### 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 energyefficiency 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 publiccomments 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 requeststo 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 GeneralCounsel), 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 TitleIII 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 forconsumer 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, andthat 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 technologicallyand 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 coveredproducts. The test procedures to be prescribed in Subpart B of Part 430 will be used in monitoring the progress 'ofmanufacturers 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 consumerswith 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 asPEA determines may be necessary to ascertain whether the energy efficiency improvement target for a type of coveredproduct will be met. If FE, A then determines that a particular target Is notlikely 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 optionshaving a potential for improving the energy efficiency of a product type, andthen 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 improvementtarget for a product type required a thorough analysis to Identify the design characteristics of currently availableproducts 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 optionsto 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 wereused 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 degreedays). The annual fuel utilization efficiencies computed for these two citieswere interpolated to determine the annual fuel utilization efficiencies for the national average number of heating load hours, 2,080 (equivalent to 5,200 degreedays). 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 todetermine 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 eachdesign 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 wasevaluated by NBS using the DEPAF computer model. The increased costs were estimated using ,-industrial engineering

r -+.1 techni ues o o es for those de- u relied on NIBS estimates of the designimprovements' 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 andfurnaces could be improved by .25 percent, and oil boilers and furnaces couldbe improved by 14 percent. Electric furnaces are considered to be 100 percent efficient at point of end use. The. gas furnace and boiler designoptions 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 theincorporation of power burners on furnaces. The oil furnace and boiler design options that were selected to demonstratethe 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 Leadtimeproduction- 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 Leadtimeproduction- 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 inthe marketplace. A simple payback analnnual ysis which compared increased retail 1975,en efficiencyEnergy 1975 fuel

annual 1980 a

fuel ee improve- izat costs to operating cost savings was used consumption Percent improve- - utilization utilization by NBS as the criterion for selecting a X1012 Btu savings ment target 'efficiency efcieney evaluation. (percent) (percent) (percent)

, design option for further cost exceeded the Where the increase d savings, an option was rejected. Of course, the target incorporating theseoptions 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 modelto determine the maximum technologically feasible energy efficiency improvement for furnaces. The energy savingsof 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 thetechnological feasibility of the 1980 target for furnaces was then subjected to aneconomic analysis to determine their economic feasibility. As described In detail below, this economic feasibility analysis Gas boilers and furnaces--------------------- 122.7 20 25 64 80 Oil boilers 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 upona vast array of demand-supply relationships which affect consumers not only In their purchasing decisions butalso in their daily use of furnaces. In performing the analysis, a comprehensive methodology for examining all signifiicant and relevant economic effects wasused 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 ofeconometrics, statistics ,and other mathematical methods. In assessing the roleof consumer products within the economy, a micro-economic analysis was relied upon, as much as possible, to project trends and simulate changes whichthe proposed targets might induce. However, where either, the lack of data or limited model structure prevented strictadherence 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 quantitiesin 1980 relies upon a combination of analytical procedures. One essential feature 11980 AFUE-1975 AFUE X 100 - f- perk - percentage 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 to1980 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 theanalysis of economic possibilities: Primary data sources were Federal Government publications, including the Census of Manufacturers (U.S. Bureau of theCensus, 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 testimonysubmitted at May and June 1976 hearings on Subpart C as previously proposed (41, FR 19977, May 14, 1976), as well asthe 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 shouldnot 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 sufficientcapital to finance the required investment in plant and equipment, and to finance other costs, including materials. In addition, when costs of implementingand utilizing more energy-efficient consumer products are outweighed by thedollar 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 ofproduct, including furnaces. The first criterion on the definition, which involvesan examination of scarce material supply and investment requirements, is analyzed in stage two of the analysis. The second criterion, which involves thequantification 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 optionsdiscussed in Part II above, with corresponding material requirements and resulting energy efficiency improvementsfor 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 inthe redesign. Ttie energy savings attributable to the individual design options, and their costs, are combined so as toaccount for any overlapping energy savings , in order to arrive at an overallenergy improvement and total cost Increase. The increase in total cost is then translated into an increase in purchaseprice. 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, asare 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 designoption in 1980 over 1975. This net Increase in production of improved products between base period and target date is multiplied by the appropriate designoption 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 initialunimproved purchase cost that Is compared to the increased purchase cost of improved products for evaluating theimpact 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 consumerproducts. The particular investment requirements described In this evaluationare not meant to prescribe for manufacturers & necessary investment or financialprocedure. 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 fromincorporation of a particular design option Is the product of the number of projected 1980 shipments and the production-weighted material change for eachunit. 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 theentire 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, 1977by the industry itself to assess the possible burden. Also, the availability offunds 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, thenthe investment requirements are considered to be an available resource. Stage III-Cost-Benefit Tradeoffs and Energy Consumption. This stage of theanalysis examines the cost-benefit tradeoff confronting consumers of household appliances along with correspondingenergy savings. The tradeoff is essentially a measurement of net life cycle
benefits from the perspectives of both an individual purchaser and all householdsector purchasers. These purchases decisions determine net energy savings, :which are quantified by comparing thereduced 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-efficientproduct and for total consumer purchases of the Product. The premise underlying both perspectives Is that a moreenergy-efficient consumer product typically sells for a higher price but operatesat a lower cost, since less energy is required to perform the same task. Future dollar savings from lower operating costsare accumulated over the life of the product and expressed in present dollars bydiscounting 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 inpurchase price of the more. energy-efficientproduct. The present value of net life cyclebenefits for individual purchasers is aggregated by using a projection of 1980 shipments. The 1980 shipment projectionis 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 evengreater 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 offuel 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 measureof 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 areasof 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. Thestudy of the Interaction of demandsupply relationships within and betweenthe 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, newinvestment 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 opcratin g 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, suchimpacts may also be outweighed by favorable bnefits consisting of either reduced energy consumption on the demand side or innovative manufacturingtechniques on the supply side. In contrast, the lower the manufacturing cost requirements

, the greater the opportunity for energy savings, enhancedhousehold purchasing power, and negligible negative Impacts.This fourth stage of the analysis Inttially evaluates the posy ble chances Inaggregate demand along with the resulting Impact on Production

, employmentand 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 achievementof 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 deviationaround the base case projection, the previously quantified Impacts would not besubstantially altered. The reasonableness of using 1930 base case projections in stages two and three stems, in past, from an assumption, that between 1975and 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 thisas_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 andthe 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 i gnored, however , demandcould 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 plausiblecase 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 theultimate 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 relativeprice elasticities Primarily reflect attitudes before the 1973 energy crisis_ On this basis, it is concluded that the fall indemand 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, moreenergy-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-FRID AY, SEPT'-JAD ER 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 logform, measure the responsiveness 'between quantity purchased as it relates to product purchase price on the one hand and quantity purchased-as it relates toenergy usage price on the other. Correlation analysis of the logarithm of quantitypurchased (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 keyelasticities are purchase Price and energy price.A product price elasticity-of one indicates that for every 1 percent increase inproduct 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 greaterthan 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 thereverse of the demand elasticity. It is assumed that energy price elasticity derived from regression analysis is similarto 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 inthe 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 onthe quantity Purchased. The positive effect on quantity purchased due to higherprices, 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 gasThe impact of shifting household demand on employment is the direct consequence of a net Increase or decrease inquantity 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 percentIncrease or decrease in quantity purchased is assumed to equal the corresponding percent Increase or decrease Indirect 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 tosmaller 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, theburden 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 economicanalysis 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 themethodology presented above, has determined that the proposed energy efficiency improvement for gas furnaces is themaximum 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. Allof 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 limitingdomestic 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 furnacescomplying 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 notpay 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 themethodology presented above, has determined that the proposed energy efficiency improvement for oil furnaces is the maximum improvement which Istechnologically 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 Arm s. 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 sub stantial 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 plo yyyment 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 fur naces. previously estimated for ga

., furnaces.
th d e t ti hi ' e e d o n

. assump on was ma u limiting domestic supplies ar signiSeant

- T 

### ono ao alz°ena of hlpraextt dates sufffcient to d- imports reasin in I

.

g ,p c Profitability and growth of the major PEA, in a manner consistent with themanufacturers 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 Improvementfor gas boilers is the$30 thousand per firm in additional re- maslmunrImprovementwhichi:,technosearch and development along with carpi- log i cally 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 boilersnaves, 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 e

lasticities for gas boiler. Givsan the similarities in market demand for all clan ;es of fces, FF.& baliteves that
the a .:.s umption is valid

. Tie resulting
conclu s ions are that: Demand in

. 2930 might re as onably 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 increaseinpurcha s eprice. Dmployment might temporarily Increase by 402 production wor kers, or about 34 percent of the g as boner industry employment In re sponse to higher demand.
The threat of shifts in indu s try marketstructure which might affect the existence of small firms app arently 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 ofthe stated desgin options. Such a revenue base is typical of the small firms. Alternatively

, smaller flans could achieve the target by choo sing 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

, becaus e available informations suggests that all. Income groups pay approximately the same price for gas boilers.

ors. 801LEPS
FFA, In

-a manner consistent with themethodology presented above, has determined that the proposed energy eff'ichency improvement for oil b oilers Is therawdalum 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 domesticsupplies 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, orabout '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, issufficient to finance investment requirements of the stated design options. Such a revenue base is typical of the small firms. Alternatively, smaller firms couldachieve 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 incomegroups 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 onall 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 offurnaces, 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 affectthe efficiency-improvement target. Comments with respect to the efficiency improvement target regarding provisions inpreviously promulgated or proposed section 430.2 are timely until the close of thewritten 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'sper 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 .acasing 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 agas 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 generatedby 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 systemsupplied by a manufacturer which provides outdoor air directly to a furnace for combustion and draft relief, If theunit 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 boileroperates at or below 160 psig water pressure and 2500 F water temperature (42 FR 40830, August 11, 1977). 'Low pressure steam or hot waterboiler' means a gas or oil burning furnace designed to supply low pressure steam or hot water for space heating application. A low pressure steam boileroperates 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. COMME NT PROCEDURES

A. WRITTEN COMMENTSInterested 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 theoutside 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 bythe person furnishing it to be confidential must be so Identified and submitted in writing, one copy only. PEAreserves the right to determine the confidential status of the information ordata 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 intoday'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, 1977and 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 proposedoral 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 thedate given in the beginning of this preamble. In the event any person wishing totestify cannot meet the 50 copy requirement, alternative arrangements can bemade 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 heardat this hearing, to schedule their respective presentations, and to establish the procedures governing the conduct of thehearing. 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 thehearing, 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 submitquestions 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 madewritten or oral presentations, with respect to disputed issues of material fact. Such an opportunity will be afforded tothe extent PEA determines that questioning pursuant to such procedures islikely to result in a more timely and effective resolution of the issues of mate- . rial fact. Such opportunity with regardto 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 personand/or employee, FEA will consider affording an additional opportunity forquestioning at a convenient time. An opportunity to question employees of the United States who have made writtenpresentations 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 forinspection 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., Mondaythrough 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 thehuman 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, itis virtually impossible for PEA to undertake meaningful analysis of the nature or scope of any environmental effects 

### 52433

which might indirectly flow from thetargets. Moreover, the goal of these targets Is to induce reductions in energyconsumption, as well. as the environmental residuals of energy consumption and, thus, to improve environmentalquality. On this basis, PEA has determined that, with respect to prescribing efficiency improvement targets under the conservation proogram for appliances, noenvironmental 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 assumptionthat manufacturers will in fact implement the measures which the economicfeasibility 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 predictthe actual degree of compliance It cannot, accordingly , predict the target's
actual economic impact . An economicimpact 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