... 35 228 228 247 247 67 

Non-Weatherized, NonCondensing Oil Furnace 

Fan ............................... 40 40 344 40 344 132 

Non-Weatherized Electric 

Furnace/Modular Blower Fan ........................... 21 160 160 185 185 17 

Manufactured Home NonWeatherized, Non-Condensing Gas Furnace 

Fan ............................... 26 26 146 26 146 (116) 

Manufactured Home NonWeatherized, Condensing Gas Furnace 

Fan ............................... 27 27 152 27 152 (86) 

Manufactured Home Electric Furnace/Modular 

Blower Fan ................... 14 14 64 78 78 (86) 

Consumer Median PBP years 

Non-Weatherized, NonCondensing Gas Furnace Fan ...................... 1.34 2.69 2.69 5.38 5.38 11.20 

Non-Weatherized, Condensing Gas Furnace 

Fan ............................... 1.35 2.73 2.73 5.39 5.39 11.03 

Weatherized Non-Condensing Gas Furnace 

Fan ............................... 1.27 2.65 2.65 6.39 6.39 13.32 

Non-Weatherized, NonCondensing Oil Furnace 

Fan ............................... 5.49 5.49 6.97 5.49 6.97 25.41 

Non-Weatherized Electric 

Furnace/Modular Blower Fan ........................... 2.39 3.15 3.15 3.55 3.55 13.45 

Manufactured Home NonWeatherized, Non-Condensing Gas Furnace 

Fan ............................... 3.35 3.35 7.02 3.35 7.02 26.73 

Manufactured Home NonWeatherized, Condensing Gas Furnace 

Fan ............................... 2.73 2.73 6.46 2.73 6.46 32.23 

Manufactured Home Electric Furnace/Modular 

Blower Fan ................... 2.49 2.49 4.35 4.61 4.61 17.11 

* Parentheses indicate negative values. 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64129 

TABLE V.30—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL FURNACE FAN STANDARDS: DISTRIBUTION OF

CONSUMER LCC IMPACTS

Product Class TSL 1 

(percent) 

TSL 2 

(percent) 

TSL 3 

(percent) 

TSL 4 

(percent) 

TSL 5 

(percent) 

TSL 6 

(percent) 

Non-Weatherized, Non-Condensing Gas Furnace Fan 

Net Cost ................................................... 2 18 18 33 33 58 

No Impact ................................................. 68 25 25 14 14 0 

Net Benefit ............................................... 30 57 57 53 53 42 

Non-Weatherized, Condensing Gas Furnace Fan 

Net Cost ................................................... 1 10 10 24 24 57 

No Impact ................................................. 75 41 41 34 34 0 

Net Benefit ............................................... 24 49 49 42 42 43 

Weatherized Non-Condensing Gas Furnace Fan 

Net Cost ................................................... 0 7 7 25 25 63 

No Impact ................................................. 81 56 56 33 33 0 

Net Benefit ............................................... 18 37 37 41 41 37 

Non-Weatherized, Non-Condensing Oil Furnace Fan 

Net Cost ................................................... 12 12 43 12 43 79 

No Impact ................................................. 71 71 28 71 28 0 

Net Benefit ............................................... 18 18 29 18 29 21 

Non-Weatherized Electric Furnace/Modular Blower Fan 

Net Cost ................................................... 5 20 20 27 27 68 

No Impact ................................................. 73 37 37 25 25 0 

Net Benefit ............................................... 21 42 42 48 48 32 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan 

Net Cost ................................................... 13 13 58 13 58 85 

No Impact ................................................. 56 56 0 56 0 0 

Net Benefit ............................................... 32 32 42 32 42 15 

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan 

Net Cost ................................................... 7 7 38 7 38 84 

No Impact ................................................. 68 68 29 68 29 0 

Net Benefit ............................................... 26 26 32 26 32 16 

Manufactured Home Electric Furnace/Modular Blower Fan 

Net Cost ................................................... 8 8 28 34 34 82 

No Impact ................................................. 71 71 38 26 26 0 

Net Benefit ............................................... 21 21 34 40 40 18 

Note: Components may not sum to total due to rounding. 

First, DOE considered TSL 6, which 

would save an estimated total of 6.25 

quads of energy, an amount DOE 

considers significant. TSL 6 has an 

estimated NPV of consumer benefit of 

$3.65 billion using a 7-percent discount 

rate, and $17.95 billion using a 3- 

percent discount rate. 

The cumulative CO2 emissions 

reduction at TSL 6 is 582.3 million 

metric tons. The estimated monetary 

value of the CO2 emissions reductions 

ranges from $3.041 billion to $48.13 

billion. The other emissions reductions 

are 427.4 thousand tons of SO2, 308.7 

thousand tons of NOX, 2.38 tons of Hg, 

6.88 thousand tons of N2O, and 1.295 

thousand tons of CH4.

At TSL 6, the average LCC savings are 

positive for Non-weatherized, Noncondensing Gas Furnace Fans, Nonweatherized, Condensing Gas Furnace 

Fans, Weatherized Non-Condensing Gas 

Furnace Fan, Non-Weatherized, NonCondensing Oil Furnace Fan, and Nonweatherized Electric Furnace/Modular 

Blower Fans. The LCC savings are 

negative for Manufactured Home Nonweatherized, Non-condensing Gas 

Furnace Fans, Manufactured Home 

Non-weatherized, Condensing Gas 

Furnace Fans, and Manufactured Home 

Electric Furnace/Modular Blower Fans. 

The median payback period is lower 

than the median product lifetime 

(which is 22.6 years for gas and electric 

furnace fans) for all of the product 

classes. The share of consumers 

experiencing an LCC cost (increase in 

LCC) is higher than the share 

experiencing an LCC benefit (decrease 

in LCC) for all of the product classes. 

At TSL 6, manufacturers may expect 

diminished profitability due to large 

increases in product costs, stranded 

assets, capital investments in equipment 

and tooling, and expenditures related to 

engineering and testing. The projected 

change in INPV ranges from a decrease 

of $170.1 million to an increase of $58.2 

million based on DOE’s manufacturer 

markup scenarios. The upper bound of 

$58.2 million is considered an 

optimistic scenario for manufacturers 

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64130 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

because it assumes manufacturers can 

fully pass on substantial increases in 

product costs. DOE recognizes the risk 

of large negative impacts on industry if 

manufacturers’ expectations concerning 

reduced profit margins are realized. TSL 

6 could reduce INPV in the residential 

furnace fan industry by up to 67.5 

percent if impacts reach the lower 

bound of the range. 

Accordingly, the Secretary tentatively 

concludes that at TSL 6 for residential 

furnace fans, the benefits of significant 

energy savings, positive NPV of 

consumer benefit, emission reductions 

and the estimated monetary value of the 

CO2 emissions reductions, as well as 

positive average LCC savings for most 

product classes would be outweighed by 

the high percentage of consumers that 

would experience an LCC cost in all of 

the product classes, and the substantial 

reduction in INPV for manufacturers. 

Consequently, DOE has concluded that 

TSL 6 is not economically justified. 

Next, DOE considered TSL 5, which 

would save an estimated total of 4.629 

quads of energy, an amount DOE 

considers significant. TSL 5 has an 

estimated NPV of consumer benefit of 

$8.64 billion using a 7-percent discount 

rate, and $26.57 billion using a 3- 

percent discount rate. 

The cumulative CO2 emissions 

reduction at TSL 5 is 435.2 million 

metric tons. The estimated monetary 

value of the CO2 emissions reductions 

ranges from $2.275 billion to $36.01 

billion. The other emissions reductions 

are 316.9 thousand tons of SO2, 233.6 

thousand tons of NOX, 1.80 tons of Hg, 

5.19 thousand tons of N2O, and 922.3 

thousand tons of CH4.

At TSL 5, the average LCC savings are 

positive for all of the product classes. 

The median payback period is lower 

than the average product lifetime for all 

of the product classes. The share of 

consumers experiencing an LCC benefit 

(decrease in LCC) is higher than the 

share experiencing an LCC cost 

(increase in LCC) for five of the product 

classes (Non-Weatherized, NonCondensing Gas Furnace Fans, Nonweatherized, Condensing Gas Furnace 

Fans, Weatherized Non-Condensing Gas 

Furnace Fans, Non-weatherized Electric 

Furnace/Modular Blower Fans, and 

Manufactured Home Electric Furnace/ 

Modular Blower Fans), but lower for the 

other three product classes. 

At TSL 5, the projected change in 

INPV ranges from a decrease of $55.5 

million to an increase of $34.2 million. 

At TSL 5, DOE recognizes the risk of 

negative impacts if manufacturers’ 

expectations concerning reduced profit 

margins are realized. If the lower bound 

of the range of impacts is reached, as 

DOE expects, TSL 5 could result in a net 

loss of 22.0 percent in INPV for 

residential furnace fan manufacturers. 

Accordingly, the Secretary tentatively 

concludes that at TSL 5 for residential 

furnace fans, the benefits of significant 

energy savings, positive NPV of 

consumer benefit, positive average LCC 

savings for all of the product classes, 

emission reductions and the estimated 

monetary value of the CO2 emissions 

reductions, would be outweighed by the 

high percentage of consumers that 

would be negatively impacted for some 

of the product classes, and the 

substantial reduction in INPV for 

manufacturers. Consequently, DOE has 

concluded that TSL 5 is not 

economically justified. 

Next, DOE considered TSL 4, which 

would save an estimated total of 4.576 

quads of energy, an amount DOE 

considers significant. TSL 4 has an 

estimated NPV of consumer benefit of 

$8.51 billion using a 7-percent discount 

rate, and $26.16 billion using a 3- 

percent discount rate. 

The cumulative CO2 emissions 

reduction at TSL 4 is 429.8 million 

metric tons. The estimated monetary 

value of the CO2 emissions reductions 

ranges from $2.247 billion to $35.56 

billion. The other emissions reductions 

are 313.5 thousand tons of SO2, 230.9 

thousand tons of NOX, 1.77 tons of Hg, 

5.12 thousand tons of N2O, and 913.7 

thousand tons of CH4.

At TSL 4, the average LCC savings are 

positive for all of the product classes. 

The median payback period is lower 

than the average product lifetime for all 

of the product classes. The share of 

consumers experiencing an LCC benefit 

(decrease in LCC) is higher than the 

share experiencing an LCC cost 

(increase in LCC) for all of the product 

classes. 

At TSL 4, the projected change in 

INPV ranges from a decrease of $54.4 

million to an increase of $33.8 million. 

At TSL 4, DOE recognizes the risk of 

negative impacts if manufacturers’ 

expectations concerning reduced profit 

margins are realized. If the lower bound 

of the range of impacts is reached, as 

DOE expects, TSL 4 could result in a net 

loss of 21.6 percent in INPV for 

residential furnace fan manufacturers. 

After considering the analysis and 

weighing the benefits and the burdens, 

the Secretary tentatively concludes that 

at TSL 4 for residential furnace fans, the 

benefits of significant energy savings, 

positive NPV of consumer benefit, 

positive average LCC savings for all of 

the product classes, emission reductions 

and the estimated monetary value of the 

CO2 emissions reductions would 

outweigh the reduction in INPV for 

manufacturers. The Secretary has 

tentatively concluded that TSL 4 would 

save a significant amount of energy and 

is technologically feasible and 

economically justified. Therefore, DOE 

today proposes to adopt the energy 

conservation standards for residential 

furnace fans at TSL 4. Table V.31 

presents the proposed energy 

conservation standards for residential 

furnace fans. 

TABLE V.31—PROPOSED ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL FURNACE FANS

Product class Proposed standard: 

FER * (W/1000 cfm) 

Non-Weatherized, Non-Condensing Gas Furnace Fan .............................................................................................. FER = 0.029 × QMax + 180. 

Non-weatherized, Condensing Gas Furnace Fan ...................................................................................................... FER = 0.029 × QMax + 196. 

Weatherized Non-Condensing Gas Furnace Fan ...................................................................................................... FER = 0.029 × QMax + 135. 

Non-Weatherized, Non-Condensing Oil Furnace Fan ................................................................................................ FER = 0.051 × QMax + 301. 

Non-weatherized Electric Furnace/Modular Blower Fan ............................................................................................ FER = 0.029 × QMax + 165. 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan ............................................................ FER = 0.051 × QMax + 242. 

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan ................................................................... FER = 0.051 × QMax + 262. 

Manufactured Home Electric Furnace/Modular Blower Fan ....................................................................................... FER = 0.029 × QMax + 105. 

Manufactured Home Weatherized Non-Condensing Gas Furnace Fan .................................................................... Reserved. 

Manufactured Home Non-Weatherized Non-Condensing Oil Furnace Fan ............................................................... Reserved. 

* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the proposed DOE test procedure. 78 FR 19606, 19627 

(April 2, 2013). 

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Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 64131 

81 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value in 2013, the year used for discounting the 

NPV of total consumer costs and savings, for the 

time-series of costs and benefits using discount 

rates of 3 and 7 percent for all costs and benefits 

except for the value of CO2 reductions. For the 

latter, DOE used a range of discount rates. From the 

present value, DOE then calculated the fixed annual 

payment over a 30-year period, starting in 2013, 

that yields the same present value. The fixed annual 

payment is the annualized value. Although DOE 

calculated annualized values, this does not imply 

that the time-series of cost and benefits from which 

the annualized values were determined would be a 

steady stream of payments. 

2. Summary of Benefits and Costs 

(Annualized) of the Proposed Standards 

The benefits and costs of these 

proposed standards 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 2012$, of 

the benefits from operating products 

that meet the proposed standards 

(consisting primarily of operating cost 

savings from using less energy, minus 

increases in equipment purchase costs, 

which is another way of representing 

consumer NPV), and (2) the monetary 

value of the benefits of emission 

reductions, including CO2 emission 

reductions.81 The value of the 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. 

Although combining the values of 

operating savings and CO2 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 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 2019–2048. The 

SCC values, on the other hand, reflect 

the present value of future climaterelated impacts resulting from the 

emission of one metric ton of CO2 in 

each year over a very long period. 

Table V.32 shows the annualized 

values for the proposed standards for 

residential furnace fans. The results 

under the primary estimate are as 

follows. (All monetary values below are 

expressed in 2012$.) 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 SCC series corresponding to a 

value of $40.8/ton in 2015), the cost of 

the residential furnace fan standards 

proposed in this rule is $231 million per 

year in increased equipment costs, 

while the benefits are $872 million per 

year in reduced equipment operating 

costs, $571 million in CO2 reductions, 

and $8.24 million in reduced NOX

emissions. In this case, the net benefit 

amounts to $1,220 million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the SCC series 

corresponding to a value of $40.8/ton in 

2015, Table V.32 shows the cost of the 

residential furnace fans standards 

proposed in this rule is $290 million per 

year in increased equipment costs, 

while the benefits are $1585 million per 

year in reduced operating costs, $571 

million in CO2 reductions, and $15.56 

million in reduced NOX emissions. In 

this case, the net benefit amounts to 

$1,882 million per year. 

TABLE V.32—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS (TSL 4) FOR RESIDENTIAL FURNACE FANS

Discount Rate 

million 2012$/year 

Primary estimate * Low net benefits estimate High net benefits estimate 

Benefits 

Operating Cost Savings .... 7% ..................................... 872 .................................... 710 .................................... 1082 

3% ..................................... 1585 .................................. 1264 .................................. 2011 

CO2 Reduction Monetized 

Value ($12.9/t case) **.

5% ..................................... 139 .................................... 117 .................................... 171 

CO2 Reduction Monetized 

Value ($40.8/t case)**.

3% ..................................... 571 .................................... 477 .................................... 702 

CO2 Reduction Monetized 

Value ($62.2/t case)**.

2.5% .................................. 877 .................................... 732 .................................... 1079 

CO2 Reduction Monetized 

Value ($117/t case)**.

3% ..................................... 1761 .................................. 1471 .................................. 2167 

NOX Reduction Monetized 

Value (at $2,639/ton)**.

7% ..................................... 8.24 ................................... 6.97 ................................... 9.99 

3% ..................................... 15.56 ................................. 13.03 ................................. 19.09 

Total Benefits † .................. 7% plus CO2 range ........... 1,019 to 2,641 ................... 834 to 2,188 ...................... 1,263 to 3,259 

7% ..................................... 1,451 ................................. 1,194 ................................. 1,794 

3% plus CO2 range ........... 1,740 to 3,362 ................... 1,394 to 2,748 ................... 2,201 to 4,197 

3% ..................................... 2,172 ................................. 1,754 ................................. 2,732 

Costs 

Incremental Product Costs 7% ..................................... 231 .................................... 273 .................................... 201 

3% ..................................... 290 .................................... 346 .................................... 250 

Net Benefits 

Total † ................................ 7% plus CO2 range ........... 788 to 2,410 ...................... 561 to 1,915 ...................... 1,062 to 3,058 

7% ..................................... 1,220 ................................. 921 .................................... 1,593 

3% plus CO2 range ........... 1,450 to 3,072 ................... 1,047 to 2,402 ................... 1,951 to 3,947 

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64132 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

TABLE V.32—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS (TSL 4) FOR RESIDENTIAL FURNACE FANS— 

Continued 

Discount Rate 

million 2012$/year 

Primary estimate * Low net benefits estimate High net benefits estimate 

3% ..................................... 1,882 ................................. 1,407 ................................. 2,482 

* This table presents the annualized costs and benefits associated with residential furnace fans shipped in 2019–2048. These results include 

benefits to consumers which accrue after 2048 from the products purchased in 2019¥2048. Costs incurred by manufacturers, some of which 

may be incurred in preparation for the rule, are not directly included, but are indirectly included as part of incremental equipment costs. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices and housing starts from the AEO 2012 Reference case, Low 

Estimate, and High Estimate, respectively. Incremental product costs reflect a constant product price trend in the Primary Estimate, an increasing 

price trend in the Low Benefits Estimate, and a decreasing price trend in the High Benefits Estimate. 

** The CO2 values represent global values of the SCC, in 2012$, in 2015 under several scenarios. 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 values increase over time. The value for NOX (in 2012$) is the average of the low and 

high values used in DOE’s analysis. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value of $40.8/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) There is a lack of consumer 

information and/or information 

processing capability about energy 

efficiency opportunities in the home 

appliance market. 

(2) There is asymmetric information 

(one party to a transaction has more and 

better information than the other) and/ 

or high transactions costs (costs of 

gathering information and effecting 

exchanges of goods and services). 

(3) There are external benefits 

resulting from improved energy 

efficiency of residential furnace fans 

that are not captured by the users of 

such equipment. These benefits include 

externalities related to environmental 

protection and energy security that are 

not reflected in energy prices, such as 

reduced emissions of greenhouse gases. 

In addition, DOE has determined that 

this regulatory action is an 

‘‘economically 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, 

issued on January 18, 2011 (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 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. 

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 Web site (http://energy.gov/

gc/office-general-counsel). DOE has 

prepared the following IRFA for the 

products that are the subject of this 

rulemaking. 

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82See www.ahridirectory.org/ahriDirectory/

pages/home.aspx. 

83See http://dsbs.sba.gov/dsbs/search/dsp_

dsbs.cfm. 

1. Description and Estimated Number of 

Small Entities Regulated 

a. Methodology for Estimating the 

Number of Small Entities 

For the manufacturers of residential 

furnace fans, 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 NAICS code and industry 

description and are available at: 

www.sba.gov/idc/groups/public/

documents/sba_homepage/serv_sstd_

tablepdf.pdf. Residential furnace fan 

manufacturing is classified under 

NAICS 333415, ‘‘Air-Conditioning and 

Warm Air Heating Equipment and 

Commercial and Industrial Refrigeration 

Equipment Manufacturing.’’ The SBA 

sets a threshold of 750 employees or less 

for an entity to be considered as a small 

business for this category. 

To estimate the number of companies 

that could be small business 

manufacturers of products covered by 

this rulemaking, DOE conducted a 

market survey using available public 

information to identify potential small 

manufacturers. DOE’s research involved 

industry trade association membership 

directories (including AHRI), public 

databases (e.g., AHRI Directory,82 the 

SBA Database 83), individual company 

Web sites, and market research tools 

(e.g., Hoovers reports) to create a list of 

companies that manufacture or sell 

products covered by this rulemaking. 

DOE also asked stakeholders and 

industry representatives if they were 

aware of any other small manufacturers 

during manufacturer interviews and at 

DOE public meetings. DOE reviewed 

publicly-available data and contacted 

select companies on its list, as 

necessary, to determine whether they 

met the SBA’s definition of a small 

business manufacturer of covered 

residential furnace fans. DOE screened 

out companies that do not offer 

products covered by this rulemaking, do 

not meet the definition of a ‘‘small 

business,’’ or are foreign owned and 

operated. 

DOE initially identified at least 40 

potential manufacturers of residential 

furnace fan products sold in the U.S. 

DOE then determined that 26 were large 

manufacturers, manufacturers that are 

foreign owned and operated, or 

manufacturers that do not produce 

products covered by this rulemaking. 

DOE was able to determine that 

approximately 14 manufacturers meet 

the SBA’s definition of a ‘‘small 

business’’ and manufacture products 

covered by this rulemaking. 

b. Manufacturer Participation 

Before issuing this NOPR, DOE 

attempted to contact all the small 

business manufacturers of residential 

furnace fans it had identified. One of the 

small businesses consented to being 

interviewed during the MIA interviews. 

DOE also obtained information about 

small business impacts while 

interviewing large manufacturers. 

c. Industry Structure 

The 14 identified domestic 

manufacturers of residential furnace 

fans that qualify as small businesses 

under the SBA size standard account for 

a small fraction of industry shipments. 

Generally, manufacturers of furnaces are 

also manufacturers of furnace fan 

products. The market for domestic gas 

furnaces is almost completely held by 

seven large manufacturers, and small 

manufacturers in total account for only 

1 percent of the market. These seven 

large manufacturers also control 97 

percent of the market for central air 

conditioners. The market for 

manufactured home furnaces is 

primarily held by one large 

manufacturer. In contrast, the market for 

domestic oil furnaces is almost entirely 

comprised of small manufacturers. 

d. Comparison Between Large and Small 

Entities 

The proposed standards for 

residential furnace fans could cause 

small manufacturers to be at a 

disadvantage relative to large 

manufacturers. One way in which small 

manufacturers could be at a 

disadvantage is that they may be 

disproportionately affected by product 

conversion costs. Product redesign, 

testing, and certification costs tend to be 

fixed and do not scale with sales 

volume. For each product model, small 

businesses must make investments in 

research and development to redesign 

their products, but because they have 

lower sales volumes, they must spread 

these costs across fewer units. In 

addition, because small manufacturers 

have fewer engineers than large 

manufacturers, they would need to 

allocate a greater portion of their 

available resources to meet a standard. 

Since engineers may need to spend 

more time redesigning and testing 

existing models as a result of the new 

standard, they may have less time to 

develop new products. 

Furthermore, smaller manufacturers 

may lack the purchasing power of larger 

manufacturers. For example, since 

motor suppliers give discounts to 

manufacturers based on the number of 

motors they purchase, larger 

manufacturers may have a pricing 

advantage because they have higher 

volume purchases. This purchasing 

power differential between high-volume 

and low-volume orders applies to other 

furnace fan components as well, 

including the impeller fan blade, 

transformer, and capacitor. 

2. Description and Estimate of 

Compliance Requirements 

Since the proposed standard for 

residential furnace fans could cause 

small manufacturers to be at a 

disadvantage relative to large 

manufacturers, DOE cannot certify that 

the proposed standards would not have 

a significant impact on a significant 

number of small businesses, and 

consequently, DOE has prepared this 

IRFA. 

At TSL 4, the level proposed in this 

notice, DOE estimates no capital 

conversion costs and product 

conversion costs of $0.014 million for a 

typical small manufacturer, compared to 

product conversion costs of $0.431 

million for a typical large manufacturer. 

These costs and their impacts are 

described in detail below. 

To estimate how small manufacturers 

would be potentially impacted, DOE 

used the market share of small 

manufacturers to estimate the annual 

revenue, earnings before interest and tax 

(EBIT), and research and development 

(R&D) expense for a typical small 

manufacturer. DOE then compared these 

costs to the required product conversion 

costs at each TSL for both an average 

small manufacturer and an average large 

manufacturer (see Tables VI.1 and Table 

VI.2). In the following tables, TSL 4 

represents the proposed standard. 

Although conversion costs can be 

considered substantial for all 

companies, the impacts could be 

relatively greater for a typical small 

manufacturer because of much lower 

production volumes and the relatively 

fixed nature of the R&D resources 

required per model. Small 

manufacturers also have less 

engineering staff and lower R&D 

budgets. As a result, the product 

conversion costs incurred by a small 

manufacturer would likely be a larger 

percentage of its revenues, R&D 

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expenses, and EBIT, than those for a 

large manufacturer. Table VI.1 shows 

the product conversion costs for a 

typical large manufacturer versus those 

of a typical small manufacturer. Table 

VI.2 compares the total conversion costs 

of a typical large manufacturer as a 

percentage of annual R&D expense, 

annual revenue, and EBIT to those of a 

typical small manufacturer. 

TABLE VI.1—COMPARISON OF A TYPICAL SMALL AND LARGE RESIDENTIAL FURNACE FAN MANUFACTURER’S PRODUCT

CONVERSION COSTS

Product 

conversion 

costs for a 

typical large 

manufacturer 

(2012$ millions) 

Product 

conversion 

costs for a 

typical small 

manufacturer 

(2012$ millions) 

Baseline ....................................................................................................................................................... $0.000 $0.000 

TSL 1 ........................................................................................................................................................... 0.154 0.007 

TSL 2 ........................................................................................................................................................... 0.378 0.012 

TSL 3 ........................................................................................................................................................... 0.391 0.014 

TSL 4 ........................................................................................................................................................... 0.431 0.014 

TSL 5 ........................................................................................................................................................... 0.438 0.019 

TSL 6 ........................................................................................................................................................... 1.261 0.045 

TABLE VI.2—COMPARISON OF A TYPICAL SMALL AND LARGE RESIDENTIAL FURNACE FAN MANUFACTURER’S PRODUCT

CONVERSION COSTS TO ANNUAL R&D EXPENSE, ANNUAL REVENUE, AND EBIT 

Large manufacturer Small manufacturer 

Product 

conversion 

costs as a 

percentage 

of annual 

R&D expense 

Product 

conversion 

costs as a 

percentage 

of annual 

revenue 

Product 

conversion 

costs as a 

percentage 

of annual 

EBIT 

Product 

conversion 

costs as a 

percentage 

of annual R&D 

expense 

Product 

conversion 

costs as a 

percentage 

of annual 

revenue 

Product 

conversion 

costs as a 

percentage 

of annual 

EBIT 

Baseline ................................................... 0.0 0.0 0.0 0.0 0.0 0.0 

TSL 1 ....................................................... 14.7 0.3 4.0 137.9 2.6 37.4 

TSL 2 ....................................................... 36.1 0.7 9.8 226.3 4.3 61.4 

TSL 3 ....................................................... 37.3 0.7 10.1 267.7 5.1 72.7 

TSL 4 ....................................................... 41.1 0.8 11.2 267.7 5.1 72.7 

TSL 5 ....................................................... 41.8 0.8 11.3 368.4 7.0 100.0 

TSL 6 ....................................................... 120.4 2.3 32.7 850.6 16.2 230.9 

Based on the results in Table VI.1 and 

Table VI.2, DOE understands that the 

potential product conversions costs 

faced by small manufacturers may be 

proportionally greater than those faced 

by larger manufacturers. However, the 

total cost at TSL 4 of approximately 

$14,000 per small manufacturer is still 

a small percentage of a small 

manufacturer’s total annual revenues 

(5.1 percent) and product conversion 

costs would also only be a one-time 

expense. Furthermore, TSLs lower than 

the proposed TSL would not result in 

significantly lower product conversion 

costs for small manufacturers. 

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 proposed 

today. 

4. Significant Alternatives to the Rule 

The discussion above analyzes 

impacts on small businesses that would 

result from the other TSLs DOE 

considered. Although TSLs lower than 

the proposed TSLs would be expected 

to reduce the impacts on small entities, 

DOE is required by EPCA to establish 

standards that achieve the maximum 

improvement in energy efficiency that is 

technically feasible and economically 

justified, and result in a significant 

conservation of energy. Thus, DOE 

rejected the lower TSLs. 

In addition to the other TSLs being 

considered, the NOPR TSD includes a 

regulatory impact analysis in chapter 

17. For residential furnace fans, this 

report discusses the following policy 

alternatives: (1) No standard, (2) 

consumer rebates, (3) consumer tax 

credits, (4) manufacturer tax credits, and 

(5) early replacement. DOE does not 

intend to consider these alternatives 

further because they are either not 

feasible to implement without authority 

and funding from Congress, or are 

expected to result in energy savings that 

are much smaller (ranging from less 

than 1 percent to approximately 33 

percent) than those that would be 

achieved by the proposed energy 

conservation standards. 

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. 

C. Review Under the Paperwork 

Reduction Act of 1995 

1. Description of the Requirements 

DOE is developing regulations to 

implement reporting requirements for 

energy conservation, water 

conservation, and design standards, and 

to address other matters including 

compliance certification, prohibited 

actions, and enforcement procedures for 

covered consumer products and 

commercial and industrial equipment 

covered by EPCA, including furnace 

fans. DOE will send an information 

collection approval to OMB under 

Control Number 1910–1400. 

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2. Method of Collection 

DOE is proposing that respondents 

must submit electronic forms using 

DOE’s on-line Compliance Certification 

Management System (CCMS) system. 

3. Data 

The following are DOE estimates of 

the total annual reporting and 

recordkeeping burden imposed on 

manufacturers of residential furnace 

fans subject to the proposed certification 

provisions in this notice. These 

estimates take into account the time 

necessary to develop testing 

documentation, maintain all the 

documentation supporting the 

development of the certified rating for 

each basic model, complete the 

certification, and submit all required 

documents to DOE electronically. 

OMB Control Number: 1910–1400. 

Form Number: None. 

Type of Review: Regular submission. 

Affected Public: Manufacturers of 

residential furnace fans covered by this 

rulemaking. 

Estimated Number of Respondents: 

37. 

Estimated Time per Response: 

Certification reports, 20 hours. 

Estimated Total Annual Burden 

Hours: 740. 

Estimated Total Annual Cost to the 

Manufacturers: $55,000 in 

recordkeeping/reporting costs. 

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 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 (August 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 

that 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 

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, Executive Order 13132 

requires no further action. 

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 

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. Public Law 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/sites/

prod/files/gcprod/documents/umra_

97.pdf. 

Although this proposed rule, which 

proposes new energy conservation 

standards for residential furnace fans, 

does not contain a Federal 

intergovernmental mandate, it may 

require annual expenditures of $100 

million or more by the private sector. 

Specifically, the proposed rule would 

likely result in a final rule that could 

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64136 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

require expenditures of $100 million or 

more, including: (1) Investment in 

research and development and in 

capital expenditures by residential 

furnace fans 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 residential furnace 

fans, 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. As 

required by 42 U.S.C. 6295(f) and (o), 

this proposed rule would establish 

energy conservation standards for 

residential furnace fans 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 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 sets forth 

proposed energy conservation standards 

for residential furnace fans, is not a 

significant energy action because the 

proposed standards are not likely to 

have a significant adverse effect on the 

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, 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 

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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 

Web site at: http://www1.eere.energy.

gov/buildings/appliance_standards/

product.aspx/productid/42. Participants 

are responsible for ensuring their 

systems are compatible with the 

webinar software. 

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 handdeliver 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 Program, Mailstop EE–2J, 

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. 

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 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 Web 

site. 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 Web page 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 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 

Web site 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. 

Submitting comments via email, hand 

delivery/courier, or mail. Comments and 

documents submitted via email, hand 

delivery/courier, or mail also will be 

posted to www.regulations.gov. If you 

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64138 Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 / Proposed Rules 

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 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 well-marked 

copies: One copy of the document 

marked ‘‘confidential’’ including all the 

information believed to be confidential, 

and one copy of the document marked 

‘‘non-confidential’’ 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. 

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. Additional FER value data that are 

generated using the DOE residential 

furnace fans test procedure proposed in 

the April 2, 2013 SNOPR (78 FR 19606), 

as well as the product class, measured 

airflow capacity in the maximum 

airflow control setting, and technology 

options of the model for which each 

FER value is calculated. 

2. DOE’s methodology for accounting 

for the relationship between FER and 

airflow capacity, and the resulting 

efficiency levels that are represented by 

equations for FER as a function of 

airflow capacity. (See Chapter 5 of the 

NOPR TSD) 

3. The reasonableness of the values 

that DOE used to characterize the 

rebound effect with higher-efficiency 

residential furnace fans. 

4. DOE’s estimate of the base-case 

efficiency distribution of residential 

furnace fans in 2018. 

5. The long-term market penetration 

of higher-efficiency residential furnace 

fans. 

6. DOE performed physical teardowns 

on a selection of units currently on the 

market. From the bills of materials and 

cost model developed using this 

teardown data, DOE calculated an 

estimate of the manufacturer production 

cost for each covered product class in 

the engineering analysis. DOE also 

developed estimates of the costs for 

components that affect energy 

consumption, namely those it 

considered as design options. These 

estimates were obtained from a 

combination of sources, including 

publicly available prices from vendors 

and confidential estimates provided by 

manufacturers. These price data are 

aggregated for use in the engineering 

analysis. DOE seeks comment and data 

regarding the manufacturer production 

costs for furnace fan equipment and 

components and the technological 

feasibility of applying technologies 

identified in the engineering analysis to 

meet the proposed standards. 

7. To estimate the impact on 

shipments of the price increase for the 

considered efficiency levels, DOE used 

the relative price elasticity approach 

that was applied in the 2011 energy 

conservation standards rulemaking for 

residential furnaces. DOE welcomes 

stakeholder input and estimates on the 

effect of amended standards on future 

furnace fan equipment shipments. DOE 

also welcomes input and data on the 

demand elasticity estimates used in the 

analysis. 

8. DOE requests comment on whether 

there are features or attributes of the 

more energy-efficient furnace fans that 

manufacturers would produce to meet 

the standards in this proposed rule that 

might affect how they would be used by 

consumers. DOE requests comment 

specifically on how any such effects 

should be weighed in the choice of 

standards for furnace fans for the final 

rule. 

9. For this rulemaking, DOE analyzed 

the effects of this proposal assuming 

that the furnace fans would be available 

to purchase for 30 years, and it 

undertook a sensitivity analysis using 9 

years rather than 30 years of product 

shipments. The choice of a 30-year 

period of shipments is consistent with 

the DOE analysis for other products and 

commercial equipment. 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 standards. We are seeking input, 

information and data on whether there 

are ways to refine the analytic timeline 

further. 

10. DOE defines lifetime as the age at 

which residential furnace fan 

equipment is retired from service. DOE 

modeled furnace fan lifetime based on 

the distribution of furnace lifetimes 

developed for the recent energy 

conservation standards rulemaking for 

residential furnaces. DOE welcomes 

further input on the average equipment 

lifetimes for the LCC analysis and NIA. 

11. DOE solicits comment on the 

application of the new SCC values used 

to determine the social benefits of CO2

emissions reductions over the 

rulemaking analysis period. The 

rulemaking analysis period covers from 

2017 to 2046 plus an additional 50 years 

to account for the lifetime operation of 

the equipment purchased in that period. 

In particular, the agency solicits 

comment on its derivation of SCC 

values after 2050, where the agency 

applied the average annual growth rate 

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of the SCC estimates in 2040–2050 

associated with each of the four sets of 

values. 

12. The agency also seeks input on the 

cumulative regulatory burden that may 

be imposed on industry either from 

recently implemented rulemakings for 

these products or other rulemakings that 

affect the same industry. 

VIII. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of this notice of proposed 

rulemaking. 

List of Subjects 

10 CFR Part 429 

Administrative practice and 

procedure, Commercial equipment, 

Confidential business information, 

Energy conservation, Household 

appliances, Imports, Reporting and 

recordkeeping requirements. 

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 September 

30, 2013. 

David T. Danielson, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

For the reasons stated in the 

preamble, DOE proposes to amend parts 

429 and 430 of chapter II, subchapter D, 

of title 10 of the Code of Federal 

Regulations, as set forth below: 

PART 429—CERTIFICATION, 

COMPLIANCE, AND ENFORCEMENT 

FOR CONSUMER PRODUCTS AND 

COMMERCIAL AND INDUSTRIAL 

EQUIPMENT 

■ 1. The authority citation for part 429 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6317. 

■ 2. Section 429.12 is amended by: 

■ a. Amending paragraph (d) table, first 

column, second row (i.e., for products 

with a submission deadline of May 1st) 

by removing the word ‘‘and’’ and by 

adding ‘‘and Residential furnace fans’’ 

at the end of the listed products. 

■ b. Removing in paragraph (b)(13) 

‘‘429.54’’ and adding in its place 

429.58’’; and 

■ c. Adding reserved paragraph (i)(5) 

and adding paragraph (i)(6). 

The addition reads as follows: 

§ 429.12 General requirements applicable 

to certification reports. 

* * * * * 

(i) * * * 

(5) [Reserved] 

(6) Residential furnace fans, [date five 

years after publication of the final rule]. 

■ 3. Section 429.58 is added to read as 

follows: 

§ 429.58 Furnace fans. 

(a) [Reserved] 

(b) Certification reports. (1) The 

requirements of § 429.12 of this part are 

applicable to residential furnace fans; 

and 

(2) Pursuant to § 429.12(b)(13) of this 

part, a certification report shall include 

the following public product-specific 

information: The fan energy rating (FER) 

in watts per thousand cubic feet per 

minute (W/1000 cfm); the calculated 

maximum airflow at the reference 

system external static pressure (ESP) in 

cubic feet per minute (cfm); the control 

system configuration for achieving the 

heating and constant-circulation 

airflow-control settings required for 

determining FER as specified in the 

furnace fan test procedure (10 CFR part 

430, subpart B, appendix AA); the 

measured steady-state gas, oil, or 

electric heat input rate (QIN) in the 

heating setting required for determining 

FER; and for modular blowers, the 

manufacturer and model number of the 

electric heat resistance kit with which it 

is equipped for certification testing. 

PART 430—ENERGY CONSERVATION 

PROGRAM FOR CONSUMER 

PRODUCTS 

■ 4. The authority citation for part 430 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6309; 28 U.S.C. 

2461 note. 

■ 5. Section 430.32 is amended by 

adding paragraph (y) to read as follows: 

§ 430.32 Energy and water conservation 

standards and their effective dates. 

* * * * * 

(y) Residential furnace fans. 

Residential furnace fans manufactured 

on or after (date five years after date of 

final rule publication in the Federal 

Register), shall have a fan energy rating 

(FER) value that meets or is less than the 

following values: 

Product class FER * (watts/cfm) 

Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG–NC) .......................................................................... FER = 0.029 × QMax + 180. 

Non-Weatherized, Condensing Gas Furnace Fan (NWG–C) .................................................................................... FER = 0.029 × QMax + 196. 

Weatherized Non-Condensing Gas Furnace Fan (WG–NC) ..................................................................................... FER = 0.029 × QMax + 135. 

Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO–NC) ............................................................................ FER = 0.051 × QMax + 301. 

Non-Weatherized Electric Furnace/Modular Blower Fan (NWEF/NWMB) ................................................................. FER = 0.029 × QMax + 165. 

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan (MH–NWG–NC) ................................ FER = 0.051 × QMax + 242. 

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan (MH–NWG–C) ........................................... FER = 0.051 × QMax + 262. 

Manufactured Home Electric Furnace/Modular Blower Fan (MH–EF/MB) ................................................................ FER = 0.029 × QMax + 105. 

Manufactured Home Non-Weatherized Oil Furnace Fan (MH–NWO) ....................................................................... Reserved. 

Manufactured Home Weatherized Gas Furnace Fan (MH–WG) ............................................................................... Reserved. 

* QMax is the airflow, in cfm, at the maximum airflow-control setting. 

* * * * * 

[FR Doc. 2013–24613 Filed 10–24–13; 8:45 am] 

BILLING CODE 6450–01–P 

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