C-RM-77-011 COMMENT 01

52126

proposed Pules

This section of the FEDERAL REGISTER contains notices to the public of the proposed Issuance of rules and regulations. The purpo-,o of

these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rubes.

[ 3128-011

FEDERAL ENERGY

ADMINISTRATION

E 10 CFR Part 430 ]

ENERGY CONSERVATION PROGRAM

FOR APPLIANCES

Proposed Rulemaking and Public Hearing

Regarding Energy Efficiency I mprovement Target for Furnaces

AGENCY: Federal Energy Administration.

ACTION: Proposed rule.

SUMMARY: The Federal Energy Administration hereby proposes an energy

efficiency improvement target for furnaces, under the Energy Policy and Conservation Act, as amended by the Energy

Conservation and Production Act. This

legislation requires that energy efficiency

improvement targets be prescribed for

certain types of appliances. The intended

effect of this proposal is to solicit public

comments before these targets are prescribed.

DATES: Comments by November 4,

1977; requests to speak by October 25,

1977; statements by November 4, 1977.

Hearing to be held on November 8, 1977,

at 9:30 a.m.

ADDRESSES: Comments and requests

to speak at hearing to: Executive Communications, Federal Energy Administration, Box PP, 12th and Pennsylvania

Avenue NW., Washington, D.C. 20461.

Statements to: Regulations Management, Federal Energy Administration,

Room 2214, 2000 M Street NW., Washington, D.C. 20461. Hearing location:

Room 2105, 2000 M Street NW., Washington, D.C. 20461.

FOR FURTHER INFORMATION CONTACT:

James A. Smith (Office of Conservation), Room 307, Old Post Office Building, 12th and Pennsylvania Avenue

NW., Washington, D.C. 20461 (202-

566-4635).

Robert C. Gillette (Hearing Procedures), 2000 M Street NW., Room

2222A, Washington, D.C. 20461 1202-

254-5001).

Jim Merna (Media; Relations), 12th.

and Pennsylvania Avenue NW., Room

3104, Washington, D.C. 20461 (202-

566-9833).

William J. Dennison (Office of General

Counsel), 12th and Pennsylvania Avenue NW., Room 7148, Washington, D.C.

20461 (202-566-9750).

SUPPLEMENTARY INFORMATION:

I. Introduction.

It. Technological analysis.

1 RI_ Economic analysis.

IV. Request for particular comments.

V. Comment procedures: -

A. Written comments.

B. Public hearing.

VI. Environmental and inflationary review.

I. INTRODUCTION

Part B (42 U.S.C. 6291-6309) of Title

III of the Energy Policy and Conservation Act (Act) (Pub. L. 94-163), as

amended by section 161 of the Energy

Conservation and Production Act (Pub.

L. 94-385), requires the implementation

of an energy conservation program for

consumer products other than automobiles. Section 325(a) of the Act requires that the Federal Energy Administration (PEA) direct the National Bureau of Standards (NBS) to develop, and

that PEA by rule prescribe, energy efficiency improvement targets for covered

products, which are types of appliances

specified in section 322 (a) in the Act. The

targets are required to be designed so as

to identify the maximum improvement

in the energy efficiency of appliances

determined by PEA to be technologically

and economically feasible by 1980. Covered products are the following types of

products (including their functional

equivalents) :

(1) Refrigerators and refrigerator-freezers.

(2) Freezers.

(3) Dishwashers.

(4) Clothes dryers.

(5) Water heaters.

(6) Room air conditioners.

(7) Some heating equipment, not including furnaces.

(8j Television sets.

(9) Kitchen ranges and ovens.

(10) Clothes washers.

(11) Humidifiers and dehumidifiers.

(12) Central air-conditioners.

(13) Furnaces.

Targets for the product types listed In

(1) through (10) above were proposed on

July 8, 1977 (42 FR 36648, July 15, 197T).

Targets for the product types listed in

(11) and (12) above were proposed on

August 4, 1977 (42 FR 40701, August 11,

1977). This notice proposes a target for

furnaces.

'Section 323. of the Act requires PEA

to prescribe test procedures for covered

products. The test procedures to be prescribed in Subpart B of Part 430 will be

used in monitoring the progress 'of

manufacturers toward meeting the energy efficiency improvement targets,

which will be prescribed in Subpart C.

The test procedures will also be used by

the Federal Trade Commission (FTC)

under section 324 of the Act, which requires FTC to prescribe product labeling

rules designed 'to provide consumers

with energy Information which will assist them in making purchasing decisions

concerning appliances.'

tinder section 325(x) (4) of the Act,

PEA will require manufacturers of covered products to submit such reports as

PEA determines may be necessary to ascertain whether the energy efficiency improvement target for a type of covered

product will be met. If FE, A then determines that a particular target Is not

likely to be met, ME A is required to commence a proceeding to prescribe an energy efficiency standard for the particular type of product or a class thereof.

These proposed targets were ,established by first identifying design options

having a potential for improving the energy efficiency of a product type, and

then analyzing those options to determine whether they were technologically

feasible. The energy savings of individual technologically feasible design options were combined to provide a single

target for each product, and the economic feasibility of the energy efficiency

improvement targets thus derived was

t11en evaluated.

II. TECH oboe CAL Ar savsis

The determination of a technologically

feasible energy efficiency improvement

target for a product type required a thorough analysis to Identify the design

characteristics of currently available

products which affect their energy efitciency. The Act requires that the target

for furnaces b^ designed to achieve the

maximum improvement in energy efi1-

ciency which Is technologically and economically feasible in 1980 . This necessitated an iterative process whereby various design improvement options and

combinations of these options were

studied to determine their technological

feasibility, their effects on Improving the

efficiency of the product type, and their

economic feasibility.

The design options referred to In this

notice are being used to demonstrate the

technological and economic feasibility of

the 1980 target -but are not intended to

dictate future product design. There may

be other design options or combinations

of design options which could be used by

a given manufacturer to achieve the 1080

energy efficiency Improvement target

being proposed today, but no greater

efficiency Improvement Is technologically

and economically feasible for the furnace

industry as a whole.

NBS analyzed various design options

to determine their contributions to Improving the annual fuel utilization efficiency of furnaces and boilers. A computer model, DEPAF-Design and Performance Analysis of Furnaces, was used

for these studies. The first stop was to

establish a reference furnace for thebaso

year 1975. Data collected by NES were

used to determine the steady state efitI

FEDERAL REGISTER, VOL. 42, NO. 190-FRIDAY, SEPTEMBER 30, 7977
C-RM-77-011 COMMENT 01

PROPOSED RULES ' • 52427

elency of a reference gas and oil furnace.

Using the reference furnaces, the DEPAF

computer model was used to evaluate the

annual fuel utilization efficiency at two

locations, Washington, D.C. (4,224 degree

days) and Syracuse, N.Y, "(6,756 degree

days). The annual fuel utilization efficiencies computed for these two cities

were interpolated to determine the annual fuel utilization efficiencies for the

national average number of heating load

hours, 2,080 (equivalent to 5,200 degree

days). This national average was determined by NIBS during the development

of the test procedure for furnaces. The

annual fuel utilization efficiencies of the

reference furnaces with various design

options or combinations of design options

were determined in an identical manner,

and an average efficiency improvement

was computed for each design option and

combinations of options.

The technological feasibility analysis

then identified design options that would

'improve -the energy efficiency of a product: Once these design options were identified, they were evaluated by NBS to

determine their contribution to improving the energy efficiency of the product,

their impact on increased retail cost, and

their impact on material usage: In order

for a design option to, be considered tech,

nologically feasible, it had to be an available technology that could be Incorporated into production by 1980 without

significant hardship. Increased materials

required by the implementation of each

design change had to be readily available, so. that incorporation of the design

change would not be limited by the lack

of materials.

The contribution of each design improvement to the product's efficiency was

evaluated by NBS using the DEPAF computer model. The increased costs were

estimated using ,-industrial engineering

techni ues o o es for those de- r -+.1 u

relied on NIBS estimates of the design

improvements' effects on efficiency • improvements, increased retail costs, and

increased material usage. The efficiency

improvement targets for gas furnaces

and boilers and for oil furnaces and

boilers were combined by a simple

weighted average approach using their

estimated 1975 energy consumption,

A detailed discussion of the target determination procedure is contained in a

separate technical paper prepared by

NBS. As provided later in this notice,

the paper is available for inspection by

interested persons.

The proposed energy efficiency improvement target for furnaces is 23 percent. To arrive at this target, the determination was made that gas boilers and

furnaces could be improved by .25 percent, and oil boilers and furnaces could

be improved by 14 percent. Electric furnaces are considered to be 100 percent

efficient at point of end use.

The. gas furnace and boiler design

options that were selected to demonstrate the technological feasibility of the

proposed target are: improved heat

transfer, electric ignition, installation of

stack dampers; and an increase in the

incorporation of power burners on furnaces. The oil furnace and boiler design

options that were selected to demonstrate

the technological feasibility of the proposed target are: improved heat transfer

and the installation of stack dampers,

The production-weighted energy savings of these design, options, and the

TABLE 1.-Summary of 1980 energy efetency improvement (EEI) target calculations for gas furnaces and boilers

Design option

Estimated Leadtime

production- for impleweighted - meirtation

energy (years)

savings

(percent)

1. Improved heat transfer---- ' 5 . 1-2

2. Electric ignition----------- 6 1-2

8. Stack damper-------------- G 1-2

4. Power burner.--- ..----- 3 2

Aggregate---------------- 20

1980 energy efficiency Improvement target= 20 100-20

=25 pet.

1975 annual fuel utilization efficiency (AFUE).=04 pet.

1980AFTUE=80 pet'

11980 AFUE=1975 AFUEX100--pereentage EEL

100

TABLE 2.-Summary of 1980 energy effloiency improvemserit (EEI) target calcu-.

lotions for oil furnaces and boilers

Estimated Leadtime

production- for impleDesign option - weighted mentation'

energy (years)

savings

(percent)

1. Improved heat transfer- ----- 6 1-2

2. Stack damper- -------------- 8. 1-2

Aggregate---- -------- 12 --------

estimated lead-time required for its im- 19so energy efficiency improvement target= 12. 100

plementation, are presented. in tables 1 100-12X

and 2. The data in table 3 were used -in =14 pet.

the methodology discussed above to de- -1975annual fuel utilization ediciency (AFUE) =77 pet.

I980 AFUE.=88 pet'

termine the proposed energy. -efficiency

improvement target of 23 percent for

furnaces. -

q g

TABLE 3.-.Furnace and boiler efficiency improvement target sign features which already existed in

the marketplace. A simple payback analysis which compared increased retail nnual

1975,en efficiencyEnergy 1975 fuel annual 1980 a

fuel costs to operating cost savings was used consumption Percent improve- - utilization utilization ee improve- izat

by NBS as the criterion for selecting a X1012 Btu savings ment target 'efficiency efcieney

design option for further , evaluation. (percent) (percent) (percent)

Where the increased cost exceeded the

savings, an option was rejected. Of

course, the target incorporating these

options still had to meet the further economic feasibility test discussed below.

After individual technologically feasible design options were identified, combinations, of design options, were evaluated using the DEPAP computer model

to determine the maximum technologically feasible energy efficiency improvement for furnaces. The energy savings

of each design option was then production-weighted.

Annual fuel utilization efficiencies for

these products were determined using the

proposed FEA test procedures.

The combination of design improvement options chosen to demonstrate the

technological feasibility of the 1980 target for furnaces was then subjected to an

economic analysis to determine their economic feasibility. As described In detail

below, this economic feasibility analysis

Oil boilers

Gas boilers and furnaces--------------------- 122.7 20 25 64 80 and furnaces----------------------

-F 24.6 12 14 77 88 urnaces and boilers------------------------- 147.3 19 ' 23 ------ --------- __--_------

III. ECONOMIC ANALYSIS

A. Methodology for Determining Economic Feasibility. The economic feasibility analysis of today's proposal is com-,

plex because the analysis touches upon

a vast array of demand-supply relationships which affect consumers not

only In their purchasing decisions but

also in their daily use of furnaces. In performing the analysis, a comprehensive

methodology for examining all signifiicant and relevant economic effects was

used in order to insure that the proposed target maximizes benefits, especially in the area of energy conservation,

while minimizing any adverse consequences.

The analytical procedures used both to

-project trends and to quantify economic

factors consisted of the application of

econometrics, statistics ,and other mathematical methods. In assessing the role

of consumer products within the economy, a micro-economic analysis was relied upon, as much as possible, to project trends and simulate changes which

the proposed targets might induce. However, where either, the lack of data or

limited model structure prevented strict

adherence to econometrics, the expertise of FEA played a large role.

Most economic factors are quantified

in terms of 1980 prices, and quantities

because 1980 is the year in which impacts

of the targets will generally first occur.

The projection of prices and quantities

in 1980 relies upon a combination of analytical procedures. One essential feature

11980 AFUE-1975 AFUE X 100 - - percen f- perk tage EEI

FEDERAL REGISTER, VOL. 42, NO. 990-FRIDAY, SEPTEMBER 30, 1977
5242S

of these procedures is that the outcome,

both for energy savings and for costbenefit Impacts, Is not significantly altered by variance around these projections. The forecast of shipments, price

and other economic factors relating to

1980 provides a base case for quantifying possible Impacts. If these projections

were to shift, the quantified impacts for

various costs and benefits would shift in

la proportional manner. For example,

variations in projected 1980 sales yield

similar net benefits for consumers with

negligible impact on long term energy

trends.

Various data sources were used in

quantifying economic factors and in the

analysis of economic possibilities: Primary data sources were Federal Government publications, including the Census

of Manufacturers (U.S. Bureau of the

Census, Industry Series, 1975) and Current Industrial Reports (U.S. Bureau of

the Census, 1973), together with private

sector publications, such as Appliance

Manufacturer (Dana Chase Publications,

Inc,, 1915-77) and Merchandising Week

(Billboard Publication, Inc., 1972-77).

Another source of data was testimony

submitted at May and June 1976 hearings on Subpart C as previously proposed

(41, FR 19977, May 14, 1976), as well as

the written comments received In response to that proposal.

The methodology consists of establishing a test of economic feasibility, and

conducting a four-stage analysis which

quantifies all'relevant economic factors.

Use of this methodology by PEA should

not preclude interested parties from suggesting the use of different methodologies, but such suggestions should include

a clearly defined methodology along with

verified quantifications. Presentations

from respondents are encouraged, since

a thorough understanding of all relevant

economic factors is necessary in prescribIng economically feasible targets for consumer products.

A proposed energy efficiency improvement target for a particular consumer

product Is economically feasible when:

1. Appropriate economic resources are

available for production and 'shipment

of the more energy-efficient consumer

product, and

2. Either benefits exceed costs of implementing the proposed targets, or negative impacts are not of substantial

consequence.

Economic resources are considered

available when manufacturers can obtain necessary scarce or imported materials to implement energy efficiency improvements, and can secure sufficient

capital to finance the required investment in plant and equipment, and to

finance other costs, including materials.

In addition, when costs of implementing

and utilizing more energy-efficient consumer products are outweighed by the

dollar value of benefits, the target is considered to be economically feasible.

Where, however, costs exceed benefits,

and both energy savings are substantial

and economic impact on overall economic

trends Is not of substantial consequence,

C-RM-77-011 COMMENT 01

PROPOSED ROLEx

then the proposed target remains economically feasible. An economic impact

is not of substantial consequence when

it does not alter a reasonable projected

path of stable growth by an appreciable

margin, In a manner which causes undue

stress or burden to some sector of the

economy.

FEA applied this test to each type of

product, including furnaces. The first criterion on the definition, which involves

an examination of scarce material supply and investment requirements, is analyzed in stage two of the analysis. The

second criterion, which involves the

quantification of costs and benefits associated with proposed targets, is analyzed

in stages three and four of the analysis,

where effects on employment, production, prices, demand, energy, investment,

and market structure are also quantified. The first stage of the analysis relates

energy saving design options to basic

economic factors upon which the other

stages depend.

Stage I-Integration of Design options

with Economic Impacts--certain technological engineering factors are accepted as given for the purpose of the

economic analysis. These technological

factors include the set of design options

discussed in Part II above, with corresponding material requirements and resulting energy efficiency improvements

for each consumer product. The economic analysis derives a cost estimate for

implementing each design option by

pricing required materials along with

costs for labor and overhead when these

are considered important elements in

the redesign. Ttie energy savings attributable to the individual design options,

and their costs, are combined so as to

account for any overlapping energy savings, in order to arrive at an overall

energy improvement and total cost Increase. The increase in total cost is then

translated into an increase in purchase

price. Evidence of current price differentials for products already incorporating energy efficient design options was

used where appropriate. In this manner,

the price increase per unit Is directly

linked to technological design options

and energy efficiency improvements.

The per unit price increase is further

adjusted in two ways. First, the per unit

price increase is production-weighted, as

are energy efficiency improvements, according to 1975 and 1980 shipment characteristics. For each consumer product,

the percentage of 1975 shipments incorporating the same design option, resulting in the percentage increase in products marketed with a specific design

option in 1980 over 1975. This net Increase in production of improved products between base period and target date

is multiplied by the appropriate design

option price increase, yielding a production-weighted price increase, by design

option. -The production-weighted price

increase for each design option is

summed for all design options to arrive

at a production-weighted price increase

for the consumer product.

The second adjustment is the calculation of the production-weighted price

increase expressed In 1980 prices. Because

recent available retail prices were most

often 1975 prices, a price increase rate of

about 3 percent per year, compounding

to 15.9 percent, was used to convert 1975

prices into 1980 prices. An annual price

rise of 3 percent Is in line with past

consumer product price trends,

Projected unimproved consumer product prices multiplied by base-case projected 1980 shipments yields an initial

unimproved purchase cost that Is compared to the increased purchase cost of

improved products for evaluating the

impact on demand and supply relationships.

Stage I%-Availa'bitity of Economic Resources.-This stage of the analysis evaluates the sufficiency of economic resources, Including materials and capital,

to permit the manufacture and shipment

of the more energy-efficient consumer

products. The particular investment requirements described In this evaluation

are not meant to prescribe for manufacturers & necessary investment or financial

procedure. Although particular manufacturing and financial factors are presented along with their impacts, the purpose of this analysis is only to demonstrate one economically feasible approach in the achievement of the proposed energy target.

This evaluation relies essentially upon

the given technological factors to define

.material requirements. Each design option 1s related to the number of pounds

of material per unit. Per unit material

requirements are aggregated by using

Production-weighted percentages such as

were used for price increases. The total

change in each material resulting from

incorporation of a particular design option Is the product of the number of projected 1980 shipments and the production-weighted material change for each

unit. Total material changes are expressed as a percent of the total U.S. production of each material In order to

assess the potential impact. If the material impact Is judged to be nonsignificant then it is considered to be an available economic resource.

Investment requirements are also

analyzed In stage two. First, investment

requirements are estimated for a typical

size manufacturing firm. A typical sire,.

firm Is considered to be one which has

a market share equal to or better than

the average market share of all firms

manufacturing the product. The neces- '

sary investment resources are considered to be available if the financial status of a typical firm manufacturing the

particular production Is adequate to

undertake the Investment. Second, the

availability of sufficient funds for the

entire industry is evaluated by aggregating the investment requirements of

all firmsdn the Industry. The aggregation

of investment at the industry level is

calculated by multiplying the investment

required by a typical firm times the

number of firms estimated to {account

for a major portion of the market. The

additional investment for the industry

is compared to recent investment trends

FEDERAL REGISTER, VOL. 42, NO. 190-FRIDAY, SEPTEMBER 30, 1977
by the industry itself to assess the possible burden. Also, the availability of

funds in the financial market is evaluated by contrasting the additional industry needs with-manufacturers' performance in terms of growth and profitability. If the financial position of manufacturers of a consumer product is adequate to obtain necessary funds, then

the investment requirements are considered to be an available resource.

Stage III-Cost-Benefit Tradeoffs and

Energy Consumption.This stage of the

analysis examines the cost-benefit tradeoff confronting consumers of household

appliances along with corresponding

energy savings. The tradeoff is essentially a measurement of net life cycle

benefits from the perspectives of both an

individual purchaser and all household

sector purchasers. These purchases decisions determine net energy savings,

:which are quantified by comparing the

reduced energy consumption in the normal operation of the product and the

possible greater energy consumed in the

manufacture of a more efficient product.

First, costs and benefits to the household sector are evaluated. Net life cy.Fle

benefits are derived both for individual

purchases of a more energy-efficient

product and for total consumer purchases of the Product. The premise underlying both perspectives Is that a more

energy-efficient consumer product typically sells for a higher price but operates

at a lower cost, since less energy is required to perform the same task. Future

dollar savings from lower operating costs

are accumulated over the life of the product and expressed in present dollars by

discounting future dollar flows. The discounting formula is based on a 10 percent - interest rate and an engineering

estimate of product life. In this manner,

a rational consumer can compare, dollar

for dollar, the current value of future

operating savings with the increase in

purchase price of the more. energy-efficientproduct.

The present value of net life cycle

benefits for individual purchasers is aggregated by using a projection of 1980

shipments. The 1980 shipment projection

is assumed to equal all household purchases and provides the basis for quantifying reduced energy consumption,

household savings and increased expenditures resulting from the household

sector purchase and use of more efficient

Products which sell at a slightly higher

price but operate at a lower energy cost.

However, total energy savings is even

greater than the amount of reduced consumption by the household sector. Reduced energy consumption is measured

first at household end use in cubic feet

of natural gas and barrels of fuel oil and

second at utility plants in Btu's. The

measurement of energy consumed by the

utility is the actual energy content of

fuel consumed in order ultimately to operate the consumer product in the home.

The measurement of energy consumed

by the utility Is further converted into

barrels of crude petroleum by using a

conversion factor of 5.6 million Btu's per

C-RM-77-011 COMMENT 01

PROPOSED RULES

barrel. However. simply because reduced

energy consumption Is equivalently

measured In quantity of crude petroleum, this does not imply that either imports or domestic production of petroleum will decline by a similar amount,

since this is only an equivalent measure

of the savings for gas furnaces and boilers. But overall reduction in household

energy consumption will proportionately

make available for more productive use

supplies of Petroleum, coal, and natural

gas, especially in industry.

Stage IV-Assessment of Negative Impacts on Demand and Emplcjment.-

The last stage of the analysis quantifies

impacts within and betwei?n household

and manufacturing sectors. This stage

is primarily an evaluation of possible

substantial negative impacts but, where

appropriate, costs are offset by benefits.

The analysis examines the potential impact of shifts in household demand on

production and employment. Other areas

of potential negative impacts Include industry structure and income groups.

The purpose of this stage I to examine

changes In demand-supply relationships

in terms of economic feasibility. The

study of the Interaction of demandsupply relationships within and between

the household and manufacturing sectors yields costs, benefits, and impacts of

energy efficiency targets. The extent to

which costs, benefits and impacts vary

depends essentially upon two factors:

1. The extent to r. hich manufacturing

costs, including substituted roaterials, new

investment in plant and equipment. and additional financing co ;ts, incrca: a porch co

price.

2. The degree to which household demand

for consumer products varier with respect to

higher prices on the one hand but la; er opcrating costs on the other.

The higher the manufacturing cost

requirements to Implement the proposed

target, the greater the negative impact

from higher prices on household demand.

employment, production, Inflation, and

market structure. Negative impacts are,

however, viewed In relative terms since.

although they may be significant, such

impacts may also be outweighed by favorable bnefits consisting of either reduced energy consumption on the demand side or innovative manufacturing

techniques on the supply side. In contrast, the lower the manufacturing cost

requirements, the greater the opportunity for energy savings, enhanced

household purchasing power, and negligible negative Impacts.

This fourth stage of the analysis Inttially evaluates the posy ble chances In

aggregate demand along with the resulting Impact on Production, employment

and market structure. The analysis examines possible deviations from the 1080

base case shipment projection In order

to assess possible substantial negative

impacts resulting from the achievement

of the proposed energy efficiency Improvement target. The 1980 base case

projection of shipments and purchases

was used as the most reasonable basis

land best approximation for quantifying

material and energy Impacts along with

52429

life cycle benefits discussed In stages two

and three. Taus, even though possible

negative impacts might cause a deviation

around the base case projection, the previously quantified Impacts would not be

substantially altered. The reasonableness of using 1930 base case projections

in stages two and three stems, in past,

from an assumption, that between 1975

and 1930 manufacturers will have introduced hie her-price. more efficient products In a progressive manner so that

households are not suddenly faced with

a one-time jump in prices of more

energ -efflcient products in 1920. If this

as_suription holds tru , the negative impacts would not be of material consequence because they would be spread

over a number of years and in essence

diluted by other economic factors.

However, In order to measure the passibility of more substantial negative impacts, this methodology in stage four

further analyzes an alternative case in.

which households react to a sudden jump

In 1930 prices of more energy-efficient

products. The extent to which demand

shift-, In response to a sudden jump in

prices is subject to continuing fluctuation

as the relative pricy of purchasing and

operating a product change, along with

changes in arareness and perception of

future. price trends. For these reasons, a

plausible maximum-minimum range of

household response to higher price: is

Presented. For example, where rational

consumers compare life cycle operating

savin s to increased purchase price and

the positive impact from operating saci= outweigh the negative impact from

higher purchase price then demand

could, in fact, exceed the 1930 bass case

projections. Where life cycle operating

savings are ignored, however, demand

could fall below the base case projectionIt is these two plausible consumer perceptions which are described in the maximum-minimum range.

FEA has- determined that minimum

negative impact is the most plausible

case for several reasons. First, the quantification of shifts in both demand and

employment does not fully consider the

positive effect that a successful consumer

education and labeling program might

have on increasing consumer preference

for low energy usage products with the

ultimate effect of outweighing the negative effects of purchase price elasticityAi :o, recent structural changes in consumer Preferences between purchase

price and operating cost have not been

given appropriate weighting, since time

seris used In this analysis of relative

price elasticities Primarily reflect attitudes before the 1973 energy crisis_ On

this basis, it is concluded that the fall in

demand with attendant employee layoffs may approach the minimum negative impact but that it Is temporary

(probably less than one year).

In order to examine the responsiveness.

of households to higher-priced, more

energy-efflcient prcducts,a demand function was developed for each of the consumer Products. Historical time series

were relied upon to quantify changes in

FEDERAL ' REGISTER, VOL 42, NO. 190-FRIDAY, SEPT'-JADER 30, 1977
52430

household purchases with respect to

changes in product Prices, energy Prices.

real income, ,housing starts, household

stock and other relevant economic factors. These equations, correlated In log

form, measure the responsiveness 'between quantity purchased as it relates to

product purchase price on the one hand

and quantity purchased-as it relates to

energy usage price on the other. Correlation analysis of the logarithm of quantity

purchased (the dependent variable) together with the logarithm of purchase

price, energy price, and other related

parameters yields coefficients which are

the pertinent elasticities. The two key

elasticities are purchase Price and energy price.

A product price elasticity-of one indicates that for every 1 percent increase in

product purchase price, quantity purchased declines by 1 percent. If Product

purchase price elasticity Is less than one,

then a 1 percent increase in Product Purchase price generates something less

than a 1 percent decrease in quantity

purchased. if price elasticity is greater

than one, however, then a 1 percent increase in product purchase price generates something greater than a 1 percent decrease in quantity Purchased.

The relationship between the number

of units purchased and operating cost

elasticity of a particular product.s the

reverse of the demand elasticity. It is assumed that energy price elasticity derived from regression analysis is similar

to operating cost elasticity.- Large savings in operating costs are directly correlated with lower energy usage prices.

For an energy price (or operating cost)

elasticity larger than one, a reduction in

the operating cost of a particular product will result In a greater increase in the

quantity purchased than would result if

the energy price elasticity were one less.

The lower the energy usage price elasticity (less than one), the less will be the

positive effect of increased efficiency on

the quantity Purchased. The positive effect on quantity purchased due to higher

prices, are netted to derive a corresponding increase or decrease in quan- cfently available to -permit the impletity purchased by households. mentation of the proposed target for gas

The impact of shifting household demand on employment is the direct consequence of a net Increase or decrease in

quantity purchased. The net change inquantity purchased is expressed as a percent of 1980 projections of sales. The percent inceease or decrease in quantity

purchased. The net change in quantity

purchased Is expressed as a percent of

1980 projectioins of sales. The percent

Increase or decrease in quantity purchased is assumed to equal the corresponding percent Increase or decrease In

direct employment. This is an assumption based on available information. Direct employment is the number of production workers in the appropriate industry. If the Industry SIC category of

production workers according-to Bureau

of Census Standard Industrial Code does

not match the consumer product being

evaluated, then the ratio of dollar value

of shipments of a consumer product to

C-RM-77-011 COMMENT 01

PROPOSED RULES

shipments of the SIC industry as a whole

is used to apportion Industry production

workers to correspond to the consumer

product classification,

Two other concerns which are examined in terms of potential negative Impact are -industry structure and income

groups. With respect to industry structure, typical size firms are compared to

smaller firms in order to evaluate possible bias against smaller firms. Smaller

firms are examined in light of their cost

structure and market share . If the investment requirements or other factors

do not appear to cause dramatic shifts

in industry structure, then the negative

impact on small firms is not considered

to be of substantial consequence.

With respect to income groups, the

burden on lower income purchasers is examined for possible unfavorable bias. If

the percentage increase in purchase price

for lower income groups does not appear

to exceed that for higher income groups

by a significant amount, then the negative impact is not considered to be of

substantial consequence.

PEA 'used this methodology to evaluate the economic feasibility of the proposed energy efficiency improvement target for furnaces. The entire economic

analysis is available for Inspection by Interested persons, as provided for later in

this notice. A summary of the analysis

follows:

GAS FURNACES .

PEA, in a manner consistent with the

methodology presented above, has determined that the proposed energy efficiency improvement for gas furnaces is the

maximum improvement which Is technologically and economically feasible. A

summary of economic findings for gas

furnaces follows:

Stage I-The total price increase resulting from implementation of the selected design options is $233 per unit,

which yields a production-weighted price

increase of $161 in current prices and

$187 in 1980 prices.

Stage II-Both scarce material supplies and investment funds are suffifurnaces.

The scarce materials primarily affected by the proposed target are steel,

for which demand increases by 2600 tons,

cast iron, for which demand increases by

2400 tons, aluminum, for which demand

increases by 152 tons, and copper, for

which demand increases by 88 tons. All

of these material changes are a negligible percent of the total U.S. production,

and the respective industries will be able

to meet demand shifts without limiting

domestic supplies or significantly increasing imports.

Profitability and growth of the major

manufacturers is adequate to finance the

total gas furnace industry investment of

$1.3 million, which amounts to about

$124 thousand per firm in additional research and development along with capital costs. The investment requirement

per firm Is the cumulative cost for each

design option. Alternative Investment to

produce an amount of energy equivalent

to that which will be saved by the design

options is $187.3 million.

Stage III-Benefits exceed costs for

the household sector In the purchase and

use of higher-priced, more efficient gas

furnaces, resulting in measurable energy

savings.

The purchase and use of projected

1980 shipments of 1,600,000 gas furnaces

complying with the proposed target Initially costs households an additional

$296 million but lowers life cycle operating costs by $691 million, yielding a net

benefit of $395 million calculated on a

present value basis.

Achievement of proposed operating

efficiency for projected 1980 shipments

results in an annual energy savings of

30.2 billion cubic feet of natural gas,

equivalent to 33.9 trillion Btu's of utility

energy supply. Total energy savings of

these 1980 shipments Is 600 billion cubic

feet of natural gas, equivalent to 674

trillion Btu's over the 20-year life of an

average gas furnace.

Stage IV-Negative impacts resulting

from implementation of the proposed gas

furnace target are not of substantial

consequence.

Demand In 1980 might reasonably Increase by 10.1 percent, or 161,600 gas

furnaces, because the improvement in

energy efficiency, which translates Into

lower operating costs, more than offsets

the increase in purchase price.

Employment might temporarily Increase 438 production workers, or about

10 percent of gas furnace employment,

in response to increased demand.

The threat of shifts In industry market structure which might affect the existence of small firms apparently does

not exist for gas furnace manufacturers,

since a revenue base of about $5 million,

or 1 percent of market share, Is sufficient

to finance Investment requirements of

the stated design options. Such a revenue

base is typical of the small firms.

The lowest income quartile will not

pay a proportionately larger price Increase than higher income groups for

more efficient gas furnaces, because

available Information suggests that all

income groups pay approximately the

same price for gas furnaces.

OII. FURNACES

FEA, in a manner consistent with the

methodology presented above, has determined that the proposed energy efficiency improvement for oil furnaces is

the maximum improvement which Is

technologically and economically feasible. A summary of economic findings for

oil furnaces follows:

Stage I-The total price increase resulting from implementation of the selected design options is $113 per unit,

which yields a production-weighted price

increase of $113 In current prices and

$131 in 1980 prices.

Stage II-Both scarce material supplies and investment funds are sufficiently available to permit the implementation of the proposed target for oil furnaces. The scarce materials primarily

FEDERAL REGISTER, VOL. 42, NO. 190-FRIDAY, SEPTEMBER 30, 1977
C-RM-77-011 COMMENT 01

PROPOSED RULES 52-

afi`ected by the proposed target are steel, finance investment requirements of the trillion Batts, over the 20 year life of

for which demand increases by 575 tons, stated design options. Such a revenue an average gas bailer.

cast iron,

for which demand increases base Is typical of the small Arms. Stage IV-- Ne ative Impacts resulting

by 688 tons, aluminum,

for which de- Tice lowest income quartile apparently from implementation of the proposed gas

nand increases by 100 tons, and copper. will not pay a proportionately larger boiler target ara not of substantial confor which demand increases by 75 tons. price Increase than higher Income groups : -quence. In order to quantify the ImAII of these material changes are a neg- for more efficient oil furnaces, because pacts of the target on de and and e=-

ligible percent of the total 11.8. produc- available information suggests that all ployyyment FFA used the pureha re price

Lion, and the respective industries will Income groups pay approximately the elasticity and the energy prL^e elasticity

be able to meet demand shifts without same price for oil furnaces. previously estimated for ga., furnaces.

hin. assumption was made d'ue to the

limiting domestic supplies ar signiSeant- T

ono ao alz°ena of hlpraextt dates sufffcient to d- I,p increasing imports.

Profitability and growth of the major PEA, in a manner consistent with the

manufacturers is adequate to finance methodology presented above, bas detertotal' furnace industry investment of mined that the proposed energy-efii-

$300 thousand, which amounts to about clency Improvement for gas boilers is the

$30 thousand per firm in additional re- maslmunrImprovementwhichi:,technosearch and development along with carpi- logically and economically feasible. A

tal costs. The investment requirement summary of economic findings for gas

per firm,

is the cumulative cost of each boilers follows:

design option. Alternative investment Stage I-The total price increase rerequired to produce an amount of energy suiting from implementation of' the

equivalent to that which will be saved selected design options is $233 per unit,

by the design options is $15.3 million. w hich. yields a production-weighted price

Stage III-Benefits exceed costs for Increase of $161 in current prices and

the household sector in the purchase and $187 In 2900 prices.

use. Of higher-priced, more efficient oil Stage II--Both scarce material supfuinaces,

resulting in measurable energy plies and investment funds are sumsavings. clently available to permit the ImapieThe purchase-and use of projected mentation of the proposed target for

1980 shipments of 250 thousand oil fur- boilers.

naves complying with the -proposed tar- Thesearcematerhaisprimarilyaiected

get Initially costs households an addi- by the proposed target are steel, for

tional $32.7 million but lowers life cycle which demand increases by 211 tons,

operating costs by $88.8 million, yielding cast Iron, for which demand increases by

a net benefit of $56.1 million calculated 195 tons, aluminum, ,for which demand

onapresentvaluebasis. Increases by 7.8 tons, and copper. for

Achievement of proposeeoperatiug which demand increases by 11 .7 tons,

efficiency for projected 1980 shipments All of these material changes are a negliresults In an annual energy savings of Bible percent of the total U.S. production,

18.0 uaillion gallons of. fuel on. which Is and the respective industries will be able

equivalent to 2.7 ( trillion Btu's of energy. to meet demand shifts without l miting

Total energy savings of these 1980 ship - domestic supplies or significantly inmeats Is 360 minion gallons of fuel off, erasing imports.

equivalent to 54 trillion Btu's, over the Profitability and growth of the major

20-year life of an average oil furnace . manufacturers are adequate to finance

Stage .t'9-Negative Impacts resulting the total gas boiler Industry investfrom implementation of the proposed oil meat of $643,068, which amounts to about

furnace target are not of substantial $71 thousand per Aran In additional reconsequence.In order to quantify the im- search and development along with capipacts of the target on demand and em- tai costs, Investment requirement per

ployment FE'S. used the purchase price firm is the cumulative cost for each deelasticity and the energy price elasticity sign option. Alternative investment to

previously estimated for gas furnaces. produce an amount of energy equivalent

This assumption was made due to the to that which will be saved by the design.

absence of shipment data sufficient to options is $13 million.

determine elasticities for oil furnaces. Stage Ill Benefits exceed costs for

Given the similarities In market demand the household sector in the purchase and

for all classes of furnaces, PEA. believes use of higher-priced, more efficient gas

that the assumption is valid. The result- boners, resulting in measurable energy

ing conclusions are that: savings.

Demand In 1980 might reasonably in- The purchase and use of projected

crease by 8.7 percent, or 21,800 oil fur- 1980 shipments of 130.000 gas boilers

naves, because the improvement In ever- complying with the proposed target m lBy efficiency, which translates Into lower tially costs households an additional

costs, niore than. offsets the Increase In $24.3 million but low era life cycle operat .

purchase price. lug costs by $56.3 million, yielding a net

Employment might temporarily in- benefit of $32 million calculated on a

crease by 220 production workers, or present value basis.

about 9 percent of oil furnace employ- Achievement of proposed operating efment, In response to higher demand. ficfency for projected 1980 shipments re.

The threat of shifts In Industry market suits In an annual energy savings of

structure which might affect the exist- 2.46 billion cubic feet of natural gas,

ence of small firm apparently does not which is equivalent to 2.8 trillion Btu's

exist for oil furnace manufacturers,since of utility energy supply. Total energy

a revenue base of about $L4 million, or 1 savings of these 1980 shipments is 49.1

percent of market share, is sufficient to billion cubic feet of natural gas, or 55.2

ta_rmkine elasticities for gas boiler. Givsan

the similarities in market demand for all

clan ;es of fces, FF.& baliteves that

the a.:.sumption is valid. Tie resulting

conclusions are that:

Demand in. 2930 might reasonably in.-

creae by 34 percent, or 44,200 gas bailers,

because the Improvement In energy cfflciency, which translates into lower operatin; costs, more than ozzea the increaseinpurchaseprice.

Dmployment might temporarily Increase by 402 production workers, or

about 34 percent of the g as boner industry employment In response to higher

demand.

The threat of shifts in industry market

structure which might affect the existence of small firms apparently does not

exist for gas boiler manufacturer since

a revenue bass of about $13 million, or

1 percent of market ft we. is sufficient,

to finance Investment requirements of

the stated desgin options. Such a revenue base is typical of the small firms.

Alternatively,smaller flans could achieve

the target by choosing other design options which require smaller investments.

The lowest income quartile apparently

will not pay a proportionately larger

price Increase than higher income group

for more efficient gas boilers, because

available informations suggests that all.

Income groups pay approximately the

same price for gas boilers.

ors. 801LEPS

FFA, In-a manner consistent with the

methodology presented above, has determined that the proposed energy eff'ichency improvement for oil boilersIs the

rawdalum improvement which Is technologically and economicaly feasible- A

summary of economic findings for on,

boilers follow:

p Stage I-The total price increase resulffin, from Implementation of the selected. design options is $113 per unit,

which yields a production-weighted price

increase of $113 in current prices and

$131 In 19E0 prices.

Stage II--Both scare materiel supplies

and investment funds are sufficiently

available to permit the Implementation

of the proposed -target for oil boners. The

scarce materials primarily affected by

the proposed terg9t are st'ee'l, for which

demand increases by 244 tons, cast iron,

for which demand increases by 231 tons,

aluminum, for which demand increases

by 14 tons„ and copper, for which demand Increases by 25 tons. All of these

material changes are a negligibe percent

of the total US. production, and the-respective industries will be able to meet

FEDERAL REGISTER, VOL 42, NO. 190-FRIDAY, SEPTEMBER 30, 1977

1
C-RM-77-011 COMMENT 01--__

52432

demand shifts without limiting domestic

supplies or significantly increasing imports.

Profitability and growth of the major

manufactuerers Is adequate to finance

total boiler industry investment of $594

thousand, which amounts to about $66

thousand per firm in additional research

and development along with capital

costs. The investment requirement per

firm is the cumulative cost of each design option. Alternative investment required to produce an amount of energy

equivalent to that which will; be saved

by the design options is $19.2 million.

Stage 111-Benefits exceed costs for

the household sector in the purchase and

use of higher-priced, more efficient oil

boiler, resulting in measurable energy

savings.

The purchase and use of projected

1980 shipments of 140 thousand oil boilers complying with the proposed target

Initially costs households an additional

$18.3 million but-lowers life cycle operating costs by $49.8 million, yielding*a net

benefit of $31.5 million calculated on a

present value basis.

Achievement of proposed operating ef--

flefency for projected 1980 shipments

results in an annual energy savings of

9.9 million gallons of -fuel oil, which Is

equivalent to 1.3 trillion Btu's of energy.

Total energy savings of these 1980 shipments Is 199 million gallons of fuel oil

or 30 trillion Btu's over the 20 year life

of an average oil boiler.

Stage IV-Negative impacts resulting

from implementation of the proposed oil

boiler target are not of substantial con=

sequence. In order to quantify the impacts of the target on demand and em-,

ployment PEA used the purchase price

elasticity and-the energy price elasticity

previously estimated for gas furnaces.

This assumption was made due to the

absence of shipment data sufficient to

determine elasticities for oil boilers. Given the similarities in market demand for

all classes of furnaces, PEA believes that

the assumption is valid. The resulting

conclusions are that:

Demand In 1980 might reasonably increase by 20.2 percent, or 28,300 oil boilers, because the improvement in energy

efficiency, which translates into lower

operating costs, more than offsets the

increase in purchase price.

Employment might temporarily increase by 393 production workers, or

about '20 percent of oil boiler employment, in response to greater demand.

The threat of shifts in industry market structure which might affect the existence of small firms apparently does

not exist for oil boiler manufacturers,

since a revenue base of about $1.4 million, or 1 percent of market share, is

sufficient to finance investment requirements of the stated design options. Such

a revenue base is typical of the small

firms. Alternatively, smaller firms could

achieve the target by choosing other- design options which require smaller investments.

The lowest income quartile apparently

will not pay a proportionately larger

PROPOSED RULES

price increase than higher income

groups for more efficient oil boilers, because available information'suggests that

all income groups pay approximately the

same price for oil boilers.

IV. REQUEST FOR PARTICULAR CODIraENTS

While FEA is soliciting comments on

all aspects of this proposed energy efficiency improvement target, PEA is particularly interested in receiving comments on the following matters:

1. Information relating to the number of

furnaces manfuactured in 1975, by capacity,

and their corresponding, steady state ef-,

ficiencies. -

2. Information relating to the number of

furnaces, manufactured in 1975 that incorporated any of the design options suggested

in the technological analysis presented above.

3. Information relating to the reasons for

recent annual growth in shipments of gas

and oil boilers.

In addition, PEA is interested in receiving comments on all definitions previously promulgated or proposed In section 430.2 as these provisions might affect

the efficiency-improvement target. Comments with respect to the efficiency improvement target regarding provisions in

previously promulgated or proposed section 430.2 are timely until the close of the

written record. It is expected that definitions for this product type will be

made final before the.prescription of the

target.

For the convenience of the reviewer,

the proposed definitions directly related

to the efficiency improvement target for

furnaces are as follows:

"Furnace" means a device designed to

be the principal heating source for the

living space of a residence having a

heat input rate less than 400,000 Btu's

per hour, and includes forced air central furnace, gravity central furnace,

electric central furnace, electric boiler,

and low pressure steam or hot water

boiler (42 PR 40829, August 11, 1977).

"Forced air central furnace" means

a gas or oil-burning furnace designed to

supply heat through a system of ducts

with air as the heating- medium. The

heat generated by combustion of gas or

oil is transferred to the air within .a

casing by conduction through heat exchange surfaces and is circulated

through the duct system by means of

a fan or blower (42 FR 40829, August 11,

1977).

"Gravity central furnace" means a

gas fueled furnace which depends primarily on natural convection for circulation of heated air and which is designed to be used-in conjunction with a

system of ducts (42 FR 40829, August 11,

1977).

"Electric central furnace" means a

furnace designed to supply heat through

a system of ducts with air as the heating

medium, and in which heat is generated

by one or more electric resistance heating elements and the heated air is circulated by means of a fan or blower

(42 FR 40829, August 11, 1977).-

- "Direct vent system" means a system

supplied by a manufacturer which provides outdoor air directly to a furnace

for combustion and draft relief, If the

unit is so equipped (42 FR 40830, August 11, 1977). ,

"Electric boiler" means an electrically

powered furnace designed to supply low

pressure steam or hot water for space

heating application. A low pressure

steam boiler operates at or below 15

psig steam pressure; a hot water boiler

operates at or below 160 psig water pressure and 2500 F water temperature (42

FR 40830, August 11, 1977).

'Low pressure steam or hot water

boiler' means a gas or oil burning furnace designed to supply low pressure

steam or hot water for space heating

application. A low pressure steam boiler

operates at or below 15 psig steam pressure; a hot water boiler operates at or

below 160 psig water pressure and 250°

F water temperature (42 FR 40830, August 11, 1977).

V. COMMENT PROCEDURES

A. WRITTEN COMMENTS

Interested persons are Invited to participate In this rulemal;ing by submitting data, views, or arguments with respect to the proposed energy efficiency

improvement targets set forth In this

notice to Executive Communications,

Room 3317, Federal Energy Administration, Box PP, Washington, D.C. 20461.

Comments should be identified on the

outside of the envelope and on the documents submitted to PEA Executive Communications with the designation "Proposed Efficiency Improvement Target.;-

Furnaces." Fifteen copies should be

submitted. All comments received by

November 4, 1977, before 4:30 p.m., and

all other relevant Information will be

considered by PEA before final notion Iq

taken on the proposed regulations.

Any information or data considered by

the person furnishing it to be confidential must be so Identified and submitted in writing, one copy only. PEA

reserves the right to determine the confidential status of the information or

data and to treat It according to Its determination.

B, PUBLIC HEARING

1. Request Procedures. A public hearing in this proceeding will be held beginning at 9:30 a.m. on November 8, 1977,

in Room 2105, 2000 M Street, NW., Washington, D.C. 20461, In order to receive

comments from interested persons on

the matter set forth herein.

Any person who has an interest In the

proposed rulemaking issued today, or

who is a representative of a group or

class or persons that has an interest in

today's proposed rulemaking, may request In writing an opportunity to make

an oral presentation. Such a request

should be directed to the address indicated at the beginning of this preamble,

and must be received before 4:30 p,m., on

October 25, 1977. Such a request may be

hand-delivered to such address, between

the hours of 8:00 am. and 4:30 pm„

Monday through Friday. A request

should be labeled both on the document

FEDERAL REGISTER, VOL. 42, NO. 190-FRIDAY, SEPTEMBER 30, 1977
and on the envelope "Proposed Efficiency

Improvement Target-Furnaces."-

The person making the request should

briefly describe the interest concerned; or

appropriate, state why she or he is a

proper representative of a group or class

of persons that has such an interest; and

give a concise summary of the proposed

oral presentation and a telephone number where he or she may be contacted

through October 25, 1977. Each person

selected to be heard will be so notified

by FEA before 4:30 p.m., October 28,

1977, and must submit 50 copies of his or

her statement to the address and by the

date given in the beginning of this preamble. In the event any person wishing to

testify cannot meet the 50 copy requirement, alternative arrangements can be

made with the Office of Regulations Management in advance of the hearing by so

indicating in the letter requesting an oral

presentation or by calling the Office of

Regulations Management at 202--254-

3345. .

2. Conduct of hearing. FEA reserves

the right to select the persons to be heard

at this hearing, to schedule their respective presentations, and to establish the

procedures governing the conduct of the

hearing. The length of each presentation may be limited, based on the number

of persons requesting to be heard.

An PEA official will be designated to

preside at the hearing. This will not be

a judicial or evidentiary-type hearing.

Except as provided below, questions may

be asked only by those conducting the

hearing, and there will be no cross-examination of persons presenting statements. At the conclusion of all initial oral

statements, each person will be given the

opportunity, if he or she so desires, to

make a rebuttal statement. The rebuttal

statements will be given in the order in

which the initial statements were made

and will be subject to time limitations.

Any interested persons may submit

questions to be asked of any person making a statement at the hearing, the Executive Communications, Box PP, FEA,

12th and Pennsylvania Avenue NW.,

Washington, D.C. 20461, November 4,

1977. PEA will determine whether the

question is relevant, and whether the

time limitations permit to be presented

for answer. Any decision made by FEA

with respect to the subject matter of the

hearing will be based on all information

available to FE-AL

Further questioning will be permitted

by FEA pursuant to section 336(a) (1)

(B) of the Act. Any interested person

will have the opportunity to question (1)

other interested persons whd have made

oral presentations, and (2) employees

of the United States who have made

written or oral presentations, with respect to disputed issues of material fact.

Such an opportunity will be afforded to

the extent PEA determines that questioning pursuant to such procedures is

likely to result in a more timely and effective resolution of the issues of mate- .

rial fact. Such opportunity with regard

to oral presentations of Interested persons and employees of the United States,

C-RM-77-011 COMMENT 01

PROPOSED RULES

will be provided at the public hearing.

If this opportunity alone is sufficient or

inconvenient for any interested person

and/or employee, FEA will consider affording an additional opportunity for

questioning at a convenient time. An opportunity to question employees of the

United States who have made written

presentations may be availed of by submission of written questions which must

.be received by Executive Communications, Box PP, FEA, by November 22,

1977. Questions must pertain to disputed Issues of material fact regarding

the target for furnaces.

Any further procedural rules needed

for the proper conduct of the hearing

will be announced by the presiding

officer.

A transcript of the hearing will. be

made and the entire record of the hearing, including the transcript, will be retained by FEA and made available for

inspection at the PEA Freedom of Information Office, Room 2107, Federal

Building, 12th and Pennsylvania Avenue

NW., Washington, D.C., between the

hours of 8:00 am. and 4:30 p.m., Monday

through Friday. Any person may purchase a copy of the transcript from the

reporter. Technical and economic papers

related to today's proposal will also be

available for Inspection by interested

persons at the PEA Freedom of Information Office.

In addition to the information available at the Freedom of Information Office, PEA will. make available background

materials concerning the assumptions

and data which were used in the analysis

of economic feasibility. These background materials are classified by class

and by fuel type, and are available to any

person who submits a written request to

James A. Smith, Room 307, Old Post Office Building, Federal Energy Administration, 12th and Pennsylvania Avenue

NW., Washington, D.C. 20461.

VI. ErrvinOmIENTAL Aim IrrFLATIONAa7

Rsvmw

As required In section 7(c) (2) of the

PEA Act, a copy of this notice has been

submitted to the Administrator of the

Environmental Protection Agency for his

comments concerning the Impact of this

proposal on the quality of the environment. The Administrator has no

comments.

The National Environmental Policy

Act of 1969 requires that PEA review

Agency proposals to determine whether

they constitute "major Federal actions

significantly affecting the quality of the

human environment" within the meaning of section 102 (2) (c) of that Act.

Since the targets proposed today are

voluntary, compliance with these targets

is a voluntary private action. This type

of Compliance is not a "Federal action"

within the meaning of the statutory

language. Since any compliance with the

targets is entirely at the initiative of

affected manufacturers and not FBA, it

is virtually impossible for PEA to undertake meaningful analysis of the nature

or scope of any environmental effects

52433

which might indirectly flow from the

targets. Moreover, the goal of these targets Is to induce reductions in energy

consumption, as well. as the environmental residuals of energy consumption

and, thus, to improve environmental

quality. On this basis, PEA has determined that, with respect to prescribing

efficiency improvement targets under the

conservation proogram for appliances, no

environmental impact statement, is required.

This proposed target has been reviewed in accordance with Executive

Order 11821 as amended by Executive

Order 11949, and OMB CircularNo. A107,

and has been determined to be a major

proposal, but only on the assumption

that manufacturers will in fact implement the measures which the economic

feasibility analysis has found to be reasonable and achieveable and that, therefore, they will fully comply with the

target. The target, however, is voluntary

in nature and since PEA cannot predict

the actual degree of compliance It cannot, accordingly, predict the target's

actual economic impact. An economic

impact evaluation, based upon the assuitlptions contained In the economic

feasibility analysis rather than on actual

economic impact, has been completed

and Is available for public review, as

provided above.

(Energy Policy and Conservation Act, Pub.

L. 9£-163, as amended by Pub. L_ 94-385;

Federal Energy Administration Act of 1974.

Pub. L. 93-2755, as amended by Pub. L. 94-

363; E.O. 11790, 39 FR 23185.)

On consideration of the foregoing, it

Is proposed to amend Chapter II of Title

10, Code of Federal Regulations, as set

forth below.

Issued In Washington, D.C., September 23. 1977.

Eric J. FYGt,

Acting General Counsel,

Federal Energy Administration.

1. Section 430.32 is amended by adding

paragraph (n), to read as follows;

§430.32 Energy efficiency improvement

targets.

x x x x s

(n) The energy elliciencylmprGvement

target for furnaces shall be a 23 percent

increase In energy efficiency for the total

number of fueled furnaces manufactured

by all manufacturers in calender year

1980, when compared with the energy efficiency on the total number of furnaces

manufactured by all manufacturers in

calender year 1975.

[PR Doc.77--28830 Filed 9-29-77;8:45 aml

FEDERAL REGISTER, VOL. 42, NO. 190-FRIDAY, SEi'TEMAMER 30, 1977