BEFORE THE U.S. DEPARTMENT OF ENERGY

OFFICE OF HEARINGS AND APPEALS

CASE NO

. VEE-0054

COMMENTS OF MAYTAG CORPORATION

REGARDING APPLICATION FOR EXCEPTION BY AMANA APPLIANCES

FROM PROVISIONS OF 10 C.F.R. PART 430 - ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS; ENERGYCONSERVATION STANDARDS FOR REFRIGERATORS, REFRIGERATORFREEZERS AND FREEZERS

Maytag Corporation 403 West Fourth Street North Newton, Iowa 50208

March 15, 1999BEFORE THE U. S. DEPARTMENT OF ENERGY OFFICE OF HEARINGS AND APPEALS

Energy Conservation Program for Consumer Products: Energy ConservationStandards for Refrigerators, RefrigeratorFreezers and Freezers CASE NO. VEE-0054

COMMENTS OF MAYTAG CORPORATION REGARDING APPLICATION FOR EXCEPTION FILED BY AMANA APPLIANCES

Maytag Corporation (Maytag) submits these comments regarding Amana Appliances' Application for Exception relief from the provisions of 10 C.F.R. Part 430, Energy ConservationProgram for Consumer Products: Energy Conservation Standards for Refrigerators, RefrigeratorFreezers and Freezers. Maytag Corporation is a leading manufacturer of home and commercial appliances. The corporation's home appliance brands include Maytag, Jenn-Air and Magic Chef major appliances, and Hoover floor care products. Maytag manufactures a complete line of refrigerator-freezers, including top and side freezer models, at its facilities in Galesburg, Illinois.

2Maytag believes that Amana's application for exception relief from the refrigerator energy

standards that will be implemented on July 1, 2001 is premature and should not be approved. Maytag is faced with the same regulatory concerns as Amana -- the Department's new refrigerator/freezer standards, as well as the requirement to replace the current foam blowing agent, HCFC-141b, with an acceptable alternative by January 1, 2003. Maytag asserts, however, that exception relief should not be granted to Amana for the following reasons: • Exception relief would be a disincentive for the introduction of HFC-245fa as a substitute blowing agent. • Exception relief would be a disincentive for the development of alternative blowing agents. • Exception relief would provide Amana with an unreasonable and significant competitive advantage. • Exception relief would penalize Maytag and other manufacturers who have already made significant capital investments in anticipation of the new mandated refrigerator standards. • Exception relief would not address the probability that refrigerators manufactured in Mexico containing HCFC-141b: may be exported to the U.S. after the U.S. phaseout is implemented. Further, Maytag believes that exception relief should only be considered when it can be
demonstrated that : a) all potential alternative blowing agents have been thoroughly tested and an acceptable substitute is not available ; and b) no single manufacturer would gain a competitive advantage in the marketplace as a result of the exception. Maytag and other refrigerator manufacturers are currently engaged in negotiations with Allied Signal for the supply of C-245fa on or before 1/1/03. Maytag is also investigating the use of other blowing agents which may be suitable alternatives to HCFC-141b. HCFC-124 is commercially available and shows promise as an interim substitute for HCFC-141b. Other
3blowing agents and blends are also being investigated. These ongoing activities are crucial to

rapid development of technologies which achieve the optimum balance between energy use, ozone depletion, and global warming concerns. Granting of exception relief to Amana at this time would jeopardize the successful conclusion of these negotiations and investigations. A margin of 10% relief from the new energy standards would provide Amana with a very significant competitive advantage. Refrigerator/freezer manufacturers will be employing many of the technologies that were reviewed by the Department prior to the issuance of the new energy standards. Each incremental reduction in energy usage accelerates the costs of the technologies employed to achieve that target. If the requested relief is granted, Amana will be able to avoid the most costly of these technologies. This would seriously, and unfairly, disadvantage other manufacturers by providing Amana with a significant cost advantage. This product cost differential would be harmful to Maytag and other refrigerator manufacturers who compete in one of the most highly competitive markets in the U. S. Over the past five years, Maytag has invested extraordinary capital and human resources in retooling its entire line of refrigerators in anticipation of complying with the new federal energy standards. Today, Maytag offers a full line of refrigerators many of which qualify for the Department's "Energy Star" label which illustrate its commitment to innovative, energy efficient appliances. Granting an exception for relief to any single company would jeopardize these investments by permitting a competitor to avoid similar investments, thereby enjoying a lower
overall cost structure. Maytag shares Amana's concern that other manufacturers may produce refrigerators containing HCFC-141b at locations outside the United States, including Mexico, and export those products to the U.S. beyond the January 1, 2003 phaseout date for HCFC's. While this issue

4must be addressed, granting exception relief to Amana at this time does not address or resolve this

potential problem. In summary, Maytag believes that Amana's application for exception relief is premature and should not be approved. However, should the Department determine that such relief can be justified, it should then be extended to all manufacturers rather than to an individual company which would, by virtue of the exception, immediately achieve a significant competitive advantage.

5NATUTAL

REsouRcis DEFENSE COUNCIL.

March 12, 1999 Office of Hearings and Appeals COMMENTS U.S. Department of Energy 1000 Independence Avenue, SW Washington, DC 20585 Attn: Mr. Fred Brown BY FAX ( 202-426-1415) 

### rr9 PAR is 

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Docket No. VEE-0054: Comments of the Natural Resources Defense Council (NRDC) on Amana's Application for an Exception from Refrigerator Standards. Dear Mr. Brown,
These comments are submitted on behalf of the Natural Resources Defense Council (NRDC), a national environmental organization with over 400,000 members and- contributors. NRDC has promoted energy efficiency at the state, regional, national and international levels for 25 years, and has participated in DOE appliance efficiency rulemakings since 1980 and state appliance efficiency proceedings since 1975. The National Appliance Energy Conservation Act of 1987 follows from an agreement negotiated between NRDC and the major appliance manufacturer trade associations. On February 18, 1999 Amana Appliances filed with the Department' of Energy (DOE) an Application for Exception (Application) to the energy efficiency standards.for refrigerators, refrigerator-freezers, and freezers that are established in 10 CFR § 430.32(a) and that go into effect on July 1, 2001. Amana's Application was filed pursuant to 10 CFR Part 1003, Subparts A and B. As a representative of our members, NRDC has an interest in reducing air pollution, global climate change, and other environmental impacts that are a direct consequence of energy consumption. Energy use can be reduced substantially as a result of energy efficiency improvements, such as those produced by the standards in question.

71 Stevenson Street 6310 San Vicente Boulevard 1200 New York Ave., N.W. 40 West 20th Street Suite 1825 Suite 250 Suite 400 New York, NY 10011 San Francisco, CA 94105 Los Angeles, CA 90048 Washington, DC 20005 212 727-2700 415 777-0220 213 934--6900 202 289-6868 Fax 212 727-1773 Fax 415 495-5996 Fax 213 934-1210- Fax 202 289-1060 www.nrdc.org toy Nawm .merRaydedOffice of Hearings and Appeals

NRDC Comments March 12, 1999 Page 2 NRDC has reviewed the comments submitted by the Oregon Department of Energy (ODOE) and the California Energy Commission (CEC), and supports their arguments and conclusions that the Amana Application should be rejected. In addition, NRDC has other concerns in our capacity as a negotiator of the 1994 'joint comments on which the proposed DOE rule was in large part based and a negotiator of the final agreement's joint comments on which the Final Rule was in large part based. From these discussions, we note that the issue of the choice of alternative refrigerant was not ignored or downplayed in the rulemaking either by stakeholders negotiating over the potential for joint comments, or by the Department of Energy in deciding whether or not to accept joint comments, and in determining what they would promulgate in the event that stakeholders were unable to offer consensus recommendations. The issues in the Application were addressed fully in the Final Rule. DOE's perspective on this issue was presented in the Final Rule, .pages 23108- 23109 of the Federal Register of 28 April 1977(Vol.. 62, Number. 81) where DOE noted the basis of its decision in data concerning expectations for refrigerant availability and in a description of a petition process for exceptional relief that could be used. It is important to note that DOE's discussion talks about the "possibility that [HFC-245fa's] commercial availability will be delayed beyond 2003," not 1999, 2000, or 2001. Based on this discussion and stakeholders' discussions, a petition for relief is premature. The parties agreed that in Spring 1997 HFC-245fa looked like it would be available in time for the year 2003 phase-out date of the current blowing agent (and not by the phase-in date of the standard of July 1st, 2001). Now, only two years into this nearly 6-year timeline, we simply do not know enough new information to make this application timely. Indeed, the hurdles identified in the Final Rule have been successfully overcome.. Page 1 of Amana's Application notes that DOE's Final Rule states "it is still possible that subsequent tests [of toxicity] will identify unacceptable risks associated with the use of this product'or that its, commercial availability will be delayed-beyond 2003. Under such conditions DOE may grant manufacturers exception relief' (emphasis added).Office of Hearings and Appeals

NRDC Comments March 12, 1999 Page 3 Amana has not brought forth any evidence that subsequent tests did identify unacceptable risks, or that additional tests to be performed beyond the current date will do so. Thus, the first condition referred to by DOE has not eventuated. The second condition is that the commercial availability of HFC-245fa may be delayed beyond the year 2003. Amana has produced no evidence that this is any more likely to happen than was expected when the Final Rule was promulgated. Instead, Amana refers to commercial availability in 1999 or 2000. These were never identified in the Final Rule as conditions under which any applicant could petition for exception. The problems to which Amana refers in its petition go beyond the scope of those identified in the Final Rule, at least in terms of consideration in 1999. Amana's Application for Exception should be denied at this point simply because it is too soon to know whether any burden will be imposed upon them. Even if Amana were able to demonstrate a burden, the relief that they request is grossly disproportionate to the problem. As noted in the Final Rule, the initial proposal by stakeholders, including Amana, was for a loosening of the standard for a time period between three and nine years after publication of the Final Rule, or until January 1st; 2004, assuming DOE had promulgated the Final Rule according to statutory schedule. At that time (1994), the potential of HFC-245fa for being the blowing agent of choice was not even discussed.Thus, without the encouraging data available today about the prospects of HFC245fa, .Amapa was willing to settle for an exception from the standard only until the year 2004.. NRDC believes that it is outrageous that Amana is now demanding several additional years of relief from the standard compared to their position in 1994. This is particularly troublesome in light of the fact that there are more options available now for meeting the higher levels of efficiency than there were in 1994. The Office of Hearings and Appeals should note the unusual character of the rule that Amana is seeking exception from. It is based on recommendations from stakeholders, including Amana, as well as independent analyses and decisionmaking by the.Department of Energy. It is hard to believe that Amana is seeking exception from a rule it proposed itself less than two years ago, when none of the milestones identified in the rule as being potentially problems have occurred. Granting this exception, therefore, would not only waste energy, but would undercut the credibility of negotiated rulemakings by opening up theOffice of Hearings and Appeals

NRDC Comments March 12, 1999 Page 4 option that any party could agree to a rule in one year, and then seek special exception from its provisions less than two years later. In summary, NR-DC recommends that Amana's Application be denied. As a procedural matter, I wish to note that I have been the signatory of NRDC's comments, both individually and jointly-submitted with other stakeholders, since 1980, and am the duly authorized NRDC representative on the issue of appliance efficiency standards. Yet, my name was not included on the service list. Instead, NRDC's President's name appears on the service list. Given the short time frame for comments, even with the deadline extension, this mistake has put NRDC at a disadvantage in being able to respond fully. [Note that Mr. - Adams' address is also incorrectly specified; the correct address is 40 West 20th Street, New York, NY 10011]. In the future, all correspondence dealing with this issue should be sent to my attention at: NRDC, 71 Stevenson Street, #1825, San Francisco, CA 94105, Fax (415) 495-5996. Thank you. Sincerely,

David B. Goldstein Energy Program Co-Director

cc: Amana

AmanaStdCmts.docDepartment of Consumer and Business Services

John A. K,tzhaber, M.D., Governor March 12, 1999 

### -b Office of Energy 625 Marion St. NE, Suite I Salem, OR 97301-3742 Phone: (503) 378-4040 Toll Free: 1-800-221-8035 FAX: (503 ) 373-7806 Web site: www.cbs.state.or.us/external/ooe/ Office of Hearings and Appeals COMMENTS U.S. Department of Energy 1000 Independence Avenue, SW Washington, DC 20585
Attn: Mr. Fred Brown BY FAX (202-426-1415) AND BY OVERNIGHT DELIVERY Docket No. VEE-0054: Comments of the OREGON OFFICE of ENERGY on Amana Appliances Application for Exception from Refrigerator Standards Dear Mr. Brown, On February 18, 1999 Amana Appliances filed with the Department of Energy (DOE) an Application for Exception (Application) to the energy efficiency standards for refrigerators, refrigerator-freezers, and freezers that are established in 10 CFR § 430.32(a) and that go into effect on July 1, 2001 (the 2001 Standard). Amana's Application was filed pursuant to 10 CFR Part 1003, Subparts A and B. The Oregon Office of Energy The Oregon Office of Energy (OOE) is a state agency responsible for establishing state energy policy and, as part of the implementation of that policy, working with DOE to enact and enforce federal energy efficiency standards for appliances, including refrigerators, refrigerator-freezers, and freezers. The State of Oregon and the Pacific Northwest have a long history of pursuing cost-effective energy efficiency to displace more costly and environmentally damaging power generation. Therefore, OOE has a direct interest in the amount of energy that will be saved by the federal appliance efficiency standards; any reduction in savings from federal standards means that additional power generation, with its associated adverse economic and environmental impacts, will be necessary to meet our region's electricity needs. Because of the very limited time available for comment in this docket, there has been no time to research the specific parts of the record supporting DOE's decision on the July 1, 2001 Refrigerator and Refrigerator/Freezer Standard. That record includes the



### 15 

## in,Pg 2

Office of Hearings and Appeals March 12, 1999 Federal Register Notice (10 CFR Part 430, Energy Conservation Program for Consumer Products: Energy Conservation Standards for Refrigerators, Refrigerator/Freezers and Freezers; Final Rule), the related Technical Support Document (TSD), and a substantial public record of workshops, hearings and technical submissions. Our comments here, while short on specific citations, are based on our first-hand knowledge of that record, and intensive involvement in the rulemaking at issue. While in many areas we take no issue with the situation as Amana describes it, we draw vastly different conclusions than Amana with regard to the appropriateness and cost effectiveness of the standard, and the timing of its implementation. The Amana Appliances Petition In the "Purpose" section of its narrative, Amana states as its reason for the Application "the potential unavailability of HFC-245fa" and goes on to cite a section of the DOE Federal Register notice of the 2001 Standard (10 CFR Part 430, Energy Conservation Program for Consumer Products: Energy Conservation Standards for Refrigerators, Refrigerator/Freezers and Freezers; Final Rule, page 23108, column 3). As can be taken from a reading of this section, it was written with a prospective view of blowing agentavailability and cost, but with a good deal of information in hand with regard to HFC245fa. A second issue that Amana raises postulates a "competitive disadvantage" situation that really hasn't to do with the availability of HFC-245fa, but rather asserts a potential harm to Amana arising from competitors' continuing to use HCFC-141 b after January 1, 2003. Of course, if Amana's predictions about HFC-245fa availability were to come true, then competitive disadvantage is largely irrelevant. In other words, these two Amana arguments are not additive, but rather are mutually exclusive. The Oregon Office of Energy opposes the granting of the Exception applied for by Amana

. Amana has not demonstrated that it will, in fact, suffer any particular hardship , burden or inequity as a result of complying with the 2001 Standard, much less that such injury would be serious , gross or unfair. Amana fails to meet the criteria for an exception for the following reasons: 1. Amana's arguments concerning the availability and performance of HFC-245fa as a replacement blowing agent for HCFC-141b are founded entirely on speculation. Should Allied Signal follow through with its plans to make adequate quantities of the new blowing agent available at a price near that assumed by DOE in the analyses supporting the new standard, then the entire foundation of the Application for Exception collapses.Pg 3

Office of Hearings and Appeals March 12, 1999 a. In a November 5, 1996 letter to Mr. Chuck Samuels of the American Home Appliance Manufacturers Association (AHAM), Mr. David Weidman of Allied Signal discusses the prospects of his company's development of HFC-245fa as an alternative blowing agent to HCFC-141b (copy attached). In the final paragraph, Mr. Weidman describes the estimated time line for all of the activities required to bring HFC-245fa to market. Today, all of the toxicity tests alluded to have been successfully completed, testing for the insulation performance of foam insulation blown with HFC245fa has been substantial and complete, and the company is ready for the initial production and "usability" phase of the program. While Allied Signal appears to be about a year behind the earlier projected time line, there is clearly more than ample time remaining for full production to meet the January 1, 2003 phase-out date for HCFC-141b. b. While Amana correctly notes some of the advantages of HFC-245fa in section 3 of the Application, the "negatives" list actually amounts to a single fault - Amana's dissatisfaction with the prospect of a sole source for this blowing agent (Allied Signal). While we sympathize with any buyer faced with a sole source situation for an important commodity, such circumstances are growing more numerous by the month, and have become common in all sectors and at all levels in our economy. And yet the economy presses on. c. Amana is correct in stating that at this time there is no manufacturing facility for HFC-245fa. But the scaling of a proposed new production facility is, after all, the goal of Allied Signal in its negotiations with AHAM members. Amana has presented no evidence or convincing argument that the manufacturing facility will not be built. Nor has it provided any evidence to justify its assertion that only one such plant will be built. d. While we're not familiar with the status and terms of the negotiations of AHAM members with Allied Signal , we found no compelling argument in Amana's Application that suggests that an agreement will not be reached

. Nor has Amana convinced us that the terms of a final agreement will be those dictated by Allied Signal. e. The price for HFC-245fa cited by Amana (page 3 of the Application) was anticipated in the DOE life cycle cost analysis for the new standard, and in no way provides cause for rethinking DOE's decision. The TSD supporting the Final Rule estimates that the added cost to consumers of meeting the new standard will be $80. Approximately one quarter of this added cost is associated with the use of HFC-245fa as the replacement blowing agent for HCFC-141b. So while we havePg 4

Office of Hearings and Appeals March 12, 1999 no reason to doubt Amana 's assertions with regard to added manufacturing costs, we do take issue with Amana ' s suggestion that these costs can not be passed on to consumers, or that somehow this wasn 't accounted for in the justification of the Final Rule

. Federal law requires DOE to examine the impact on consumers in justifying its standard decision

. The law also requires that DOE account for what fraction of the added costs from the new standard can be passed on by manufacturers, and to analyze the resulting financial impact on the manufacturers. All of this was done. The negotiations leading to the consensus recommendation to DOE , of which Amana was a part , considered these same issues as well. f. While we won't argue Amana's point concerning the lack of HFC-245fa testing in production quantities of product (bottom of page 3 of the Application), we do wish to point out that the performance of production product almost always exceeds the performance of prototype product , once the manufacturing process is fine-tuned. In the spring of 1998 , we followed through this process with another manufacturer as their new refrigerator/ freezer line was brought from initial to full production volumes

. Initial units fell significantly short of expectations in energy use performance , but full production units exceeded expectations. These units perform at or above the level of the 2001 Standard. 2. Since Amana has, in our opinion, failed to make a convincing case for consideration of blowing agents other than HFC

-245fa , the company's discussion of other alternatives seems beside the point. While we recognize that the use of blowing agents such as cyclopentane and HFC

- 1 34a result in a lowering of energy efficiency , the DOE analysis was based on the best information available in early 1997 on alternative blowing agents , and it considered these

. The conclusion then was that HFC-245fa represented the most promising and likely choice , and much information was gathered about probable price , testing time lines, and availability. All of the information assumed then has been validated to a remarkable degree in the interim

. Allied Signal could not now be negotiating production volumes with AHAM members if it had not. We also note here that Amana cites a seriously dated passage from DOE's 1995 Proposed Rule in its attempt to justify a 10 percentage point increase in allowable energy use over that required by the 2001 Standard. However, the cited text was simply a proposal made by DOE at that ti me , and was based on very preliminary information with regard to specific alternative blowing agents , their cost, their performance , or their availability. The Final Rule was based on much better, more recent information in this area , and is much better founded than the passage that Amana cites. We are aware that maximum allowable refrigerator/ freezer energy consumption is basedPg 5

Office of Hearings and Appeals March 12, 1999 on volume (as is that of water heaters); it should not be otherwise. However, it would be wrong to assume that product internal volume reduction is the only way to achieve the energy efficiency performance required by the new standard. Amana dismisses a number of the other technology options at its disposal (improved heat exchangers, more efficient motors or compressors, etc.). But we wish to point out that Amana has been manufacturing products for several years now that meet (their S6 line), and nearly meet (their S5/V5 line), this level of performance, using technologies that are now at least five years old. Given this record of accomplishment, we find it hard to believe that Amana will find it impossible or too costly to compensate for the 2-4 percent energy efficiency penalty that might result from the use of HFC-245fa as a blowing agent (2-4% is the worst case testing result so far for insulation blown with HFC-245fa). 3. We acknowledge Amana ' s concern with regard to some level of competitive disadvantage that might result if some of its competitors continue to use HCFC

- 141 b in products manufactured outside the United States (section 5 of the Application). However , several points not raised by Amana are relevant here. First, only a limited number of products are manufactured in Mexico and Canada , and these products comprise only a fraction of these manufacturers ' product lines

. Second, this advantage is temporary , lasting only until HCFC- 141b is phased out everywhere . Third, the cost penalty is small ($9-12), as pointed out by Amana, and should not result in a significant level of cost differentiation of product in the marketplace

. And even that small differential may disappear if manufacturers of HCFC- 141b take advantage of the higher price of alternatives to raise their prices. In addition, we not at all persuaded that decisions to locate a manufacturing plant within or outside the U.S. will be made on the basis of a $9-12 cost advantage conferred by choice of blowing agents. One need only examine the history of factory relocation to Mexico to conclude that more significant advantages stem from labor and infrastructure cost savings

. For instance , blowing agents are not an issue for fluorescent lamp ballast manufacturers, but most production for these devices has been moved overseas. But these larger advantages have thus far failed to move most of the refrigerator/freezer manufacturing out of the U.S. If such decisions are taken, it would be a long stretch of logic to attribute them to blowing agent cost differentials. 3. We strongly dispute the assertion by Amana that, "The DOE 7/1/01 Refrigerator/Freezer Standards were negotiated but not financially justified." First, the standards were not negotiated. What was negotiated was a consensus recommendation for a standard, and Amana was a willing stakeholder in that negotiation. Once DOE received that recommendation, it was still obligated under NAECA to justify its decision as the highest standard that is technologically feasible and economically justified, andPg 6

DOE Office of Hearings and Appeals March 12. 1999 to examine the other criteria specified by law

. These other criteria included manufacturer and competitive impacts. As pointed out above , the decision was made using the most recent information available with regard to blowing agent cost and availability

. And those assumptions have been borne out to a remarkable degree today. Amana states that , " In effect , this states that the DOE could financially justify approximately a 20% reduction in energy consumption in refrigerators and freezers;..." We have no idea what document or phrase "this" is , but our reading of the analysis supporting the Final Rule is that the 30% reduction in energy use, and the cost to achieve it, provided a 4-year payback to consumers (see the TSD , life cycle cost analysis section ). Given this, and the results of the analyses for other criteria ( manufacturer and competitive impact , for instance ), all of which were used and understood by the parties negotiating the consensus recommendation , there is clear justification for the new standard level. We find no reason whatsoever to believe that the same decision would not be reached today. 4. While Amana ' s discussion of internal volume as a key market driver is interesting, the subtle assumption in its comparisons of HFC

- 134a as the alternative blowing agent yields a more drastic impact on internal volume than is warranted

. If one assumes HFC245fa instead , the impact on volume is quite negligible

. As we find no reason believe that HFC

-245fa won 't be available , we find no merit in Amana's arguments based on HFC-134a.
Likewise , we find little merit in Amana 's discussion of other technology options for improving the overall efficiency of their product line

. As we pointed out earlier, Amana, using older technologies , has already manufactured product that meets , and nearly meets , the new standard

. Other manufacturers are using these technologies

. Maytag now manufactures versions of almost all of its products that=exceed the efficiency levels required by the 2001 standard , using some of the same technologies, reliably, that Amana disparages

. Amana notes a $5 premium for a permanent split capacitor motor (PSC motor) that provides a 1-2% improvement in energy efficiency

. It is our belief, based on the extensive testing already done, that this 1

-2% improvement is virtually all that is needed to overcome the energy penalty that might be imposed by the use of HFC245fa as a blowing agent

. In the long term , there may be no penalty at all to overcome.Pg 7

DOE Office of Hearings and Appeals aich 1_. qr^n In Conclusion: We urge the Office of Hearings and Appeals to reject Amana's Application for Exception. • Amana's arguments concerning the availability and price of HFC-245fa are unconvincing. In fact, this Application resembles nothing so much as.one part of a negotiating strategy, as Amana's discussions with Allied Signal are ongoing. • The Exception terms applied for (a ten percentage point increase in allowable energy consumption, for all products, for nearly nine years) amount to a drastic remedy for a potential minor risk. - The worst energy penalty implied by Amana's arguments is an 8 percent reduction in energy performance if cyclopentane is used as a blowing agent , assuming that no other cost-effective efficiency-enhancing design options are used to reduce this penalty. In fact, the blowing agent penalty will be substantially less than this. Like other manufacturers have already demonstrated, Amana should have no trouble making up at least some of this shortfall, were it to occur. There is no reason to assume that an exception should be granted for Amana's entire product line. As manufacturers, including Amana, have argued in the past, energy performance improvements are more difficult for some models than others. Amana has failed to take account of this fact anywhere in its arguments. The 8%2 year Exception term applied for is far too long, and applied for too soon. The recent#mistory of refrigerator technology upgrades demonstrates that significant advances occur in a 3-5 year cycle. There is every reason to believe that whatever barriers to achieving a 30% performance improvement exist today will be overcome well before 2005. In fact, a rulemaking for the next standard could conceivably be underway by then. The year 2010 is significant only as the next mark on the international time line for the phase-out of HCFC-141b. In other words, 2010 should be largely irrelevant to the refrigeratortfreezer industry in North America. On an additional note , Amana 's application is premature. It is too early to be able to conclusively demonstrate that suitable alternative blowing agents will not be available, or that there will be energy efficiency penalties large enough that they can not be overcome using other component upgrades.Pg 8

DOE Office of Hearings and Appeals March 12. 1999 ® Amana ' s potential exposure to competitive impacts due to blowing agent performance and cost is minimal , and is considerably outweighed by other factors affecting manufacturers ' financial and market positions . There is no basis for assuming an impact on U

. S. manufacturing jobs caused by such small cost differences.
This concludes our comments at this time. Pursuant to 10 CFR § 1003.9(b), I certify that I am a duly authorized representative of the Oregon Office of Energy.

Charlie Stephens Policy Analyst Conservation Division 503 378-4298

# H W

David N

. Weidman prewm( PlucwLnc Products AtUcdSlana! inc. 201 655 3611 P.U. Bux 1053 Motr*itawn. NJ 07962.1053 201455 2759 Fax

November 5,1996

Mr. Charles A. Samuels Government Relations Counsel Association of Home Appliance Manufrcturcrs 701 Pennsylvania Avenue, NW Suite 900 Washington , DC 20004
Dear Chuck: AlliedSignal has identified HFC 245fa as the most likely replacement product for HCFC 141b in appliance systems and boardstock. IIFC 245fa has outstanding energy efficiency characteristics that should lead to significant environmental benefits.
As we discussed at the CYC Confcrcncc in Washington, DC, the commercialization process has some critically important steps that have to be taken before HFC 245fa, or any other product, can be said to be commercially available. I want AHAM members to understand how we see the timetable for the commercialization of 1IFC 245fa today. I want to emphasize "today" because, as we discussed, it's impossible to predict with complete accuracy what the'future holds. Our view of the world is that toxicity, manufacturability, and what I call usability are the three critical steps we have to address. With regard to toxicity testing, we have completed the 28-day test which came out well and expect to see the results of the 90-day test around December I st

. We will rcvicw those results with AlliedSignal ' s Risk Assessment Committee, EPA and potential users of the product

.. At that point, we have to decide whether more tox testing , such as a two generation study is needed , or whether we arc confident enough in the results to move forward. Subsequently, we expect food migration studies to be conducted by appliance manufacturers. These studies will be completed and reviewed by the GRAS committee, followed by recommendations to the FDA. We expect this process.to be completed within about a year now.6



## -2- A • X7'0 ".L rv

On the manufacturing side, we have significant work ahead of us. Presently we manufacture WC 245fa at a pilot plant in our Fluorine Research Center in Buffalo, New York. We will need to build a manufacturing plant to support the nccds of the industry, We are still optimizing the manufacturing process and evaluating different locations for customizing . As we go forward with engineering and design , we will put together a capital request to our management for constructing an HFC 245fa plant

- Like all capital requests it will be judged on the basis of its return to AlliedSignal ' s shareholders. We won't know the cost of the facility until we get much deeper into the engineering and design work. The final point to make is in regard to what I will call usability. Once we have a manufacturing facility running, we will ship commercial grade quantities of product to customers to allow them to qualify AtlicdSignal 's HFC 245fa. We will also be optimizing our process because an important lesson we have learned during the CFC phase out is that the substitutes are more challenging to manufacture: Today we believe that the timeline that results from these events, if all goes well, is AlliedSigial investing in a facility in early 1998 , having it begin production in late 1999, early 2000 , and delivering products shortly after that time

. We see a ramp up in capacity taking some time as customers qualify product and make their necessary investments to use HFC 245fa. For these reasons, we believe that the phase out date for HCPC 141b in 2003 is still appropriate as our capacity ramps up and our customers change out will take some time. Chuck, I would be happy to meet with you to discuss any points in this letter or any other questions you may have about HFC 245fa Sincerely, r.Va



# i

# W.C. Wood Company Limited

HEAD OFFICE GUELPH (519) 823-9663 (905) 457-5354 (416) 861-0178 CORP. FAX (519) 767-1458

1999-March-12 Office of Hearings and Appeals U.S. Department of Energy 1000 Independence Avenue, SW Washington, D.C. 20585-0107
Attention : Fred L. Brown

Deputy Assistant Director Re: Case No. VEE - 0054

Dear Mr. Brown P. O. BOX 750 5 ARTHUR ST. SOUTH GUELPH. ONTARIO CANADA N I H 6L9

Cr

Thank you for the opportunity to comment on the 'Application for Exception', filed by Amana Appliances (Amana), with respect to relief from the provisions of 10 C.F.R. Part 430, Energy Conservation Program for Consumer Products: Energy Conservation Standards for Refrigerators, Refrigerators-Freezers and Freezers. W. C. Wood Company is a privately owned North American appliance manufacturer with manufacturing facilities in Ontario, Canada and Ohio, U.S.A. While not a 'full line' manufacturer of appliances, W. C. Wood does manufacture a complete line of chest and upright household freezers as well as compact and 'niche market refrigerators and freezers. W. C. Wood competes in the North American and the international marketplace. W. C. Wood shares the North American freezer market with virtually its only competitor, Frigidaire (parent company Electrolux). Competition in the compact and 'niche' refrigerator market comes from numerous sources, both domestic and off shore. The issues and concerns raised by Amana , in their 'Application for Exception ', hold true for W. C. Wood Company as well and we believe that the data supplied by Amana is correct and unbiased and further data from W

. C. Wood Company is not required

. It should be noted that Amana was not the only North American company to cease the manufacture of freezers as a result of the 1990 and 1993 energy standard requirements

. As previously mentioned , only W

. C. Wood and Frigidaire made the decision to invest in the redesign required to manufacture freezers which would meet the energy regulations of the United States and Canada

. A continuation of this investment was required when the industry was required to phase out of CFC's for 1996/01 /01. At that time W

. C. Wood moved from CFC-12 to HFC-134a in the refrigeration system and a blend of HCFC- 141b and HCFC-22 as a replacement blowing agent for CFC- 11 in the appliance foam insulation.

MANUFACTURERS OF FREEZERS , KITCHEN COMPACTS, REFRIGERATORS HUMIDIFIERS AND DEHUMIDIFIERS 

### I1 h?Both of these changes resulted in additional loss of energy efficiencies which had to be

overcome in order to have our freezer products continue to meet the DOE 1993 Energy Standard. As correctly stated in the Amana application , at the time of the 'energy standards' negotiations, the industry believed that HFC-245fa would be available and could provide manufacturers with an alternative blowing agent which would not further compromise refrigeration appliance energy efficiency

. The already significant challenge of meeting the new 2001/07/01 energy standards now appears to be even more difficult. The current situation has the two best blowing agent alternatives for appliance foam insulation (on EPA's SNAP list), R134a and cyclopentane , demonstating to have a negative impact on energy efficiency of 10% to 12%. The availability of HFC-245fa as a comparable alternative blowing agent is very uncertain at this time. In fact, at this point in time, we do not believe that HFC-245fa has been peer reviewed, let alone 'SNAP' listed. W. C. Wood Company is not opposing the Amana application, nor contemplating a similar application on its own behalf, at this time. It must be noted however, that W. C. Wood Company is very seriously evaluating and considering which refrigeration products may not be viable to manufacture due to technical , economic or market acceptance issues

. This is due to the very real possibility of HFC-245fa not being commercially available , and virtually all products requiring a redesign to meet 2001/07/01 and then another redesign to overcome the additional 10% energy penalty which would be incurred with the 2003101/01 phase out of HCFC- 141 b. Product decisions end designs must be 'finalized ', and tooling and plant modifications started in the next few months for products to be ready for the 2001/07/01 Energy Standard deadline. Thank you for your time, and please do hesitate to contact me for any further information or clarification required.
Sincerely,

David M. Sheach 

### Manager , Corporate Engineering and Quality

cc: Alan F. Kessler Vice President, Engineering & Quality Amana Appliances

## Statement by :

Whirlpool Corporation

In response to a petition by Amana Appliances

Regarding:

An Application for Exception to the Office of Hearings and

Appeals, U.S. Department of Energy

10 CFR Part 430, Energy Conservation Program for Consumer Products:Energy Conservation for Standards for Refrigerators, RefrigeratorFreezers, and Freezers



## March 15, 1999Whirlpool Corporation has comments regarding Amana Appliances Application for Exception (dated

February 18, 1999). The Amana Application petitions the Department of Energy (DOE) for exception relief from the 7/1/01 Refrigerator Standards due to "potential unavailability of HFC-245fa." Amana Appliances also states that "it is still possible that subsequent tests will identify unacceptable risks associated with the loss of this product or that its commercial availability will be delayed beyond 2003." By way of background, Whirlpool Corporation is a leading manufacturer of a full line of major home appliances and has three refrigerator plants in the U.S. We have been deeply involved in the crafting of every DOE energy standard since the inception of the National Appliance Energy Conservation Act of 1987 (NAECA). We were a leading participant in the informal regulatory negotiations that led to the formulation of the pending new refrigerator energy standards that are the focus of the Amana petition. Amana appliances requests exception relief under Section 504 of the Department of Energy Organization Act that authorizes the DOE to make adjustments of any rule issued under the Energy Policy and Conservation Act to prevent "special hardship, inequity, or unfair distribution of burdens" [42 USC Section 7194 (a)]. Amana's petition further states that the issues need to be discussed in the context of two regulations affecting the appliance industry: 1) the EPA rule phasing out the production of HCFC-141b, and 2) the DOE rule requiring a 30% reduction in energy consumption effective 7/1/01. Amana bases their petition on uncertainty of the availability of HFC-245fa at a reasonable cost. HCFC-141b is a critical, interim blowing agent with excellent insulating qualities and has been used in the manufacture of most refrigerators produced in the U.S. since the phase-out of CFCs. However, it will no longer be available after 1/1/2003. HFC-245fa is a candidate replacement blowing agent that also produces foam that has excellent insulating qualities that are comparable to those of HCFC-141b foam. However, testing has indicated that the use of any of the other available replacements for HCFC-141b results in an "energy penalty" of approximately 10%. Because of questions relating to the availability and acceptability of HFC-245fa, the DOE stated in the Final Rule for refrigerators (dated April 28,1997) that "some uncertainty still exists about the ultimate acceptability of HFC-245fa or other comparable blowing agents, as .well as some uncertainty regarding the timing of commercial production of such product" (62 FR 23108, third column). It is for these reasons that the DOE offered (in the final rule) to consider granting exception relief under Section 504 of the Department of Energy Organization Act (62 FR 23108, third column). Amana is correct in their general argument that if HFC-245fa is not available as a blowing agent, the standards would result in costs and business risks that are unacceptable. However, this is true for the entire appliance industry, not just for Amana. Therefore, if an exception is granted, it should be for all products produced without HCFC-141b, regardless of the manufacturer. The net effect of the Amana petition, if granted , would be to reduce the stringency of the DOE's 2001 energy efficiency standards by 10% for products that do not use HCFCs. We agree with many of Amana ' s statements and will file a similar petition if it becomes clear that HFC-245fa will not be available when needed

. The outcome of negotiations (regarding the availability of HFC-245fa) should be apparent in the near future.Page 2 - Whirlpool Corporation comments

We believe that there is substantial merit to the case for a different standard level for products produced without HCFCs and wish to emphasize the following: 1) The-original negotiated consensus "98 standard" included a provision for a different standard for products produced without HCFCs. This was based upon agreement in principle that the "30,%" standard level was economically justified for products made with HCFC-14lb, but not for products made with less efficient blowing agents. However, the DOE dropped this provision when the standard was finally issued, because at that time it appeared that HFC-245fa would be available as a replacement. 2) If the 30% standard is maintained for products using HFC-134a or cyclopentane (realistically, the only other choices available to the industry at this time), manufacturers will effectively be required to achieve a 37% reduction in energy consumption below the 1993 standards levels. We believe that this level would definitely NOT meet legal requirements of NAECA for economic justification." 3) Amana's comments about the value of storage volume have credibility, as do most of their statements about other options. Compliance situations will differ from manufacturer to manufacturer, but achieving the 30% standard with either HFC-134a or c-pentane will be extremely expensive, result in longer return on investment to consumers, significantly increase life cycle costs and could negatively impact the net present value of the U.S. appliance industry. The burden of cumulative regulatory costs will also be exacerbated by failure to grant relief if HFC=245fa proves not to be available or acceptable as a blowing agent in the near term. In summary, we strongly support the Amana petition for exception relief from pending new DOE refrigerator energy standards, provided that relief is granted equally to all manufacturers for products produced without the use of HCFC-141b. If it becomes apparent that current negotiations to secure a source for HCFC-245-fa will not be. successful, Whirlpool will submit its own petition for similar relief. The "adjustments" contemplated under Section 5104 of the Department of Energy Reorganization Act require a spirit of fairness that will "prevent special hardship, inequity and unfair distribution of burdens." Consequently, such relief (if granted) must apply across the entire U.S. refrigerator manufacturing industry, not just to Amana. Thank you for the opportunity to comment. 

### For further information please contact: Robert Johnson Director, Product Technology Support Whirlpool Corporation Highway 41 North Evansville, IN 47727 PH: 812/426-4610 Mike Thompson Director, Government Relations Whirlpool Corporation 

### 2000 M 63 Benton Harbor, MI 49022 PH: 616/923-4647 michael-c-thompson@email-whirlpool.com

r:Mvbm co,.cea rs v ^o ^acw+ A-MAL-DX

TOTAL P.04WHITE CONSOLIDATED INDUSTRIES, INC.
11770 BEREA ROAD CLEVELAND, OHIO 44111-1688
TERRY V

. THIELE ASSOCIATE GENERAL COUNSEL 11 March 1999 Office of Hearings and Appeals U.S. Department of Energy 1000 Independence Avenue, S.W. Washington, DC 20585-0107 RE: Amana Appliances Petition for Exception Relief to the 7/1/01 Refrigerator/Freezer Energy Standards Due to the Potential Unavailability of HFC-245fa
Dear Sir or Madam: This is the preliminary response of White Consolidated Industries , Inc." ("WCI"), to the Amana Appliances ("Amana") petition submitted to the Office of Hearings and Appeals (" OHA") for exception relief to the 7/1/01 refrigerator/

freezer energy standards promulgated by the Department of Energy under the National Appliance Energy Conservation Act. Specifically, Amana has petitioned for relief in the form of a 10% increase in allowable energy consumption for all classes of refrigerator/ freezers under the pending energy standards , found at 10 CFR Part 430

. Amana seeks this relief from the effective date of those standards, 1 July 2001, until 1 January

. 2010. WCI , through its Frigidaire Home Products division , manufactures and sells refrigerators and freezers governed by the aforementioned energy standards and, consequently, could be aggrieved by the OHA action sought by Amana

. WCI reserves the right to file additional comments at a later date , as explained more fully below

. WCI hereby certifies to the OHA our compliance with the notification provisions of paragraph 1003.23(d).2 Amana petitions pursuant to 17 CFR Part 1003 , which establishes procedures for authorizing an exception from a Departmental rule or regulation , as provided for in § 504 (42 U.S .C. 7194) of the Department of Energy Organization Act (42 U

. S.C. 7101 et seq .), based on a demonstration of serious hardship, gross inequity or unfair distribution of burdens

. Amana claims that such a serious hardship will result from having to comply with the aforementioned energy standards , given the unavailability of HFC-245fa. Amana argues that the energy standard levels were justified upon the assumption that HFC-245fa would be available and that the Department agreed to entertain petitions for relief if the commercial availability of HFC

-245fa was delayed beyond 2003:

1 White Consolidated Industries, Inc., is a wholly owned subsidiary of AB Electrolux, headquartered in Stockholm, Sweden. 2 10 CFR Part 1003

- Sec. 1003

.23 Notice. (a) The applicant shall send by United States mail a copy of the application and any subsequent amendments or other documents relating to the application, or a copy from which confidential information has been deleted in accordance with § 1003.9(f), to each person who is reasonably ascertainable by the applicant as a person who would be aggrieved by the OHA action sought. (d) Any person submitting written comments to the OHA with- respect to an application filed under this subpart shall send a copy of the comments, or a copy from which confidential information has been deleted in accordance with § 1003.9(f), to the applicant. The person shall certify to the OHA that he has complied with the requirements of this paragraph. The OHA may notify other persons participating in the proceeding of such comments and provide an opportunity for such persons to respond.

P.O. BOX 110036 ® TELEPHONE (216) 252-8376 ® FAX (216) 252-8158WHITE CONSOLIDATED INDUSTRIES, INC.

DOE recognizes that some uncertainty still exists about the ultimate acceptability of HFC-245fa or other comparable blowing agents , as well as some uncertainty regarding the timing of commercial production of such a product

.... Consequently , it is still possible

. . . that [HFC

-245fa'sj commercial availability will be delayed beyond 2003

. Under such conditions, DOE may grant manufacturers exception relief. Section 504 of the Department of Energy Organization Act authorizes DOE to make adjustment of any rule or order issued under the Energy Policy and Conservation Act, consistent with the other purposes of the Act , if necessary to prevent special hardship, inequity, or unfair distribution of burdens

. 42 U.S

. C. Section 7194(a). 62 Fed

. Reg. 23102 , 23108 (April 28 , 1997).
WCI offers comments to the following statements made by Amana in support of its petition. We reserve the right to offer additional comments as developments in the near future may warrant:
"HFC-245fa availability is at high risk. There is currently no manufacturing facility anywhere in the world that has the capabilities to produce HFC-245fa. " We agree with this characterization of the current risk vis-a-vis HFC-245fa availability. "Allied Signal, working through AHAM ( Association of Home Appliance Manufacturers), is working to obtain a commitment by 3/99 from the appliance industry such that Allied Signal can move forward and commercialize HFC-245fa and start building a manufacturing facility to produce the chemical." We agree with this statement. "HFC-245fa would have a sole supplier ( Allied Signal

); and therefore, there would be no competition to further drive the cost of this blowing agent downward as time continues to go along." We agree with this statement. "Allied Signal owns the license from Bayer

. The license contract expiration from Bayer is unknown at this time." We agree with this statement. "HFC-245fa would be produced in a single manufacturing facility (Allied Signal ), and there is no backup chemical that is easily converted in a refrigerator/freezer factory or from a product performance standpoint if a natural disaster occurs such as a flood , tornado, fire, and so forth. " We infer that Amana is alluding to a disruption in supply of HFC
-245fa resulting from a natural disaster

. Given that clarification , we agree with this statement. "It is unlikely that the members of AHAM will sign up and agree to the business commitments or terms and conditions that Allied Signal has presented to the AHAM members

. The proposal is a long-term take or pay contract which minimizes any risk to Allied Signal. We submit that the veracity of this statement will be known within the next 30 days

. However, it is premature to draw such a conclusion as of this date. "HFC-245fa price increases in the future are a possibility

. The cost of HFC-245fa is extremely high now, and price increases in the future would make it even more uneconomical. The increase in the cost ofeach refrigerator would be approximately $9 to $12 depending upon the size of the refrigerator and the amount

2WHITE CONSOLIDATED INDUSTRIES, INC.

of foam insulation that is used in each specific refrigerator

. This is approximately a 4% increase in the standard manufacturing cost of a refrigerator

. Price increases in the marketplace historically cannot be passed on to the consumers, and the manufacturers profit margins have been declining also." We agree with these statements. "HFC-245fa is not commercially available yet in large quantities; and therefore , significant testing with large quantities of product and field testing has not been trialed yet. Only small numbers of units have been tested. " We agree with this statement. "There are some alternatives to HFC-245fa including HFC-134a, and cyclopentane. Neither of these blowing agents are nearly as energy efficient as HFC-245fa." We agree with this statement insofar as it characterizes the energy efficiency of HFC-134a andcyclopentane. We note that the energy performance of other chemicals, such as R-22 or HCFC124, could present economically justifiable alternatives to HFC-245fa if long term accessibility to such chemicals was guaranteed. We note that these chemicals are ozone depleting substances, the continued access to which is governed by the Environmental Protection Agency. To date, EPA has declined to ensure long term access to these chemicals for refrigeration foam applications. However, it is our understanding that EPA has grandfathered long term access for manufacturers already using such chemicals (R-22). "Internal volume is a significant market driver. For example, a 23 ft3 refrigerator provides more value to a consumer than a 21 f3 refrigerator, especially if the price at retail is equivalent." We agree with this statement. "Refrigerator manufacturers do NOT have the luxury of increasing the outside or external cabinet dimensions. The kitchen cabinet openings in most instances limit the dimensions to 28", 30", 33" or 36" wide and 62", 66" or 69" high." We agree with this statement. "[A]s we use less efficient blowing agents in foam insulations, the adjusted volume will be significantly reduced; and therefore, the allowable energy consumption will be reduced." We agree with this statement. "The lead time to qualify an alternate blowing agent is typically 3-6 years". We agree with this statement as long as Amana's definition of "qualify" includes the identification and development of the blowing agent plus the installation of all necessary plant facilities.. "Other blowing agents such as HFC-236ea, HFC-365mfc, and others have been briefly evaluated but have been unsuccessful due to poor thermal performance, chemical compatibility, cost, availability, toxicity, etc." We generally agree with this statement, with the exception of HCFC-124 and R-22. "Other energy reduction opportunities available to the U.S. refrigerator/freezer manufacturers are not cost effective and/or are not sufficiently reliable. These include, but not limited to, vacuum insulation panels (VIP), ECM (electronically commutated motor) evaporator motors, ECM condenser motors, and PSC (permanent split capacitor) condenser motors. . . . Catastrophic failure modes may occur when an evacuated panel fails. Panels are not currently available commercially since Owens Corning ceased manufacturing several months ago. Vacuum insulation panels historically have not been cost effective.

3WHITE CONSOLIDATED INDUSTRIES, INC.

"PSC evaporator motors are not currently available in the market that can withstand the environmental requirements necessary to meet long-term reliability test standards. "PSC condenser motors are available at a high cost ($5 premium per motor).... However, depending on the allowable energy of the refrigerator and several other factors, the energy savings for a PSC motor is typically only I% to 2%." We agree with these statements. Due to the fact that the EPA regulations only ban the use of HCFC-141b in the U.S.A. after 1/1/03, Amana Appliance's competitors such as General Electric in Mexico, Whirlpool in Mexico, W.C. Wood in Canada, and General Electric in Canada, have a significant competitive advantage since they can produce product outside of the U.S.A. and export product into the U.S.A. until the year 2010 (or later) with a significantly more cost effective and a significantly more energy efficient blowing agent in HCFC-141b. This puts Amana Appliances at a tremendous competitive disadvantage when our competitors can build product across the border and very easily ship product into the U.S.A. One can assume that more and more refrigerators will be produced between now and the year 2010 and beyond in countries such as Mexico and Canada, and significant employment could be lost in the U.S.A. We agree with these statements.
We hope that our comments facilitate the OHA review of the Amana petition.
Very1ruly yours,

Terry V.'Thiele Associate General Counsel
Copy to: Alan F. Kessler, PE Vice President, Engineering & Quality Amana Appliances 2800 220th Trail Amana, Iowa 52204-0001

4