Vol. 79 Thursday, 

No. 128 July 3, 2014 

Part II 

Department of Energy 

10 CFR Parts 429 and 430 

Energy Conservation Program for Consumer Products: Energy 

Conservation Standards for Residential Furnace Fans; Final Rule 

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38130 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

DEPARTMENT OF ENERGY 

10 CFR Parts 429 and 430 

[Docket Number EERE–2010–BT–STD– 

0011] 

RIN 1904–AC22 

Energy Conservation Program for 

Consumer Products: Energy 

Conservation Standards for 

Residential Furnace Fans 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Final rule. 

SUMMARY: Pursuant to the Energy Policy 

and Conservation Act of 1975 (EPCA), 

as amended, the U.S. Department of 

Energy (DOE) must prescribe energy 

conservation standards for various 

consumer products and certain 

commercial and industrial equipment, 

including residential furnace fans. 

EPCA requires DOE to determine 

whether such standards would be 

technologically feasible and 

economically justified, and would save 

a significant amount of energy. In this 

final rule, DOE is adopting new energy 

conservation standards for residential 

furnace fans. DOE has determined that 

the prescribed energy conservation 

standards for these products would 

result in significant conservation of 

energy, and are technologically feasible 

and economically justified. 

DATES: The effective date of this rule is 

September 2, 2014. Compliance with the 

prescribed standards established for 

residential furnace fans in this final rule 

is required on and after July 3, 2019. 

ADDRESSES: The docket for this 

rulemaking, which includes Federal 

Register notices, public meeting 

attendee lists and transcripts, 

comments, and other supporting 

documents/materials, is available for 

review at www.regulations.gov. All 

documents in the docket are listed in 

the www.regulations.gov index. 

However, not all documents listed in 

the index may be publicly available, 

such as information that is exempt from 

public disclosure. 

A link to the docket Web page can be 

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

buildings/appliance_standards/

rulemaking.aspx/ruleid/41. The 

www.regulations.gov Web page contains 

simple instructions on how to access all 

documents, including public comments, 

in the docket. 

For further information on how to 

review the docket, contact Ms. Brenda 

Edwards at (202) 586–2945 or by email: 

Brenda.Edwards@ee.doe.gov. 

FOR FURTHER INFORMATION CONTACT: 

Mr. Ron Majette, U.S. Department of 

Energy, Office of Energy Efficiency 

and Renewable Energy, Building 

Technologies Office, EE–5B, 1000 

Independence Avenue SW., 

Washington, DC 20585–0121. 

Telephone: (202) 586–7935. Email: 

Ronald.Majette@ee.doe.gov. 

Mr. Eric Stas, U.S. Department of 

Energy, Office of the General Counsel, 

GC–71, 1000 Independence Avenue 

SW., Washington, DC 20585–0121. 

Telephone: (202) 586–9507. Email: 

Eric.Stas@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Summary of the Final Rule 

A. Benefits and Costs to Consumers 

B. Impact on Manufacturers 

C. National Benefits and Costs 

D. Conclusion 

II. Introduction 

A. Authority 

B. Background 

1. Current Standards 

2. History of Standards Rulemaking for 

Residential Furnace Fans 

III. General Discussion 

A. Test Procedures 

B. Product Classes and Scope of Coverage 

C. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

D. Energy Savings 

1. Determination of Savings 

2. Significance of Savings 

E. Economic Justification 

1. Specific Criteria 

a. Economic Impact on Manufacturers and 

Commercial Customers 

b. Savings in Operating Costs Compared To 

Increase in Price (Life-Cycle Costs) 

c. Energy Savings 

d. Lessening of Utility or Performance of 

Equipment 

e. Impact of Any Lessening of Competition 

f. Need of the Nation To Conserve Energy 

g. Other Factors 

2. Rebuttable Presumption 

IV. Methodology and Discussion 

A. Market and Technology Assessment 

1. Definition and Scope of Coverage 

2. Product Classes 

3. Technology Options 

a. Fan Housing and Airflow Path Design 

Improvements 

b. Inverter Controls for PSC Motors 

c. High-Efficiency Motors 

d. Multi-Stage or Modulating Heating 

Controls 

e. Backward-Inclined Impellers 

B. Screening Analysis 

1. Screened-Out Technologies 

2. Remaining Technologies 

a. High-Efficiency Motors 

b. Backward-Inclined Impellers 

C. Engineering Analysis 

1. Efficiency Levels 

a. Baseline 

b. Percent Reduction in FER 

2. Manufacturer Production Cost (MPC) 

a. Production Volume Impacts on MPC 

b. Inverter-Driven PSC Costs 

c. Furnace Fan Motor MPC 

d. Motor Control Costs 

e. Backward-Inclined Impeller MPC 

f. Other Components 

D. Markups Analysis 

E. Energy Use Analysis 

F. Life-Cycle Cost and Payback Period 

Analysis 

1. Installed Cost 

2. Operating Costs 

3. Furnace Fan Lifetime 

4. Discount Rates 

5. Compliance Date 

6. Base-Case Efficiency Distribution 

7. Payback Period 

G. Shipments Analysis 

H. National Impact Analysis 

1. National Energy Savings Analysis 

2. Net Present Value Analysis 

I. Consumer Subgroup Analysis 

J. Manufacturer Impact Analysis 

1. Overview 

2. Government Regulatory Impact Model 

a. Government Regulatory Impact Model 

Key Inputs 

b. Government Regulatory Impact Model 

Scenarios 

3. Discussion of Comments 

a. Conversion Costs 

b. Cumulative Regulatory Burden 

c. Scope of MIA Coverage 

d. Markups Analysis 

e. Employment Impacts 

f. Consumer Utility 

g. Small Businesses 

K. Emissions Analysis 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

1. Social Cost of Carbon 

a. Monetizing Carbon Dioxide Emissions 

b. Development of Social Cost of Carbon 

Values 

c. Current Approach and Key Assumptions 

M. Utility Impact Analysis 

N. Employment Impact Analysis 

O. Comments on Proposed Standards 

V. Analytical Results and Conclusions 

A. Trial Standard Levels 

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Consumers 

a. Life-Cycle Cost and Payback Period 

b. Consumer Subgroup Analysis 

c. Rebuttable Presumption Payback 

2. Economic Impact on Manufacturers 

a. Industry Cash-Flow Analysis Results 

b. Impacts on Employment 

c. Impacts on Manufacturing Capacity 

d. Impacts on Subgroups of Manufacturers 

e. Cumulative Regulatory Burden 

3. National Impact Analysis 

a. Significance of Energy Savings 

b. Net Present Value of Consumer Costs 

and Benefits 

c. Indirect Impacts on Employment 

4. Impact on Product Utility or 

Performance 

5. Impact of Any Lessening of Competition 

6. Need of the Nation To Conserve Energy 

7. Other Factors 

C. Conclusions 

1. Benefits and Burdens of Trial Standard 

Levels Considered for Residential 

Furnace Fans 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38131 

1 DOE calculated a present value in 2014; all 

monetary values in this document are expressed in 

2013 dollars unless explicitly stated otherwise. 

2All monetary values in this section are 

expressed in 2013$ and are discounted to 2014. 

2. Summary of Benefits and Costs 

(Annualized) of Today’s Standards 

VI. Procedural Issues and Regulatory Review 

A. Review Under Executive Orders 12866 

and 13563 

B. Review Under the Regulatory Flexibility 

Act 

C. Review Under the Paperwork Reduction 

Act 

D. Review Under the National 

Environmental Policy Act of 1969 

E. Review Under Executive Order 13132 

F. Review Under Executive Order 12988 

G. Review Under the Unfunded Mandates 

Reform Act of 1995 

H. Review Under the Treasury and General 

Government Appropriations Act, 1999 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General 

Government Appropriations Act, 2001 

K. Review Under Executive Order 13211 

L. Review Under the Information Quality 

Bulletin for Peer Review 

M. Congressional Notification 

VII. Approval of the Office of the Secretary 

I. Summary of the Final Rule 

Title III, Part B of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

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

6291–6309, as codified), established the 

Energy Conservation Program for 

Consumer Products Other Than 

Automobiles. Pursuant to EPCA, any 

new or amended energy conservation 

standard that DOE prescribes for certain 

products, such as furnace fans, must be 

designed to achieve the maximum 

improvement in energy efficiency that is 

technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A)). Furthermore, the new or 

amended standard must result in a 

significant conservation of energy. (42 

U.S.C. 6295(o)(3)(B)). In accordance 

with these and other statutory 

provisions discussed in this notice, DOE 

proposes amended energy conservation 

standards for furnace fans. The 

proposed standards shall have a fan 

energy rating (FER) value that meets or 

is less than the values shown in Table 

I.1. These standards would apply to all 

products listed in Table I.1 and 

manufactured in, or imported into, the 

United States on or after manufactured 

on and after July 3, 2019. 

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

Product class FER*

(watts/cfm) 

Percent 

increase over 

baseline 

(percent) 

Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG–NC) ................................................... FER = 0.044 x QMax + 182 46 

Non-Weatherized, Condensing Gas Furnace Fan (NWG–C) ............................................................. FER = 0.044 x QMax + 195 46 

Weatherized Non-Condensing Gas Furnace Fan (WG–NC) .............................................................. FER = 0.044 x QMax + 199 46 

Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO–NC) ..................................................... FER = 0.071 x QMax + 382 12 

Non-Weatherized Electric Furnace/Modular Blower Fan (NWEF/NWMB) ......................................... FER = 0.044 x QMax + 165 46 

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan (MH–NWG–NC) .................... FER = 0.071 x QMax + 222 12 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan (MH–NWG–C) ............................... FER = 0.071 x QMax + 240 12 

Mobile Home Electric Furnace/Modular Blower Fan (MH–EF/MB) .................................................... FER = 0.044 x QMax + 101 46 

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

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

* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the final DOE test procedure at 10 CFR part 430, subpart 

B, appendix AA. 

A. Benefits and Costs to Consumers 

Table I.2 presents DOE’s evaluation of 

the economic impacts of today’s 

standards on consumers of residential 

furnace fans, as measured by the average 

life-cycle cost (LCC) savings and the 

median payback period (PBP). The 

average LCC savings are positive for all 

product classes. 

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

Product class 

Average LCC 

savings 

(2013$) 

Median payback period 

(years) 

Non-Weatherized, Non-Condensing Gas Furnace Fan .......................................................................................... $506 5.4 

Non-weatherized, Condensing Gas Furnace Fan ................................................................................................... $341 5.8 

Weatherized Non-Condensing Gas Furnace Fan ................................................................................................... $447 4.4 

Non-Weatherized, Non-Condensing Oil Furnace Fan ............................................................................................ $46 1.7 

Non-weatherized Electric Furnace/Modular Blower Fan ......................................................................................... $204 3.2 

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan .................................................................... $36 2.7 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan ........................................................................... $35 2.3 

Mobile Home Electric Furnace/Modular Blower Fan ............................................................................................... $85 4.1 

B. Impact on Manufacturers 

The industry net present value (INPV) 

is the sum of the discounted cash flows 

to the industry from the base year 

through the end of the analysis period 

(2014 to 2048). Using a real discount 

rate of 7.8 percent, DOE estimates that 

the INPV for manufacturers of 

residential furnace fans is $349.6 

million.1 Under today’s standards, DOE 

expects that manufacturers may lose up 

to 16.9 percent of their INPV, which is 

approximately $59.0 million. Total 

conversion costs incurred by industry 

prior to the compliance date are 

expected to reach $40.6 million. 

C. National Benefits and Costs 2

DOE’s analyses indicate that today’s 

standards would save a significant 

amount of energy. The lifetime energy 

savings for residential furnace fans 

purchased in the 30-year period that 

begins in the year of compliance with 

the standards (2019–2048) amount to 

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38132 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

3A quad is equal to 1015 British thermal units 

(Btu). 

4A metric ton is equivalent to 1.1 short tons. 

Results for NOX and Hg are presented in short tons. 

5 DOE calculated emissions reductions relative to 

the Annual Energy Outlook 2013 (AEO 2013) 

Reference case, which generally represents current 

legislation and environmental regulations for which 

implementing regulations were available as of 

December 31, 2012. 

6Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive 

Order 12866, Interagency Working Group on Social 

Cost of Carbon, United States Government (May 

2013; revised November 2013) (Available at: 

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

assets/inforeg/technical-update-social-cost-ofcarbon-for-regulator-impact-analysis.pdf). 

7 DOE is investigating valuation of avoided Hg 

and SO2 emissions. 

8 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value in 2014, the year used for discounting the 

NPV of total consumer costs and savings, for the 

time-series of costs and benefits using discount 

rates of three and seven percent for all costs and 

benefits except for the value of CO2 reductions. For 

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

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

3.99 quadrillion Btu (quads 3). The 

estimated annual energy savings in 2030 

(0.07 quads) are equivalent to 0.3 

percent of total U.S. residential energy 

use in 2012. 

The cumulative net present value 

(NPV) of total consumer costs and 

savings of today’s standards for 

residential furnace fans ranges from 

$10,024 million (at a 7-percent discount 

rate) to $28,810 million (at a 3-percent 

discount rate). This NPV expresses the 

estimated total value of future 

operating-cost savings minus the 

estimated increased product costs for 

residential furnace fans purchased in 

2019–2048. 

In addition, today’s standards are 

expected to have significant 

environmental benefits. The energy 

savings would result in cumulative 

emission reductions of approximately 

180.6 million metric tons (Mt) 4 of 

carbon dioxide (CO2), 695.0 thousand 

tons of methane (CH4), 235.7 thousand 

tons of sulfur dioxide (SO2), 84.0 

thousand tons of nitrogen oxides (NOX), 

6.2 thousand tons of nitrous oxide 

(N2O), and 0.4 tons of mercury (Hg).5

The cumulative reduction in CO2

emissions through 2030 amounts to 34 

million Mt. 

The value of the CO2 reductions is 

calculated using a range of values per 

metric ton of CO2 (otherwise known as 

the Social Cost of Carbon, or SCC) 

developed by a recent Federal 

interagency process.6 The derivation of 

the SCC values is discussed in section 

IV.L. Using discount rates appropriate 

for each set of SCC values, DOE 

estimates that the net present monetary 

value of the CO2 emissions reductions is 

between 1,134 million to 16,799 

million. DOE also estimates that the net 

present monetary value of the NOX

emissions reductions is $53.1 million at 

a 7-percent discount rate, and $110.8 

million at a 3-percent discount rate.7

Table I.3 summarizes the national 

economic costs and benefits expected to 

result from today’s standards for 

residential furnace fans. 

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

CONSERVATION STANDARDS* 

Category Present value 

million 2013 $ 

Discount rate 

(percent) 

Benefits 

Consumer Operating Cost Savings ....................................................................................................................... 13,409 7 

34,999 3 

CO2 Reduction Monetized Value ($12.0/t case)** ................................................................................................ 1,134 5 

CO2 Reduction Monetized Value ($40.5/t case)** ................................................................................................ 5,432 3 

CO2 Reduction Monetized Value ($62.4/t case)** ................................................................................................ 8,694 2 .5 

CO2 Reduction Monetized Value ($119/t case)** ................................................................................................. 16,799 3 

NOX Reduction Monetized Value (at $2,684/ton)** .............................................................................................. 53 7 

111 3 

Total Benefits† ....................................................................................................................................................... 18,894 7 

40,542 3 

Costs 

Consumer Incremental Installed Costs ................................................................................................................. 3,385 7 

6,189 3 

Net Benefits 

Including CO2 and NOX† Reduction Monetized Value ......................................................................................... 15,509 7 

34,353 3 

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

consumers which accrue after 2048 from the products purchased in 2019–2048. The results account for the incremental variable and fixed costs 

incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate. 

The benefits and costs of today’s 

standards, for products sold in 2019– 

2048, can also be expressed in terms of 

annualized values. The annualized 

monetary values are the sum of: (1) The 

annualized national economic value of 

the benefits from operating the product 

that meets the new or amended standard 

(consisting primarily of operating cost 

savings from using less energy, minus 

increases in equipment purchase and 

installation costs, which is another way 

of representing consumer NPV), and (2) 

the annualized monetary value of the 

benefits of emission reductions, 

including CO2 emission reductions.8

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38133 

then calculated the fixed annual payment over a 30- 

year period (2019 through 2048) that yields the 

same present value. The fixed annual payment is 

the annualized value. Although DOE calculated 

annualized values, this does not imply that the 

time-series of cost and benefits from which the 

annualized values were determined is a steady 

stream of payments. 

Although adding the value of 

consumer savings to the values of 

emission reductions provides a valuable 

perspective, two issues should be 

considered. First, the national operating 

cost savings are domestic U.S. consumer 

monetary savings that occur as a result 

of market transactions, whereas the 

value of CO2 reductions is based on a 

global value. Second, the assessments of 

operating cost savings and CO2 savings 

are performed with different methods 

that use different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

residential furnace fans shipped in 

2019–2048. The SCC values, on the 

other hand, reflect the present value of 

all future climate-related impacts 

resulting from the emission of one 

metric ton of carbon dioxide in each 

year. These impacts continue well 

beyond 2100. 

Estimates of annualized benefits and 

costs of today’s standards are shown in 

Table I.4. The results under the primary 

estimate are as follows. Using a 7- 

percent discount rate for benefits and 

costs other than CO2 reduction (for 

which DOE used a 3-percent discount 

rate along with the SCC series that has 

a value of $40.5/t in 2015), the cost of 

the residential furnace fans standards in 

today’s final rule is $358 million per 

year in increased equipment costs, 

while the benefits are $1416 million per 

year in reduced equipment operating 

costs, $312 million in CO2 reductions, 

and $5.61 million in reduced NOX

emissions. In this case, the net benefit 

amounts to $1,376 million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the SCC series 

that has a value of $40.5/t in 2015, the 

cost of the residential furnace fans 

standards in today’s rule is $355 million 

per year in increased equipment costs, 

while the benefits are $2010 million per 

year in reduced operating costs, $312 

million in CO2 reductions, and $6.36 

million in reduced NOX emissions. In 

this case, the net benefit amounts to 

$1,973 million per year. 

TABLE I.4—ANNUALIZED BENEFITS AND COSTS OF STANDARDS FOR RESIDENTIAL FURNACE FANS

Discount rate Primary 

estimate * 

Low net benefits 

estimate * 

High net benefits 

estimate * 

million 2013$/year 

Benefits 

Consumer Operating Cost 

Savings.

7% .....................................

3% .....................................

1416 ..................................

2010 ..................................

1167 ..................................

1626 ..................................

1718 

2467 

CO2 Reduction (at $12.0/t 

case) **.

5% ..................................... 90 ...................................... 77 ...................................... 108 

CO2 Reduction (at $40.5/t 

case) **.

3% ..................................... 312 .................................... 268 .................................... 377 

CO2 Reduction (at $62.4/t 

case) **.

2.5% .................................. 459 .................................... 393 .................................... 555 

CO2 Reduction (at $119/t 

case) **.

3% ..................................... 965 .................................... 828 .................................... 1166 

NOX Reduction (at $2,684/

ton) **.

7% .....................................

3% .....................................

5.61 ...................................

6.36 ...................................

4.80 ...................................

5.35 ...................................

6.82 

7.86 

Total Benefits † .................. 7% plus CO2 range ...........

7% .....................................

1,512 to 2,387 ...................

1,734 .................................

1,249 to 2,000 ...................

1,439 .................................

1,833 to 2,891 

2,102 

3% plus CO2 range ........... 2,106 to 2,981 ................... 1,708 to 2,459 ................... 2,583 to 3,641 

3% ..................................... 2,328 ................................. 1,899 ................................. 2,852 

Costs 

Consumer Incremental 

Product Costs.

7% .....................................

3% .....................................

358 ....................................

355 ....................................

314 ....................................

304 ....................................

410 

419 

Net Benefits 

Total † ......................... 7% plus CO2 range ........... 1,154 to 2,029 ................... 935 to 1,685 ...................... 1,423 to 2,481 

7% ..................................... 1,376 ................................. 1,125 ................................. 1,692 

3% plus CO2 range ........... 1,750 to 2,625 ................... 1,404 to 2,155 ................... 2,164 to 3,222 

3% ..................................... 1,973 ................................. 1,595 ................................. 2,433 

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

benefits to consumers which accrue after 2048 from the products purchased from 2019–2048. The results account for the incremental, variable, 

and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low 

Benefits, and High Benefits Estimates utilize projections of energy prices and housing starts from the AEO 2013 Reference case, Low Estimate, 

and High Estimate, respectively. In addition, incremental product costs reflect a flat rate for projected product price trends in the Primary Estimate, a slightly increasing rate for projected product price trends in the Low Benefits Estimate, and a slightly declining rate for projected product 

price trends in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3% discount rate. In the 

rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled discount 

rate, and those values are added to the full range of CO2 values. 

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38134 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

9For editorial reasons, upon codification in the 

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

10All references to EPCA in this document refer 

to the statute as amended through the American 

Energy Manufacturing Technical Corrections Act 

(AEMTCA), Public Law 112–210 (Dec. 18, 2012). 

D. Conclusion 

Based on the analyses culminating in 

this final rule, DOE found the benefits 

to the nation of the standards (energy 

savings, consumer LCC savings, positive 

NPV of consumer benefit, and emission 

reductions) outweigh the burdens (loss 

of INPV and LCC increases for some 

users of these products). DOE has 

concluded that the standards in today’s 

final rule represent the maximum 

improvement in energy efficiency that is 

technologically feasible and 

economically justified, and would result 

in significant conservation of energy. 

II. Introduction 

The following section briefly 

discusses the statutory authority 

underlying today’s final rule, as well as 

some of the relevant historical 

background related to the establishment 

of standards for residential furnace fans. 

A. Authority 

Title III, Part B9 of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

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

6291–6309, as codified) established the 

Energy Conservation Program for 

Consumer Products Other Than 

Automobiles, a program covering most 

major household appliances 

(collectively referred to as ‘‘covered 

products’’),10 which includes the types 

of residential furnace fans that are the 

subject of this rulemaking. (42 U.S.C. 

6295(f)(4)(D)) 

Pursuant to EPCA, DOE’s energy 

conservation program for covered 

products consists of essentially of four 

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

establishment of Federal energy 

conservation standards; and (4) 

certification and enforcement 

procedures. The Federal Trade 

Commission (FTC) is primarily 

responsible for labeling, and DOE 

implements the remainder of the 

program. Subject to certain criteria and 

conditions, DOE is required by EPCA to 

consider and establish energy 

conservation standards for ‘‘electricity 

used for purposes of circulating air 

through duct work’’ (which DOE has 

referred to in shorthand as residential 

‘‘furnace fans’’). (42 U.S.C. 6295(f)(4)(D)) 

DOE is also required by EPCA to 

develop test procedures to measure the 

energy efficiency, energy use, or 

estimated annual operating cost of each 

covered product prior to the adoption of 

an energy conservation standard. (42 

U.S.C. 6295(o)(A)(3) and (r)) 

Manufacturers of covered products must 

use the prescribed DOE test procedure 

as the basis for certifying to DOE that 

their products comply with the 

applicable energy conservation 

standards adopted under EPCA and 

when making representations to the 

public regarding the energy use or 

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

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

must use these test procedures to 

determine whether the products comply 

with standards adopted pursuant to 

EPCA. (42 U.S.C. 6295(s)) The DOE test 

procedures for residential furnace fans 

currently appear at title 10 of the Code 

of Federal Regulations (CFR) part 430, 

subpart B, appendix AA. 

DOE must follow specific statutory 

criteria for prescribing new or amended 

standards for covered products, 

including furnace fans. As indicated 

above, any standard for a covered 

product must be designed to achieve the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. (42 

U.S.C. 6295(o)(2)(A) and (3)(B)) 

Furthermore, DOE may not adopt any 

standard that would not result in the 

significant conservation of energy. (42 

U.S.C. 6295(o)(3)) Moreover, DOE may 

not prescribe a standard: (1) For certain 

products, including residential furnace 

fans, if no test procedure has been 

established for the product, or (2) if DOE 

determines by rule that the standard is 

not technologically feasible or 

economically justified. (42 U.S.C. 

6295(o)(3)(A)–(B)) In deciding whether a 

standard is economically justified, DOE 

must determine whether the benefits of 

the standard exceed its burdens. (42 

U.S.C. 6295(o)(2)(B)(i)) DOE must make 

this determination after receiving 

comments on the proposed standard, 

and by considering, to the greatest 

extent practicable, the following seven 

factors: 

(1) The economic impact of the standard 

on manufacturers and consumers of the 

products subject to the standard; 

(2) The savings in operating costs 

throughout the estimated average life of the 

covered products in the type (or class) 

compared to any increase in the price, initial 

charges, or maintenance expenses for the 

covered products that are likely to result 

from the standard; 

(3) The total projected amount of energy (or 

as applicable, water) savings likely to result 

directly from the standard; 

(4) Any lessening of the utility or the 

performance of the covered products likely to 

result from the standard; 

(5) The impact of any lessening of 

competition, as determined in writing by the 

Attorney General, that is likely to result from 

the standard; 

(6) The need for national energy and water 

conservation; and 

(7) Other factors the Secretary of Energy 

(Secretary) considers relevant. 

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

EPCA, as codified, also contains what 

is known as an ‘‘anti-backsliding’’ 

provision, which prevents the Secretary 

from prescribing any standard that 

either increases the maximum allowable 

energy use or decreases the minimum 

required energy efficiency of a covered 

product. (42 U.S.C. 6295(o)(1)) Also, the 

Secretary may not prescribe an amended 

or new standard if interested persons 

have established by a preponderance of 

the evidence that the standard is likely 

to result in the unavailability in the 

United States of any covered product 

type (or class) of performance 

characteristics (including reliability), 

features, sizes, capacities, and volumes 

that are substantially the same as those 

generally available in the United States. 

(42 U.S.C. 6295(o)(4)) 

Further, EPCA, as codified, 

establishes a rebuttable presumption 

that a standard is economically justified 

if the Secretary finds that the additional 

cost to the consumer of purchasing a 

product complying with an energy 

conservation standard level will be less 

than three times the value of the energy 

savings during the first year that the 

consumer will receive as a result of the 

standard, as calculated under the 

applicable test procedure. (See 42 U.S.C. 

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

Additionally, under 42 U.S.C. 

6295(q)(1), the statute specifies 

requirements when promulgating an 

energy conservation standard for a 

covered product that has two or more 

subcategories. DOE must specify a 

different standard level for a type of 

class of covered product that has the 

same function or intended use, if DOE 

determines that products within such 

group: (A) Consume a different kind of 

energy from that consumed by other 

covered products within such type (or 

class); or (B) have a capacity or other 

performance-related feature which other 

products within such type (or class) do 

not have and such feature justifies a 

higher or lower standard. (42 U.S.C. 

6295(q)(1)) In determining whether a 

performance-related feature justifies a 

different standard for a group of 

products, DOE must consider such 

factors as the utility to the consumer of 

such a feature and other factors DOE 

deems appropriate. Id. Any rule 

prescribing such a standard must 

include an explanation of the basis on 

which such higher or lower level was 

established. (42 U.S.C. 6295(q)(2)) 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38135 

11 In the May 15, 2012 NOPR for the test 

procedure, DOE referred to FER as ‘‘fan efficiency 

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

procedure SNOPR, DOE proposed to rename the 

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

same abbreviation (FER). 

Federal energy conservation 

requirements generally supersede State 

laws or regulations concerning energy 

conservation testing, labeling, and 

standards. (42 U.S.C. 6297(a)–(c)) DOE 

may, however, grant waivers of Federal 

preemption for particular State laws or 

regulations, in accordance with the 

procedures and other provisions set 

forth under 42 U.S.C. 6297(d)). 

Finally, pursuant to the amendments 

contained in the Energy Independence 

and Security Act of 2007 (EISA 2007), 

Public Law 110–140, any final rule for 

new or amended energy conservation 

standards promulgated after July 1, 

2010, is required to address standby 

mode and off mode energy use. (42 

U.S.C. 6295(gg)(3)) Specifically, when 

DOE adopts a standard for a covered 

product after that date, it must, if 

justified by the criteria for adoption of 

standards under EPCA (42 U.S.C. 

6295(o)), incorporate standby mode and 

off mode energy use into a single 

standard, or, if that is not feasible, adopt 

a separate standard for such energy use 

for that product. (42 U.S.C. 

6295(gg)(3)(A)–(B)) The furnace fan 

energy rating metric does not account 

for the electrical energy consumption in 

standby mode and off mode, because 

energy consumption in those modes is 

being fully accounted for in the DOE 

energy conservation standards for 

residential furnaces and residential 

central air conditioners (CAC) and heat 

pumps (HP). Manufacturers will be 

required to use the new metrics and 

methods adopted in those rulemakings 

for the purposes of certifying to DOE 

that their products comply with the 

applicable energy conservation 

standards adopted pursuant to EPCA 

and for making representations about 

the efficiency of those products. (42 

U.S.C. 6293(c); 42 U.S.C. 6295(s)) 

B. Background 

1. Current Standards 

Currently, no Federal energy 

conservation standards apply to 

residential furnace fans. 

2. History of Standards Rulemaking for 

Residential Furnace Fans 

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

DOE must consider and prescribe new 

energy conservation standards or energy 

use standards for electricity used for 

purposes of circulating air through duct 

work. DOE has interpreted this statutory 

language to allow regulation of the 

electricity use of any electricallypowered device applied to residential 

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

purpose of circulating air through duct 

work. 

DOE initiated the current rulemaking 

by issuing an analytical Framework 

Document, ‘‘Rulemaking Framework for 

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

published the Notice of Public Meeting 

and Availability of the Framework 

Document for furnace fans in the 

Federal Register on June 3, 2010. 75 FR 

31323. See http://

www1.eere.energy.gov/buildings/

appliance_standards/rulemaking.aspx/

ruleid/41. The Framework Document 

explained the issues, analyses, and 

process that DOE anticipated using to 

develop energy conservation standards 

for residential furnace fans. DOE held a 

public meeting on June 18, 2010 to 

solicit comments from interested parties 

regarding DOE’s analytical approach. 

DOE originally scheduled the comment 

period on the Framework Document to 

close on July 6, 2010, but due to the 

large number and broad scope of 

questions and issues raised, DOE 

subsequently published a notice in the 

Federal Register reopening the 

comment period from July 15, 2010 

until July 27, 2010, to allow additional 

time for interested parties to submit 

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

As a concurrent effort to the 

residential furnace fan energy 

conservation standard rulemaking, DOE 

also initiated a test procedure 

rulemaking for residential furnace fans. 

On May 15, 2012, DOE published a 

notice of proposed rulemaking (NOPR) 

for the test procedure in the Federal 

Register. 77 FR 28674. In that NOPR, 

DOE proposed to establish methods to 

measure the performance of covered 

furnace fans and to obtain a value for 

the proposed metric, referred to as the 

‘‘fan efficiency rating’’ (FER).11 DOE 

held the test procedure NOPR public 

meeting on June 15, 2012, and the 

comment period closed on July 30, 

2012. After receiving comments on the 

NOPR alleging significant manufacturer 

burden associated with the proposed 

test procedure, DOE determined that an 

alternative test method should be 

developed. DOE published in the 

Federal Register an SNOPR on April 2, 

2013, which contained its revised test 

procedure proposal and an explanation 

of the changes intended to reduce 

burden. 78 FR 19606. DOE proposed to 

adopt a modified version of the 

alternative test method recommended 

by the Air-Conditioning, Heating, and 

Refrigeration Institute (AHRI) and other 

furnace fan manufacturers to rate the 

electrical energy consumption of 

furnace fans. DOE concluded that the 

AHRI-proposed method provides a 

framework for accurate and repeatable 

determinations of FER that is 

comparable to the test method 

previously proposed by DOE, but at a 

significantly reduced test burden. DOE 

published in the Federal Register a final 

rule on January 3, 2014, which 

contained the final test procedure for 

residential furnace fans. 79 FR 500. 

To further develop the energy 

conservation standards for residential 

furnace fans, DOE gathered additional 

information and performed a 

preliminary technical analysis. This 

process culminated in publication in the 

Federal Register of a Notice of Public 

Meeting and the Availability of the 

Preliminary Technical Support 

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

40530. DOE published a NOPR in the 

Federal Register and made available an 

accompanying NOPR TSD on October 

25, 2013. 78 FR 64068. In that 

document, DOE requested comment on 

the following matters discussed in the 

TSD: (1) Additional FER values; (2) the 

methodology for accounting for the 

relationship between FER and airflow 

capacity; (3) the reasonableness of the 

values that DOE used to characterize the 

rebound effect with high-efficiency 

residential furnace fans; (4) DOE’s 

estimate of the base-case efficiency 

distribution of residential furnace fans 

in 2018; (5) the long-term market 

penetration of higher-efficiency 

residential furnace fans; (6) data 

regarding manufacturer product costs 

for furnace fan equipment and 

components; (7) the effect of standards 

on future furnace fan equipment 

shipments; (8) whether there are 

features or attributes of the more energyefficient furnace fans that manufacturers 

would produce to meet the standards in 

the proposed rule that might affect how 

they would be used by consumers; (9) 

data that would refine the analytical 

timeline; (10) input on average 

equipment lifetimes; (11) the new SCC 

values used to determine the social 

benefits of CO2 emissions reductions 

over the rulemaking analysis period; 

and (12) input on the cumulative 

regulatory burden. Id. DOE also invited 

written comments on these subjects, as 

well as any other relevant issues. A PDF 

copy of the NOPR TSD is available at 

http://www.regulations.gov/

#!documentDetail;D=EERE-2010-BTSTD-0011-0068. 

The NOPR TSD provided an overview 

of the activities DOE undertook in 

developing proposed energy 

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38136 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

conservation standards for residential 

furnace fans, and discussed the 

comments DOE received in response to 

the Preliminary Analysis. It also 

described the analytical methodology 

that DOE used and each analysis DOE 

had performed up to that point. These 

analyses were as follows: 

• A market and technology 

assessment addressed the scope of this 

rulemaking, identified the potential 

product classes of residential furnace 

fans, characterized the markets for these 

products, and reviewed techniques and 

approaches for improving their 

efficiency; 

• A screening analysis reviewed 

technology options to improve the 

efficiency of furnace fans, and weighed 

these options against DOE’s four 

prescribed screening criteria; 

• An engineering analysis developed 

relationships that show the 

manufacturer’s cost of achieving 

increased efficiency; 

• A markups analysis developed 

distribution channel markups that relate 

the manufacturer production cost (MPC) 

to the cost to the consumer; 

• An energy use analysis estimated 

the annual energy use of furnace fans at 

various potential standard levels; 

• A life-cycle cost (LCC) analysis 

calculated, at the consumer level, the 

discounted savings in operating costs 

throughout the estimated average life of 

the product, compared to any increase 

in installed costs likely to result directly 

from the adoption of a given standard; 

• A payback period (PBP) analysis 

estimated the amount of time it would 

take consumers to recover the higher 

expense of purchasing more-energyefficient products through lower 

operating costs; 

• A shipments analysis estimated 

shipments of residential furnace fans 

over the time period examined in the 

analysis (30 years), which were used in 

performing the national impact analysis; 

• A national impact analysis assessed 

the aggregate impacts at the national 

level of potential energy conservation 

standards for residential furnace fans, as 

measured by the net present value of 

total consumer economic impacts and 

national energy savings; 

• A manufacturer impact analysis 

estimated the financial impact of new 

energy conservation standards on 

manufacturers and calculated impacts 

on competition, employment, and 

manufacturing capacity; 

• A consumer subgroup analysis 

evaluated variations in customer 

characteristics that might cause a 

standard to affect particular consumer 

sub-populations (such as low-income 

households) differently than the overall 

population; 

• An emissions analysis assessed the 

effects of the considered standards on 

emissions of carbon dioxide (CO2), 

sulfur dioxide (SO2) nitrogen oxides 

(NOX), mercury (Hg), nitrous oxide 

(N20), and methane (CH4); 

• An emissions monetization 

estimated the economic value of 

reductions in CO2 and NOX emissions 

from the considered standards; 

• A utility impact analysis estimated 

selected effects of the considered 

standards on electric utilities; 

• An employment impact analysis 

assessed the impacts of the considered 

standards on national employment; and 

• A regulatory impact analysis (RIA) 

evaluated alternatives to amended 

energy conservation standards in order 

to assess whether such alternatives 

could achieve substantially the same 

regulatory goal at a lower cost. 

The NOPR public meeting took place 

on December 3, 2013. At this meeting, 

DOE presented the methodologies and 

results of the analyses set forth in the 

NOPR TSD. The numerous comments 

received since publication of the 

October 2013 NOPR, including those 

received at the NOPR public meeting, 

have contributed to DOE’s resolution of 

the issues raised by interested parties. 

The submitted comments include a 

comment from the American Council for 

an Energy-Efficiency Economy (ACEEE); 

a joint comment from the American 

Fuel and Petrochemical Manufacturers 

(AFPM), the U.S. Chamber of Commerce 

(the Chamber), the Council of Industrial 

Boiler Owners (CIBO), the American 

Forest and Paper Association (AF&PA), 

and the American Petroleum Institute 

(API); a comment from the American 

Gas Association (AGA); a comment from 

the Air-Conditioning, Heating, and 

Refrigeration Institute (AHRI); a 

comment from the American Public Gas 

Association (APGA); a joint comment 

from the Appliance Standards 

Awareness Project (ASAP), Alliance to 

Save Energy (ASE), National Consumer 

Law Center (NCLC) and the Natural 

Resources Defense Council (NRDC); a 

second joint comment from California 

Investor-Owned Utilities (CA IOUs) 

including Pacific Gas and Electric 

Company (PG&E), Southern California 

Edison (SCE), Southern California Gas 

Company (SCGC), and San Diego Gas 

and Electric (SDGE); a comment from 

the Cato Institute; a comment from 

China WTO (WTO); a comment from 

Earthjustice; a comment from Edison 

Electric Institute (EEI); a comment from 

the George Washington University 

Regulatory Studies Center; a comment 

from Goodman Global, Inc. (Goodman); 

a comment from Heating, AirConditioning and Refrigeration 

Distributers International (HARDI); a 

comment from Johnson Controls; a 

comment from Laclede Gas Company 

(Laclede); a comment from a comment 

from Lennox International, Inc. 

(Lennox); a comment from the Mercatus 

Center at George Mason University; a 

comment from Morrison Products, Inc. 

(Morrison); a comment from Mortex 

Product, Inc. (Mortex); a comment from 

the National Association of 

Manufacturers (NAM); a joint comment 

from the Northwest Energy Efficiency 

Alliance (NEEA) and the Northwest 

Power and Conservation Council 

(NPCC); a comment from the Northeast 

Energy Efficiency Partnerships (NEEP); 

a comment from Rheem Manufacturing 

Company (Rheem); a comment from 

Southern Company; a comment from 

Ingersoll Rand; and a comment from 

Unico, Incorporated. Comments made 

during the public meeting by those not 

already listed include Nidec Motor 

Corporation (Nidec) and the motor 

manufacturer Regal Beloit. This final 

rule summarizes and responds to the 

issues raised in these comments. A 

parenthetical reference at the end of a 

quotation or paraphrase provides the 

location of the item in the public record. 

III. General Discussion 

A. Test Procedures 

DOE published the furnace fan test 

procedure final rule in the Federal 

Register on January 3, 2014. 79 FR 499. 

DOE’s test procedure for furnace fans 

(hereinafter referred to as ‘‘the test 

procedure’’) is codified in appendix AA 

of subpart B of part 430 of the code of 

federal regulations (CFR).The test 

procedure is applicable to circulation 

fans used in weatherized and nonweatherized gas furnaces, oil furnaces, 

electric furnaces, and modular blowers. 

The test procedure is not applicable to 

any non-ducted products, such as 

whole-house ventilation systems 

without ductwork, central airconditioning (CAC) condensing unit 

fans, room fans, and furnace draft 

inducer fans. 

DOE aligned the test procedure with 

the DOE test procedure for furnaces by 

incorporating by reference specific 

provisions from an industry standard 

that is also incorporated by reference in 

the DOE test procedure for furnaces. 

DOE’s test procedure for furnaces is 

codified in appendix N of subpart B of 

part 430 of the CFR. The DOE furnace 

test procedure incorporates by reference 

American National Standards Institute 

(ANSI)/American Society of Heating, 

Refrigerating and Air Conditioning 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38137 

12Mobile home external static pressure is much 

lower because there is no return air ductwork in 

mobile homes. Also, the United States Department 

of Housing and Urban Development (HUD) 

requirements for mobile homes stipulate that the 

ductwork for cooling should be designed for 0.3 in. 

water column (wc). 24 CFR 3280.715. 

Engineers (ASHRAE) 103–1993, Method 

of Testing for Annual Fuel Utilization 

Efficiency of Residential Central 

Furnaces and Boilers (ASHRAE 103– 

1993). The DOE furnace fan test 

procedure incorporates by reference the 

definitions, test setup and equipment, 

and procedures for measuring steadystate combustion efficiency provisions 

of the 2007 version of ASHRAE 103 

(ASHRAE 103–2007). In addition to 

these provisions, the test procedure 

includes provisions for apparatuses and 

procedures for measuring temperature 

rise, external static pressure, and 

furnace fan electrical input power. The 

test procedure also incorporates by 

reference provisions for measuring 

temperature and external static pressure 

from ANSI/ASHRAE 37–2009, Methods 

of Testing for Rating Electrically Driven 

Unitary Air-Conditioning and Heat 

Pump Equipment (ASHRAE 37–2009). 

There are no differences between the 

2005 version (which is already 

incorporated by reference in the CFR) 

and the 2009 version of the ASHRAE 37 

provisions incorporated by reference for 

the furnace fan test procedure. The test 

procedure also establishes calculations 

to derive the rating metric, fan energy 

rating (FER), for each furnace fan basic 

model based on the results of testing per 

the test method for furnace fans codified 

in appendix AA of subpart B of part 430 

of the CFR. 

FER is the estimated annual electrical 

energy consumption of a furnace fan 

normalized by: (a) The estimated total 

number of annual fan operating hours 

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

maximum airflow-control setting. For 

the purposes of the furnace fan test 

procedure, the estimated annual 

electrical energy consumption is the 

sum of the furnace fan electrical input 

power (in Watts), measured separately 

for multiple airflow-control settings at 

different external static pressures 

(ESPs), multiplied by national average 

operating hours associated with each 

setting. These ESPs are determined by a 

reference system, based on operation at 

maximum airflow that represents 

national average ductwork system 

characteristics. Table III.1 includes the 

reference system ESP values by 

installation type that are specified by 

the test procedure. In previous 

rulemaking documents for the furnace 

fan test procedure and energy 

conservation standard rulemaking, DOE 

used the term ‘‘manufactured home 

furnace’’ to be synonymous with 

‘‘mobile home furnace,’’ as defined in 

the Code of Federal Regulation (CFR). 

10 CFR 430.2. DOE will use the term 

‘‘mobile home’’ hereinafter to be 

consistent with the CFR definition for 

‘‘mobile home furnace.’’ All provisions 

and statements regarding mobile homes 

and mobile home furnaces are 

applicable to manufactured homes and 

manufactured home furnaces. 

TABLE III.1—REQUIRED REFERENCE

SYSTEM CRITERIA (I.E., ESP AT

MAXIMUM AIRFLOW) BY FURNACE

FAN INSTALLATION TYPE

Installation type 

ESP at 

maximum 

airflow 

(in. wc) 

Units with an internal evaporator coil ............................ 0.50 

Units designed to be paired 

with an evaporator coil ...... 0.65 

Units designed to be installed in a mobile home 12 0.30 

The test procedure requires 

measurements for the airflow-control 

settings that correspond to fan operation 

while performing the cooling function 

(which DOE finds is predominantly 

associated with the maximum airflowcontrol setting), heating function, and 

constant-circulation function. Table III.2 

describes the required airflow-control 

settings by product type. 

TABLE III.2—AIRFLOW-CONTROL SETTINGS AT WHICH MEASUREMENTS ARE REQUIRED FOR EACH PRODUCT TYPE

Product type Airflow-control 

setting 1 

Airflow-control 

setting 2 

Airflow-control 

setting 3 

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

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

* For the purposes of the test procedure, ‘‘absolute maximum’’ airflow-control setting refers to the airflow-control setting that achieves the maximum attainable airflow at the operating conditions specified by the test procedure. 

As shown in Table III.2, for products 

with single-stage heating, the three 

airflow-control settings to be tested are: 

The default constant-circulation setting; 

the default heating setting; and the 

absolute maximum setting. For products 

with multi-stage heating or modulating 

heating, the airflow-control settings to 

be tested are: The default constantcirculation setting; the default low 

heating setting; and the absolute 

maximum setting. The absolute lowest 

airflow-control setting is used to 

represent constant circulation if a 

default constant-circulation setting is 

not specified. DOE defines ‘‘default 

airflow-control settings’’ as the airflowcontrol settings for installed use 

specified by the manufacturer in the 

product literature shipped with the 

product in which the furnace fan is 

integrated. See Section 2.2 of Appendix 

AA to Subpart B of 10 CFR part 430. 

Manufacturers typically provide 

detailed instructions for setting the 

default heating airflow-control setting to 

ensure that the product in which the 

furnace fan is integrated operates safely. 

In instances where a manufacturer 

specifies multiple airflow-control 

settings for a given function to account 

for varying installation scenarios, the 

highest airflow-control setting specified 

for the given function shall be used for 

the DOE test procedure. High heat and 

reduced heat shall be considered 

different functions for multi-stage 

heating units. Manufacturer installation 

guides also provide detailed 

instructions regarding compatible 

thermostats and how to wire them to 

achieve the specified default settings. 

The Watt measurements for 

calculating FER are weighted using 

designated annual operating hours for 

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

constant circulation) that represent 

national average operation. Table III.3 

shows the estimated national average 

operating hours for each function. 

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38138 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

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

Operating mode Variable Single-stage 

(hours) 

Multi-stage 

or modulating 

(hours) 

Heating ......................................................................................................................................... HH 830 830/HCR 

Cooling ......................................................................................................................................... CH 640 640 

Constant Circulation .................................................................................................................... CCH 400 400 

For multi-stage heating or modulating 

heating products, the specified 

operating hours for the heating mode are 

divided by the heating capacity ratio 

(HCR) to account for variation in time 

spent in this mode associated with 

turndown of heating output. The HCR is 

the ratio of the measured reduced heat 

input rate to the measured maximum 

heat input rate. 

The FER equation is: 

Where: 

CH = annual furnace fan cooling operating 

hours; 

EMax = furnace fan electrical consumption at 

maximum airflow-control setting 

operating point; 

HH = annual furnace fan heating operating 

hours; 

EHeat = furnace fan electrical consumption at 

the default heating airflow-control 

setting operating point for units with 

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

point for units with multi-stage heating; 

CHH = annual furnace fan constant 

circulation hours; 

ECirc = furnace fan electrical consumption at 

the default constant-circulation airflowcontrol setting operating point (or 

minimum airflow-control setting 

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

specified); 

QMax = airflow at maximum airflow-control 

setting operating point; and 

1000 = constant to put metric in terms of 

watts/1000cfm, which is consistent with 

industry practice. 

DOE received comments from 

interested parties regarding the furnace 

fan test procedure in response to the 

furnace fan energy conservation 

standard (ECS) NOPR. Interested 

parties’ comments on the test procedure 

are summarized below. DOE addressed 

many of these issues in the test 

procedure final rule, published in the 

Federal Register on January 3, 2014. (79 

FR 514). The publication of the test 

procedure final rule occurred after the 

standards NOPR public meeting, held 

on December 3, 2013, but before the 

close of the standards NOPR comment 

period on January 23, 2014. For 

comments that were addressed in the 

test procedure final rule, a reference to 

the applicable discussion contained in 

the test procedure final rule document 

is provided. DOE’s detailed response is 

provided in this document for 

comments that were not addressed in 

the test procedure final rule document. 

AHRI, Goodman, Morrison, Rheem, 

Southern Company, Johnson Controls, 

and Ingersoll Rand commented that 

DOE’s schedule for finalizing the test 

procedure did not provide interested 

parties with sufficient time to evaluate 

product performance in accordance 

with the final test procedure in order to 

develop and submit substantive 

comments on the standards proposed in 

the NOPR. (AHRI, No. 98 at p. 2, 3; 

Goodman, No. 102 at pp. 7, 8; Morrison, 

No. 108 at p. 3; Rheem, No. 83 at p. 1; 

Southern Company, No. 85 at p. 2; 

Johnson Controls, No. 95 at p. 3; 

Ingersoll Rand, No. 43 at p. 33) Ingersoll 

Rand added that the comments they 

have submitted to date are based on the 

proposed test procedure, not the final 

test procedure. (Ingersoll Rand, No. 107 

at pp. 2, 10) AGA and Allied Air agree 

and recommend that DOE delay 

promulgation of standards to give 

interested parties and DOE more time to 

conduct analyses using the final test 

procedure. (AGA, No. 110 at pp. 3, 4; 

Allied Air, Public Meeting Transcript, 

No. 43 at p. 48) Goodman recommended 

a delay of three months for this type of 

product and testing. (Goodman, No. 102 

at p. 3) Prior to publication of the test 

procedure final rule, EEI expressed 

support for DOE issuing a supplemental 

notice of proposed rulemaking (SNOPR) 

for the standard if changes were made 

to the test procedure final rule that had 

significant impacts on DOE’s analyses 

results. (EEI, No. 87 at p. 3) APGA and 

Southern Company also recommended 

that DOE publish a standards SNOPR. 

(APGA, No. 90 at p. 2; Southern 

Company, No. 43 at p. 37) 

DOE recognizes that interested parties 

need sufficient time to collect and 

evaluate relevant fan performance data 

in order to submit meaningful 

comments on the proposed energy 

conservation standard for furnace fans. 

Thus, on December 24, 2013, DOE 

posted a pre-publication test procedure 

final rule notice to regulations.gov and 

issued a 30-day extension of the 

standards NOPR comment period to 

provide interested parties with time to 

evaluate DOE’s proposed standards 

using the final test procedure. 

AHRI, Johnson Controls, and 

Morrison stated that, even with the 

comment period extension, the 20 days 

between the publication of the test 

procedure final rule on January 3, 2014 

and the close of the standards NOPR 

comment period on January 23, 2014 

did not provide interested parties with 

sufficient time to assess the energy 

conservation standards NOPR based on 

the provisions within the final test 

procedure. AHRI added that DOE was 

obligated to issue the NOPR on the 

proposed energy conservation standards 

after the issuance of the final rule on the 

furnace fan test procedures per Section 

7(c) of Appendix A to Subpart C of 10 

CFR part 430. (AHRI, No. 98 at pp. 2, 

3; Johnson Controls, No. 95 at p. 3; 

Morrison, No. 108 at p. 3) Mortex stated 

that they were not able to test any of 

their products according to the final test 

procedure by the time the energy 

conservation standard NOPR comment 

period closed. (Mortex, No. 104 at p. 2) 

Ingersoll Rand commented that DOE’s 

standards NOPR analyses are invalid 

because they were not based on the test 

procedure final rule. (Ingersoll Rand, 

No. 107 at p. 2, 10). NEEA and NPCC 

provided there is a need for product 

testing using the final test procedure, 

and a re-assessment of the derivation of 

the proposed FER equations and 

standard levels. NEEA and NPCC added 

that they do not support a decision on 


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standards before there is sufficient data 

with which to verify that the proposed 

FER values will not disqualify from 

compliance the majority of the very 

products upon which they are founded, 

and for which DOE’s economic analyses 

are valid. (NEEA and NPCC, No. 96 at 

p. 2) 

DOE disagrees with AHRI and 

Morrison that the extended comment 

period was insufficient. DOE issued a 

test procedure SNOPR for furnace fans 

on April 2, 2013. 78 FR 19606. DOE did 

not make changes to the test procedure 

between the SNOPR and final rule that 

would significantly alter FER values for 

most products. Interested parties that 

conducted testing in accordance with 

the test procedure SNOPR proposal 

should not have to retest most furnace 

models to derive an FER value that is 

consistent with the final test procedure. 

For most furnaces, the FER value should 

not change or the FER value can be 

recalculated per the final test procedure 

requirements using the raw data 

measured according to the SNOPR test 

method. Therefore, notwithstanding the 

20 days between the test procedure final 

rule and the close of the standards 

NOPR comment period, interested 

parties still had over nine months 

between the publication of the test 

procedure SNOPR and the close of the 

standards NOPR comment period to 

collect and evaluate fan performance 

data that is relevant to DOE’s proposed 

standards. DOE received data that could 

be used to derive FER values that meet 

the final test procedure requirements 

from multiple manufacturers during this 

period. 

DOE agrees with NEEA and NPCC 

that its proposed standards should be 

assessed based on FER values that are 

reflective of performance as measured 

by the final test procedure. For the 

reasons stated above, DOE was able to 

use much of the FER data it has 

collected in previous phases of this 

rulemaking to generate FER values that 

meet the requirements of the final test 

procedure. DOE also conducted testing 

prior to and during the development of 

the test procedure final rule that 

generated a broad set of results to enable 

DOE to derive FER values that are 

consistent with the requirements of the 

final test procedure. In addition, DOE 

continued to collect and use data from 

publicly-available product literature. 

DOE relied on the mathematical 

methods outlined in the test procedure 

NOPR for using this data to model fan 

performance and estimate FER values 

that meet the final test procedure 

requirements. 77 FR 28690 (May 15, 

2012). DOE recognizes that this method 

is not identical to the final test 

procedure method. However, DOE 

believes the FER values generated in 

this manner are still relevant because 

the final test method is similar to the 

test method proposed by AHRI (with 

support from Goodman, Ingersoll Rand, 

Lennox, and Morrison) in response to 

the test procedure NOPR, which they 

argued would result in accurate and 

repeatable FER values that are 

comparable to the FER values resulting 

from the methods proposed in the 

NOPR. (AHRI, No. 16 at p. 3; Goodman, 

No. 17 at p. 4; Ingersoll Rand, No. 14 at 

p. 1; Morrison, No. 21 at p. 3.) For these 

reasons, Ingersoll Rand’s comment 

stating that DOE’s standards NOPR 

analyses are invalid because they are 

not based on the test procedure final 

rule is inaccurate. The standards 

proposed in the NOPR and those 

established by this final rule are based 

on relevant FER data. 

Goodman stated that DOE’s 

modifications to the test procedure 

since the April 2013 test procedure 

SNOPR will have a significant impact 

on FER. Goodman referred specifically 

to the modification in the test procedure 

that specifies that airflow be calculated 

based on firing the product in the 

absolute maximum airflow-control 

setting if that setting is a default heating 

setting. According to Goodman, most 

furnaces allow heating operation at the 

highest airflow setting. Thus, instead of 

heating airflow setting being a midrange temperature rise as typically set 

by factory default, it will now be a lowrange temperature rise at a much higher 

and less efficient setting for FER 

calculation (and a setting that will not 

be typical of a field installation). 

(Goodman, No. 102 at p. 7) Ingersoll 

Rand echoed Goodman’s statement, 

adding that the modification would also 

result in higher watts in heating mode 

and a higher FER value than would have 

resulted using the procedure in the 

SNOPR for a majority of furnaces. 

(Ingersoll Rand, No. 107 at pp. 2, 10). 

DOE disagrees with Goodman’s and 

Ingersoll Rand’s comments. DOE 

expects that both interested parties have 

misinterpreted the test procedure 

requirement. DOE recognizes that 

product controls can be altered from 

factory settings to allow heating in the 

absolute maximum airflow-control 

setting. The test procedure does not 

allow for this practice. The test 

procedure only requires testing in 

factory-set configurations. Specific to 

the modification in question, the test 

procedure requires heating in the 

absolute maximum airflow-control 

setting only if that setting is a default 

heat setting. See Section 8.6.1.2 of 

Appendix AA to Subpart B of 10 CFR 

part 430. By definition, as outlined in 

the test procedure, a default heating 

airflow-control setting is factory-set and 

specified for installed-use as a heat 

setting by the manufacturer. See Section 

2.2 of Appendix AA to Subpart B of 10 

CFR part 430. Consequently, the 

resulting temperature rise is also 

factory-set by the manufacturer, and the 

measured performance will be 

representative of field use. In addition, 

the test procedure SNOPR and final rule 

requirements for EHeat (the watts in 

heating mode input for FER) are 

consistent and the measured values for 

this input should not change. The 

impacts of the modification in question 

are explained in more detail in the test 

procedure final rule. 79 FR 514 (January 

3, 2014). 

AHRI commented that in the final test 

procedure that was published on 

January 3, 2014, DOE introduced a 

change within the test procedure that 

increases the measured FER. AHRI 

stated that DOE decided not to 

implement AHRI’s recommendation that 

a furnace be fired at the maximum 

airflow rate to calculate the maximum 

airflow. Instead, according to AHRI, the 

final rule specifies that the maximum 

airflow is determined by applying the 

airflow equation for a heating setting 

and adjusting to the maximum setting 

based on pressure measurements. AHRI 

claims that this approach results in an 

increase of the measured FER and was 

not accounted within the analyses 

associated with the energy conservation 

standards NOPR TSD that was issued on 

October 25, 2013. AHRI recommends 

that DOE reevaluate the analyses within 

the entire TSD due to this single change. 

(AHRI, No. 98 at p. 3, 4) 

DOE introduced the change referred 

to by AHRI in the April 2, 2013 test 

procedure SNOPR. A detailed 

discussion of DOE’s reasoning for that 

change are provided in that notice. 78 

FR 19616. DOE made additional 

changes to this provision in the test 

procedure final rule by requiring that 

the product under test be fired at the 

maximum airflow rate to calculate the 

maximum airflow for furnaces for which 

the maximum airflow-control setting is 

a default heat setting (consistent with 

AHRI’s recommendation). See Section 

8.6.1.2 of Appendix AA to Subpart B of 

10 CFR part 430. DOE disagrees with 

AHRI that the change in question will 

result in higher FER values. DOE fan 

performance tests, including tests 

following the final test procedure, show 

that the maximum airflow calculated 

when firing the product under test in 

the maximum airflow control setting is 

typically lower than when applying the 

airflow equation for a heating setting 

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and adjusting to the maximum setting 

based on pressure measurements. 

Consequently, FER values would be 

lower if they were derived using airflow 

values calculated when firing in the 

maximum airflow-control setting. AHRI 

did not provide data to the contrary. As 

stated above, DOE’s proposed standards 

and the standards established by this 

document are valid because they are 

based on FER values that are consistent 

with the final test procedure (to include 

FER values employing the airflow 

adjustment method in question). 

AHRI, Morrison, and Ingersoll Rand 

commented that they are opposed to 

DOE eliminating the HCR from the 

denominator of the FER equation. 

According to AHRI, DOE did not 

provide a sound technical justification 

for such a modification and 

unnecessarily penalized the FER values 

associated with multi-stage and 

modulating units. (AHRI, No. 98 at p. 2, 

3; Morrison, No. 108 at p. 3, 4; Ingersoll 

Rand, No. 107 at p. 2, 10) 

As discussed in the test procedure 

final rule, DOE found that including 

HCR in the denominator of the FER 

equation resulted in percent reductions 

in estimated annual energy 

consumption, as calculated for FER, of 

15 percent. 79 FR 515 (January 3, 2014). 

Further, DOE found percent reductions 

in FER of approximately 30 percent 

when comparing single-stage products 

using constant-torque brushless 

permanent magnet (BPM) motors to 

multi-stage products using constanttorque BPM motors. DOE eliminated 

HCR from the FER equation because, as 

a result, percent reductions in FER 

dropped to 15 percent on average, 

which is consistent with percent 

reduction in estimated annual energy 

consumption. 79 FR 515 (January 3, 

2014). DOE did not receive any new 

FER values for products that use a 

constant-torque BPM motor and multistage heating. DOE was also unable to 

find data in the public domain with 

which to calculate new FER values to 

represent such products. In the absence 

of new data, DOE used the raw airflow, 

ESP, and fan electrical energy 

consumption data for single-stage 

furnaces with constant-torque BPM 

motors to generate FER values reflecting 

the addition of theoretical multi-stage 

heating capabilities. Single-stage 

furnaces using constant-torque BPM 

motors typically have additional 

airflow-control settings that provide less 

airflow than the factory-set heating 

airflow-control setting. Theoretically, 

these airflow-control settings could be 

used for a low heat setting in a multistage heating configuration. DOE 

identified as many models as possible 

that meet this criterion and for which 

DOE has sufficient data to calculate 

theoretical FER values for a multi-stage 

configuration. For each model, DOE first 

calculated the temperature rise in the 

default heating setting based on the 

airflow, thermal efficiency and input 

heat rating in that setting. Next, DOE 

used a variation of the same relationship 

between these parameters to calculate 

the theoretical low input capacity that 

would achieve the same temperature 

rise for each available airflow-control 

setting below the heat setting. DOE then 

evaluated the HCR for each of the lower 

airflow-control settings based on the 

theoretical input capacity of the lower 

setting and the rated input capacity of 

the default heat setting. DOE selected 

the low airflow-control setting that 

produced an HCR between 0.4 and 0.9 

that was closest to 0.7 to represent the 

theoretical low heating setting. DOE 

chose these criteria based on 

investigation of typical HCR values 

observed in currently available 

products. Finally, DOE calculated 

estimated annual energy consumption 

and an FER value using the single-stage 

model’s data for the absolute maximum 

and constant circulation airflow-control 

settings and the data for the theoretical 

low heating setting for the heating 

airflow-control setting. DOE’s new data 

shows that multi-staging reduces 

estimated annual energy consumption 

by an average of 14 percent and FER by 

an average of 12 percent. These findings 

are consistent with DOE’s previous 

findings and support its decision to 

eliminate HCR from the denominator of 

the FER calculation. 

Ingersoll Rand stated that the final 

test procedure reduces the estimated 

savings associated with BPM motors. 

Ingersoll Rand commented that BPM 

motors consume more power as static 

pressure increases than permanent-split 

capacitor (PSC) motors. (Ingersoll Rand, 

No. 107 at p. 2, 10) 

DOE addressed this issue in the 

energy conservation standards NOPR. 

78 FR 64084 (October 25, 2013). While 

BPM motors consume more power as 

static pressure increases, they also 

provide more airflow. FER is 

normalized by airflow to account for 

this difference in behavior between 

BPM and PSC motors. In addition, the 

standards established in this document 

are a function of airflow. BPM motordriven fan performance is evaluated 

relative to PSC motor-driven fans that 

provide the same amount of airflow at 

the same reference system static 

pressure as a result. Interested parties 

did not provide any evidence that these 

methods are inappropriate for 

evaluating relative fan performance. 

China WTO commented that FER 

includes factors, such as HCR, to 

account for multi-stage heating but does 

not include analogous factors for multistage cooling. (China WTO, No. 92 at p. 

1) 

DOE considered accounting for fan 

performance during multi-stage cooling 

operation for the test procedure NOPR. 

77 FR 28680. DOE did not include 

factors for multi-stage cooling in the 

final test procedure because the 

presence and capacity of low-stage 

cooling is dependent on the cooling 

system with which a product containing 

a furnace fan is paired. DOE found in its 

review of publicly-available product 

literature that detailed characteristics of 

the cooling system are not typically 

provided. Consequently, entities 

performing the DOE furnace fan test 

procedure cannot identify the airflowcontrol setting that would be designated 

for low-stage cooling operation. In 

addition, multi-stage heating is not 

necessarily associated with multi-stage 

cooling capability (e.g., multi-stage 

cooling equipment is much less 

common than multi-stage heating 

equipment). 

China WTO stated that the final test 

procedure does not provide a method 

for calculating the maximum airflow 

when the maximum airflow-control 

setting is only designated for cooling. 

(China WTO, No. 92 at p. 1) 

The method for calculating the 

maximum airflow when the maximum 

airflow-control setting is only 

designated for cooling is provided in the 

final rule and in Section 9 of appendix 

AA of subpart B of part 430 of the CFR. 

79 FR 524 (January 3, 2014). 

The California Investor Owned 

Utilities (CA IOU) commented that they 

observed a potential error in the 

calculation of airflow in the final test 

procedure. Specifically, CA IOU 

recommended that DOE include the 

humidity ratio in pounds water vapor 

per pounds dry air. CA IOU submits that 

this addition will increase the accuracy 

of the calculation of specific volume of 

test room air in cubic feet per pound of 

dry air to calculate airflow. (CA IOU, 

No. 106 at p. 4) 

The equation for calculating airflow 

in the final test procedure already 

includes the humidity ratio in pounds 

water vapor per pounds dry air as 

codified in Section 9 of appendix AA of 

subpart B of part 430 of the CFR. 

CA IOU recommended that in 

addition to reporting FER, which is the 

basis for the performance standard, DOE 

require manufacturers to report 

individual mode electrical energy 

consumption values (e.g., EHeat, EMax, 

and ECirc). According to CA IOU, 

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reporting these values would greatly 

facilitate the development of more 

targeted energy efficiency incentive 

programs, and manufacturers already 

have to measure and perform these 

calculations for the composite FER. CA 

IOU recognizes that EMax could 

represent fan electrical energy 

consumption in either heating or 

cooling mode depending on the 

product. Nonetheless, CA IOU also 

recommends that DOE require 

manufacturers to report fan electrical 

energy consumption in cooling mode 

even if not included in FER because 

having it as an additional data point 

could be useful for the development of 

utility programs across the country. CA 

IOU stated that energy efficiency 

incentive programs typically require a 

rigorous level of review and justification 

for implementation. Gaps in 

performance data of commercially 

available equipment is one of the main 

limiting factors in program 

development, contributing to the 

lengthy and resource-intensive data 

collection and verification processes. In 

the case of this rulemaking, 

manufacturers will already be required 

to test their products in heating, cooling, 

and constant circulation modes. CA IOU 

believes that the minimal extra effort 

required by manufacturers to report 

these values would be outweighed by 

the opportunity for utilities and other 

public agencies to develop incentive 

programs using these performance 

metrics, which in turn would positively 

impact manufacturers of high 

performing products. For these reasons, 

CA IOU strongly urge DOE to require 

manufacturers to report tested and 

calculated metrics that feed into a 

composite metric for the standard. 

ASAP, ASE, NCLC, and NRDC, 

hereinafter referred to as ASAP, et al., 

agree. (ASAP, et al., No. 105 at p. 3) 

At this time, DOE is declining to 

adopt reporting requirements for 

individual mode electrical consumption 

values as the CA IOU suggests. While 

DOE is open to considering additional 

reporting metrics in the future, DOE 

believes that establishing a Federal test 

procedure and metric (i.e., FER) will 

provide utility programs with a basis for 

establishing meaningful incentive 

programs as the CA IOUs desire. 

Further, DOE believes that reporting the 

aggregated electrical consumption (i.e., 

the FER metric) will provide market 

differentiation amongst currentlyavailable models, thereby allowing the 

utility programs to set voluntary levels 

for incentive programs at meaningful 

levels to obtain energy savings. If data 

and analyses are provided, which show 

the disaggregated levels are necessary 

for the proper execution of utility 

incentive programs, DOE will consider 

modifying the certification requirements 

for furnace fans. 

Unico pointed out that DOE presents 

the required minimum reference system 

ESP values inconsistently across 

rulemaking documents. Unico noticed 

that in some documents DOE presents 

these values as a range for each 

installation type, and in other 

rulemaking documents DOE presents 

only the lower value within each range 

with an asterisk. (Unico, No. 93 at p. 6) 

As explained in the test procedure 

final rule, DOE’s test experience 

confirms manufacturer concerns that 

specific ESP values are difficult to 

achieve and maintain when measuring 

airflow. The final test procedure 

specifies that products maintain an ESP 

level between the minimum reference 

system value and 0.05 in. wc. above that 

minimum value to allow for slight 

variations. 79 FR 508 (January 3, 2014). 

Consequently, DOE presents the 

minimum required ESP values as a 

range in Section 8.6.1.2 in appendix AA 

of subpart B of part 430 in the CFR or 

as the minimum value with an asterisk 

accompanied by the explanation above 

in other DOE documents. 

AHRI commented that DOE should 

provide the option of employing an 

alternative efficiency determination 

method (AEDM) to determine FER. 

AHRI insists that an AEDM is critical for 

manufacturers to implement new 

requirements on a timely basis while 

minimizing burden. AHRI believes that 

the number of furnace fan basic models 

will be greater than the number of 

furnace basic models. According to 

AHRI, the pressure drop due to the gas 

heat exchanger will require that each 

furnace basic model also be considered 

as a furnace fan basic model. AHRI 

added that additional furnace fan basic 

models would be created in order to 

account for the type of installation. 

AHRI also pointed out that many 

furnace fan manufacturers also produce 

several other DOE regulated products. 

AHRI submits that rather than requiring 

manufacturers to spend valuable 

resources on conducting several tests, 

DOE should recognize that those 

resources could be better spent on 

innovating more efficient products. 

(AHRI, No. 98 at p. 13) 

DOE provided a detailed discussion of 

this issue in the test procedure final 

rule. 79 FR 513 (January 3, 2014). DOE 

currently does not allow the use of 

AEDMs for residential products, with 

the exception of central air conditioners 

and heat pumps due to the uniquely 

large number of combinations of splitsystem air conditioners and heat pumps 

that are rated. DOE recognizes that the 

number of furnace fan basic models may 

outnumber furnace basic models for the 

reasons AHRI lists. Even so, DOE 

expects the number of basic models of 

furnace fans to be significantly less than 

the number of basic models of 

residential central air conditioners and 

heat pumps (CAC and HP) for which 

alternative rating methods are currently 

allowed. DOE has not found the 

residential furnace fan market to be 

highly customized (i.e., containing 

many unique built-to-order designs) and 

expects that manufacturers will be able 

to group similar individual furnace fan 

types into basic models to reduce testing 

burden. DOE notes that it currently has 

over 1 million CAC combinations 

certified in the Compliance Certification 

Management System (CCMS) compared 

to approximately 12,500 certified 

furnace basic models. Consequently, 

DOE does not agree with AHRI’s 

assertion that an alternative rating 

method needs to be considered at this 

time. Should AHRI or the industry 

provide additional data or 

substantiation for its requests 

demonstrating why testing furnace fans 

are unique, as compared to the majority 

of other residential products for which 

AEDMs are not allowed, then DOE may 

consider such requests in a separate 

rulemaking. 

B. Product Classes and Scope of 

Coverage 

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

refers to ‘‘furnaces and boilers,’’ DOE 

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

written using notably broader language 

than the other provisions within the 

same section. Specifically, that statutory 

provision directs DOE to ‘‘consider and 

prescribe energy conservation standards 

or energy use standards for electricity 

used for purposes of circulating air 

through duct work.’’ Such language 

could be interpreted as encompassing 

electrically-powered devices used in 

any residential HVAC product to 

circulate air through duct work, not just 

furnaces, and DOE has received 

numerous comments on both sides of 

this issue. However, in this rulemaking, 

DOE is only covering those circulation 

fans that are used in furnaces and 

modular blowers. DOE is using the term 

‘‘modular blower’’ to refer to HVAC 

products powered by single-phase 

electricity that comprise an encased 

circulation blower that is intended to be 

the principal air-circulation source for 

the living space of a residence. A 

modular blower is not contained within 

the same cabinet as a residential 

furnace, CAC, or heat pump. Instead, 

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13 DOE also presents a sensitivity analysis that 

considers impacts for products shipped in a 9-year 

period. 14 In the past, DOE presented energy savings 

results for only the 30-year period that begins in the 

year of compliance. In the calculation of economic 

impacts, however, DOE considered operating cost 

savings measured over the entire lifetime of 

products purchased during the 30-year period. DOE 

has chosen to modify its presentation of national 

energy savings to be consistent with the approach 

used for its national economic analysis. 

modular blowers are designed to be 

paired with separate residential HVAC 

products that provide heating and 

cooling, typically a separate CAC/HP 

coil-only unit. DOE finds that modular 

blowers and electric furnaces are very 

similar in design. In many cases, the 

only difference between a modular 

blower and electric furnace is the 

presence of an electric resistance 

heating kit. DOE is aware that some 

modular blower manufacturers offer 

electric resistance heating kits to be 

installed in their modular blower 

models so that the modular blowers can 

be converted to stand-alone electric 

furnaces. In addition, FER values for 

modular blowers can be easily 

calculated using the final test 

procedure. DOE addresses the furnace 

fans used in modular blowers in this 

rulemaking for these reasons. As a result 

of the extent of the current rulemaking, 

DOE is not addressing public comments 

that pertain to fans in other types of 

HVAC products. 

When evaluating and establishing 

energy conservation standards, DOE 

divides covered products into product 

classes by the type of energy used or by 

capacity or other performance-related 

features that justify a different standard. 

In making a determination whether a 

performance-related feature justifies a 

different standard, DOE must consider 

such factors as the utility to the 

consumer of the feature and other 

factors DOE determines are appropriate. 

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

DOE differentiates between product 

classes based on internal structure and 

application-specific design differences 

that impact furnace fan energy 

consumption. Details regarding how 

internal structure and applicationspecific design differences that impact 

furnace fan energy consumption are 

included in chapter 3 of the final rule 

technical support document (TSD). DOE 

includes the following product classes 

for this rulemaking. 

• Non-Weatherized, Non-Condensing 

Gas Furnace Fan (NWG–NC) 

• Non-Weatherized, Condensing Gas 

Furnace Fan (NWG–C) 

• Weatherized Non-Condensing Gas 

Furnace Fan (WG–NC) 

• Non-Weatherized, Non-Condensing 

Oil Furnace Fan (NWO–NC) 

• Non-Weatherized Electric Furnace/

Modular Blower Fan (NWEF/NWMB) 

• Mobile Home Non-Weatherized, NonCondensing Gas Furnace Fan (MH– 

NWG–NC) 

• Mobile Home Non-Weatherized, 

Condensing Gas Furnace Fan (MH– 

NWG–C) 

• Mobile Home Electric Furnace/

Modular Blower Fan (MH–EF/MB) 

• Mobile Home Weatherized Gas 

Furnace Fan (MH–WG) 

• Mobile Home Non-Weatherized Oil 

Furnace Fan (MH–NWO) 

Each product class title includes 

descriptors that indicate the 

application-specific design and internal 

structure of its included products. 

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

are descriptors that indicate whether the 

HVAC product is installed outdoors or 

indoors, respectively. Weatherized 

products also include an internal 

evaporator coil, while non-weatherized 

products are not shipped with an 

evaporator coil but may be designed to 

be paired with one. ‘‘Condensing’’ refers 

to the presence of a secondary, 

condensing heat exchanger in addition 

to the primary combustion heat 

exchanger in certain furnaces. The 

presence of an evaporator coil or 

secondary heat exchanger significantly 

impacts the internal structure of an 

HVAC product, and in turn, the energy 

performance of the furnace fan 

integrated in that HVAC product. 

‘‘Mobile home’’ products meet certain 

design requirements that allow them to 

be installed in mobile homes (e.g., a 

more compact cabinet size). Descriptors 

for ‘‘gas,’’ ‘‘oil,’’ or ‘‘electric’’ indicate 

the type of fuel that the HVAC product 

uses to produce heat, which determines 

the type and geometry of the primary 

heat exchanger used in the HVAC 

product. 

C. Technological Feasibility 

1. General 

In each energy conservation standards 

rulemaking, DOE conducts a screening 

analysis based on information gathered 

on all current technology options and 

prototype designs that could improve 

the efficiency of the products or 

equipment that are the subject of the 

rulemaking. As the first step in such an 

analysis, DOE develops a list of 

technology options for consideration in 

consultation with manufacturers, design 

engineers, and other interested parties. 

DOE then determines which of those 

means for improving efficiency are 

technologically feasible. DOE considers 

technologies incorporated in 

commercially-available products or in 

working prototypes to be 

technologically feasible. 10 CFR part 

430, subpart C, appendix A, Section 

4(a)(4)(i). 

After DOE has determined that 

particular technology options are 

technologically feasible, it further 

evaluates each technology option in 

light of the following additional 

screening criteria: (1) Practicability to 

manufacture, install, and service; (2) 

adverse impacts on product utility or 

availability; and (3) adverse impacts on 

health or safety. 10 CFR part 430, 

subpart C, appendix A, Section 

4(a)(4)(ii)–(iv). Additionally, it is DOE 

policy not to include in its analysis any 

proprietary technology that is a unique 

pathway to achieving a certain 

efficiency level. Section IV.B of this 

document discusses the results of the 

screening analysis for residential 

furnace fans, particularly the designs 

DOE considered, those it screened out, 

and those that are the basis for the tcrial 

standard levels (TSLs) in this 

rulemaking. For further details on the 

screening analysis for this rulemaking, 

see chapter 4 of the final rule TSD. 

2. Maximum Technologically Feasible 

Levels 

When DOE proposes to adopt a new 

standard for a type or class of covered 

product, it must determine the 

maximum improvement in energy 

efficiency or maximum reduction in 

energy use that is technologically 

feasible for such product. (42 U.S.C. 

6295(p)(1)) Accordingly, in the 

engineering analysis, DOE determined 

the maximum technologically feasible 

(‘‘max-tech’’) improvements in energy 

efficiency for residential furnace fans, 

using the design parameters for the 

most-efficient products available on the 

market or in working prototypes. The 

max-tech levels that DOE determined 

for this rulemaking are described in 

section IV.C of this final rule and in 

chapter 5 of the final rule TSD. 

D. Energy Savings 

1. Determination of Savings 

For each TSL, DOE projected energy 

savings from the products that are the 

subjects of this rulemaking purchased 

during a 30-year period that begins in 

the year of compliance with amended 

standards (2019–2048).13 The savings 

are measured over the entire lifetime of 

products purchased in the 30-year 

period.14 DOE used the NIA model to 

estimate the NES for products 

purchased over the above period. The 

model forecasts total energy use over the 

analysis period for each representative 

product class at efficiency levels set by 

each of the considered TSLs. DOE then 

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15 ‘‘Review of Site (Point-of-Use) and Full-FuelCycle Measurement Approaches to DOE/EERE 

Building Appliance Energy-Efficiency Standards,’’ 

(Academy report) was completed in May 2009 and 

included five recommendations. A copy of the 

study can be downloaded at: http://www.nap.edu/ 

catalog.php?record_id=12670. 

compares the aggregated energy use at 

each TSL to the base-case energy use to 

obtain the NES. The NIA model is 

described in section IV. H of this 

document and in chapter 10 of the final 

rule TSD. 

DOE used its NIA spreadsheet model 

to estimate energy savings from 

amended standards for the products that 

are the subject of this rulemaking. The 

NIA spreadsheet model (described in 

section IV. H of this notice) calculates 

energy savings in site energy, which is 

the energy directly consumed by 

products at the locations where they are 

used. For electricity, DOE reports 

national energy savings in terms of the 

primary (source) energy savings, which 

are the savings in the energy that is used 

to generate and transmit the site 

electricity. To convert site energy to 

primary energy, DOE derives annual 

conversion factors from the model used 

to prepare the Energy Information 

Administration’s (EIA) Annual Energy 

Outlook 2013 (AEO 2013). 

DOE also has begun to estimate fullfuel-cycle energy savings. 76 FR 51282 

(August 18, 2011), as amended at 77 FR 

49701 (August 17, 2012). The full-fuelcycle (FFC) metric includes the energy 

consumed in extracting, processing, and 

transporting primary fuels (i.e., coal, 

natural gas, petroleum fuels), and thus 

presents a more complete picture of the 

impacts of energy efficiency standards. 

DOE’s evaluation of FFC savings is 

driven in part by the National Academy 

of Science’s (NAS) report on FFC 

measurement approaches for DOE’s 

Appliance Standards Program.15 The 

NAS report discusses that FFC was 

primarily intended for energy efficiency 

standards rulemakings where multiple 

fuels may be used by a particular 

product. In the case of this rulemaking 

pertaining to residential furnace fans, 

only a single fuel—electricity—is 

consumed by the product. DOE’s 

approach is based on the calculation of 

an FFC multiplier for each of the energy 

types used by covered products. 

Although the addition of FFC energy 

savings in the rulemakings is consistent 

with the recommendations, the 

methodology for estimating FFC does 

not project how fuel markets would 

respond to this particular standards 

rulemaking. The FFC methodology 

simply estimates how much additional 

energy, and in turn how many tons of 

emissions, may be displaced if the 

estimated fuel were not consumed by 

the products covered in this rulemaking. 

It should be noted that inclusion of FFC 

savings has not affected DOE’s choice of 

the energy conservation standards 

adopted in today’s final rule. For more 

information on FFC energy savings, see 

section IV. H.2. 

2. Significance of Savings 

EPCA prohibits DOE from adopting a 

standard for a covered product that 

would not result in significant energy 

savings. (42 U.S.C. 6295(o)(3)(B)) 

Although the term ‘‘significant’’ is not 

defined in EPCA, the U.S. Court of 

Appeals for the District of Columbia, in 

Natural Resources Defense Council v. 

Herrington, 768 F.2d 1355, 1373 (D.C. 

Cir. 1985), opined that Congress 

intended ‘‘significant’’ energy savings in 

this context to be savings that were not 

‘‘genuinely trivial.’’ The energy savings 

for today’s standards (presented in 

section V of this notice) are nontrivial, 

and, therefore, DOE considers them 

‘‘significant’’ within the meaning of 

section 325 of EPCA. 

E. Economic Justification 

1. Specific Criteria 

As discussed in section II.A, EPCA 

provides seven factors to be evaluated in 

determining whether a potential energy 

conservation standard is economically 

justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)– 

(VII)) The following sections generally 

discuss how DOE is addressing each of 

those seven factors in this rulemaking. 

For further details and the results of 

DOE’s analyses pertaining to economic 

justification, see sections IV and V of 

today’s document. 

Economic Impact on Manufacturers and 

Commercial Customers 

In determining the impacts of a 

potential new or amended energy 

conservation standard on 

manufacturers, DOE conducts a 

manufacturer impact analysis (MIA), as 

discussed in section IV.J. DOE first 

determines a potential standard’s 

quantitative impacts using an annual 

cash flow approach. This step includes 

both a short-term assessment (based on 

the cost and capital requirements 

associated with new or amended 

standards during the period between the 

announcement of a regulation and the 

compliance date of the regulation) and 

a long-term assessment (based on the 

costs and marginal impacts over the 30- 

year analysis period). The impacts 

analyzed include: (1) Industry net 

present value (INPV) (which values the 

industry based on expected future cash 

flows); (2) cash flows by year; (3) 

changes in revenue and income; and (4) 

other measures of impact, as 

appropriate. Second, DOE analyzes and 

reports the potential impacts on 

different types of manufacturers, paying 

particular attention to impacts on small 

manufacturers. Third, DOE considers 

the impact of new or amended 

standards on domestic manufacturer 

employment and manufacturing 

capacity, as well as the potential for 

new or amended standards to result in 

plant closures and loss of capital 

investment, as discussed in section 

IV.N. Finally, DOE takes into account 

cumulative impacts of other DOE 

regulations and non-DOE regulatory 

requirements on manufacturers. 

For individual customers, measures of 

economic impact include the changes in 

LCC and the PBP associated with new 

or amended standards. These measures 

are discussed further in the following 

section. For consumers in the aggregate, 

DOE also calculates the national net 

present value of the economic impacts 

applicable to a particular rulemaking. 

DOE also evaluates the LCC impacts of 

potential standards on identifiable 

subgroups of consumers that may be 

affected disproportionately by a national 

standard. 

Savings in Operating Costs Compared to 

Increase in Price (Life-Cycle Costs) 

EPCA requires DOE to consider the 

savings in operating costs throughout 

the estimated average life of the covered 

product compared to any increase in the 

price of the covered product that are 

likely to result from the standard. (42 

U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts 

this comparison in its LCC and PBP 

analysis. 

The LCC is the sum of the purchase 

price of a product (including the cost of 

its installation) and the operating costs 

(including energy, maintenance, and 

repair costs) discounted over the 

lifetime of the equipment. To account 

for uncertainty and variability in 

specific inputs, such as product lifetime 

and discount rate, DOE uses a 

distribution of values, with probabilities 

attached to each value. For its analysis, 

DOE assumes that consumers will 

purchase the covered product in the 

first year of compliance with new 

standards. 

The LCC savings and the PBP for the 

considered efficiency levels are 

calculated relative to a base-case 

scenario, which reflects likely market 

trends in the absence of new or 

amended standards. DOE identifies the 

percentage of consumers estimated to 

receive LCC savings or experience an 

LCC increase, in addition to the average 

LCC savings associated with a particular 

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standard level. DOE’s LCC analysis is 

discussed in further detail in section 

IV.F. 

Energy Savings 

Although significant conservation of 

energy is a separate statutory 

requirement for adopting an energy 

conservation standard, EPCA also 

requires DOE, in determining the 

economic justification of a standard, to 

consider the total projected energy 

savings that are expected to result 

directly from the standard. (42 U.S.C. 

6295(o)(2)(B)(i)(III)) DOE uses NIA 

spreadsheet results in its consideration 

of total projected savings. For the results 

of DOE’s analyses related to the 

potential energy savings, see section V.B 

of this notice and chapter 10 of the final 

rule TSD. 

Lessening of Utility or Performance of 

Equipment 

In establishing product classes, and in 

evaluating design options and the 

impact of potential standard levels, DOE 

follows EPCA’s requirement to develop 

standards that would not lessen the 

utility or performance of the products 

under consideration. (42 U.S.C. 

6295(o)(2)(B)(i)(IV)) DOE has 

determined that none of the TSLs 

presented in today’s final rule would 

reduce the utility or performance of the 

products under consideration in this 

rulemaking. During the screening 

analysis, DOE eliminated from 

consideration any technology that 

would adversely impact customer 

utility. See section IV.B of this notice 

and chapter 4 of the final rule TSD for 

further details. 

Impact of Any Lessening of Competition 

EPCA requires DOE to consider any 

lessening of competition that is likely to 

result from setting new or amended 

standards. It also directs the Attorney 

General of the United States (Attorney 

General) to determine the impact, if any, 

of any lessening of competition likely to 

result from a proposed standard and to 

transmit such determination to the 

Secretary within 60 days of the 

publication of a proposed rule, together 

with an analysis of the nature and 

extent of the impact. (42 U.S.C. 

6295(o)(2)(B)(i)(V) and (ii)) 

To assist the Department of Justice 

(DOJ) in making such a determination, 

DOE provided DOJ with copies of both 

the NOPR and NOPR TSD for review. In 

its assessment letter responding to DOE, 

DOJ concluded that the proposed energy 

conservation standards for residential 

furnace fans are unlikely to have a 

significant adverse impact on 

competition. DOE is publishing the 

Attorney General’s assessment at the 

end of this final rule. 

Need of the Nation To Conserve Energy 

Another factor that DOE must 

consider in determining whether a new 

or amended standard is economically 

justified is the need for national energy 

and water conservation. (42 U.S.C. 

6295(o)(2)(B)(i)(VI)) The energy savings 

from new or amended standards are 

likely to provide improvements to the 

security and reliability of the Nation’s 

energy system. Reductions in the 

demand for electricity may also result in 

reduced costs for maintaining the 

reliability of the Nation’s electricity 

system. DOE conducts a utility impact 

analysis to estimate how new or 

amended standards may affect the 

Nation’s needed power generation 

capacity, as discussed in section IV.M. 

Energy savings from energy 

conservation standards are also likely to 

result in environmental benefits in the 

form of reduced emissions of air 

pollutants and greenhouse gases 

associated with energy production (i.e., 

from power plants). For a discussion of 

the results of the analyses relating to the 

potential environmental benefits of 

today’s standards, see sections IV.K, 

IV.L and V.B.6 of this notice. DOE 

reports the expected environmental 

effects from today’s standards, as well as 

from each TSL it considered, in chapter 

13 of the final rule TSD. DOE also 

reports estimates of the economic value 

of emissions reductions resulting from 

the considered TSLs in chapter 14 of the 

final rule TSD. 

Other Factors 

EPCA allows the Secretary, in 

determining whether a new or amended 

standard is economically justified, to 

consider any other factors that the 

Secretary deems to be relevant. (42 

U.S.C. 6295(o)(2)(B)(i)(VII)) There were 

no other factors considered for today’s 

final rule. 

2. Rebuttable Presumption 

As set forth in 42 U.S.C. 

6295(o)(2)(B)(iii), EPCA provides for a 

rebuttable presumption that an energy 

conservation standard is economically 

justified if the additional cost to the 

consumer of a product that meets the 

new or amended standard is less than 

three times the value of the first-year 

energy (and, as applicable, water) 

savings resulting from the standard, as 

calculated under the applicable DOE 

test procedure. DOE’s LCC and PBP 

analyses generate values that calculate 

the PBP for consumers of products 

subject to potential new and amended 

energy conservation standards. These 

analyses include, but are not limited to, 

the 3-year PBP contemplated under the 

rebuttable presumption test. However, 

DOE routinely conducts an economic 

analysis that considers the full range of 

impacts to consumers, manufacturers, 

the Nation, and the environment, as 

required under 42 U.S.C. 

6295(o)(2)(B)(i). The results of these 

analyses serve as the basis for DOE’s 

evaluation of the economic justification 

for a potential standard level (thereby 

supporting or rebutting the results of 

any preliminary determination of 

economic justification). The rebuttable 

presumption payback calculation is 

discussed in section IV.F of this 

rulemaking and chapter 8 of the final 

rule TSD. 

IV. Methodology and Discussion 

A. Market and Technology Assessment 

DOE develops information that 

provides an overall picture of the 

market for the products concerned, 

including the purpose of the products, 

the industry structure, manufacturers, 

market characteristics, and technologies 

used in the products. This activity 

includes both quantitative and 

qualitative assessments, based primarily 

on publicly-available information. The 

subjects addressed in the market and 

technology assessment for this 

residential furnace fans rulemaking 

include: (1) A determination of the 

scope of this rulemaking; (2) product 

classes; (3) manufacturers; (4) quantities 

and types of products sold and offered 

for sale; (5) retail market trends; (6) 

regulatory and non-regulatory programs; 

and (7) technologies or design options 

that could improve the energy efficiency 

of the product(s) under examination. 

The key findings of DOE’s market 

assessment are summarized below. See 

chapter 3 of the final rule TSD for 

further discussion of the market and 

technology assessment. 

1. Definition and Scope of Coverage 

EPCA provides DOE with the 

authority to consider and prescribe new 

energy conservation standards for 

electricity used to circulate air through 

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

adopted the term ‘‘furnace fan’’ as 

shorthand to describe the range of 

products encompassed by this statutory 

mandate. In the preliminary analysis, 

DOE interpreted its statutory mandate 

by defining ‘‘furnace fan’’ to include 

‘‘any electrically-powered device used 

in residential central heating, 

ventilation, and air-conditioning 

(HVAC) systems for the purpose of 

circulating air through duct work.’’ 77 

FR 40530, 40532 (July 10, 2012). DOE 

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16 ‘‘Laminar flow’’ is as term to describe when all 

fluid particles move in paths parallel to the overall 

flow direction (i.e., in layers). Laminar flow may 

occur when the flow channel is small and the speed 

is low. ‘‘Turbulent flow’’ is characterized by a threedimensional movement of the fluid particles 

superimposed on the overall direction of motion. 

Turbulent flow may occur when the flow speed is 

higher and when there are obstacles in the channel 

that disrupt the flow profile. The turbulent flow 

intensifies the heat transfer, thus resulting in more 

efficient heat exchange. 

considered a typical furnace fan as 

consisting of a fan motor and its 

controls, an impeller, and a housing, all 

of which are components of an HVAC 

product that includes additional 

components, including the cabinet. 

In response to the preliminary 

analysis, many interested parties 

disagreed with DOE’s definition of 

‘‘furnace fan’’ and corresponding 

approach to set component-level 

regulations, which they warned would 

ignore system effects that could impact 

both fan and HVAC system energy 

consumption. California investor-owned 

utilities CA IOUs suggested that 

‘‘furnace fan’’ should be defined as a 

unit consisting of a fan motor, its 

controls, an impeller, shroud, and 

cabinet that houses all of the heat 

exchange material for the furnace. 

According to CA IOUs, their suggested 

definition would reduce ambiguity and 

ensure that the components in HVAC 

products that affect furnace fan energy 

consumption are considered in this 

rulemaking. (CA IOUs, No. 56 at p. 1) 

Ingersoll Rand went further and 

suggested a system-level regulatory 

approach, where the entire duct and 

furnace system would be regulated, 

maintaining that such approach would 

produce a more useful metric to 

consumers when evaluating 

performance. (Ingersoll Rand, PA Public 

Meeting Transcript, No. 43 at p. 42) 

Conversely, NEEP observed that by 

regulating fan energy use separately, the 

individual efficiency of the component 

is considered when it would otherwise 

be ignored by manufacturers. (NEEP, 

No. 51 at p. 3) Rheem commented that 

some designs require higher air velocity 

to improve heat transfer but also require 

more electrical consumption to drive 

the blower at the higher velocity. 

(Rheem, PA Public Meeting Transcript, 

No. 43 at p. 63) Rheem commented that 

turbulent flow is considerably more 

efficient for heat transfer than laminar 

flow,16 but more energy is required to 

move turbulent air. (Rheem, No. 54 at p. 

10) Similarly, Lennox and Morrison 

commented that in order to improve 

heating and cooling efficiency, often a 

second heating coil is added, but this 

also leads to higher electrical 

consumption by the furnace fan. 

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

43 at p. 64) Ingersoll Rand argued that 

as the efficiency of the furnace fan 

motor increases, it dissipates less heat, 

and consequently, the furnace will 

consume more gas to compensate and 

meet the desired house heat load. 

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

In the NOPR, DOE responded by 

explaining that DOE is required by 

EPCA to consider and prescribe new 

energy conservation standards or energy 

use standards for electricity used for 

purposes of circulating air through duct 

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

Consequently, in the context of furnace 

fans, DOE does not have latitude to 

apply only a single standard for the 

larger HVAC product (which is already 

regulated). Pursuant to this statutory 

mandate, DOE issued a NOPR which 

proposed energy conservation standards 

for circulation fans used in residential 

central HVAC systems (78 FR 64068 

(Oct. 25, 2013)). DOE added that it did 

not interpret its authority as including 

regulating the duct work itself. DOE 

recognized that component-level 

regulations could have system-level 

impacts. Accordingly, DOE conducted 

its NOPR analyses and selected the 

standard levels proposed in the NOPR 

in such a way that meets the statutory 

requirements set forth by EPCA without 

ignoring system effects, which 

otherwise might compromise the 

thermal performance of the HVAC 

products that incorporate furnace fans. 

For example, the final test procedure 

codified in DOE’s regulations at 10 CFR 

part 430, subpart B, appendix AA 

specifies that the furnace fan be tested 

as factory-installed in the HVAC 

product, thereby enabling the rating 

metric, FER, to account for system 

effects on airflow delivery and, 

ultimately, energy performance. In 

addition, the product class structure 

proposed in the NOPR allowed for 

differentiation of products with designs 

that achieve higher thermal efficiency 

but may have lower fan performance, 

such as condensing furnaces. 78 FR 

64068, 64082 (Oct. 25, 2013). 

In the January 3, 2014 test procedure 

final rule, DOE broadened its definition 

of ‘‘furnace fan’’ to mean ‘‘an 

electrically-powered device used in a 

consumer product for the purpose of 

circulating air through ductwork.’’ 79 

FR 500, 521. 

In response to the NOPR, DOE did not 

receive comments from interested 

parties regarding the definition of 

‘‘furnace fan’’ established by the test 

procedure final rule. Consequently, in 

this standards final rule, DOE is 

maintaining the definition for ‘‘furnace 

fan,’’ codified at 10 CFR 430.2. 

However, DOE did receive comments on 

its definitions for certain product types 

that include furnace fans. DOE 

summarizes and responds to these 

comments later in this section of the 

notice. 

The scope of the preliminary analysis 

included furnace fans used in furnaces, 

modular blowers, and hydronic air 

handlers. Even though DOE has 

interpreted its authority as 

encompassing any electrically-powered 

device used in residential HVAC 

products to circulate air through duct 

work, the preliminary analysis scope 

excluded single-package central air 

conditioners (CAC) and heat pumps 

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

analysis, DOE determined that it may 

consider these and other such products 

in a future rulemaking as data and 

information to develop credible 

analyses becomes available. 

In response to the preliminary 

analysis, efficiency advocates expressed 

concern at DOE’s exclusion of packaged 

and split-system CAC products because 

advocates believe current standards for 

these products do not maximize the 

technologically feasible and 

economically justified energy savings 

for the circulation fans integrated in 

these products. ASAP and Adjuvant 

stated that the metric used for CAC 

products does not accurately represent 

field conditions and requested that they 

be added to the scope. 78 FR 64068, 

64080 (Oct. 25, 2013). 

In contrast, many manufacturers 

submitted comments in response to the 

preliminary analysis that they believe 

that the scope of coverage presented in 

the preliminary analysis exceeds the 

statutory authority granted to DOE 

because the statutory language for this 

rulemaking is found in 42 U.S.C 6295(f) 

under the title ‘‘Standards for furnaces 

and boilers.’’ Consequently, 

manufacturers stated that DOE should 

not include any non-furnace products 

such as central air conditioners, heat 

pumps, or condensing unit-blower-coil 

combinations. Manufacturers also 

claimed that the electricity used to 

circulate air through duct work is 

already adequately accounted for in 

existing energy efficiency metrics for 

CAC and HP products that use 

circulation fans. 78 FR 64068, 64080–81 

(Oct. 25, 2013). 

In the October 25, 2013 furnace fan 

energy conservation standard NOPR, 

DOE noted that, although the title of this 

statutory section refers to ‘‘furnaces and 

boilers,’’ the applicable provision at 42 

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

notably broader language than the other 

provisions within the same section. 78 

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38146 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

FR 64068, 64081. Specifically, that 

statutory provision directs DOE to 

‘‘consider and prescribe energy 

conservation standards or energy use 

standards for electricity used for 

purposes of circulating air through duct 

work.’’ Id. Such language could be 

interpreted as encompassing 

electrically-powered devices used in 

any residential HVAC product to 

circulate air through duct work, not just 

furnaces, and DOE has received 

numerous comments on both sides of 

this issue. In the standards NOPR, 

however, DOE only proposed energy 

conservation standards for those 

circulation fans that are used in 

residential furnaces and modular 

blowers (see discussion below). As a 

result, DOE did not address public 

comments that pertain to fans in other 

types of HVAC products (other than to 

clarify instances where there was 

uncertainty as to whether a given 

product fits within the scope of the 

current rulemaking). The following list 

describes the furnace fans which DOE 

proposed to address in the standards 

NOPR. 

• Products addressed in this 

rulemaking: Furnace fans used in 

weatherized and non-weatherized gas 

furnaces, oil furnaces, electric furnaces, 

and modular blowers. 

• Products not addressed in this 

rulemaking: Furnace fans used in other 

products, such as split-system CAC and 

heat pump indoor units, through-thewall indoor units, small-duct, highvelocity (SDHV) indoor units, energy 

recovery ventilators (ERVs), heat 

recovery ventilators (HRVs), draft 

inducer fans, exhaust fans, or hydronic 

air handlers. 

Id. 

In the October 25, 2013 NOPR, DOE 

also maintained its proposal to account 

for the electrical consumption of 

furnace fans while performing all active 

mode functions (i.e., heating, cooling, 

and constant circulation) because 

furnace fans are used not just for 

circulating air through duct work during 

heating operation, but also for 

circulating air during cooling and 

constant-circulation operation. In DOE’s 

view, in order to obtain a complete 

assessment of overall performance and a 

metric that reflects the product’s 

electrical energy consumption during a 

representative average use cycle, the 

metric must account for electrical 

consumption in a set of airflow-control 

settings that spans all active mode 

functions. This would ensure a more 

accurate accounting of the benefits of 

improved furnace fans. Id. 

China WTO commented that DOE’s 

definition for ‘‘furnace fan’’ and the 

proposed scope show that residential 

furnace fans primarily perform the 

heating function. For this reason, China 

WTO recommended that DOE exclude 

fan performance for cooling operation to 

avoid unnecessary test procedure 

burden. (China WTO, No. 92 at pp. 1– 

2). 

For the reasons stated above, the 

energy conservation standards 

established by this notice account for 

the electrical consumption of furnace 

fans while performing all active mode 

functions (i.e., heating, cooling, and 

constant circulation). The commenter 

did not dispute the fact that fans will 

operate in cooling or constantcirculation mode, often for non-trivial 

periods of time. Because the electrical 

energy consumption of the fan may vary 

substantially depending on its mode of 

operation, DOE has concluded that 

testing fan operation in all these modes 

is necessary to reflect the product’s 

energy consumption during a 

representative use cycle and that such 

testing would not be unduly 

burdensome to conduct. 

Unico submitted comments regarding 

concerns with DOE’s test procedure and 

proposed standard levels as they apply 

to SDHV systems. Unico explains that 

DOE proposed to exclude SDHV 

products from the rulemaking but 

included modular blowers and electric 

furnaces, resulting in a potential 

conflict. Unico added that most of their 

SDHV air handlers are modular in 

construction. Unico also offers an addon electric furnace to provide secondary 

or backup heat, but very few systems are 

installed as an electric furnace. As a 

result, Unico expressed uncertainty 

whether this rule applies to SDHV 

modular blowers and SDHV electric 

furnaces. Unico provided data showing 

that SDHV blowers operate at different 

conditions compared to the products 

proposed to be covered and cannot meet 

the proposed FER levels. Ultimately, 

Unico expressed concerns that this rule 

could potentially eliminate many SDHV 

products from the market if they are 

subject to DOE’s proposed standards. 

(Unico, No. 93 at pp.1–4) 

In response to the comment, DOE 

clarifies that the furnace fan test 

procedure and the energy conservation 

standards established by this final rule 

do not apply to SDHV products, 

including SDHV modular blowers and 

electric furnaces. DOE recognizes that 

these products operate at different 

conditions which significantly impact 

their fan performance, as compared to 

the products addressed in this 

rulemaking. While DOE’s regulations at 

10 CFR 430.2 include a definition for 

‘‘small duct high velocity systems,’’ it 

does not include a definition for small 

duct high velocity modular blowers or 

SDHV electric furnaces. Absent 

clarification, DOE realizes that 

confusion may result regarding which 

products are and are not covered by 

today’s standards. Accordingly, DOE is 

adopting the following definition of 

‘‘small-duct high-velocity (SDHV) 

modular blower,’’ which has been 

drafted to be consistent with the 

existing definition of ‘‘SDHV system’’ at 

10 CFR 430.2: 

Small-duct high-velocity (SDHV) 

modular blower means a product that: 

• Meets the definition of ‘‘modular 

blower,’’ as set forth in 10 CFR part 430, 

subpart B, appendix AA; 

• Is designed for, and produces, at 

least 1.2 inches of external static 

pressure when operated at the certified 

air volume rate of 220–350 CFM per 

rated ton of cooling in the highest 

default cooling airflow-controls setting; 

and 

• When applied in the field, uses 

high velocity room outlets generally 

greater than 1,000 fpm that have less 

than 6.0 square inches of free area. 

Similarly, DOE is adopting a 

definition for ‘‘small-duct high-velocity 

(SDHV) electric furnace’’ to read as 

follows: 

Small-duct high-velocity (SDHV) 

electric furnace means a product that: 

• Meets the definition of ‘‘electric 

furnace,’’ as set forth in 10 CFR 430.2; 

• Is designed for, and produces, at 

least 1.2 inches of external static 

pressure when operated at the certified 

air volume rate of 220–350 CFM per 

rated ton of cooling in the highest 

default cooling airflow-control setting; 

and 

• When applied in the field, uses 

high velocity room outlets generally 

greater than 1,000 fpm that have less 

than 6.0 square inches of free area. 

DOE has concluded that these 

amendments should eliminate any 

confusion associated with DOE not 

addressing SDHV modular blowers and 

SDHV electric furnaces in the present 

rulemaking. Unico also submitted other 

SDHV-related concerns, but DOE need 

not discuss those issues further because 

SDHV products are not addressed in 

this rulemaking. 

AHRI, Morrison, Goodman, Johnson 

Controls, and Mortex stated that 

modular blowers should be excluded 

from the scope of this rulemaking. 

(AHRI, No. 98 at pp. 1, 2; Morrison, No. 

108 at p. 1; Goodman, No. 102 at p. 5; 

Johnson Controls, No. 95 at p. 2; and 

Mortex, NOPR Public Meeting 

Transcript, No. 91 at pp. 78–79). AHRI, 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38147 

Morrison, and Johnson Controls 

continue to advance an interpretation of 

42 USC 6295(f)(4)(D) as being only 

applicable to furnaces, and these 

commenters argued that absent a 

legislative change, DOE has exceeded its 

statutory authority in terms of the 

NOPR’s proposed coverage of modular 

blowers. (AHRI, No. 98 at pp. 1–2; 

Morrison, No. 108 at p. 1; and Johnson 

Controls, No, 95 at p. 2). AHRI and 

Johnson Controls added that some 

modular blowers in today’s marketplace 

are not designed to operate with electric 

resistance heat kits, rendering the final 

test procedure insufficient for these 

products. (AHRI, No. 98 at pp. 1, 2; and 

Johnson Controls, No. 95 at p. 3). 

ASAP, et al., on the other hand, 

expressed support for the inclusion of 

modular blowers in the scope of 

coverage. ASAP, et al. stated that they 

understand that the strip heat used with 

electric furnaces is often installed in the 

field, which means that an ‘‘electric 

furnace’’ is often sold by the 

manufacturer as a ‘‘modular blower.’’ 

ASAP, et al. cite DOE’s finding that nonweatherized and mobile home electric 

furnace/modular blower furnace fans 

represent 10 percent of all furnace fan 

sales. According to ASAP, et al., 

excluding modular blowers from the 

scope of coverage would not only 

reduce energy savings from this 

rulemaking, but would also create a 

loophole—i.e., manufacturers would 

have an incentive to sell electric 

furnaces as modular blowers (without 

strip heat installed) in order to avoid 

compliance with the furnace fan energy 

conservation standards. (ASAP, et al., 

No. 105 at pp. 1, 2) 

As stated above, DOE maintains its 

interpretation that the relevant statutory 

language at 42 U.S.C. 6295(f)(4)(D) is 

broader in its applicability than just 

furnaces, and consequently, it provides 

DOE authority to cover modular blowers 

in this rulemaking. These same 

arguments were already addressed in 

some detail in the NOPR (see 78 FR 

64068, 64081 (Oct. 25, 2013)). DOE also 

disagrees with the contention of AHRI 

and Johnson Controls that the final test 

procedure is not sufficient to address all 

modular blowers. All modular blower 

models of which DOE is aware can be 

operated in conjunction with an electric 

resistance heat kit, and commenters did 

not identify any models of modular 

blowers that cannot. Even assuming 

arguendo that modular blowers do exist 

that are not designed to operate with an 

electric resistance heat kit, DOE expects 

that number of such models would be 

de minimis and that manufacturers 

producing modular blowers that cannot 

be operated in conjunction with an 

electric resistance heat kit would apply 

for a waiver from the test procedure. 

DOE provides more details regarding 

this issue in the January 3, 2014 test 

procedure final rule. 79 FR 504. 

In its comments, Johnson Controls 

stated that DOE’s use of the phrase 

‘‘primary heat source’’ is too ambiguous, 

especially when certain products might 

be modified in the field. According to 

Johnson Controls, DOE’s 

characterizations of air handlers and 

modular blowers when an air handler or 

modular blower is the primary heating 

source is still confusing and brings 

uncertainty to the NOPR market 

assessment. Johnson Controls 

commented that none of the residential 

air handlers, modular blowers, or 

residential single-package finished good 

models built by Johnson Controls 

includes factory-installed electric heat 

kits. Therefore, according to the 

commenter, electric heat kits installed 

in these products cannot be considered 

to be the primary source for heat in their 

applications, and so none of these 

products should be included in this 

rulemaking. Johnson Controls added 

that while field-installed electric heat 

kits are available and used frequently, 

the use of field kits is outside of the air 

handler or modular blower 

manufacturer’s control, unlike gas 

furnaces where the application is 

known to usually be the primary heating 

source in the vast number of situations. 

(Johnson Controls, No. 95 at p. 2) NEEA, 

Mortex, and Daikin agreed that the 

contractor determines whether a CAC/

HP blower-coil unit with electric 

resistance heat is the principal source of 

heating for a residence, rendering any 

such determination speculative for other 

entities. (NEEA, NOPR Public Meeting 

Transcript, No. 91 at pp. 64–65; Mortex, 

NOPR Public Meeting Transcript, No. 91 

at pp. 78–79; and Daikin, NOPR Public 

Meeting Transcript, No. 91 at pp. 75–76) 

Modular blowers are not a source of 

heat per DOE’s definition of ‘‘modular 

blower’’ as provided in 10 CFR part 430, 

subpart B, appendix AA. Consequently, 

the ‘‘principal heating source’’ qualifier 

(per the definition of ‘‘furnace’’ at 10 

CFR 430.2) does not apply to modular 

blowers, so this part of the ‘‘furnace’’ 

definition has the effect of excluding 

modular blowers from that definition. 

However, the ‘‘furnace’’ definition is not 

the only factor in deciding whether 

modular blowers are covered in this 

rulemaking, contrary to what Johnson 

Controls suggests. If electric resistance 

heat is added to a modular blower 

product, that product no longer meets 

DOE’s definition of a ‘‘modular blower.’’ 

Instead, DOE considers the modified 

product an electric furnace, absent other 

design changes. Regardless of whether 

the electric resistance heat is factoryinstalled, both product variations are 

covered in the final test procedure and 

this energy conservation standard. 

DOE recognizes that interested parties 

may have trouble determining whether 

a CAC/HP blower-coil unit with electric 

resistance heating is considered an 

electric furnace and thereby covered by 

the energy conservation standards 

established by this final rule. Strictly 

following the DOE definition for 

‘‘electric furnace’’ (which references the 

DOE definition of ‘‘furnace’’) as set forth 

at 10 CFR 430.2, coverage in this final 

rule of a CAC/HP blower-coil with 

electrical resistance heating depends on 

whether the electric resistance heating 

is the ‘‘principal heating source for the 

residence.’’ As Johnson Controls points 

out, this is not as easily determined as 

for gas and oil furnaces. DOE expects 

that in the significant majority of CAC/ 

HP blower-coil models that have electric 

resistance heat, the electric resistance 

heat is supplemental in nature and not 

the principal heating source for the 

residence. For this reason, DOE has 

decided that the energy conservation 

standards established by this rule will 

not cover CAC/HP blower-coil units, 

regardless of whether they include 

electric resistance heat. 

Lennox argued that including 

weatherized commercial products in 

this rulemaking is unrealistic and 

improper. Specifically, Lennox 

expressed concerns that DOE 

mischaracterizes single-package 

weatherized products as ‘‘residential’’ 

when these products are offered with a 

single-phase power source. The 

commenter stated that these products 

are often used in commercial 

applications, explaining that singlephase weatherized products are often 

designed to have higher duct static 

pressure capability than a traditional 

residential furnace. Lennox commented 

that they have single-phase belt-drive 

products that are capable of operating 

up to 2 inches water column external 

static pressure to meet commercial duct 

static requirements. According to 

Lennox, BPM motors (including both 

constant-torque and constant-airflow 

BPM motors) typically used in 

residential products cannot achieve the 

high static pressures required in these 

commercial installations. Therefore, 

Lennox recommended that DOE should 

exclude all products marked not for 

residential use from standards coverage. 

(Lennox, No. 100 at p. 4). 

DOE recognizes that industry may 

differentiate between residential 

products and commercial equipment 

differently than DOE. The standards 

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38148 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

17For information about obtaining exception 

relief, see 10 CFR part 1003 (available at http://

www.ecfr.gov/cgi-bin/text-idx?SID=d95bf6ed9cd8

49253fab734656f80c2e&node=10:4.0.3.5.3

&rgn=div5). 

established by this final rule do not 

cover all single-phase, single-package 

HVAC products, only single-phase 

weatherized furnaces (i.e., single-phase, 

single-package HVAC products that 

include a ‘‘furnace’’ as defined at 10 

CFR 430.2). Lennox did not identify, 

and after additional research, DOE is not 

aware of any weatherized gas furnace 

models that operate at the static 

pressures mentioned by the commenter. 

DOE expects that the operating 

conditions mentioned by Lennox are 

typical of single-package heat pump 

equipment, which is not covered by this 

rule. DOE expects the number of models 

covered by this rule that DOE defines as 

residential but are designed and 

operated in commercial applications to 

be de minimis. Any manufacturer which 

can substantiate its case that it would 

suffer serious hardship, gross inequity, 

and an unfair distribution of burdens if 

required to comply with the furnace fan 

standards may seek exception relief 

from DOE’s Office of Hearings and 

Appeals (OHA).17

ACEEE commented that if 

manufacturers offered air handlers as a 

separate product, without the coil, the 

modified product would not be 

inherently different than a modular 

blower. ACEEE stated that DOE should 

cover CAC/HP blower-coil units 

following the same logic that DOE used 

to justify covering modular blowers (i.e., 

because of their similarities to electric 

furnaces). ACEEE also commented that 

the DOE definition for ‘‘modular 

blower’’ is confusing because, in their 

experience, all (or almost all) 

conventional indoor blower units— 

whether furnaces, HP, or CAC—use a 

separate assembly (or field-fabricated 

‘plenum’) to house the coil used as the 

evaporator (CAC) or evaporator and 

condenser (HP). (ACEEE, No. 94 at pp. 

1–2, 4). 

DOE disagrees with ACEEE’s 

assessment that a CAC/HP blower-coil 

unit with the coil removed and an 

electric furnace are equally comparable 

to a modular blower. For example, 

modular blowers are typically designed 

to accommodate the addition of electric 

resistance heating kits (after which DOE 

would consider them as electric 

furnaces) without modifying the 

product envelope. Modular blower 

envelope dimensions are similar, and in 

many cases identical, to electric furnace 

dimensions as a result. In addition, the 

final test procedure requires an electric 

resistance heat kit to be installed in 

modular blowers to produce a 

temperature rise allowing for 

calculation of airflow for the rating 

metric, FER. The test configurations for 

electric furnaces and modular blowers 

are almost identical as a result. In turn, 

the FER values for an electric furnace 

and modular blower with no other 

design difference other than the 

presence of an electric resistance heat 

kit are expected to be approximately 

equivalent. On the other hand, the coils 

typically included in CAC/HP blowercoil units are larger than heat resistance 

kits. Consequently, blower-coil unit 

envelope dimensions are different than 

modular blower dimensions, which 

impacts fan performance. CAC/HP 

blower-coil unit design, as it relates to 

fan performance, cannot be compared to 

modular blower design for this reason. 

The final test procedure does not 

include methods for deriving an FER 

value for CAC/HP blower-coil units. 

Furthermore, the coil and envelope 

dimension differences mentioned would 

preclude the circulation fan 

performance of a CAC/HP blower-coil 

unit from being deemed equivalent to an 

otherwise similarly-designed modular 

blower. In addition, modular blowers 

and electric furnaces are product 

configurations installed in the field. 

DOE doubts that a CAC/HP blower-coil 

unit with the coil removed would be 

offered by manufacturers or purchased 

and installed in the field. Regarding the 

criticism of its definition of ‘‘modular 

blower,’’ DOE recognizes that the 

definition for ‘‘modular blower’’ as set 

forth at 10 CFR part 430, subpart B, 

appendix AA may be confusing because 

it does not explicitly state that a 

modular blower does not include an 

indoor refrigerant coil, only that it does 

not provide heating or cooling. An 

‘‘indoor unit,’’ on the other hand, is 

defined at 10 CFR 430.2 as containing 

a ‘‘coil.’’ This notice modifies the 

definition of ‘‘modular blower’’ to 

explicitly exclude products that contain 

an indoor refrigerant coil in order to 

eliminate ambiguity between the two 

definitions. 

ACEEE, Earthjustice, and CA IOU 

stated that DOE’s decision to exclude 

products such as CAC/HP and hydronic 

air handlers is inappropriate and in 

conflict with DOE’s interpretation of the 

statutory language. These interested 

parties also commented that DOE does 

not provide a justification for its 

decision to exclude products for which 

DOE claims to have authority to set 

energy conservation standards. (ACEEE, 

No. 94 at pp. 1–2, 4; and CA IOU, No. 

106 at pp. 1, 2) According to 

Earthjustice, DOE’s decision to exclude 

products for which it claims authority to 

cover represents a failure to carry out 

EPCA’s command to adopt ‘‘standards 

for electricity used for purposes of 

circulating air through ductwork’’ and 

does not comply with the statute’s 

requirement that standards ‘‘shall be 

designed to achieve the maximum 

improvement in energy efficiency’’ that 

is ‘‘technologically feasible and 

economically justified.’’ (42 U.S.C. 

6295(o)(2)(A). Earthjustice adds that 

EPCA authorizes DOE not to prescribe 

an amended or new standard for a type 

or class of covered product in three 

situations: (1) The standard will 

eliminate certain product features from 

the market; (2) the standard will not 

result in significant conservation of 

energy or is not technologically feasible 

or economically justified; or (3) for 

certain products, test procedures have 

not been established. (42 U.S.C. 

6295(o)(3) and (4)). Earthjustice states 

that DOE has failed to show that the 

products it is not addressing in this rule 

meet those criteria. (Earthjustice, No. 

101 at p. 1). 

ASAP, et al. encouraged DOE to adopt 

standards and/or test procedure changes 

to drive improved efficiency of furnace 

fans that are part of single-package and 

blower-coil central air conditioners and 

heat pumps in the future. According to 

ASAP, et al., CA IOU and ACEEE, the 

operating conditions and metrics used 

in the DOE test procedures for CAC/HP 

(i.e., SEER and HSPF) are insufficient 

for representing furnace fan 

performance in the field for those 

products. (ASAP, et al., No. 105 at pp. 

2, 3; CA IOU, No. 106 at pp. 1, 2; and 

ACEEE, No. 94 at pp. 1–2, 4). Further, 

ASAP, et al. are concerned that heat 

pump indoor units will increasingly be 

installed and operated as electric 

furnaces (without an outdoor unit) to 

avoid both the DOE standard for CAC/ 

HP and the standards established by this 

rule. ASAP, et al. added that consumers 

will have greater incentive to install 

heat pump indoor units to operate as 

electric furnaces if a heat pump indoor 

unit with a PSC motor is less expensive 

than an electric furnace/modular blower 

with a constant-torque BPM motor. 

(ASAP, et al., No. 105 at pp. 2, 3) 

Earthjustice also identified CAC/HP 

blower-coil units installed without an 

outdoor unit and operated as an electric 

furnace as a potential loophole. 

(Earthjustice, No. 101 at p. 1) While 

ASAP, et al., stated that they recognize 

that it may be too late to include furnace 

fans that are part of single-package and 

blower-coil central air conditioners and 

heat pumps in the scope of coverage in 

the current rulemaking, they encourage 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38149 

DOE to address furnace fan efficiency in 

these products in the future through one 

of two options: (1) Amend the test 

procedures for central air conditioners 

and heat pumps to incorporate more 

realistic external static pressure values; 

or (2) include furnace fans that are part 

of single-package and blower-coil 

central air conditioners and heat pumps 

in a future rulemaking for furnace fans. 

ASAP, et al., submitted that if DOE 

pursued the second option, changing 

the external static pressure values in the 

central air conditioner and heat pump 

test procedures would be less critical, 

because fan efficiency would be 

addressed through standards for furnace 

fans. (ASAP, et al., No. 105 at pp. 2, 3) 

CA IOU also expressed support for a 

separate, expedited rulemaking to set 

energy conservation standards for 

products not addressed in this rule. CA 

IOU claims that such a rule would 

ensure that the entire market for furnace 

fans is regulated, thereby avoiding the 

negative market impacts due to the 

prevalence of unregulated products. (CA 

IOU, No. 106 at pp. 1, 2). NEEA and 

NPCC also expressed disappointment 

that DOE is choosing to cover only twothirds of furnace fan products by 

excluding indoor blower/cool units 

used with split system heat pump and 

air conditioning systems and hydronic 

air handlers, which leaves substantial 

energy savings on the table. (NEEA and 

NPCC, No. 96 at p. 3). ACEEE estimated 

that approximately two quads of 

potential cumulative energy savings are 

left uncaptured by DOE’s decision to 

exclude CAC/HP blower-coil units, 

which ACEEE claims could jeopardize 

achievement of the Administration’s 

goal of 3 billion tons of CO2 avoided. 

(ACEEE, No. 94 at p. 1–2, 4). CA IOU 

cited these potential energy savings as 

another reason that a separate, 

expedited rulemaking is warranted. (CA 

IOU, No. 106 at pp. 1, 2). Laclede, 

APGA, and AGA also recommended 

that DOE expand the scope of this rule 

to include products such as split-system 

central air conditioners, heat pump air 

handlers, through-the-wall air handlers, 

and small-duct high-velocity air 

handlers that compete with the types of 

natural gas furnaces covered by this 

rules. Each cited concerns that DOE’s 

decision to exclude fans used in these 

products could lead to fuel switching. 

(Laclede, No. 89 at p. 2; APGA, No. 90 

at p. 2; and AGA, No. 110 at p. 2). 

Laclede believes the Department failed 

to adequately explain why fans in heat 

pumps are excluded and to clearly 

demonstrate how this exclusion serves 

the best interests of the American 

public. 

EEI, on the other hand, supports 

DOE’s exclusion of CAC/HP blowercoils and hydronic air handlers from 

this rulemaking. EEI commented that 

the energy used by the fans operating in 

the cooling mode is part of the 

calculation of SEER, EER, and HSPF. 

EEI explains that manufacturers have 

already made design decisions that 

reduce the energy usage of such fans for 

these systems to meet the higher air 

conditioner and heat pump energy 

conservation standards (based on SEER 

and HSPF) that took effect in 1992 and 

2006, and will take effect in 2015. EEI 

stated that including these fans in this 

rule would be a form of ‘‘double 

regulation’’ of the same product. (EEI, 

No. 87 at p. 3) Southern Company 

agreed that CAC/HP fan energy is 

already covered by the SEER and HSPF 

rating. (Southern Company, NOPR 

Public Meeting, No. 43 at p. 70). 

As explained previously, DOE has 

noted the relatively broad scope of the 

language of 42 U.S.C. 6295(f)(4)(D), 

which provides DOE authority to 

regulate ‘‘electricity used for purposes 

of circulating air through duct work.’’ At 

the present time, however, DOE is only 

adopting energy conservation standards 

for those circulation fans that are used 

in residential furnaces and modular 

blowers. The DOE test procedure for 

furnace fans is not currently equipped 

to address fans contained in central air 

conditioners, heat pumps, or other 

products, as would be required for the 

adoption of standards under 42 U.S.C. 

6295(o)(3). Consequently, DOE is not 

considering standard setting for other 

products beyond the current scope of 

the rulemaking at this time. 

2. Product Classes 

DOE identified nine key product 

classes in the preliminary analysis, each 

of which was assigned its own 

candidate energy conservation standard 

and baseline FER. DOE identified 

twelve additional product classes that 

represent significantly fewer shipments 

and significantly less overall energy use. 

DOE grouped each non-key product 

class with a key product class to which 

it is closely related in applicationspecific design and internal structure 

(i.e., the primary criteria used to 

differentiate between product classes). 

DOE assigned the analytical results of 

each key product class to the non-key 

product classes with which it is grouped 

because DOE expected the energy use 

and incremental manufacturer 

production costs (MPCs) of improving 

efficiency to be similar within each 

grouping. Table IV.1 lists the 21 

preliminary analysis product classes. 

TABLE IV.1—PRELIMINARY ANALYSIS PRODUCT CLASSES

Key product class Additional product classes 

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

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

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

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

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

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

Mobile Home Weatherized Electric Furnace/Modular Blower Fan (MH– 

WEF/WMB). 

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

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

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

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

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

Mobile Home Heat/Cool Hydronic Air Handler Fan (MH–HAH–HC). 

Mobile Home Heat-Only Hydronic Air Handler Fan (MH–HAH–H). 

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

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan 

(MH–NWG–NC).

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38150 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

18The inlet cone is the opening of the furnace fan 

housing through which return air enters the 

housing. The inlet cone is typically curved inward, 

forming a cone-like shape around the perimeter of 

the opening, to provide a smooth surface to direct 

air from outside the housing to inside the housing 

and into the impeller. 

TABLE IV.1—PRELIMINARY ANALYSIS PRODUCT CLASSES—Continued 

Key product class Additional product classes 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan (MH– 

NWG–C).

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

Manufacturers agreed that the 

selected key product classes are an 

accurate representation of the market. 

Some manufacturers disagreed with 

DOE’s approach to specify additional 

product classes within a key product 

class, stating that shipment data 

indicates that the additional product 

classes are too small to be covered. 

In the NOPR, DOE agreed with 

manufacturers’ assertion that the 

additional non-key product classes 

represent products with few and in 

many cases, no shipments. 78 FR 64082. 

Individual discussions with 

manufacturers for the MIA confirmed 

this assertion. Additionally, review of 

the AHRI appliance directory revealed 

that only two of the additional non-key 

product classes have active models 

listed: (1) Mobile home weatherized gas 

furnace fans (MH–WG) and (2) mobile 

home non-weatherized oil furnace fans 

(MH–NWO). The number of active basic 

models for MH–WG and MH–NWO are 

4 and 16, respectively. For this reason, 

DOE proposed in the NOPR to eliminate 

the additional non-key product classes 

except for MH–WG and MH–NWO. Due 

to the limited number of basic models 

for MH–WG and MH–NWO, DOE did 

not have data to directly analyze and 

establish standards for these additional 

product classes. As a result, DOE 

proposed to reserve space to establish 

standards for MH–WG and MH–NWO 

furnace fans in the future as sufficient 

data become available. DOE also 

proposed to exclude hydronic air 

handlers from consideration in this 

rulemaking, thereby further reducing 

the number of product classes addressed 

in the NOPR to 10. 78 FR 64082. Table 

IV.2 includes a list of the revised set of 

product classes for residential furnace 

fans used in the NOPR. 

DOE did not receive comment or 

additional information on the proposed 

product classes, thus, DOE is not 

making changes to the product classes 

in this Final Rule. Table IV.2 includes 

a list of the product classes for 

residential furnace fans used in the 

Final Rule. 

TABLE IV.2—PRODUCT CLASSES FOR RESIDENTIAL FURNACE FANS

Product class 

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

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

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

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

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

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

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

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

Mobile Home Weatherized Gas Furnace Fan (MH–WG) 

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

3. Technology Options 

In the preliminary analysis, DOE 

considered seven technology options 

that would be expected to improve the 

energy efficiency of furnace fans: (1) Fan 

housing and airflow path design 

modifications; (2) high-efficiency fan 

motors (in some cases paired with 

multi-stage or modulating heating 

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

backward-inclined impellers; (5) 

constant-airflow brushless permanent 

magnet (BPM) motor control relays; (6) 

toroidal transformers; and (7) switching 

mode power supplies. In the NOPR, 

DOE revised its proposed scope of 

coverage to no longer address hydronic 

air handlers, the only furnace fan 

product class for which standby mode 

and off mode energy consumption is not 

already fully accounted for in the DOE 

energy conservation standards 

rulemakings for residential furnaces and 

residential CAC and HPs. 76 FR 37408 

(June 27, 2011); 76 FR 67037 (Oct. 31, 

2011). Consequently, the standby mode 

and off mode technology options 

(options 5 through 7 in the list above) 

are no longer applicable. In addition, 

DOE found that multi-staging and 

modulating heating controls can also 

improve FER, so DOE evaluated multistaging and modulating heating controls 

as a separate technology option for the 

NOPR. 78 FR 64083. 

DOE did not receive comment or 

additional information regarding the 

evaluated technology options, so DOE 

did not make any changes to the list of 

technology options identified in the 

NOPR. The resultant list of technology 

options identified to be evaluated in the 

screening analysis before consideration 

in the engineering analysis for the Final 

Rule include: (1) Fan housing and 

airflow path design modifications; (2) 

inverter-driven PSC fan motors; (3) 

high-efficiency fan motors; (4) multistaging and modulating heating 

controls; and (5) backward-inclined 

impellers. Each identified technology 

option is discussed below and in more 

detail in chapter 3 of the Final Rule 

TSD. 

Fan Housing and Airflow Path Design 

Improvements 

The preliminary analysis identified 

fan housing and airflow path design 

modifications as potential technology 

options for improving the energy 

efficiency of furnace fans. Optimizing 

the shape of the inlet cone 18 of the fan 

housing, minimizing gaps between the 

impeller and fan housing inlet, and 

optimizing cut-off location and 

manufacturing tolerances were 

identified as enhancements to a fan 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38151 

19Wiegman, Herman, Final Report for the 

Variable Speed Integrated Intelligent HVAC Blower 

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

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

20Walker, I.S, State-of-the-art in Residential and 

Small Commercial Air Handler Performance (2005) 

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

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

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

and constant torque (respectively) BPM offerings of 

a specific motor manufacturer. Throughout this 

notice, DOE will refer to these technologies using 

generic terms, which are introduced in the list 

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

used by the interested party when referring to motor 

technologies. 

22A lower turndown ratio can significantly 

improve furnace fan efficiency because fan input 

power has a cubic relationship with airflow. 

23See chapter 3 of the TSD for more details 

regarding fan operation. 

housing that could improve efficiency. 

Separately, modification of elements in 

the airflow path, such as the heat 

exchanger, could reduce internal static 

pressure and as a result, reduce energy 

consumption. Manufacturer input was 

requested to determine the use and 

practicability of these potential 

technology options. 

Interested parties expressed support 

for DOE’s consideration of the 

aerodynamics of furnace fan cabinets in 

its initial analysis of technology options. 

In particular, ASAP cited a 2003 GE 

study 19 that quantified energy savings 

produced by modifying fan housing as 

justification for its inclusion as an 

option. ACEEE, et al. also cited a 

Lawrence Berkeley National Laboratory 

(LBNL) study 20 that linked changes in 

efficiency to modifying the clearance 

between fan housing and an air handler 

cabinet wall. Ingersoll Rand stated that 

there are proprietary fan housing 

designs on the market that already 

improve mechanical efficiency by 10–20 

percent at a cost much lower than the 

cost to implement high-efficiency 

motors or make changes to the impeller 

and its tolerances. 78 FR 64083. 

DOE is aware of the studies cited by 

ASAP and ACEEE, as well as the 

proprietary housing design mentioned 

by Ingersoll Rand. For the NOPR, DOE 

decided to include fan housing design 

modifications as a technology to be 

evaluated further in the screening 

analysis because of these indications 

that each could improve fan efficiency. 

78 FR 64083. 

Many interested parties requested that 

DOE keep airflow path design as a 

technology option. Manufacturers stated 

that improving airflow path design, like 

modifying fan housing, is highly costeffective when compared to other 

enhancements. Similar to the fan 

housing design modifications, DOE 

decided to include airflow path design 

as a technology option to be evaluated 

further in the screening analysis as a 

result of these claims of potential fan 

efficiency improvement. 78 FR 64083. 

DOE believes including airflow path 

design is appropriate because of its 

potential to impact fan efficiency. 

Airflow path design will impact the 

rating metric, FER, because the DOE test 

procedure requires the furnace fan to be 

tested as it is factory-installed in the 

HVAC product. 

DOE did not receive comment or 

additional information on fan housing 

about including airflow path design 

improvements as a technology option, 

thus, DOE is including these as 

technologies to be evaluated further in 

the screening analysis. Chapter 3 of the 

Final Rule TSD provides more technical 

detail regarding fan housing and airflow 

path design modifications and how 

these measures could reduce furnace fan 

energy consumption. 

Inverter Controls for PSC Motors 

In the preliminary analysis, DOE 

identified inverter-driven PSC motors as 

a technology option. DOE is aware of a 

series of non-weatherized gas furnaces 

with inverter-driven PSC furnace fan 

motors that was once commercially 

available. DOE has determined that 

inverter controls provide efficiency 

improvement by offering additional 

intermediate airflow-control settings 

and a wider range of airflow-control 

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

conventional PSC controls. The 

additional airflow-control settings and 

range enable the furnace fan to better 

match demand. Publically-available 

performance data for the series of 

furnaces using inverter-driven PSCs 

demonstrate that the use of this 

technology results in reduced FER 

values compared to baseline PSC 

furnace fans. Consequently, DOE 

considered inverter-driven PSCs as a 

technologically feasible option for 

reducing furnace fan energy 

consumption. 

Manufacturers were opposed to listing 

inverter-driven PSCs as a viable 

technology option. Manufacturers 

commented that there are alternate, 

more cost-effective solutions to reduce 

energy consumption for air-moving 

systems, such as airflow path design or 

ECM (referred to herein by DOE as a 

‘‘constant-airflow BPM motor’’) 

technology. 78 FR 64084. 

For the NOPR analysis, DOE 

recognized manufacturers’ concerns 

with the cost-effectiveness of inverterdriven PSC fan motors. However, DOE 

decided to include inverter-driven PSC 

motors as a technology option to be 

evaluated further in the screening 

analysis due to their potential to reduce 

furnace fan energy consumption. 78 FR 

64084. 

DOE did not receive comment or 

additional information on including 

inverter controls for PSC motors as a 

technology option, thus, DOE is 

including this technology option in the 

Final Rule. DOE evaluates in the 

engineering analysis the costeffectiveness of all energy-saving 

technology options that are not screened 

out. Chapter 3 of the Final Rule TSD 

provides a more detailed discussion of 

inverter-driven PSC furnace fan motors. 

High-Efficiency Motors 

In the preliminary analysis, DOE 

identified four motor types that are 

typically used in furnace fan assemblies: 

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

have more than 3 airflow-control 

settings and sometimes improved 

materials (hereinafter referred to as 

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

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

BPM motors (often referred to as 

‘‘ECMs’’).21 DOE finds that furnace fans 

using high-efficiency motor technology 

options operate more efficiently than 

furnace fans using baseline PSC motors 

by: 

• Functioning more efficiently at a 

given operating condition; 

• Maintaining efficiency throughout 

the expected operating range; and 

• Achieving a lower turndown ratio 22

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

airflow in highest setting). 

Ingersoll Rand commented that a PSC 

motor will use less energy at higher 

static pressures, while an ECM increases 

energy use as static pressure rises. 

Ingersoll Rand stated that as a result, 

understanding the impact of switching 

to an ECM at higher static pressures may 

confuse the consumer. (Ingersoll Rand, 

PA Public Meeting Transcript, No. 43 at 

p. 67) 

For the NOPR analysis, DOE stated 

that it is aware that consumers may be 

confused when BPM motors (referred to 

as ECMs by Ingersoll Rand above) 

consume more energy than PSC motors 

at higher static pressures, because 

consumers expect BPM motors to 

consume less energy than PSC motors 

under the same operating conditions. In 

general, input power to the fan motor 

increases as static pressure increases to 

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

motor has to work harder in the face of 

increased resistance to provide a desired 

amount of air).23 DOE agreed with 

Ingersoll Rand that as static pressure 

increases, input power to a PSC-driven 

furnace fan will decrease, which is 

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24A further discussion of multi-stage heating 

controls is found in chapter 3 of the preliminary 

analysis TSD, which can be found at the following 

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

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

0037. 

25Wiegman, Herman, Final Report for the 

Variable Speed Integrated Intelligent HVAC Blower 

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

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

seemingly contradictory to the principle 

described above. DOE found that input 

power to a PSC-driven furnace fan 

decreases because the airflow provided 

by the fan decreases as static pressure 

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

as hard in the face of increased 

resistance because the fan is not 

providing as much air). 78 FR 64084. 

Input power to a constant-airflow BPM 

motor-driven furnace fan, on the other 

hand, will increase as static pressure 

rises because the BPM motor-driven fan 

is designed to maintain the desired level 

of airflow. Recognizing that this 

behavior could complicate comparing 

the relative performance of these motor 

technologies, DOE’s rating metric, FER, 

is normalized by airflow to result in 

ratings that are in units of watts/cfm. 

DOE believed that a comparison using a 

watts/cfm metric will mitigate 

confusion by accurately reflecting that 

even though a constant-airflow BPM 

motor is consuming more power at 

higher statics, it is also providing more 

airflow, which is useful to the 

consumer. 

As detailed in the NOPR, interested 

parties recognized the benefits provided 

by constant-torque and constant-airflow 

BPM motors. Interested parties also 

agreed that the BPM motor variations 

(i.e., constant-torque and constantairflow) and inverter-driven PSC motors 

generally have lower turndown ratios 

than a three-speed PSC motor. 78 FR 

64084. Table IV.3 contains the 

turndown ratio estimates supplied 

publicly by interested parties. 

Manufacturers generally provided 

similar feedback during interviews. 

TABLE IV.3—INTERESTED PARTY ESTIMATED FAN MOTOR TURNDOWN RATIOS

Interested party PSC Wave chopper 

controller PSC 

Constanttorque ECM Constantairflow ECM 

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

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

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

Overall, comments regarding highefficiency motor turndown ratio 

validated DOE’s expectation that lower 

turndowns are associated with 

improved PSCs, inverter-driven PSCs, 

and BPM motor variations. These 

motors consume significantly less 

energy over a typical residential furnace 

fan operating range. DOE disagreed with 

Lennox that including constant 

circulation as part of FER would 

‘‘artificially’’ inflate the performance of 

BPM motors compared to PSC motors, 

because DOE concluded that there is 

non-trivial use of this mode by 

consumers. 78 FR 64085. As part of the 

test procedure rulemaking, DOE 

estimated that on average, consumers 

operate furnace fans in constantcirculation mode 400 hours annually. 

This estimate is used to weight fan 

constant-circulation electrical energy 

consumption in FER. Excluding this 

mode from the rating metric would 

underestimate the potential efficiency 

improvements of technology options, 

such as BPM motors, that could reduce 

fan electrical consumption while 

performing this function. A detailed 

discussion of DOE’s estimate for 

national average constant-circulation 

furnace fan operating hours can be 

found in the test procedure NOPR. 77 

FR 28674, 28682 (May 15, 2012). DOE 

did not revise these estimates in the test 

procedure Final Rule published on 

January 3, 2014. 79 FR 499. 

DOE did not receive comment or 

additional information on including 

high-efficiency motors as a technology 

option, thus, DOE is including this 

technology option in the Final Rule. 

DOE evaluates in the engineering 

analysis the cost-effectiveness of all 

energy-saving technology options that 

are not screened out. Chapter 3 of the 

Final Rule TSD provides a more 

detailed discussion of high-efficiency 

furnace fan motors. 

Multi-Stage or Modulating Heating 

Controls 

In the preliminary analysis (77 FR 

40530 (July 10, 2012)), DOE identified 

two-stage and modulating heating 

controls (hereinafter collectively 

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

a method of reducing residential furnace 

fan energy consumption. Multi-stage 

furnaces typically operate at lower heat 

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

time compared to single-stage furnaces 

to heat a residence.24 Due to the cubic 

relationship between fan input power 

and airflow, operating at the reduced 

airflow-control setting reduces overall 

fan electrical energy consumption for 

heating despite the extended hours. In 

the preliminary analysis, DOE analyzed 

multi-staging controls paired with use of 

a constant-airflow BPM fan motor as one 

technology option, because DOE found 

the two to be almost exclusively used 

together in commercially-available 

products. 

Interested parties encouraged DOE to 

consider X13-level motors applied with 

multi-stage furnace controls as a 

technology option. 78 FR 64085. During 

interviews, manufacturers commented 

that multi-stage heating controls can be 

and are used regardless of motor type. 

Based on comments from 

manufacturers, DOE recognized that 

multi-stage controls can be paired with 

other motor types, not just constantairflow BPM motors. DOE agreed with 

interested parties that implementing 

multi-stage heating controls 

independent of motor type could result 

in residential furnace fan efficiency 

improvements. Consequently, DOE 

decided to de-couple multi-staging 

controls from the constant-airflow BPM 

motor technology option. Accordingly, 

DOE evaluated multi-staging controls as 

a separate technology option for the 

NOPR. 78 FR 64085. 

DOE did not receive comment or 

additional information on multi-staging 

controls as a technology option, thus, 

DOE is including this technology option 

in the Final Rule. 

Backward-Inclined Impellers 

DOE determined in the preliminary 

analysis that using backward-inclined 

impellers could lead to possible 

residential furnace fan energy savings. 

Although limited commercial data 

regarding backward-inclined impeller 

performance were available, DOE cited 

research by General Electric (GE) that 

showed large improvements in 

efficiency were achievable under certain 

operating conditions.25

Interested parties disagreed with the 

DOE’s findings, stating that literature 

indicates there are varying degrees of 

performance improvement when 

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backward-inclined impellers are used in 

place of forward-curved impellers. 78 

FR 64085. Ebm-papst, a company that 

provides custom air-movement 

products, offered a diverging opinion 

from most manufacturers regarding the 

energy-saving potential of backwardinclined impellers. That company 

retrofitted several HVAC products with 

furnace fan assemblies that incorporated 

backward-inclined impellers without 

increasing cabinet size and tested them. 

Depending on the application and the 

external static pressure load (typically 

0.5 in. w.c. to 1 in. w.c.), ebm-papst 

found that the backward-inclined 

impeller achieved input power 

reductions from 15–30 percent. (ebmpapst Inc., No. 52 at p. 1). 

DOE recognized that backwardinclined impellers may not be more 

efficient than forward-curved impellers 

under all operating conditions and that 

there may be considerable constraints to 

implementation. However, the GE 

prototype and ebm-papst prototype both 

demonstrate that significant energy 

consumption reduction is achievable at 

some points within the range of 

residential furnace fan operation. For 

this reason, DOE included backwardinclined impellers as a technology 

option in the NOPR. 78 FR 64086. 

DOE did not receive additional 

comment or information on including 

backward-inclined impellers as a 

technology option. Thus, DOE included 

backward-inclined impellers as a 

technology to be evaluated further in the 

screening analysis for the Final Rule. 

B. Screening Analysis 

DOE uses the following four screening 

criteria to determine which technology 

options are suitable for further 

consideration in an energy conservation 

standards rulemaking: 

1. Technological feasibility. 

Technologies that are not incorporated 

in commercial products or in working 

prototypes will not be considered 

further. 

2. Practicability to manufacture, 

install, and service. If it is determined 

that mass production and reliable 

installation and servicing of a 

technology in commercial products 

could not be achieved on the scale 

necessary to serve the relevant market at 

the time of the compliance date of the 

standard, then that technology will not 

be considered further. 

3. Impacts on product utility or 

product availability. If it is determined 

that a technology would have significant 

adverse impact on the utility of the 

product to significant subgroups of 

consumers or would result in the 

unavailability of any covered product 

type with performance characteristics 

(including reliability), features, sizes, 

capacities, and volumes that are 

substantially the same as products 

generally available in the United States 

at the time, it will not be considered 

further. 

4. Adverse impacts on health or 

safety. If it is determined that a 

technology would have significant 

adverse impacts on health or safety, it 

will not be considered further. 

(10 CFR part 430, subpart C, appendix 

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

In sum, if DOE determines that a 

technology, or a combination of 

technologies, fails to meet one or more 

of the above four criteria, it will be 

screened out from further consideration 

in the engineering analysis. The reasons 

for eliminating any technology are 

discussed below. 

The subsequent sections include 

comments from interested parties 

pertinent to the screening criteria, 

DOE’s evaluation of each technology 

option against the screening analysis 

criteria, and whether DOE determined 

that a technology option should be 

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

screening criteria. 

1. Screened-Out Technologies 

DOE screened out fan housing and 

airflow path design improvements in 

the preliminary analysis. DOE had little 

quantitative data to correlate specific 

fan housing alterations with efficiency 

improvements. Additionally, DOE 

anticipated that any improvements to 

airflow path design that would result in 

fan efficiency improvement would 

require an increase in furnace fan 

cabinet size or negatively impact heat 

exchanger performance, thereby 

compromising the practicability to 

manufacture or reducing utility to 

consumers. 

In response to the preliminary 

analysis, interested parties stated many 

concerns associated with modifying 

airflow path designs to reduce 

residential furnace fan electrical energy 

consumption, namely, that airflow path 

design modifications would likely 

require increasing HVAC product size. 

Manufacturers explained that increasing 

HVAC products size would have 

adverse impacts on practicability to 

install and consumer utility, because the 

furnace fan market is predominantly a 

replacement market. 78 FR 64086. 

For the NOPR, DOE did not receive or 

find additional quantitative data that 

shows a measurable increase in fan 

efficiency as a result of a specific fan 

housing or airflow path design 

modification. Even after individual 

discussion with manufacturers, DOE 

was not able to identify a case in which 

fan housing or airflow path design 

modifications could lead to potential 

fan energy savings without increasing 

the size of the HVAC product or 

compromising thermal performance or 

safety. DOE is aware of the impacts on 

thermal efficiency and furnace fan 

performance of the additional heat 

exchanger in condensing furnaces. As 

discussed in section III.B, DOE 

accounted for these impacts in its 

criteria for differentiating product 

classes. In addition, DOE concurs with 

manufacturers’ observations that an 

increase in envelope size would 

adversely impact practicability to 

manufacture and install, as well as 

product utility. Accordingly, DOE 

decided to screen out fan housing and 

airflow path design modifications in the 

NOPR. 78 FR 64086. 

DOE did not receive additional 

comment or information regarding fan 

housing and airflow path design 

modifications in response to the NOPR. 

Thus, DOE determined to screen out fan 

housing and airflow path design 

modifications in the Final Rule. 

2. Remaining Technologies 

Through a review of each technology, 

DOE found that all of the other 

identified technologies met all four 

screening criteria to be examined further 

in DOE’s analysis. 78 FR 64087. In 

summary, DOE did not screen out the 

following technology options: (1) 

Inverter-driven PSC fan motors; (2) 

high-efficiency fan motors; (3) multistage heating controls; and (4) 

backward-inclined impellers. DOE 

understands that all of these technology 

options are technologically feasible, 

given that the evaluated technologies 

are being used (or have been used) in 

commercially-available products or 

working prototypes. These technologies 

all incorporate materials and 

components that are commercially 

available in today’s supply markets for 

the residential furnace fans that are the 

subject of this Final Rule. Therefore, 

DOE believes all of the efficiency levels 

evaluated in this notice are 

technologically feasible. For additional 

details, please see chapter 4 of the Final 

Rule TSD. 

Interested parties, however, voiced 

concerns regarding these screening 

criteria as they apply to BPM fan motors 

and backward-inclined impellers in 

previous phases of this rulemaking. 

DOE summarizes and addresses these 

concerns in the sections immediately 

below. DOE did not receive public 

comments relevant to the screening 

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38154 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

analysis criteria for the other remaining 

technology options. 

High-Efficiency Motors 

In response to the preliminary 

analysis, manufacturers stated that there 

are a limited number of ECM motor 

suppliers to furnace fan manufacturers, 

and that it is a proprietary technology. 

Manufacturers also stated that no 

alternative ECM exists at the scale of 

Regal Beloit ECMs and that limiting PSC 

applicability would reduce product 

flexibility. 

Motor manufacturers disagreed with 

residential furnace fan manufacturers, 

claiming that there is more than just a 

single motor manufacturer offering ECM 

technology. Motor manufacturers also 

supported DOE’s assumption that after 

implementation of furnace fan 

efficiency standards, brushless 

permanent magnet motor technologies 

will become increasingly available over 

time. DOE discovered during interviews 

with manufacturers that there are 

multiple suppliers of BPM motors. DOE 

also found further evidence that some 

manufacturers purchase BPM motors 

from multiple suppliers. EEI stated that 

the expiration of Regal Beloit ECM 

patents around 2020 may increase the 

availability of this motor type while 

decreasing cost. (EEI, PA Public Meeting 

Transcript, No. 43 at p. 127) 

In the preliminary analysis, DOE 

requested comment as to whether 

manufacturers could alternatively 

develop BPM motor controls in-house 

when using high-efficiency motors from 

other, non-Regal Beloit, suppliers. Most 

furnace fan manufacturers claimed that 

development of in-house controls for 

BPM motors is not an option. 78 FR 

64087. 

While DOE recognizes that Regal 

Beloit possesses a number of patents in 

the BPM motor space, other motor 

manufacturers (e.g., Broad Ocean, ebmpapbst, and NMC) also offer BPM 

models. Additionally, DOE is aware that 

in years past, residential furnace fans 

paired with constant-airflow BPM 

motors accounted for 30 percent of the 

market. While DOE estimates that 

constant-airflow BPM motors represent 

only 10–15 percent of the current 

furnace fan market, the manufacturing 

capability to meet BPM motor demand 

exists. Thus, DOE continues to expect 

that BPM motor technology is currently 

available from more than one source 

and will become increasingly available 

to residential furnace fan manufacturers. 

78 FR 64087. 

Also in response to the preliminary 

analysis, some fan manufacturers 

expressed concern that high-efficiency 

motor reliance on rare earth metals 

would impact supply. However, DOE is 

aware of high-efficiency motors that do 

not contain rare earth materials. DOE is 

also confident, after discussions with 

manufacturers, that if BPM motors are 

adopted as a means to meet a future 

residential furnace fan energy 

conservation standard, manufacturers 

would have a number of cost- and 

performance-competitive suppliers from 

which to choose who have available, or 

could rapidly develop, control systems 

independently of the motor 

manufacturer. 78 FR 64087. 

DOE did not receive additional 

comment or information in response to 

the NOPR about high-efficiency motors 

related to the screening criteria. Thus 

DOE included high-efficiency motors as 

a technology option in the engineering 

analysis. 

Backward-Inclined Impellers 

In response to the preliminary 

analysis, furnace fan manufacturers 

stated that backward-inclined impellers 

must have larger diameter and operate 

at higher speed than forward-curve 

impellors in order to attain equivalent 

performance (i.e., flow and pressure 

rise). However, ebm-papst stated that 

they retrofitted existing equipment with 

backward-inclined impellers, which 

only required making minor changes to 

the airflow path within the equipment. 

78 FR 64088. 

Manufacturers were also concerned 

with the potential impacts that 

backward-inclined impellers could have 

on heat exchanger temperatures. Some 

commenters also argued that backwardinclined impellers may affect furnace 

fan utility, because the noise produced 

by this impeller type may limit product 

application. Utilities claimed that a 

backward-inclined impeller, in 

combination with increased fan motor 

speeds to achieve higher efficiency, 

leads to amplified noise levels. 78 FR 

64088. 

For the NOPR, DOE found that there 

are multiple approaches to 

implementing backward-inclined 

impellers to reduce furnace fan energy 

consumption. DOE recognized that one 

approach is to use a backward-inclined 

impeller that is larger than a standard 

forward-curved impeller, which may 

lead to larger HVAC products. Another 

approach is to pair the backwardinclined impeller with a motor that 

operates at increased RPM. Ebm-papst 

tests show a significant potential to 

reduce fan electrical energy 

consumption for a backward-inclined 

impeller assembly that uses existing 

motor technology at higher RPMs and is 

implemented in existing HVAC 

products (i.e., no increase in product 

size required). Ebm-papst does not 

believe that achieving higher RPMs with 

existing motor technology is an obstacle 

for implementing this technology. DOE 

believed that this prototype represented 

a backward-inclined implementation 

approach that could achieve fan energy 

savings while avoiding the negative 

impacts listed by manufacturers. 

Consequently, DOE decided not to 

screen out the backward-inclined 

impeller technology option in the 

NOPR. 78 FR 64088. 

DOE did not receive additional 

comment or information about 

backward-inclined impellers related to 

the screening criteria. Thus, DOE 

decided not to screen out backwardinclined impellers in the Final Rule. 

C. Engineering Analysis 

In the engineering analysis 

(corresponding to chapter 5 of the Final 

Rule TSD), DOE establishes the 

relationship between the manufacturer 

selling price (MSP) and improved 

residential furnace fan efficiency. This 

relationship serves as the basis for costbenefit calculations for individual 

consumers, manufacturers, and the 

Nation. DOE typically structures the 

engineering analysis using one of three 

approaches: (1) Design option; (2) 

efficiency level; or (3) reverse 

engineering (or cost-assessment). The 

design-option approach involves adding 

the estimated cost and efficiency of 

various efficiency-improving design 

changes to the baseline to model 

different levels of efficiency. The 

efficiency-level approach uses estimates 

of cost and efficiency at discrete levels 

of efficiency from publicly-available 

information, and information gathered 

in manufacturer interviews that is 

supplemented and verified through 

technology reviews. The reverse 

engineering approach involves testing 

products for efficiency and determining 

cost from a detailed bill of materials 

derived from reverse engineering 

representative products. The efficiency 

values range from that of a least-efficient 

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

to the maximum technologically feasible 

efficiency level. For each efficiency 

level examined, DOE determines the 

MSP; this relationship is referred to as 

a cost-efficiency curve. 

1. Efficiency Levels 

In this rulemaking, DOE used an 

efficiency-level approach in conjunction 

with a design-option approach to 

identify incremental improvements in 

efficiency for each product class. An 

efficiency-level approach enabled DOE 

to identify incremental improvements in 

efficiency for efficiency-improving 

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technologies that furnace fan 

manufacturers already incorporate in 

commercially-available models. A 

design-option approach enabled DOE to 

model incremental improvements in 

efficiency for technologies that are not 

commercially available in residential 

furnace fan applications. In combination 

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

manufacturing production cost (MPC) at 

each efficiency level identified for 

analysis. This methodology estimates 

the incremental cost of increasing 

product efficiency. When analyzing the 

cost of each efficiency level, the MPC is 

not for the entire HVAC product, 

because furnace fans are a component of 

the HVAC product in which they are 

integrated. The MPC includes costs only 

for the components of the HVAC 

product that impact FER. 

Baseline 

During the preliminary analysis, DOE 

selected baseline units typical of the 

least-efficient furnace fans used in 

commercially-available, residential 

HVAC models that have a large number 

of annual shipments. This sets the 

starting point for analyzing potential 

technologies that provide energy 

efficiency improvements. Additional 

details on the selection of baseline units 

may be found in chapter 5 of the Final 

Rule TSD. DOE compared the FER at 

higher energy efficiency levels to the 

FER of the baseline unit and compared 

baseline MPCs to the MPCs at higher 

efficiency levels. 

DOE reviewed FER values that it 

calculated using test data and 

performance information from publiclyavailable product literature to determine 

baseline FER ratings. Table IV.4 

presents the baseline FER values 

identified in the preliminary analysis 

for each product class. 

TABLE IV.4—PRELIMINARY ANALYSIS BASELINE FER 

Product class FER 

(W/1,000 cfm) 

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

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

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

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

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

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan ........................................................................... 295 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan .................................................................................. 319 

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

In response to the preliminary 

analysis, manufacturers asserted that the 

baseline FER values presented were not 

representative of the furnace fans in the 

least-efficient residential HVAC models 

offered for sale today. Some 

manufacturers also requested that DOE 

alter FER to better reflect unit capacity. 

Specifically, some manufacturers stated 

that residential furnace fans having a 

larger capacity also have higher FERs 

and recommended that DOE adjust 

baseline FER values to include the 

largest-capacity fan within a product 

class. 78 FR 64089. 

In the NOPR, DOE evaluated the 

feedback it received and used the data 

provided by interested parties to 

generate new FER values and to revise 

its baseline, intermediate efficiency 

levels, and max-tech FER estimates. 

DOE’s revisions included FER results 

for furnace fan models that span the 

capacity range of residential products. 

After reviewing all of the available FER 

values based on new data, DOE 

concluded that FER can best be 

represented as a linear function of 

airflow capacity (i.e., a first constant 

added to airflow multiplied by a second 

constant). The slope of the linear fit 

characterizes the change in FER for each 

unit of airflow capacity increase, and 

the y-intercept represents where the 

FER line intersects the y-axis (where 

airflow capacity is theoretically zero). 

For the NOPR, DOE proposed to use 

such linear functions to represent FER 

for the different efficiency levels of the 

different product classes. 78 FR 64089. 

Table IV.5 shows the revised FER 

baseline efficiency levels estimates that 

DOE used for the NOPR. 

TABLE IV.5—NOPR BASELINE FER ESTIMATES

Product class FER* 

(W/1,000 cfm) 

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

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

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

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

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

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

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

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

Mobile Home Weatherized Gas Furnace Fan ................................................................................................................ Reserved. 

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

*QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the proposed DOE test procedure at the time of the ECS 

NOPR publication. 78 FR 19606, 19627 (April 2, 2013). 

Manufacturers stated that the baseline 

FER values presented in the NOPR need 

to be re-evaluated to determine the 

appropriate baseline. Because the test 

procedure was not finalized at the time 

of the ECS NOPR publication, Lennox 

believes that assumptions were made by 

DOE to determine the baseline from 

other sources, leading to overstated 

energy savings and misleading 

conclusions. (Lennox, No. 100 at p. 3) 

Goodman believes that the NOPR 

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baseline values are too high. Goodman 

initially commented that baseline values 

were too low for the preliminary 

analysis. Based on the product testing 

per the April 2013 test procedure 

SNOPR, Goodman feels the increased 

values for baseline FER are too high, 

and should be closer (but still higher 

than) the original TSD estimated values. 

(Goodman, No. 102 at p. 8) Morrison, 

NEEA, and NPPC also commented that 

because there was no finalized test 

procedure at the time the ECS NOPR 

was published, DOE should not be using 

test data from public literature to 

generate FER values. (Morrison, No. 91 

at p. 124; NEEA, NPCC, No. 96 at p. 2) 

Ingersoll-Rand echoed Lennox’s and 

Morrison’s comments, stating that it is 

difficult to get furnace fan power data 

from public literature, and that DOE’s 

baseline FER values are over-estimated. 

(Ingersoll-Rand, No. 91 at pp. 110–111) 

Rheem and Lennox questioned whether 

the efficiency levels are based off of FER 

or the average annual auxiliary 

electrical energy consumption (Eae). 

(Rheem, No. 83 at p. 4; Lennox, No. 100 

at p. 3) Lennox and Ingersoll-Rand also 

commented specifically about the 

baseline FER for weatherized gas 

furnaces, citing a dramatic difference in 

DOE’s baseline performance level as 

compared to their product offerings. 

Additionally, when the performance 

improvement factors are applied to 

DOE’s baseline, the result is a very 

aggressive mandated increase in 

performance. (Lennox, No. 100 at p. 3; 

Ingersoll-Rand, No. 107 at p. 4) AHRI 

also commented on the FER for 

weatherized gas furnaces, stating that 

the FER values for weatherized gas 

furnace fans and non-weatherized 

condensing gas furnace fans should be 

the same because the test procedure is 

the same for both products, except for 

a difference in ESP. AHRI explained the 

difference in ESP accounts for the 

cooling coil within the weatherized gas 

furnace, therefore, in effect, the furnace 

fan assemblies for weatherized and nonweatherized gas furnaces are subject to 

the same ESP. (AHRI, No. 91 at pp. 127– 

129) Goodman agreed with AHRI that 

weatherized gas furnace fans should 

have the save efficiency levels as nonweatherized gas, non-condensing 

furnace fans. (Goodman, No. 102 at p. 3) 

DOE did not use Eae as an input for 

the engineering analysis. All efficiency 

levels considered by DOE throughout 

this rulemaking, including the baseline, 

are based on FER data, not Eae. DOE 

used Eae as a proxy for FER to evaluate 

market-wide energy performance of 

furnace fans in the market and 

technology assessment only. Further 

description of this characterization is 

found in chapter 3 of the Final Rule 

TSD. DOE disagrees with Lennox, 

Morrison, NEEA, and NPPC that FER 

values that DOE generated prior to the 

final test procedure or based on public 

literature should not be considered in 

this Final Rule. DOE outlines in detail 

in section III.A the reasons that FER 

data from previous stages of the 

rulemaking and public literature are 

relevant. Section III.A also explains how 

DOE’s changes to the test procedure 

between the test procedure SNOPR and 

final rule should not result in significant 

differences in FER values for many 

covered products. Thus, DOE disagrees 

with Ingersoll Rand, Lennox, Goodman, 

and Morrison’s claims that, in the 

absence of a final test procedure or 

because of changes in the final test 

procedure, DOE used unreliable 

information to calculate FER and model 

efficiency levels for the NOPR. 

Regardless, DOE agrees with interested 

parties that DOE should re-update its 

NOPR baseline equations based on new 

data. DOE received some baseline FER 

data from interested parties in response 

to the NOPR. As discussed in section 

III.A, DOE also conducted testing prior 

to and during the development of the 

test procedure final rule that generated 

a broad enough set of results to enable 

DOE to derive FER values that are 

consistent with the requirements of the 

final test procedure. DOE used this new 

baseline FER data to revise its baseline 

equations. 

DOE investigated interested party 

claims that DOE’s proposed baseline 

equation for weatherized gas furnace 

fans did not match manufacturer 

performance estimates. DOE did not 

receive additional baseline FER data for 

weatherized gas furnace fans. However, 

DOE did derive additional FER values 

from data from specification sheets and 

testing of weatherized gas furnaces at 

higher efficiency levels (i.e., 

weatherized gas furnaces that use 

constant-torque and constant-airflow 

BPM motors). DOE was able to collect 

more reliable FER data for more efficient 

weatherized gas furnace fans than for 

baseline weatherized gas furnace fans. 

Consequently, DOE estimated the 

weatherized gas furnace fan baseline 

FER by multiplying the market and 

capacity weighted FER value for 

weatherized gas furnace fans with 

constant-airflow BPM motor and multistaging by the expected percent increase 

in FER (i.e., the inverse of the expected 

percent reduction in FER for constantairflow BPM and multi-staging). DOE 

then developed a conversion factor from 

the non-weatherized, non-condensing 

gas furnace fan baseline FER to generate 

a y-intercept for the weatherized noncondensing gas furnace fan baseline FER 

equation. This approach significantly 

increased DOE’s estimated baseline FER 

for weatherized non-condensing gas 

furnace fans to a level consistent with 

the revised baseline for nonweatherized, condensing gas furnace 

fans. Even though they are not identical, 

DOE concludes that the approach 

described is appropriate based on 

interested party feedback. The airflow 

path design of weatherized noncondensing gas and non-weatherized, 

condensing gas furnaces are very 

different, which impacts furnace fan 

performance, accounting for the slightly 

different FER equations. 

DOE also received comments from 

interested parties regarding the slopes in 

the NOPR FER equations. Rheem and 

Lennox commented that the slope 

characterizing the relationship between 

FER and airflow capacity is too flat, 

adding that higher-capacity models are 

space constrained, and their FER values 

do not meet the proposed FER levels in 

the NOPR. (Rheem, No. 83 at p. 8; 

Lennox, No. 100 at p. 6) Ingersoll-Rand 

commented that for condensing 

furnaces and furnaces using improved 

PSC motors and multi-staging controls, 

FER tends to decrease as capacity 

increases, creating a negative slope. 

(Ingersoll-Rand, No. 91 at pp. 110–111; 

Ingersoll-Rand, No. 107 at pp. 3–4) 

Ingersoll-Rand also commented that 

even though FER values for furnace fans 

with PSC motors follow a linear trend, 

FER values for furnace fans that use 

BPM motor technologies do not because 

they react differently to changes in static 

pressure (Ingersoll-Rand, No. 107 at p. 

5) ACEEE, Goodman, and Mortex 

questioned whether a linear slope is the 

best way to characterize the relationship 

between FER and airflow capacity. 

AHRI and Goodman added that there is 

a cubic relationship between fan input 

power and airflow, thus, a non-linear 

slope may be more appropriate. (ACEEE, 

No. 94 at p. 3; Goodman, No. 102 at p. 

13; Mortex, No. 104 at p. 3; AHRI, No. 

98 at p. 3) 

In response to interested party 

comments, DOE recalculated FER versus 

airflow capacity slopes using new data 

from baseline series for both nonweatherized, non-condensing gas 

furnace fans and non-weatherized, 

condensing gas furnace fans. DOE found 

that the average baseline slope increased 

dramatically from 0.057 to 0.081. DOE 

is aware that some instances of furnace 

series models will not match DOE’s 

slope analysis results. The data, that 

DOE has, shows a positive slope when 

characterizing the relationship between 

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FER and airflow capacity. Furthermore, 

DOE did not determine that a linear fit 

was the best fit statistically. DOE 

believes a linear fit is the best 

representation of furnace fan 

performance given the level of data 

available. DOE finds that linear fits 

result in a distribution of efficiency 

levels that match the distribution of 

furnace fan performance by technology 

option used. Additionally, a cubic 

trend-line does not account for changes 

in furnace envelope size, heat exchanger 

size, furnace fan outlet size, and other 

factors the affect furnace fan 

performance. Using a cubic trend-line 

would only be appropriate if these other 

factors were held constant. DOE finds 

that input power to a PSC-driven 

furnace fan decreases because the 

airflow provided by the fan decreases as 

static pressure rises (i.e., the fan does 

not have to work as hard in the face of 

increased resistance because the fan is 

not providing as much air). Input power 

to a constant-airflow BPM motor-driven 

furnace fan, on the other hand, will 

increase as static pressure rises because 

the BPM motor-driven fan is designed to 

maintain the desired level of airflow. 

Recognizing that this behavior could 

complicate comparing the relative 

performance of these motor 

technologies, DOE’s rating metric, FER, 

is normalized by airflow to result in 

ratings that are in units of watts/cfm. 

Table IV.5 shows the revised FER 

baseline efficiency levels estimates that 

DOE used for the Final Rule. 

TABLE IV.6—FINAL RULE BASELINE FER ESTIMATES

Product class FER * 

(W/1,000 cfm) 

Non-Weatherized, Non-Condensing Gas Furnace Fan ................................................................................................. FER = 0.081 × QMax + 335. 

Non-Weatherized, Condensing Gas Furnace Fan ......................................................................................................... FER = 0.081 × QMax + 358. 

Weatherized Non-Condensing Gas Furnace Fan .......................................................................................................... FER = 0.081 × QMax + 365. 

Non-Weatherized, Non-Condensing Oil Furnace Fan ................................................................................................... FER = 0.081 × QMax + 433. 

Electric Furnace/Modular Blower Fan ............................................................................................................................ FER = 0.081 × QMax + 304. 

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan ........................................................................... FER = 0.081 × QMax + 252. 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan .................................................................................. FER = 0.081 × QMax + 273. 

Mobile Home Electric Furnace/Modular Blower Fan ...................................................................................................... FER = 0.081 × QMax + 186. 

Mobile Home Weatherized Gas Furnace Fan ................................................................................................................ Reserved. 

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

* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the final DOE test procedure. 79 FR 499, 524 (January 3, 

2014). 

Percent Reduction in FER 

For the preliminary analysis, DOE 

determined average FER reductions for 

each efficiency level for a subset of key 

product classes and applied these 

reductions to all product classes. DOE 

found from manufacturer feedback and 

its review of publically-available 

product literature that manufacturers 

use similar furnace fan components and 

follow a similar technology path to 

improving efficiency across all product 

classes. DOE does not expect the 

percent reduction in FER associated 

with each design option, whether 

commercially available or prototype, to 

differ across product classes as a result. 

Table IV.7 includes DOE’s preliminary 

analysis estimates for the percent 

reduction in FER from baseline for each 

efficiency level. 

TABLE IV.7—PRELIMINARY ANALYSIS ESTIMATES FOR PERCENT REDUCTION IN FER FROM BASELINE FOR EACH

EFFICIENCY LEVEL

Efficiency level 

(EL) Design option 

Percent 

reduction in 

FER from 

baseline 

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

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

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

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

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

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

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

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

Interested parties questioned DOE’s 

estimates for the FER reduction for highefficiency motors. Specifically, 

interested parties noted that DOE 

underestimated the efficiency gain of 

improved PSC motors over standard 

PSC motors, and overestimated the 

efficiency improvement of BPM motor 

technology options. 78 FR 64090. 

For the NOPR, DOE reviewed its 

estimates of percent reduction in FER 

from baseline for each efficiency level 

based on interested party feedback. In 

addition to the comments summarized 

above, interested parties also provided 

FER values for higher-efficiency 

products in manufacturer interviews. 

DOE used these data to revise its 

percent reduction estimates. Table IV.8 

shows DOE’s revised estimates for the 

percent reduction in FER for each 

efficiency level that DOE used in the 

NOPR. For a given product class, DOE 

applied the percent reductions below to 

both the slope and y-intercept of the 

baseline FER equation to generate FER 

equations to represent each efficiency 

level above baseline. 

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TABLE IV.8—NOPR ESTIMATES FOR PERCENT REDUCTION IN FER FROM BASELINE FOR EACH EFFICIENCY LEVEL

Efficiency level 

(EL) Design option 

Percent 

reduction 

in FER from 

baseline 

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

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

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

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

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

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

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

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

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

Note that EL 4 in the table above was 

a newly proposed efficiency level in the 

NOPR. As discussed in section IV.A.3, 

DOE analyzed multi-staging as a 

separate technology option. For the 

NOPR, DOE also evaluated a separate 

efficiency level representing applying 

multi-staging to a furnace fan with a 

constant-torque BPM motor. 78 FR 

64091. 

In response to the NOPR, AHRI asked 

if DOE considered pairing PSC motors 

with multi-stage furnace controls in its 

analysis. (AHRI, No. 91 at p. 310) While 

DOE did gather data for and investigated 

PSC-driven furnace fans in multi-stage 

products, DOE did not include this 

combination as an efficiency level for 

the Final Rule. In the engineering 

analysis, DOE assesses technology 

options in order of cost-effectiveness. 

DOE finds that constant-torque BPM 

motors are more cost-effective than PSC 

motors with multi-staging. While the 

cost of multi-staging for each motor type 

is approximately the same, multi-staging 

results in significantly less energy 

savings when used with a PSC motor. 

DOE expects this is the result of a 

limited turndown ratio as discussed in 

section III.A.4. 

Interested parties commented on the 

NOPR percent reductions in FER from 

the baseline and resulting efficiency 

level equations. Nidec stated that the 

percent reductions do not reflect 

furnace fan performance improvements 

when using higher-efficiency PSC 

motors. (Nidec, No. 91 at p. 147) Many 

manufacturers stated that the proposed 

efficiency levels are not consistent with 

product performance using the varying 

design options. Rheem, Allied Air, 

Daikin, Lennox, and Ingersoll-Rand 

stated that only their multi-staging 

furnace lines that use constant-airflow 

BPM motors would meet the proposed 

standard level. (Rheem, No, 83 at pp. 1– 

2; Allied Air, No. 91 at p. 105; Daikin, 

No. 91 at p. 105; Lennox, No. 100 at p. 

5; Ingersoll-Rand, No. 91 at pp. 102– 

103) Goodman and AHRI submitted 

similar comments stating that there are 

existing products that use the design 

options specified within TSL 5 that will 

not even meet the proposed energy 

conservation standards. (AHRI, No. 98 

at p. 3; and Goodman, No 102 at pp. 4 

and 7) In a joint comment submitted by 

Appliance Standards Awareness Project 

(ASAP), Alliance to Save Energy (ASE), 

National Consumer Law Center (NCLC), 

and National Resources Defense Council 

(NRDC) and in a separate comment 

submitted by California Investor-Owned 

Utilities (CA IOUs), interested parties 

recommended that DOE conduct 

additional testing of furnace fans with 

constant-torque BPM motors with multistaging controls to verify the accuracy of 

the proposed FER standard level 

equations, and to ensure that the 

majority of products containing 

constant-torque BPM motors with multistaging controls meet the standard. 

(ASAP, et al., No. 105 at p. 2; CA IOU, 

No. 106 at p. 3) 

DOE carefully considered the 

feedback received from interested 

parties on the percent reductions in FER 

from baseline that the Department 

proposed in the NOPR. DOE shares 

manufacturers’ concerns that their 

products are not meeting the levels 

proposed in the NOPR despite those 

models using the technologies (or more 

efficient technologies) on which those 

levels are based. DOE used data 

provided by interested parties, 

conducted additional testing using the 

final DOE test procedure, and gathered 

data from additional product 

specification sheets to generate new FER 

values. DOE used this new FER data to 

revise its estimates of percent reduction 

in FER from baseline for each efficiency 

level. In response to Nidec, DOE did 

analyze an efficiency level associated 

with improved PSC motors. However, 

DOE did not receive and could not 

gather any new FER data with which to 

revise its estimated percent reduction in 

FER from baseline for this technology. 

Using the revised estimates of percent 

reduction in FER from baseline, DOE 

revised its FER equations. Then, for the 

product classes with the highest 

shipments, DOE assessed how many 

models for which DOE has an FER value 

met the revised EL 4. DOE finds that 

over 90% of the non-weatherized, noncondensing gas, non-weatherized, 

condensing gas and weatherized noncondensing gas furnace fans for which 

DOE has FER values that use constanttorque BPM motors and multi-staging 

meet the revised EL 4. DOE finds that 

many models in those product classes 

for which DOE has FER data that use 

constant-torque BPM motors without 

multi-staging would also meet the 

revised EL 4. DOE feels that the 

percentage of models that meet the 

revised EL 4 show that the Final Rule 

efficiency levels are reflective of the 

performance of the technologies on 

which they are based. 

Ingersoll Rand stated that percent 

reduction in FER from the baseline 

should not be constant across all 

capacities for products using constanttorque BPM motor technologies. 

Specifically, Ingersoll-Rand noted that 

efficiency improvements with this 

technology decrease with increasing 

furnace capacity, and that at high 

airflow capacities, there is little or no 

difference in FER values between 

furnace fans using improved PSC 

motors and those using constant-torque 

BPM motors. (Ingersoll-Rand, No. 107 at 

p. 5) Additionally, Ingersoll-Rand stated 

that wider cabinets for furnaces with 

more cooling capacity but the same 

heating input will have lower FERs. 

(Ingersoll-Rand, NOPR Public Meeting 

Transcript, No. 91 at p. 94) IngersollRand and Mortex disagree with DOE 

using the same slope for FER equations 

for both mobile home furnaces as well 

as non-mobile home furnaces. These 

parties cite that there are space 

constraints associated with mobile 

home applications, and that it is more 

difficult to meet the proposed standard 

at higher capacities because the cabinet 

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26High-volume and low-volume product classes 

are discussed further in chapter 5 of the Final Rule 

TSD. 

size must remain the same. (IngersollRand, No. 91 at pp. 116–117; Mortex, 

No. 91 at pp. 129–131) 

DOE recognizes that percent 

reduction in FER from baseline for a 

given technology option varies with 

capacity. DOE’s estimates of percent 

reduction in FER from baseline are 

based on market-weighted averages of 

FER values from across the entire range 

of furnace fan airflow capacities to 

account for this variation. As discussed 

above, DOE finds that constant percent 

reductions in FER from baseline result 

in a distribution of efficiency levels that 

match the distribution of furnace fan 

performance by technology option used 

across the entire range of furnace fan 

airflow capacities. Thus, DOE believes 

that a constant percent reduction in FER 

from baseline across all airflow 

capacities is appropriate. DOE is also 

aware that in some instances FER may 

decrease for furnaces with higher 

cooling capacities but the same heating 

input. DOE’s analysis includes FER data 

for furnace fans that have differing 

heating capacity to cooling capacity 

ratios. DOE recognizes that these ratios 

indicate design differences that impact 

fan performance. However, a significant 

majority of the models for which DOE 

has FER data are meeting the ELs 

associated with the technologies that 

they use. Of the few models that do not, 

DOE observes no pattern related to the 

ratio of heating capacity to cooling 

capacity. DOE recognizes that mobile 

home products are more spaceconstrained than the other products 

covered by this standard. DOE did not 

receive mobile home FER data in 

response to the NOPR. Despite DOE 

using the same slope for mobile home 

product classes to characterize the 

relationship between FER and airflow 

capacity for all product classes, the 

resulting ELs for mobile home furnace 

fans are less stringent than those for 

non-mobile home furnaces at higher 

capacities. EL 4 for MH–NWG–NC and 

NWG–NC both have slopes of 44 FER 

per 1000 cfm, for example. Thus, for an 

increase in airflow capacity of 1000 cfm, 

EL 4 allows for an increase of 44 in FER 

for both classes. At 1,200 cfm, EL 4 is 

represented by and FER of 235 for 

NWG–NC and 190 for MH–NWG–NC. 

An increase of 44 in FER would 

represent an increase in FER of 

approximately 18 percent for the NWG– 

NC furnace fan, but an increase in FER 

of approximately 23% for the MH– 

NWG–NC furnace fan. Consequently, 

the allowable increase in FER as 

capacity increases is more lenient for 

mobile home furnaces. DOE believes 

this leniency is appropriate considering 

the more rigid space constraints mobile 

home furnaces must meet. DOE 

recognizes that the same variation in 

stringency occurs as a result of DOE’s 

method for establishing baseline FER 

equations using conversion factors as 

described in more detail in chapter 5 of 

the Final Rule TSD. However, the 

difference in FER values between 

mobile home and non-mobile home 

furnace fans is much greater than the 

difference between FER values amongst 

non-mobile home furnace fans. The 

variation in stringency for non-mobile 

home products is minimal as a result. 

Table IV.9 shows DOE’s revised 

estimates for the percent reduction in 

FER for each efficiency level that DOE 

used in the Final Rule analyses. 

TABLE IV.9—FINAL RULE ESTIMATES FOR PERCENT REDUCTION IN FER FROM BASELINE FOR EACH EFFICIENCY LEVEL

Efficiency level 

(EL) Design option 

Percent 

reduction 

in FER from 

baseline 

1 ................................................ Improved PSC .............................................................................................................................. 12 

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

3 ................................................ Constant-Torque BPM Motor ....................................................................................................... 41 

4 ................................................ Constant-Torque BPM Motor and Multi-Staging .......................................................................... 46 

5 ................................................ Constant-Airflow BPM Motor and Multi-Staging .......................................................................... 51 

6 ................................................ Premium Constant-Airflow BPM Motor and Multi-Staging + Backward-Inclined Impeller ........... * 56 

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

5% percent reduction in FER from baseline. The total percent reduction in FER from baseline for EL 6 includes the 51% reduction from EL 5 and 

the 5% net reduction from the backward-inclined impeller for a total percent reduction of 56% from baseline. 

Ingersoll Rand provided a significant 

amount of FER data in its written 

comment to support its statements. 

(Ingersoll Rand, No. 107 at pp. 3, 12–16) 

DOE appreciates this information and 

included these FER values in its 

revision of the engineering analysis to 

account for the furnace fan performance 

behaviors described by Ingersoll Rand. 

2. Manufacturer Production Cost (MPC) 

In the preliminary analysis, DOE 

estimated the manufacturer production 

cost associated with each efficiency 

level to characterize the cost-efficiency 

relationship of improving furnace fan 

performance. The MPC estimates are not 

for the entire HVAC product because 

furnace fans are a component of the 

HVAC product in which they are 

integrated. The MPC estimates includes 

costs only for the components of the 

HVAC product that impact FER, which 

DOE considered to be the: 

• Fan motor and integrated controls; 

• Primary control board (PCB); 

• Multi-staging components; 

• Impeller; 

• Fan housing; and 

• Components used to direct or guide 

airflow. 

DOE separated the proposed product 

classes into high-volume and lowvolume product classes and generated 

high-volume and low-volume MPC 

estimates to account for the increased 

purchasing power of high-volume 

manufacturers.26

Production Volume Impacts on MPC 

In response to the preliminary 

analysis, manufacturers commented that 

they use different manufacturing 

processes for high and low-volume 

products. In the NOPR analysis, DOE 

found that 94 percent of the MPC for 

furnace fans is attributed to materials 

(included purchased parts like fan 

motors), which are not impacted by 

process differences. DOE’s estimates 

also already accounted for process 

differences between manufacturers for 

high-volume and low-volume products. 

The products that DOE evaluated to 

support calculation of MPC included 

furnace fans from various 

manufacturers, including both highvolume and low-volume models. 

Observed process differences are 

reflected in the bills of materials for 

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38160 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

those products. DOE believed that its 

approach to distinguish between highvolume and low-volume product classes 

accounts for the expected difference in 

MPC between high-volume and lowvolume product classes. 78 FR 64091. 

DOE did not receive comment or 

additional information on production 

volume impacts on MPC, thus, DOE is 

taking the same approach to distinguish 

between high-volume and low-volume 

product classes in the Final Rule. 

Inverter-Driven PSC Costs 

In the preliminary analysis, DOE 

estimated that the MPC of inverter 

control for a PSC motor is $10–$12, 

depending on production volume. 

Interested parties commented that DOE 

was underestimating the cost of adding 

an inverter to a PSC motor, and 

questioned if DOE’s cost estimate was 

for wave chopper technology and not 

inverters. In the NOPR, DOE stated that 

the preliminary analysis estimate for the 

MPC of an inverter-driven PSC was 

indeed based on a wave chopper drive. 

DOE found that more sophisticated and 

costly inverters are required to achieve 

the efficiencies reflected in DOE’s 

analysis. Consequently, DOE adjusted 

its cost estimate for PSC inverter 

technology. DOE gathered more 

information about the cost of inverters 

that are suited for improving furnace fan 

efficiency. In addition to receiving cost 

estimates during manufacturer 

interviews, DOE also reviewed its cost 

estimates for inverter drives used in 

other residential applications, such as 

clothes washers. DOE found that $30 for 

high-volume products and $42.29 for 

low-volume products are better 

estimates of the MPC for inverters used 

to drive PSC furnace fan motors. 

Accordingly, DOE updated those values 

for the NOPR. 78 FR 64091–64092. 

DOE did not receive comment or 

additional information on cost estimates 

for inverter-driven PSC motors, thus, 

DOE is not making changes to the MPC 

estimates for inverters used to drive PSC 

furnace fan motors in the Final Rule. 

Furnace Fan Motor MPC 

In response to the preliminary 

analysis, manufacturers stated that DOE 

underestimated the incremental MPC to 

implement high-efficiency motors in 

HVAC products, other than oil furnaces. 

Most manufacturers stated that the cost 

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

twice that of the DOE’s estimate. Based 

upon the input received from interested 

parties, DOE adjusted its motor cost 

estimates in the NOPR analysis. In 

general, DOE increased its estimates by 

approximately 10 to 15 percent, which 

is consistent with the feedback DOE 

received. 78 FR 64092. 

Goodman stated that DOE 

significantly underestimated the costs of 

the increasing levels of fan motor cost. 

(Goodman, No. 102 at p. 9) Lennox 

stated that DOE underestimated the total 

cost of furnace fans with BPM motor 

technology by 10 to 30 percent, 

therefore, the incremental costs are 

underestimated by 20 to 120 percent. 

(Lennox, No. 100 at p. 6) Conversely, 

ACEEE commented that DOE has a wellestablished record of over-estimating the 

cost of complying with standards, thus, 

DOE’s cost estimates should be 

discounted to further improve the 

economics of advanced technology 

options. (ACEEE, No. 94 at p. 3) Rheem 

questioned if the DOE motor cost 

estimates included power factor 

correction filters for BPM motors, as 

those can cost $10 to $20. (Rheem, No. 

91 at p. 165) 

DOE recognizes that BPM motor use 

contributes to concerns regarding total 

harmonic distortion. However, the use 

of power factor correction filters for 

BPM motor technologies is currently not 

required under federal regulations. The 

DOE cost estimates reflect what is 

currently available on the market, thus, 

the added cost of filters for BPM motor 

technologies is not included in DOE’s 

MPC estimates for BPM motors. DOE 

believes the motor MPC estimates 

presented in the NOPR are 

representative of current motor costs. 

Thus, DOE is keeping the same furnace 

fan motor cost estimates presented in 

the NOPR for the Final Rule analysis. 

Details regarding DOE’s MPC estimates 

are provided in chapter 5 of the Final 

Rule TSD. 

Motor Control Costs 

In the preliminary analysis, DOE 

estimated that the MPC of the primary 

control board (PCB) increases with each 

conversion to a more-efficient motor 

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

BPM motor and from constant-torque to 

constant-airflow BPM motor). 

Manufacturers confirmed that higherefficiency motors and modulating 

motors require more sophisticated and 

costly controls. DOE also received 

feedback regarding the cost of the PCBs 

associated with each motor type during 

manufacturer interviews. In general, 

manufacturers commented that the 

PCBs used with constant-torque BPM 

motors are more costly. However, other 

manufacturer interview participants 

stated that the MPC of the PCB used 

with these motors should be equivalent 

or even less expensive than the PCBs 

used with PSC motors. 78 FR 64092. 

In the NOPR, DOE agreed with 

interested parties that the MPC of the 

PCB needed for a constant-airflow BPM 

motor is higher than for the PCB paired 

with a PSC motor. DOE estimated that 

the MPC of a PCB paired with a 

constant-airflow BPM motor is roughly 

twice as much as for a PCB paired with 

a constant-torque BPM motor or PSC. 

DOE also agreed with the interested 

parties that stated that the MPC for a 

PCB paired with a constant-torque BPM 

motor is equivalent to that of a PCB 

needed for a PSC motor. DOE revised its 

analysis to reflect this assumption in the 

NOPR as a result. 

DOE did not receive comment or 

additional information on motor control 

costs, thus, DOE is not making changes 

to this in the Final Rule. 

Backward-Inclined Impeller MPC 

Interested parties commented that 

DOE’s preliminary analysis estimate for 

the incremental MPC associated with 

implementing a backward-inclined 

impeller, in combination with a 

premium constant-airflow BPM motor 

and multi-staging, is too low. 

Manufacturers also commented that 

tighter tolerances and increased 

impeller diameter lead to increased 

material costs, as well as increased costs 

associated with motor mount structure 

and reverse forming fabrication 

processes. 

During the NOPR, DOE reviewed its 

manufacturer production cost estimates 

for the backward-inclined impeller 

technology option based on interested 

party comments. During manufacturer 

interviews, some manufacturers 

reiterated or echoed that DOE’s 

estimated MPC for backward-inclined 

impellers is too low, but they did not 

provide quantification of the total MPC 

of backward-inclined impellers or the 

incremental MPC associated with the 

changes needed to implement them. 

Other manufacturers did quantify the 

MPC of backward-inclined impeller 

solutions and their estimates were 

consistent with DOE’s preliminary 

analysis estimate. Consequently, DOE 

did not modify its preliminary analysis 

estimated MPC for backward-inclined 

impellers in the NOPR. 78 FR 64092. 

In response to the NOPR, Mortex 

questioned whether the price 

differential between backward-inclined 

impellers manufactured at high volume 

and those manufactured at low volume 

should be greater than DOE’s estimate of 

32 cents. (Mortex, No. 91 at p. 163) 

DOE reviewed its manufacturer 

production cost estimates for the 

backward-inclined impeller technology 

option based on interested party 

comments. DOE did not receive any 

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27Energy Information Administration, 2009 

Residential Energy Consumption Survey (Available 

at: http://www.eia.gov/consumption/residential/

data/2009/index.cfm?view=consumption). 

quantification of the total MPC of 

backward-inclined impellers or the 

incremental MPC associated with the 

changes needed to implement them. 

Consequently, DOE did not modify its 

NOPR estimated MPC for backwardinclined impellers in the Final Rule. 

Regardless, DOE finds that EL 6, which 

represents use of a backward-inclined 

impeller, is not economically justified. 

Modifying the MPC estimate for this 

technology would not impact the 

standard set by this Final Rule as a 

result. 

Other Components 

In response to the MPCs presented in 

the NOPR, Goodman commented that 

there are likely additional components 

for the furnace that may need to be 

added if significant changes to the 

blower system are implemented. For 

example, improving air moving 

efficiency may require an increase in 

cabinet size, or the addition of internal 

baffling to direct airflow over the heat 

exchanger. None of these additional 

components or modifications were 

accounted for in the furnace fan MPC. 

(Goodman, No. 102 at p. 13) 

As discussed in section III.B.1 and 

chapter 4 of the Final Rule TSD, DOE 

did not include housing design 

modifications in the engineering 

analysis. Thus, DOE did not develop 

cost estimates for housing design 

modifications. DOE recognizes that the 

airflow path design of the HVAC 

product in which the furnace fan is 

integrated impacts efficiency. DOE 

anticipates that modifying the size of 

the cabinet and the geometry of the heat 

exchanger(s) would be the primary 

considerations for improving airflow 

path design. Alterations to the design 

and configuration of internal 

components, such as the heat 

exchanger, could impact the thermal 

performance of the HVAC product, 

potentially reducing or eliminating 

product availability for certain 

applications. While DOE did not 

consider airflow path design as a 

technology option, as described in 

section III.B.1, DOE did account for the 

components used to direct or guide 

airflow in the MPC estimates. 

D. Markups Analysis 

DOE uses manufacturer-to-consumer 

markups to convert the manufacturer 

selling price estimates from the 

engineering analysis to consumer prices, 

which are then used in the LCC and PBP 

analysis and in the manufacturer impact 

analysis. Before developing markups, 

DOE defines key market participants 

and identifies distribution channels. 

Generally, the furnace distribution 

chain (which is relevant to the 

residential furnace fan distribution 

chain) includes distributors, dealers, 

general contractors, mechanical 

contractors, installers, and builders. For 

the markups analysis, DOE combined 

mechanical contractors, dealers, and 

installers in a single category labeled 

‘‘mechanical contractors,’’ because these 

terms are used interchangeably by the 

industry. Because builders serve the 

same function in the HVAC market as 

general contractors, DOE included 

builders in the ‘‘general contractors’’ 

category. 

DOE used the same distribution 

channels for furnace fans as it used for 

furnaces in the recent energy 

conservation standards rulemaking for 

those products. DOE believes that this is 

an appropriate approach, because the 

vast majority of the furnace fans covered 

in this rulemaking is a component of a 

furnace. Manufactured housing furnace 

fans in new construction have a separate 

distribution channel in which the 

furnace and fan go directly from the 

furnace manufacturer to the producer of 

mobile homes. DOE has concluded that 

there is insufficient evidence of a 

replacement market for furnace fans to 

establish a separate distribution channel 

on that basis. 

DOE develops baseline and 

incremental markups to transform the 

manufacturer selling price into a 

consumer product price. DOE uses the 

baseline markups, which cover all of a 

distributor’s or contractor’s costs, to 

determine the sales price of baseline 

models. Incremental markups are 

separate coefficients that DOE applies to 

reflect the incremental cost of higherefficiency models. 

Ingersoll Rand stated that the 

incremental markup percentages do not 

represent real life practices and are too 

low. It commented that once the new 

rule goes into effect, the more expensive 

furnaces will become the baseline and 

will need to be marked up appropriately 

for manufacturers, distributors, and 

dealers to remain viable. (Ingersoll 

Rand, No. 107 at p. 8) However, the 

commenter provided no data to support 

its expectation of how the actors 

respond in terms of pricing when 

confronted with more-stringent energy 

conservation standards. 

DOE acknowledges that detailed 

information on actual distributor and 

contractor practices would be helpful in 

evaluating their markups on furnaces. In 

the absence of such information, DOE 

has concluded that its approach, which 

is consistent with expected business 

behavior in competitive markets, is 

reasonable to apply. If the cost of goods 

sold increases due to efficiency 

standards, DOE continues to assume 

that markups would decline slightly, 

leaving profit unchanged, and, thus, it 

uses lower markups on the incremental 

costs of higher-efficiency products. 

Goodman stated that lower markups 

on incremental costs of higherefficiency products is an invalid 

practice because manufacturers will 

attempt to have higher margin dollars to 

offset overall lower volumes. (Goodman, 

No. 102 at p. 9) For the LCC and NIA 

analyses, DOE does not use a lower 

markup on the incremental 

manufacturer selling price of higherefficiency products. Instead, it assumes 

that manufacturers are able to maintain 

existing average markups in response to 

new standards. The MIA considers 

different markup scenarios for 

manufacturers (see section IV.J.2.b). 

E. Energy Use Analysis 

The purpose of the energy use 

analysis is to determine the annual 

energy consumption of residential 

furnace fans in representative U.S. 

homes and to assess the energy savings 

potential of increased furnace fan 

efficiency. In general, DOE estimated 

the annual energy consumption of 

furnace fans at specified energy 

efficiency levels across a range of 

climate zones. The annual energy 

consumption includes the electricity 

use by the fan, as well as the change in 

natural gas, liquid petroleum gas (LPG), 

electricity, or oil use for heat production 

as result of the change in the amount of 

useful heat provided to the conditioned 

space as a result of the furnace fan. The 

annual energy consumption of furnace 

fans is used in subsequent analyses, 

including the LCC and PBP analysis and 

the national impact analysis. 

DOE used the existing DOE test 

procedures for furnaces and air 

conditioners to estimate heating and 

cooling mode operating hours for the 

furnace fan. The power consumption of 

the furnace fan is determined using the 

individual sample housing unit 

operating conditions (the pressure and 

airflow) at which a particular furnace 

fan will operate when performing 

heating, cooling, and constantcirculation functions. The methodology 

and the data are fully described in 

chapter 7 of the final rule TSD. 

DOE used the Energy Information 

Administration’s (EIA) Residential 

Energy Consumption Survey (RECS) 27

to establish a sample of households 

using furnace fans for each furnace fan 

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28See http://www.eia.gov/consumption/

residential/data/2009/. 

29See http://www.census.gov/housing/ahs/data/

national.html. 

30See http://www.census.gov/popest/. 

31HUD for Mobile Home with comfort cooling 

certificate ¥0.3 inches WC at cooling airflow 

setting [Title 24 of the HUD code PART 3280— 

Mobile Home Construction and Safety Standards, 

Part 3280.715(a)(3)(ll)]. 

32Provided in CEE, No. 22 at pp. 1–2. 

33Pigg, S., ‘‘Electricity Use by New Furnaces: A 

Wisconsin Field Study’’ (October 2003) (Available 

at http://www.ecw.org/sites/default/files/230-1.pdf) 

34 Decision Analysts, 2013 American Home 

Comfort Study (2013) (Available at: http://

www.decisionanalyst.com/Syndicated/

HomeComfort.dai). 

product class. RECS data provide 

information on the age of furnaces with 

furnace fans, as well as heating and 

cooling energy use in each household. 

The survey also includes household 

characteristics such as the physical 

characteristics of housing units, 

household demographics, information 

about other heating and cooling 

products, fuels used, energy 

consumption and expenditures, and 

other relevant data. DOE uses the 

household samples not only to 

determine furnace fan annual energy 

consumption, but also as the basis for 

conducting the LCC and PBP analysis. 

DOE used RECS 2009 28 heating and 

cooling energy use data to determine 

heating and cooling operating hours. 

DOE used data from RECS 2009, 

American Housing Survey (AHS) 

2011,29 and the Census Bureau 30 to 

project household weights in 2019, 

which is the anticipated compliance 

date of any new energy efficiency 

standard for residential furnace fans. 

These adjustments account for housing 

market changes since 2009, as well as 

for projected product and demographic 

changes. 

The power consumption (and overall 

efficiency) of a furnace fan depends on 

the speed at which the motor operates, 

the external static pressure difference 

across the fan, and the airflow through 

the fan. To calculate furnace fan 

electricity consumption, DOE 

determined the operating conditions 

(the pressure and airflow) at which a 

particular furnace fan will operate in 

each RECS housing unit when 

performing heating, cooling, and 

constant-circulation functions. For the 

final rule, DOE adjusted the furnace fan 

energy use estimated from RECS 2009 

data to account for projected changes in 

heating and cooling loads due to climate 

change (as projected by EIA in AEO 

2013). 

DOE gathered field data from 

available studies and research reports to 

determine an appropriate distribution of 

external static pressure (ESP) values. 

DOE compiled over 1,300 field ESP 

measurements from several studies that 

included furnace fans in single-family 

and mobile homes in different regions of 

the country. The average ESP value in 

the cooling operating mode from these 

studies results in an average 0.65 in. 

w.c. for single-family households and 

0.30 in. w.c. for mobile homes. 

Rheem stated that substitution of a 

BPM motor can increase the 

conditioned air that is leaked to the 

atmosphere. (Rheem, No. 83 at p. 13) 

However, the commenter provided no 

data to support its view on increased air 

leakage associated with BPM motors. 

DOE agrees that if a BPM motor 

maintains flow in a high-resistance duct 

system that has leakage, it may lead to 

higher duct leakage compared to a PSC 

motor. However, in cases where the 

heating load can be met with low air 

flow, the BPM motor may have lower air 

leakage. Given that the magnitude of 

these effects is uncertain and may offset, 

DOE did not include it in its analysis. 

DOE notes that the constant-torque BPM 

motor, which meets the standards in 

today’s final rule, may not maintain the 

flow in leaky and overly-restrictive 

ducts, and, thus, would be expected to 

have similar losses as a PSC motor. 

NEEA stated that their field 

measurements of ESP for the past 40 

years are consistent with DOE’s 

analysis. (NEEA, No. 91 at p. 222) 

Daikin stated that, from experience over 

the past 30 plus years, mobile homes 

have higher external static pressure than 

the typical site-built home in the 

preponderance of cases. (Daikin, No. 91 

at p. 222) 

The data that DOE has seen (described 

in appendix 7B of the final rule TSD) do 

not indicate that mobile homes have 

higher external static pressure. 

Furthermore, the HUD static pressure 

criteria for mobile homes 31 are 

supportive of DOE’s assumptions 

regarding ESP. Consequently, DOE has 

maintained its approach regarding ESP 

for this final rule. 

DOE determined furnace fan 

operating hours in heating mode by 

calculating the furnace burner operating 

hours and adjusting them for delay 

times between burner and fan operation. 

Burner operating hours are a function of 

annual house heating load, furnace 

efficiency, and furnace input capacity. 

For the NOPR, to estimate use of 

constant circulation in the sample 

homes, DOE evaluated the available 

studies, which include a 2010 survey in 

Minnesota 32 and a 2003 Wisconsin field 

monitoring of residential furnaces.33

DOE did not use these data directly, 

however, because it believes they are 

not representative of consumer practices 

for the U.S. as a whole. In these 

northern States, many homes have low 

air infiltration, and there is a high 

awareness of indoor air quality issues, 

which could lead to significant use of 

constant circulation. To develop 

appropriate assumptions for other 

regions, DOE modified the data from 

these States using information from 

manufacturer product literature (which 

suggests very little use in humid 

climates) and consideration of climate 

conditions in other regions. For the 

NOPR, DOE used the same assumptions 

for use of constant circulation as were 

used in the proposed DOE test 

procedure for furnace fans. 77 FR 28674 

(May 15, 2012). The average value that 

emerges is approximately 400 hours per 

year. The shares of homes using the 

various constant-circulation modes are 

presented in Table IV.10. 

NEEA and NPCC commented that 

DOE’s estimate of 400 hours per year of 

continuous-circulation mode may be 

overly conservative, and they disagree 

with stakeholders who suggest that 400 

hours per year is too high. (NEEA, 

NPCC, No. 32 at p. 5) 

For the final rule, DOE examined a 

newly-released proprietary survey that 

broadly evaluates the use of continuous 

circulation across the U.S.34 This survey 

shows a higher number of continuouscirculation hours than DOE used for the 

NOPR. DOE has concerns about the 

representativeness of the data, however, 

because the survey only included 

homeowners who had been involved in 

the purchase of central HVAC 

equipment in the past two years. The 

practices of these consumers may not 

accurately portray the use of continuous 

circulation across the entire stock of 

homes with central HVAC equipment. 

Given the uncertainty regarding the 

survey data, DOE decided that it would 

not be appropriate to change the 

continuous-circulation hours for the 

final rule. 

Southern Company stated that if DOE 

is assuming a greater percentage of 

variable speed fans in the future, the 

need for constant circulation will be 

reduced. (Southern Company, No. 91 at 

p. 233) DOE accounted for the reduced 

hours of operation during constantcirculation mode when variable speed 

motors are applied (see appendix 7–C). 

Variable speed fans tend to increase the 

operating hours in heating and cooling 

modes, which would result in a smaller 

fraction of time in continuous-fan mode. 

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35U.S. Department of Energy—Energy Efficiency 

& Renewable Energy, Final Rule Technical Support 

Document: Energy Efficiency Standards for 

Consumer Products: Central Air Conditioners, Heat 

Pumps, and Furnaces (2011) (Available at: http://

www.regulations.gov/#!documentDetail;D=EERE2011-BT-STD-0011-0012). 

36State of Wisconsin, Public Service Commission 

of Wisconsin, Focus on Energy Evaluation 

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

at: https://focusonenergy.com/sites/default/files/

semiannualreport18monthcontractperiodfinal

revisedoctober192009_evaluationreport.pdf). 

DOE also performed a sensitivity 

analysis to estimate the effect on the 

LCC results if it assumed half as much 

use of constant circulation. These 

results are discussed in section V.B.1 of 

this document. 

TABLE IV.10—CONSTANT-CIRCULATION TEST PROCEDURE ASSUMPTIONS USED FOR FURNACE FANS STANDARDS

ANALYSIS

Constant-circulation fan use 

Assumed 

average 

number of 

hours 

Estimated 

share of 

homes in north 

and south-hot 

dry regions 

(percent) 

Estimated 

share of 

homes in 

south-hot 

humid region 

(percent) 

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

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

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

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

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

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

Morrison stated that not all the energy 

used in circulation is wasted heat 

because the energy consumed for 

circulation during the heating season is 

useful energy. Morrison recommended 

that for a more accurate analysis of 

energy use in circulation mode, DOE 

should split heating and cooling hours. 

(Morrison, No. 108 at p. 2) DOE adjusted 

its analysis so that heat generated by 

constant-circulation fan operation 

reduces furnace heating energy use in 

the heating season, and in the cooling 

season, it adds to the operating hours of 

the air conditioner. 

In the NOPR, DOE recognized that the 

energy savings in cooling mode from 

higher-efficiency furnace fans used in 

some higher-efficiency CAC and heat 

pumps was already accounted for in the 

analysis related to the energy 

conservation standards for those 

products. To avoid double-counting, the 

analysis for furnace fans did not include 

furnace fan electricity savings that were 

counted in DOE’s rulemaking for CAC 

and heat pump products.35

Several stakeholders stated that DOE 

may be double-counting energy savings 

in cooling mode in this rulemaking by 

accounting for the central air 

conditioner blower output used for 

calculating SEER. (JCI, No. 95 at pp. 4– 

5; Morrison, No. 108 at p. 2; AHRI, No. 

98 at p.6; Goodman, No. 102 at p. 5) EEI 

stated that a large share of the estimated 

furnace fan energy savings are a result 

of the air conditioner and heat pump 

energy efficiency standards, so some or 

all of these estimated energy savings 

should be removed from the furnace fan 

analyses. (EEI, No. 87 at p. 5) 

DOE’s rulemaking analysis for CAC 

and heat pump products included 

savings from those households 

purchasing a CAC or heat pump at SEER 

15 or above that would need to have a 

BPM motor-driven fan in the furnace to 

achieve that efficiency level. The basecase efficiency distribution of fans used 

in the current analysis includes the 

presence of those BPM motor-driven 

fans in homes with the higher-efficiency 

CAC or heat pumps. Because the energy 

savings from the considered fan 

efficiency levels are measured relative 

to the base-case efficiencies, any savings 

reported here for furnace fans are over 

and above those counted in the CAC 

and heat pump rulemaking. 

Morrison stated that any reduction in 

energy use by the fan from this 

rulemaking would be a de facto 

improvement in SEER and an unlawful 

change to the current SEER regulations. 

It noted that if there is no change to 

SEER, then there will be no energy 

savings when operated in the cooling 

mode. (Morrison, No. 108 at p. 2) 

A reduction in energy use by the 

furnace fan resulting from this 

rulemaking would improve the CAC 

operating efficiency (for homes with 

both furnace and CAC), but DOE is not 

increasing the energy conservation 

standard for CAC or requiring a change 

to the reported current SEER ratings for 

CAC. DOE has clear and explicit 

statutory authority to regulate furnace 

fans under 42 U.S.C. 6295(f)(4)(D), and 

any related improvements to CAC 

efficiency would simply be an added 

benefit. 

Recognizing the possibility of 

consumers using higher-efficiency 

furnace fans more than baseline furnace 

fans, DOE included a rebound effect in 

its preliminary analysis. DOE used a 

2009 program evaluation report from 

Wisconsin 36 to estimate the extent to 

which increased use of constant 

circulation under a standard requiring 

BPM furnace fans is likely to cancel out 

some of the savings from such a fan. The 

specific assumptions are described in 

chapter 7 of the final rule TSD. 

Commenting on the average energy 

use estimates reported in the final rule 

TSD, EEI stated that the baseline energy 

use values seem to be overstated, 

because baseline values reported in the 

market and technology assessment are 

lower than what was used in following 

analyses. Consequently, the estimated 

energy savings and energy cost savings 

are overstated as well, because they are 

shown in the NOPR as percentage 

savings based on the design options. 

(EEI, No. 87 at pp. 4–5) Goodman 

believes that the calculated baseline 

values, and thus the projected energy 

savings, are too high based on product 

testing for the April 2013 test procedure 

SNOPR. (Goodman, No. 102 at p. 8) 

The baseline values reported in the 

market and technology assessment are 

based on the test procedure. The energy 

use analysis is not based on test 

procedure conditions, but instead 

reflects actual usage in the field, which 

is more appropriate for estimating the 

impacts of higher furnace fan efficiency 

on consumers. Therefore, the estimated 

energy savings and energy cost savings 

are not overstated. 

JCI and AHRI stated that DOE needs 

to ensure that it avoids double-counting 

energy consumption associated with 

standby mode, noting that there is no 

standby mode and off mode energy use 

associated with furnace fans that would 

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38164 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

37U.S. Department of Energy—Energy 

Information Administration, Form EIA–826 

Database Monthly Electric Utility Sales and 

Revenue Data, 2013. http://www.eia.doe.gov/cneaf/ 

electricity/page/eia826.html; U.S. Department of 

Energy—Energy Information Administration, 

Natural Gas Navigator. 2013. http://

tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_nus_

m.htm. 

not already be measured by the 

established test procedures, because 

they are integrated in the electrical 

systems of the HVAC products in which 

they are used. (JCI, No. 95 at p. 5; AHRI, 

No. 98 at p. 6) 

The proposed furnace fan energy 

rating metric would not account for the 

electrical energy consumption in 

standby mode and off mode, because 

energy consumption in those modes is 

already accounted for in the energy 

conservation standards for residential 

furnaces and residential CAC and HP. 

Accordingly, DOE did not include 

standby mode and off mode energy use 

associated with furnace fans in the 

present analysis. Consequently, there 

should not be any problems associated 

with double-counting of standby mode 

and off mode energy consumption. 

F. Life-Cycle Cost and Payback Period 

Analysis 

In determining whether an energy 

conservation standard is economically 

justified, DOE considers the economic 

impact of potential standards on 

consumers. The effect of new or 

amended energy conservation standards 

on individual consumers usually 

involves a reduction in operating cost 

and an increase in purchase cost. DOE 

uses the following two metrics to 

measure consumer impacts: 

• Life-cycle cost (LCC) is the total 

consumer cost of an appliance or 

product, generally over the life of the 

appliance or product. The LCC 

calculation includes total installed cost 

(equipment manufacturer selling price, 

distribution chain markups, sales tax 

and installation cost), operating costs 

(energy, repair, and maintenance costs), 

equipment lifetime, and discount rate. 

Future operating costs are discounted to 

the time of purchase and summed over 

the lifetime of the product. 

• Payback period (PBP) measures the 

amount of time it takes consumers to 

recover the assumed higher purchase 

price of a more energy-efficient product 

through reduced operating costs. Inputs 

to the payback period calculation 

include the installed cost to the 

consumer and first-year operating costs. 

DOE analyzed the net effect of 

potential residential furnace fan 

standards on consumers by calculating 

the LCC and PBP for each efficiency 

level for each sample household. DOE 

performed the LCC and PBP analyses 

using a spreadsheet model combined 

with Crystal Ball (a commerciallyavailable software program used to 

conduct stochastic analysis using Monte 

Carlo simulation and probability 

distributions) to account for uncertainty 

and variability among the input 

variables (e.g., energy prices, 

installation costs, and repair and 

maintenance costs). It uses weighting 

factors to account for distributions of 

shipments to different building types 

and States to generate LCC savings by 

efficiency level. Each Monte Carlo 

simulation consists of 10,000 LCC and 

PBP calculations. The model performs 

each calculation using input values that 

are either sampled from probability 

distributions and household samples or 

characterized with single-point values. 

The analytical results include a 

distribution of points showing the range 

of LCC savings and PBPs for a given 

efficiency level relative to the base-case 

efficiency forecast. The results of DOE’s 

LCC and PBP analysis are summarized 

in section IV.F and described in detail 

in chapter 8 of the final rule TSD. 

1. Installed Cost 

The installed cost at each efficiency 

level is based on the product price, 

distribution chain markups, sales tax, 

and installation cost. 

The current product price comes from 

the engineering analysis. DOE believes 

that price trends for integral horsepower 

electric motors are a reasonable proxy 

for trends in prices of furnace fans, and 

for the NOPR DOE evaluated the 

historic real (i.e., adjusted for inflation) 

producer price index (PPI) of such 

motors. DOE found that this index has 

been decreasing except for the last few 

years, when it started to increase (see 

appendix 10–C of the final rule TSD). 

Given the uncertainty about whether the 

recent trend will continue or instead 

revert to the historical mean, DOE 

elected to use constant prices at the 

most recent level as the default price 

assumption to project future prices of 

furnace fans. 78 FR 64068, 64096 (Oct. 

25, 2013). 

Morrison stated that motor prices 

have remained flat in the last decade 

because production of motors moved 

offshore and foreign competitors entered 

the marketplace. It stated that in the 

coming decades, motor prices will 

increase at the rate of long run prices for 

commodities (e.g. copper, steel, 

aluminum). (Morrison, No. 108 at p. 2) 

Goodman believes that it is incorrect to 

use constant prices at the most recent 

level of motor cost, which has shown a 

recent increasing trend, as the default 

price assumption to project future prices 

of furnace fans. (Goodman, No. 102 at p. 

9) 

DOE continues to believe that it is 

unclear whether the increasing trend in 

motor prices since 2004 will continue in 

the future. Part of the recent growth in 

prices of commodities used in motors 

was due to strong demand from China. 

Current projections envision slower 

growth in China, which would likely 

dampen commodity prices. Given the 

uncertainty, DOE continued to use 

constant prices at the most recent level 

as the default price assumption for the 

final rule. For the NIA, DOE also 

conducted sensitivity analysis using 

alternative price growth assumptions. 

Because furnace fans are installed in 

furnaces in the factory, there is 

generally no additional installation cost 

at the home. However, furnace fans that 

employ a constant-airflow BPM design 

may require additional installation 

costs. DOE assumed that all constantairflow BPM furnace fan installations 

will require extra labor at startup to 

check and adjust airflow. 

Goodman stated that it is acceptable 

for relative product cost comparison to 

include costs only for the components 

of the HVAC product that impact FER 

in the manufacturing cost, but it 

disagrees with using the cost of only the 

furnace fan portion of the furnace in the 

LCC, GRIM, and other aspects of the 

financial analysis. The real upfront costs 

for the consumer will be significantly 

higher (likely two to four times more) 

than DOE has included in the analysis 

using only the furnace fan portion. 

(Goodman, No. 102 at p. 9) DOE 

believes that the commenter is claiming 

that the consumer will face higher costs 

when buying a furnace because the 

proposed furnace fan standards would 

require changes in furnace design. As 

discussed in section IV.B.1, DOE 

screened out fan housing and airflow 

path design modifications from further 

analysis. Accordingly, it is unlikely that 

significant changes in furnace design 

would be required to accommodate 

furnace fans that meet today’s 

standards. Therefore, DOE concludes 

that using the incremental costs of the 

furnace fan portion is reasonable. 

2. Operating Costs 

To estimate the annual energy costs 

for operating furnace fans at different 

efficiency levels, DOE used the annual 

energy use results from the energy use 

analysis and projections of residential 

energy prices. DOE derived average 

monthly energy prices for a number of 

geographic areas in the United States 

using the latest data from EIA 37 and 

monthly energy price factors that it 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38165 

38RS Means Company Inc., Means Facilities 

Maintenance & Repair Cost Data. 2012. Kingston, 

MA. 

39 Decision Analysts, 2008 American Home 

Comfort Study: Online Database Tool, 2009. 

Arlington, Texas. http://www.decisionanalyst.com/

Syndicated/HomeComfort.dai. 

developed. Electricity and natural gas 

prices were adjusted using seasonal 

marginal price factors to come up with 

monthly marginal electricity and natural 

gas prices. DOE assigned an appropriate 

price to each household in the sample, 

depending on its location. 

Laclede stated that using average 

utility rates leads to significantly 

overstating consumer savings. DOE 

should use marginal energy rates in its 

consumer energy savings calculations. 

(Laclede, No. 86 at p. 4) As described 

above, DOE did derive marginal 

electricity and natural gas prices based 

on recent data. (For a discussion of the 

development of marginal energy price 

factors, see appendix 8–C of the final 

rule TSD). To arrive at marginal prices 

in future years, DOE multiplied the 

current marginal prices by values in the 

Reference case projection of annual 

average residential electricity and 

natural gas price changes in EIA’s AEO 

2013. The price trends projected in the 

AEO 2013 Reference case are shown in 

chapter 8 of the final rule TSD. For 

electricity prices, which are primarily of 

interest in this rulemaking, the AEO 

2013 projection shows the average 

residential price growing from 0.119 

$/kWh in 2020 to 0.122 $/kWh in 2030 

and 0.131 $/kWh in 2040 (constant 

dollars). 

To estimate annual maintenance 

costs, DOE derived labor hours and 

costs for annual maintenance from RS 

Means data.38 The frequency with 

which the maintenance occurs was 

derived from a consumer survey 39 on 

the frequency with which owners of 

different types of furnaces perform 

maintenance. 

For the NOPR, DOE used the same 

maintenance costs for furnace fans at 

different efficiency levels. 78 FR 64096. 

Goodman stated that it is invalid to 

assume that the maintenance costs for 

all efficiency levels are the same 

regardless of technology, as higher 

technology products will take a higher 

skill level of technician, and will 

require more costly equipment for 

service than baseline products. 

(Goodman, No. 102 at p. 9) Allied Air 

stated that in shifting from a primarily 

single-stage PSC market to multistage 

constant torque, the maintenance cost 

could be two to three times current 

costs. (Allied Air, No. 43 at pp. 252– 

253) 

DOE understands that furnace fans 

require very little maintenance, and it 

did not find any evidence that there is 

any additional maintenance cost 

associated with higher efficiency 

equipment. It seems likely that the 

commenters are including repair costs 

under the term ‘‘maintenance.’’ DOE’s 

treatment of repair costs is discussed 

below. 

The most important element of repair 

costs for furnace fans is replacement of 

the fan motor. For the NOPR, to estimate 

rates of fan motor failure, DOE 

developed a distribution of fan motor 

lifetime (expressed in operating hours) 

by motor size using data developed for 

DOE’s small electric motors final rule. 

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

paired these data with the calculated 

number of annual operating hours for 

each sample furnace, including constant 

circulation as appropriate. DOE did not 

have a firm basis for quantifying 

whether constant-torque BPM motors 

and constant-airflow BPM motors have 

different failure rates than PSC motors. 

Thus, it used the same motor lifetime 

for each fan efficiency level in terms of 

total operating hours (the lifetime in 

terms of years is lower for constanttorque BPM and constant-airflow BPM 

motors because they are more frequently 

used in multi-stage heating mode). 78 

FR 64097. 

Rheem stated that DOE did not justify 

the assumption that furnace fan motor 

lifetimes are equal to furnace lifetimes. 

(Rheem, No. 83 at p. 4) DOE modeled 

overall furnace fan lifetime based on 

furnace lifetimes (see discussion below), 

but it used the approach described 

above for furnace fan motor lifetime. 

Morrison stated that multi-staged 

BPM assemblies will have longer 

operating times within a given period 

(to account for lower fire rates and heat 

output) and therefore, all else being 

equal, will have a shorter life 

expectancy. (Morrison, No. 108 at p. 5) 

DOE’s approach is consistent with the 

comment; a multi-staged BPM motor has 

a shorter lifetime measured in years. 

A number of stakeholders stated that 

failure rates are higher for BPM motors 

than for PSC motors, leading to shorter 

lifetime. Rheem stated that the PSC 

motor life, which it estimated to be 15 

years, is much longer than the BPM 

motor life. (Rheem, No. 83 at pp. 2 and 

13) Mortex stated that, based on their 

experience, BPM lifetime is half that of 

PSC motors. (Mortex, No. 104 at p. 2) 

Lennox estimated that constant-airflow 

BPM motors have failure rates that are 

50% higher than PSC motors at 5 and 

10 years, and furnaces with constanttorque BPM motors have failure rates 

that are 385% higher than PSC motors 

at 5 and 10 years. (Lennox, No. 100 at 

p. 8) Ingersoll Rand stated that its data 

indicate that BPM motors fail at 2.3 

times the rate of PSC motors in the 5 to 

10 year time frame. (Ingersoll Rand, No. 

107 at pp. 6–7) AHRI stated that the 

failure rate for a high efficiency motor 

is typically higher than that of a PSC 

motor because the electronics added to 

a high efficiency motor introduce 

additional failure modes associated with 

the life of electronic controls in damp, 

very cold and very hot conditions. AHRI 

has collected data from manufacturers 

that show that the failure rates 

associated with constant-torque BPM 

and constant-airflow BPM technologies 

are higher than PSC motors over an 

extended time period. (AHRI, No. 98 at 

p. 7) Morrison and Ingersoll Rand cited 

recent data from an AHRI survey of 

manufacturers that indicate failure rates 

at 1, 5 and 10 years are 24%, 87% and 

165% greater for BPM motors than PSC 

ones. (Morrison, No. 108 at p. 5, 

Ingersoll Rand, No. 107 at p. 6) JCI 

stated that, based on an analysis of JCI’s 

residential warranty data, failure rates 

associated with constant-torque BPM 

and constant-airflow BPM technologies 

are significantly higher than those 

experienced by standard PSC motors 

due to the added electronic controls that 

are required as part of the BPM motor 

designs, which are more susceptible to 

failure due to power fluctuations and 

other factors. (JCI, No. 95 at p. 7) 

Ingersoll Rand stated that repair of the 

electronics is not possible for the 

constant-torque BPM motors available 

today, so an electronics failure will 

result in a complete motor replacement. 

(Ingersoll Rand, No. 107 at pp. 7–8) 

In contrast, NEEA and NPCC believe 

that the NOPR analysis assumptions 

may unfairly penalize BPM motors, as 

the Department has insufficient data to 

properly estimate the frequency and 

nature of BPM motor repair. (NEEA, 

NPCC, No. 96 at p. 5) 

DOE notes that BPM motors had 

higher level of failure in the late 1990s 

and early 2000s when the electronics 

technologies went through major 

renovations. The comments from 

furnace manufacturers may reflect this 

past experience. For example, the cited 

data from an AHRI survey of 

manufacturers would reflect BPM 

technology in the early 2000s. For the 

final rule, DOE searched for more 

information on the lifetime of BPM and 

PSC motors. This information 

(discussed in appendix 8–E) suggests 

that BPM and PSC motors have similar 

lifetimes, as BPM designs have 

improved over the years. While BPM 

motor designs could have additional 

failures due to the additional controls or 

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38166 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

40RS Means Company Inc., RS Means Residential 

Cost Data (2012); RS Means Company Inc., 

Facilities Maintenance & Repair Cost Data (2012). 

electronics, furnace fan motor 

manufacturers claim longer mechanical 

life for BPM designs due to better 

bearings and less heat generated by 

inefficiency. Between now and the 

compliance date, future BPM motor 

enhancements could further strengthen 

product reliability and reduce failures. 

In this analysis, DOE assumes higher 

failures for BPM designs due to longer 

operating hours (because of multi-stage 

operating at more hours and more 

constant circulation operation of BPM 

motors), as well as additional control 

failures. For example, DOE estimates 

that 43% for BPM constant torque 

multi-stage designs experience failure 

during the lifetime of the furnace, 

compared to 35% of PSC designs. 

Recognizing that there exists some 

uncertainty regarding the lifetime of 

BPM motors, DOE conducted a 

sensitivity analysis using alternative 

assumptions, as requested in a comment 

by Mortex. (Mortex, No. 43 at pp. 264– 

265) This analysis is described in 

appendix 8–E of the final rule TSD. 

For the NOPR, the replacement motor 

costs were based on costs developed in 

the engineering analysis for each motor 

type, and the labor time and unit costs 

were based on RS Means data.40 78 FR 

64097. DOE included additional labor 

hours to repair constant-torque BPM 

and constant-airflow BPM motors, as 

well as higher equipment cost for the 

BPM motors. DOE assumed that when 

replacement is necessary, consumers 

replace the failed motor with the same 

type of motor. 

A number of stakeholders stated that 

the replacement cost of BPM motors is 

higher than the cost DOE used in its 

analysis. (Morrison, No. 108 at p. 2; 

Goodman, No 102 at p. 8; APGA, No. 

110 at p. 3) Mortex stated that DOE 

substantially underestimated BPM 

replacement costs, which in its 

experience are 2–3 times that of a PSC. 

(Mortex, No. 104 at p. 2) Ingersoll Rand 

stated that replacement costs are 

significantly underestimated for 

constant-torque BPM and constantairflow BPM motors. It added that the 

difference between PSC motor 

replacement and constant-torque BPM 

motor replacement should be at least 

$225, and the PSC to constant-airflow 

BPM difference should be at least $295. 

(Ingersoll Rand, No. 107 at pp. 7–8) JCI 

stated that outside the warranty periods 

(typically 10 years for parts), ECM 

motors can cost 3 to 5 times the 

replacement costs of PSC motors due to 

the complexity of those motors and the 

electronic controls required to use them. 

(JCI, No. 95 at p. 6) 

The replacement equipment cost of 

BPM and PSC motors used in DOE’s 

LCC analysis is based on costs derived 

in the engineering analysis, which DOE 

believes are accurate. It is possible that 

the stakeholders believe that the higher 

BPM replacement costs are largely due 

to extra labor charges by contractors. 

DOE determined that for a constant 

torque BPM motor any such extra 

charges would be minimal. In the 

analysis for today’s final rule, on 

average the replacement cost is $407 for 

a constant torque multi-stage BPM (EL 

4) and $356 for the PSC design (EL 0). 

Several stakeholders stated that the 

replacement cost of an aftermarket 

furnace fan is 2–3 times higher than 

DOE’s estimated manufacturer 

production costs for low-volume 

product classes. They added that DOE’s 

material cost estimate of $0.00 for 

furnace fan replacements is incorrect. 

(JCI, No. 95 at p. 6; Morrison, No. 108 

at p. 5; AHRI, No. 98 at p. 8; Lennox, 

No. 100 at p. 8; Unico, No. 93 at p. 5) 

DOE believes that the first comment 

above refers to a replacement motor. 

DOE applies markups to the motor MPC, 

such that the cost to the consumer is 

two to three times higher than the MPC. 

The material cost is listed as $0.00 in 

the cited tables because these tables 

refer to labor costs only (as stated in the 

table captions). 

Ingersoll Rand stated that motors that 

fail in-warranty are not free, as standard 

product warranties in the HVAC 

industry cover parts only, and do not 

typically include labor charges, which 

the homeowner must pay. (Ingersoll 

Rand, No. 107 at p. 7) DOE excluded 

labor charges only if the consumer has 

a service contract or if the motor fails 

the first year (which is rare). 

Southern Company stated that DOE 

unrealistically considered component 

failures as independent events rather 

than interdependent ones. It stated that 

in actual consumer settings, rather than 

a lab, it is likely that a capacitor failure 

will not be detected until it results in a 

motor failure. (Southern Company, No. 

85 at p. 3) Undetected capacitor failure 

that leads to motor failure (as may occur 

for PSC motors) is reflected in DOE’s 

distribution of motor lifetimes. 

3. Furnace Fan Lifetime 

DOE used the same modeling for 

furnace fan lifetime (meaning the life of 

the overall equipment not including the 

motor) as in the NOPR.78 FR 64097. 

Chapter 8 of the final rule TSD describes 

the approach. DOE used the same 

lifetime for furnace fans at different 

efficiency levels because there are no 

data that indicate variation of lifetime 

with efficiency. For the NOPR analysis, 

DOE assumed that the lifetime for the 

fans installed in electric furnaces and 

gas furnaces is the same. 

Rheem stated that the lifetime of a 

residential furnace fan is limited by the 

lifetime of the electronic control, and 

advanced controls may shorten the 

lifetime of the product. (Rheem, No. 83 

at pp. 6, 13) JCI stated that the repair 

costs for furnace fans are generally the 

cost of replacing the motors used, as 

there are very few failures of fan 

components other than the motor. (JCI, 

No. 95 at p. 6) 

DOE believes that with current 

technology there are few failures of the 

electronic control, as stated by JCI. DOE 

also expects that the reliability of the 

electronic controls is likely to increase 

as the technology matures. Nonetheless, 

DOE accounts for failure of capacitors 

and motor electronic controls in its 

repair cost analysis. 

APGA stated that 23.6 years lifetime 

for gas-fired furnace fans in the LCC 

analysis is unrealistic, and DOE should 

employ more realistic furnace fan lives 

based on documented motor lives. 

(APGA, No. 110 at p. 3) It would appear 

that APGA misinterpreted DOE’s 

approach. Motor failure, which occurs 

on average at around 15 years, is 

counted as a repair cost. However, DOE 

believes that the rest of the furnace fan 

would last as long as the furnace itself. 

Southern Company stated that 

because the analysis shows at least 50% 

greater shipments of furnace fans than 

furnaces, the data seems to indicate a 

shorter lifetime for furnace fans than 

furnaces. (Southern Company, No. 85 at 

p. 3) DOE did not calculate the 

shipments of furnace fans. Since furnace 

fans are a component of furnaces, the 

shipments in the NIA analysis are 

limited to furnace shipments only. 

4. Discount Rates 

For the NOPR, DOE used distributions 

of discount rates based on a variety of 

financial data. 78 FR 64097. For 

replacement furnaces, the average rate 

was 5.0 percent. 

Miller stated that, based on a 

literature review of consumer discount 

rates for energy-using durables, the 3- 

percent and 7-percent discount rates 

used in the analysis only represent highincome households; other consumers 

may use much higher discount rates. 

Consumers with higher discount rates— 

including median-income Americans, 

low-income Americans, and the 

elderly—are much less likely to benefit 

from higher efficiency furnace fans. 

(Miller, No. 79 at pp. 10–13) 

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41The comment refers to high discount rates 

based on studies of implicit consumer discount 

rates using the purchase of energy-using durables 

(such as air conditioners, dishwashers, and 

refrigerators) to measure consumer time 

preferences. While these studies of implicit 

consumer discount rates provide a way of 

characterizing consumer behavior, they do not 

necessarily measure consumer time preferences. 

What appears to be low valuation of future energy 

cost savings from higher-efficiency appliances 

instead may be partially a result of lack of 

information on the magnitude of savings or inability 

to evaluate the available information. 

42 DOE used the AHRI Directory of Certified 

Furnace Equipment (Available at: http://

www.ahridirectory.org/ahridirectory/pages/

home.aspx) as well as manufacturer product 

literature. 

DOE uses 3-percent and 7-percent 

discount rates to measure net consumer 

benefits from energy efficiency 

standards from a national perspective 

(see section IV.H). DOE recognizes that 

a wide range of discount rates may be 

appropriate for consumers, and thus it 

uses distributions of discount rates 

when it evaluates consumer impacts in 

the LCC analysis. For the final rule, DOE 

developed specific distributions of 

discount rates for each of six consumer 

income groups. Chapter 8 of the final 

rule TSD describes the approach. The 

estimated impacts of today’s standards 

on low-income households are 

discussed in section V.B.1.41

5. Compliance Date 

In the NOPR, DOE proposed a 5-year 

compliance date for residential furnace 

fan standards. 78 FR 64103. A number 

of stakeholders encouraged DOE to 

adopt a three-year period between the 

final rule publication and the 

compliance date rather than the five 

years proposed in the NOPR. (ACEEE, 

No. 94 p. 6; NEEP, No. 109 at p. 2; 

Earthjustice, No. 101 at p. 3; CA IOU, 

No. 106 at p. 3; Joint Advocates, No. 105 

at p. 4; NEEA, NPCC, No. 96 at p. 3) 

ACEEE, CA IOU, the Joint Advocates, 

and NEEA and NPCC stated that the 

technologies assumed to be required to 

meet TSL 4 are well-established in the 

market and commercially available. 

(ACEEE, No. 94 at p. 6; CA IOU, No. 106 

at p. 3; Joint Advocates, No. 105 at p. 

4; NEEA, NPCC, No. 96 at p. 3) NEEP 

stated that three years should provide 

adequate time for manufacturers to 

adjust product lines. (NEEP, No. 109 at 

p. 2) The Joint Advocates stated that 

constant-torque BPM motors are 

essentially drop-in replacements for 

PSC motors, and capital conversion 

costs are not required. (Joint Advocates, 

No. 105 at p. 4) NEEA and NPCC believe 

that three years of lead time should be 

sufficient to allow a ramping up of 

motor manufacturing capacity and a 

gradual shift of air handler 

manufacturing lines to incorporate 

them. The technology required to meet 

the TSL 4 standards requires little more 

than expansion of current production 

capacity for these models, which mostly 

means buying different furnace fan 

motors and the associated controls. 

(NEEA, NPCC, No. 96 at p. 3) 

Earthjustice stated that DOE must 

choose a compliance date based on an 

assessment that includes a 

consideration of factors beyond the 

impact on manufacturers. (Earthjustice, 

No. 101 at p. 3) 

JCI, Morrison, AHRI, Lennox, and 

HARDI support the five-year period 

between the final rule publication and 

the compliance date as proposed in the 

NOPR. (JCI, No. 95 at p. 2; Morrison, No. 

108 at p. 2; AHRI, No. 98 at p. 2; 

Lennox, No. 100 at p. 4; HARDI, No. 103 

at p. 2) JCI, AHRI, and Lennox stated 

that to comply with the proposed 

standard, manufacturers would not only 

have to alter the designs and fabrication 

processes for the furnace fan assembly 

but also modify the broader product 

design of the furnaces, air handlers, 

modular blowers, and residential single 

package units that include those furnace 

fans. (JCI, No. 95 at p. 2; AHRI, No. 98 

at p. 2; Lennox, No. 100 at pp. 4–5) 

AHRI stated that similar products that 

require similar actions for compliance 

typically have lead times of five years. 

(AHRI, No. 98 at p 2) Ingersoll Rand 

agrees with AHRI’s comments. (Ingersoll 

Rand, No. 107 at p. 11) 

DOE continues to believe a 5-year 

lead time is appropriate. Since EPCA 

does not mandate a specific lead time 

for furnace fan standards, DOE 

considered the actions required by 

manufacturers to comply with today’s 

standards. As discussed in the NOPR, 

during manufacturer interviews, DOE 

found that standards would result in 

manufacturers’ extending R&D beyond 

the furnace fan assembly to understand 

the impacts on the design and 

performance of the furnace or modular 

blower in which the furnace fan is 

integrated. 78 FR 64103. To comply 

with the standards, manufacturers may 

have to alter not only the designs and 

fabrication processes for the furnace fan 

assembly, but also for the furnace or 

modular blower into which the furnace 

fan is integrated. Similar products that 

require similar actions for compliance 

typically have lead times of five years. 

For these reasons, DOE selected a 5-year 

lead time, which would place the 

compliance date in 2019. For the 

purposes of the LCC and PBP analysis, 

DOE assumed that all relevant 

consumers purchase a furnace fan in 

2019. 

6. Base-Case Efficiency Distribution 

To estimate the share of consumers 

that would be affected by an energy 

conservation standard at a particular 

efficiency level, DOE’s LCC and PBP 

analysis considers the projected 

distribution (i.e., market shares) of 

product efficiencies in the first 

compliance year under the base case 

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

energy conservation standards). 

For the NOPR, DOE reviewed the 

information provided by the 

manufacturers and estimated that the 

combined market share of constanttorque BPM fans and constant-airflow 

BPM fans will be 35 percent in 2019. 

The shares are 13 percent for constanttorque BPM fans and 22 percent for 

constant-airflow BPM fans. DOE 

estimated separate shares for 

replacement and new home 

applications.78 FR 64097. 

The market shares of efficiency levels 

within the constant-torque BPM motor 

and constant-airflow BPM motor 

categories were derived from AHRI data 

on number of models.42 No such data 

were available for the PSC fan efficiency 

levels, so DOE used the number of 

models it tested or could measure using 

product literature to estimate that 40 

percent of shipments are at the baseline 

level and 60 percent are improved PSC 

fans. There are currently no models of 

PSC with a controls design, so DOE 

assumed zero market share for such 

units. Id 

No comments were received on the 

base case efficiency distribution, and 

DOE retained the NOPR assumptions for 

the final rule. The details of DOE’s 

approach are described in chapter 8 of 

the final rule TSD. 

7. Payback Period 

To calculate PBPs for the considered 

efficiency levels, DOE uses the same 

inputs as for LCC analysis, except that 

discount rates are not required. 

Goodman stated that not including 

repair costs from later years in the PBP 

does not provide a realistic picture of 

what most consumers will face. It noted 

that while repair costs later in the 

product life cycle may allow the initial 

investment to balance out faster, the 

overall life-cycle costs can be very 

negatively impacted by such repairs. 

(Goodman, No 102 at p. 10) 

DOE recognizes that the PBP metric 

does not provide a complete assessment 

of all costs that consumers may face, but 

it has found that the results are of 

interest in standards rulemakings. The 

LCC analysis does include all costs, and 

in part for this reason, DOE expresses 

the share of consumers who benefit 

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43Available at: http://www.census.gov/

construction/chars/. 

from standards in terms of the change in 

LCC. 

As discussed in section III.E.2, EPCA 

provides that a rebuttable presumption 

is established that an energy 

conservation standard is economically 

justified if the additional cost to the 

consumer of a product that meets the 

standard is less than three times the 

value of the first year’s energy savings 

resulting from the standard, as 

calculated under the applicable DOE 

test procedure. (42 U.S.C. 

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

so-called rebuttable presumption 

payback period uses the same inputs as 

the calculation of the regular PBP for 

each sample household, but it uses 

average values instead of distributions, 

and the derivation of energy 

consumption and savings only uses the 

parameters specified by the proposed 

DOE test procedure for furnace fans 

rather than the method applied in the 

energy use analysis (described in 

section IV.E), which considers the 

characteristics of each sample 

household. 

DOE’s LCC and PBP analyses generate 

values that calculate the payback period 

for consumers of potential energy 

conservation standards, which includes, 

but is not limited to, the three-year 

payback period contemplated under the 

rebuttable presumption test discussed 

above. However, DOE routinely 

conducts a full economic analysis that 

considers the full range of impacts, 

including those to the consumer, 

manufacturer, Nation, and environment, 

as required under 42 U.S.C. 

6295(o)(2)(B)(i). The results of this 

analysis serve as the basis for DOE to 

definitively evaluate the economic 

justification for a potential standard 

level (thereby supporting or rebutting 

the results of any preliminary 

determination of economic 

justification). 

G. Shipments Analysis 

DOE uses forecasts of product 

shipments to calculate the national 

impacts of standards on energy use, 

NPV, and future manufacturer cash 

flows. DOE develops shipment 

projections based on historical data and 

an analysis of key market drivers for 

each product. 

The vast majority of furnace fans are 

shipped installed in furnaces, so DOE 

estimated furnace fan shipments by 

projecting furnace shipments in three 

market segments: (1) Replacements; (2) 

new housing; and (3) new owners in 

buildings that did not previously have 

a central furnace. 

To project furnace replacement 

shipments, DOE developed retirement 

functions for furnaces from the lifetime 

estimates and applied them to the 

existing products in the housing stock. 

The existing stock of products is tracked 

by vintage and developed from 

historical shipments data. The 

shipments analysis uses a distribution 

of furnace lifetimes to estimate furnace 

replacement shipments. 

To project shipments to the new 

housing market, DOE utilized projected 

new housing construction and historic 

saturation rates of various furnace and 

cooling product types in new housing. 

For the final rule, DOE used AEO 2013 

for projections of new housing. Furnace 

saturation rates in new housing are 

provided by the U.S. Census Bureau’s 

Characteristics of New Housing.43

DOE also included a small market 

segment consisting of households that 

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

This segment consists of households 

that have central air conditioning and 

non-central heating or central air 

conditioning and electric heating and 

choose to install a gas furnace. 

Lennox stated that the shipment 

projections do not appear to be 

supported by the record or recent sales 

figures, as historical shipments data 

from AHRI for gas and oil warm air 

furnaces show a downward trend in 

shipments. (Lennox, No. 100 at pp. 6– 

7) AHRI stated that DOE’s shipment 

projections are inaccurate and the 

projected numbers significantly skew 

the national energy savings estimates. 

(AHRI, No. 98 at pp. 4–5) 

DOE’s shipments projections are 

based on replacement of furnaces 

installed over the past few decades and 

furnaces installed in future new homes. 

Most of the recent downward trend in 

shipments is due to lower new 

construction in the wake of the financial 

crisis. DOE updated historical 

shipments with 2013 data, which shows 

a growth in gas furnace shipments. DOE 

also updated the new construction 

forecast based on AEO 2013 projections, 

which reflect improving economic 

conditions and a future increase of the 

new construction market. In addition, 

the replacements reflect an updated 

furnace retirement function based on 

the latest furnace lifetime data. Oil 

furnace shipments are projected to 

continue to drop in the future. 

JCI and AHRI stated that the projected 

shipments should account for an echo 

effect loss in replacement sales for the 

furnaces that were not sold in the years 

2008–2012. (JCI, No. 95 at p. 10; AHRI, 

No. 98 at pp. 4–5) The projection for 

today’s final rule shows a lower level of 

replacement shipments in the 2025– 

2030 period, which is a consequence 

(i.e., an echo) of the decline in historical 

shipments in 2006–2009. 

JCI believes that the shipment 

projections for furnaces are too 

optimistic. It noted that during the years 

prior to 2006, demand for large homes 

with multiple furnace systems was more 

common than it is today. (JCI, No. 95 at 

pp. 9–10) Mortex stated that forecasts of 

future shipments are unrealistically 

high because new homes are smaller 

and less likely to have two furnaces. 

(Mortex, No. 104 at p. 3) In DOE’s final 

rule analysis, DOE assumed that new 

homes would not have multiple 

furnaces. 

It is reasonable to expect that energy 

conservation standards for residential 

furnace fans that result in higher 

furnace prices would have some 

dampening effect on sales. Some 

consumers might choose to repair their 

existing furnace rather than purchase a 

new one, or perhaps install an 

alternative space heating product. To 

estimate the impact on shipments of the 

price increase for the considered 

efficiency levels, DOE used a relative 

price elasticity approach. This approach 

also gives some weight to the operating 

cost savings from higher-efficiency 

products. 

Ingersoll Rand stated that the 

shipment projections do not account for 

a drop off in sales due to higher furnace 

prices that will result from using more 

expensive components. (Ingersoll Rand, 

No. 107 at p. 9) The comment is 

incorrect; the relative price elasticity 

approach does estimate the impact on 

shipments of the price increase for the 

considered efficiency levels for the 

NOPR and the final rule. 

Several stakeholders raised issues 

with DOE’s relative price elasticity 

approach. They stated that the 

household income data and data used to 

derive the elasticity are outdated and do 

not reflect current trends, and the 

household appliances used to derive the 

relative price elasticity (refrigerators, 

clothes washers and dishwashers) are 

inappropriate for this rulemaking. (JCI, 

No. 95 at p. 10; Morrison, No. 108 at p. 

8; AHRI, No. 98 at pp. 12–13; Goodman, 

No. 102 at p. 13) Rheem expressed 

similar concerns. (Rheem, No. 83 at p. 

12) 

In response, DOE notes that there are 

very few estimates of consumer demand 

elasticity for durable goods. Although 

the data that DOE used to estimate 

relative price elasticity are not current, 

and the analysis focused on products 

that differ from furnaces, DOE believes 

that consumer behavior with respect to 

the impact of higher appliance price on 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38169 

44 David Rapson. Durable Goods and Long-Run 

Electricity Demand: Evidence from Air Conditioner 

Purchase Behavior. Department of Economics, 

University of California, Davis. Available at: 

www.econ.ucdavis.edu/faculty/dsrapson/Rapson_

LR_electricity.pdf. 

demand is not likely to have changed 

significantly. One recent paper suggests 

that demand elasticity for air 

conditioners is inelastic—holding 

efficiency constant, a 10% rise in price 

leads to a 1.4% decline in sales.44 This 

is a lower elasticity than DOE uses in its 

analysis. Therefore, DOE believes that it 

is reasonable to use the relative price 

elasticity approach for today’s final rule. 

See chapter 9 in the final rule TSD for 

a description of the method. 

Mortex stated that a big increase in 

the installed cost of a new furnace 

under the proposed energy conservation 

standards will lead many consumers to 

repair rather than replace with a new 

furnace. (Mortex, No. 104 at p. 3) In 

terms of the overall cost of a new 

furnace, the increase attributable to 

using a more energy-efficient furnace 

fan is relatively small—less than 10 

percent—for fans meeting today’s 

standards. In any case, the price 

elasticity approach described above 

captures the potential consumer 

response to higher furnace prices, which 

often would consist of choosing to 

repair an existing furnace rather than 

replace it with a new furnace. 

AGA urged the Department to include 

a robust fuel switching analysis, 

including the competing economics of 

natural gas furnaces versus both electric 

furnaces and heat pumps. (AGA, No. 

110 at p. 3) There is a possibility that 

for some consumers considering 

replacement of a non-condensing gas 

furnace, the higher price of a gas furnace 

due to today’s standards could lead to 

some switching to heat pumps. 

However, this switching would only 

occur if the CAC is replaced at the same 

time as the furnace. Furthermore, 

switching to a heat pump would require 

additional cost to install backup electric 

resistance heating elements. Based on 

the above considerations, DOE believes 

that any switching to heat pumps due to 

today’s standards would be minimal. 

The standards would not create any 

incentive to switch to electric furnaces 

because electric furnaces are subject to 

the furnace fan standard and would see 

a similar incremental cost as a gas 

furnace. 

H. National Impact Analysis 

The NIA assesses the NES and the 

NPV from a national perspective of total 

consumer costs and savings expected to 

result from new or amended energy 

conservation standards at specific 

efficiency levels. DOE determined the 

NPV and NES for the potential standard 

levels considered for the furnace fan 

product classes analyzed. To make the 

analysis more accessible and 

transparent to all interested parties, 

DOE prepared a computer spreadsheet 

that uses typical values (as opposed to 

probability distributions) as inputs. To 

assess the effect of input uncertainty on 

NES and NPV results, DOE has 

developed its spreadsheet model to 

conduct sensitivity analyses by running 

scenarios on specific input variables. 

Analyzing impacts of potential energy 

conservation standards for residential 

furnace fans requires comparing 

projections of U.S. energy consumption 

with new or amended energy 

conservation standards against 

projections of energy consumption 

without the standards. The forecasts 

include projections of annual appliance 

shipments, the annual energy 

consumption of new appliances, and the 

purchase price of new appliances. 

A key component of DOE’s NIA 

analysis is the energy efficiencies 

projected over time for the base case 

(without new standards) and each of the 

standards cases. The projected 

efficiencies represent the annual 

shipment-weighted energy efficiency of 

the products under consideration during 

the shipments projection period (i.e., 

from the assumed compliance date of a 

new standard to 30 years after 

compliance is required). 

For the NOPR, DOE reviewed the 

information provided by the 

manufacturers and modified its estimate 

of the long-run trend in market shares 

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

NOPR analysis assumes a long-run trend 

that results in market share of the 

constant-torque BPM and constantairflow BPM furnace fans reaching 45 

percent in 2048. 78 FR 64099. No 

comments were received on this issue 

and DOE retained the same approach for 

the final rule. 

For the NOPR, DOE used a roll-up 

scenario for estimating the impacts of 

the potential energy conservation 

standards for residential furnace fans. 

Under the roll-up scenario, DOE 

assumes: (1) Products with efficiencies 

in the base case that do not meet the 

standard level under consideration 

would roll up to meet the new standard 

level; and (2) products with efficiencies 

above the standard level under 

consideration would not be affected. Id. 

Rheem stated that DOE’s assumption 

that the sale of premium products above 

the standard level will be unaffected is 

unreasonable. (Rheem, No. 83 at p. 3) 

DOE acknowledges that the market 

shares of fans with efficiency levels 

above a given standard level could 

change after compliance with the new 

standards is required. Estimating how 

manufacturers will respond to new 

standards with regard to their marketing 

strategy for ‘‘above-standard’’ products 

is very difficult, however. Rather than 

speculate, DOE believes that it is 

preferable to retain a roll-up scenario for 

today’s final rule. 

For the standards cases, the assumed 

efficiency trend after the compliance 

year varies depending on the particular 

standard. For the case with today’s 

standards, the overall BPM motor 

market share goes to 100 percent in 

2019 and remains at that level. The 

shares of the specific BPM motor 

designs (i.e., constant-torque BPM, 

constant-torque BPM motor + multistage, constant-airflow BPM motor + 

multi-stage, and constant-airflow BPM 

motor + multi-stage + backwardinclined impeller) remain at the levels 

of 2019. The details are provided in 

chapter 10 of the final rule TSD. 

1. National Energy Savings Analysis 

The national energy savings analysis 

involves a comparison of national 

energy consumption of the considered 

products in each potential standards 

case (TSL) with consumption in the 

base case with no new or amended 

energy conservation standards. DOE 

calculated the national energy 

consumption by multiplying the 

number of units (stock) of each product 

(by vintage or age) by the unit energy 

consumption (also by vintage). Vintage 

represents the age of the product. DOE 

calculated annual NES based on the 

difference in national energy 

consumption for the base case (without 

new efficiency standards) and for each 

higher efficiency standard. DOE 

estimated energy consumption and 

savings based on site energy and 

converted the electricity consumption 

and savings to primary energy. 

Cumulative energy savings are the sum 

of the NES for each year over the 

timeframe of the analysis. 

DOE calculates primary energy 

savings (power plant consumption) from 

site electricity savings by applying a 

factor to account for losses associated 

with the generation, transmission, and 

distribution of electricity. For the 

NOPR, DOE derived marginal site-topower plant factors based on the version 

of the National Energy Modeling System 

(NEMS) that corresponds to AEO 2012. 

78 FR 64099. The factors change over 

time in response to projected changes in 

the types of power plants projected to 

provide electricity to the country. 

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45OMB Circular A–4 (Sept. 17, 2003), section E, 

‘‘Identifying and Measuring Benefits and Costs.’’ 

Commenting on DOE’s approach, 

AGA stated that it is highly unlikely and 

unrealistic that all of the projected 

changes in types of power plant used to 

generate electricity in this country will 

occur between 2019 and 2021 and that 

essentially no change will occur from 

2031 through 2048. AGA stated that 

realistic trend lines to 2048 including a 

linear forecast of declining site-to-power 

plant energy use should be provided. 

(AGA, No. 110 at p. 3) 

For the final rule, DOE derived siteto-power plant factors based on the 

version of NEMS that corresponds to 

AEO 2013. As shown in Figure 10.3.1 in 

the final rule TSD, the factor (expressed 

as primary energy per site kWh) 

declines through 2030 as more efficient 

power plants gain share in power 

generation. After 2035, there is an 

increase due to lower projected share of 

highly-efficient combined-cycle power 

plants. DOE acknowledges that 

projections after 2035 are uncertain, but 

it believes that NEMS provides a 

reasonable projection. 

DOE has historically presented NES 

in terms of primary energy savings. In 

response to the recommendations of a 

committee on ‘‘Point-of-Use and FullFuel-Cycle Measurement Approaches to 

Energy Efficiency Standards’’ appointed 

by the National Academy of Science, 

DOE announced its intention to use fullfuel-cycle (FFC) measures of energy use 

and greenhouse gas and other emissions 

in the national impact analyses and 

emissions analyses included in future 

energy conservation standards 

rulemakings. 76 FR 51281 (August 18, 

2011). After evaluating the approaches 

discussed in the August 18, 2011 notice, 

DOE published a statement of amended 

policy in the Federal Register in which 

DOE explained its determination that 

NEMS is the most appropriate tool for 

its FFC analysis and its intention to use 

NEMS for that purpose. 77 FR 49701 

(August 17, 2012). The approach used 

for today’s final rule is described in 

appendix 10–C of the final rule TSD. 

JCI and AHRI stated that, for cooling 

mode, the NIA spreadsheet model does 

not indicate how DOE used the average 

annual electricity use values from the 

energy use analysis to determine 

national energy savings. (JCI, No. 95 at 

pp. 4–5; AHRI, No. 98 at p. 6) In the NIA 

spreadsheet, the LCC Inputs worksheet 

shows how the average annual 

electricity use values are used over the 

analysis period. 

Several stakeholders questioned the 

accuracy of the doubling in FFC energy 

savings from TSL 3 to TSL 4 from an 

incremental efficiency level 

improvement of 8 percent for five of the 

product classes from adding the multistaging option. (JCI, No. 95 at p 4; EEI, 

No. 91 at pp. 307, 309; Morrison, No. 

108 at p. 4; AHRI, No. 98 at pp. 4–5; 

Lennox, No. 100 at p. 2; Ingersoll Rand, 

No. 107 at p. 9) Similarly, AHRI stated 

that if the effect of multi-staging was 

indeed prominent enough to nearly 

double the estimated FFC energy 

savings between TSLs 3 and 4, DOE 

should have evaluated this effect for 

PSC motors as well. (AHRI, No. 98 at p. 

5) Morrison stated that for nonweatherized gas furnace fans, it is 

inconsistent that TSL 4 could produce 

a very large increase in FFC energy 

savings over TSL 3 while TSL 2 and 3 

have the same national energy savings; 

compared to the difference in energy 

use between TSL 2 and TSL 3, TSL 4 

has a much lower incremental average 

electricity savings and higher additional 

fuel use compared to TSL 3. (Morrison, 

No. 108 at p. 4) 

For the final rule, DOE incorporated 

new test data on the fan efficiency levels 

that were included in TSL 3 (constant 

torque BPM motors) and TSL 4 

(constant torque BPM motors (multistage)). These data contributed to a 

decrease in efficiency for TSL 4 (see 

section IV.C.1) With this change, the 

increase in savings from TSL 3 to TSL 

4 is now smaller than in the NOPR. The 

NIA results are presented in section 

V.B.3. 

Several stakeholders stated that it is 

implausible that the furnace fan 

standard will save about as much energy 

as the 2006 13 SEER rulemaking (76 FR 

7185) or the 2013/2015 90% AFUE 

furnace and 14 SEER rulemaking (76 FR 

37412). (AHRI, No. 98 at p. 6; Ingersoll 

Rand, No. 107 at p. 9; Lennox, No. 100 

at p. 2; Goodman, No. 102 at p. 6) 

Ingersoll Rand stated that the energy 

savings from the proposed rule claim to 

be greater than savings from the 13 

SEER rule, but the energy savings of a 

furnace switching from a PSC motor to 

a constant torque BPM is nearly an 

order of magnitude less than the energy 

use of the furnace or heat pump. 

(Ingersoll Rand, No. 107 at p. 9) 

DOE reviewed the methodology used 

to assess the energy savings estimated 

for the proposed standards, as discussed 

in previous parts of this notice, and 

believes that the energy savings 

estimated for the considered TSLs are 

reasonable. Comparison with other rules 

must be done with caution, as the 

savings in those rules depends on both 

the stringency of the standards and the 

base case that was chosen in the 

analysis. The fact that the energy 

savings of a furnace switching from a 

PSC motor to a constant torque BPM is 

much less than the energy use of the 

furnace or heat pump is not relevant to 

the energy savings associated with 

standards for furnaces or heat pumps. 

2. Net Present Value Analysis 

The inputs for determining NPV are: 

(1) Total annual installed cost; (2) total 

annual savings in operating costs; (3) a 

discount factor to calculate the present 

value of costs and savings; (4) present 

value of costs; and (5) present value of 

savings. DOE calculated net savings 

each year as the difference between the 

base case and each standards case in 

terms of total savings in operating costs 

versus total increases in installed costs. 

DOE calculated savings over the lifetime 

of products shipped in the forecast 

period. DOE calculated NPV as the 

difference between the present value of 

operating cost savings and the present 

value of total installed costs. DOE used 

a discount factor based on real discount 

rates of 3 and 7 percent to discount 

future costs and savings to present 

values. 

For the NPV analysis, DOE calculates 

increases in total installed costs as the 

difference in total installed cost between 

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

once the standards take effect). 

DOE assumed no change in 

residential furnace fan prices over the 

2019–2048 period. In addition, DOE 

conducted a sensitivity analysis using 

alternative price trends, specifically one 

in which prices decline over time, and 

another in which prices rise. These 

price trends are described in appendix 

10–C of the final rule TSD. 

DOE expresses savings in operating 

costs as decreases associated with the 

lower energy consumption of products 

bought in the standards case compared 

to the base efficiency case. Total savings 

in operating costs are the product of 

savings per unit and the number of units 

of each vintage that survive in a given 

year. 

DOE estimates the NPV of consumer 

benefits using both a 3-percent and a 7- 

percent real discount rate. DOE uses 

these discount rates in accordance with 

guidance provided by the Office of 

Management and Budget (OMB) to 

Federal agencies on the development of 

regulatory analysis.45 The NPV results 

for the residential furnace fan TSLs are 

presented in section V.B.3 of this 

document. 

I. Consumer Subgroup Analysis 

A consumer subgroup comprises a 

subset of the population that may be 

affected disproportionately by new or 

revised energy conservation standards 

(e.g., low-income consumers, seniors). 

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46U.S. Securities and Exchange Commission, 

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

http://sec.gov). 

47U.S. Census Bureau, Annual Survey of 

Manufacturers: General Statistics: Statistics for 

Industry Groups and Industries (Available at: 

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

searchresults.xhtml?refresh=t). 

48Hoovers Inc. Company Profiles (Various 

Companies) (Available at: http://

www.hoovers.com). 

The purpose of a consumer subgroup 

analysis is to determine the extent of 

any such disproportional impacts. 

For today’s final rule, DOE evaluated 

impacts of potential standards on two 

subgroups: (1) Senior-only households 

and (2) low-income households. DOE 

identified these households in the RECS 

sample and used the LCC spreadsheet 

model to estimate the impacts of the 

considered efficiency levels on these 

subgroups. The consumer subgroup 

results for the residential furnace fan 

TSLs are presented in section V.B.1 of 

this document. 

J. Manufacturer Impact Analysis 

1. Overview 

DOE performed an MIA to estimate 

the financial impact of new energy 

conservation standards on 

manufacturers of residential furnace 

fans and to calculate the potential 

impact of such standards on 

employment and manufacturing 

capacity. The MIA has both quantitative 

and qualitative aspects. The quantitative 

part of the MIA primarily relies on the 

Government Regulatory Impact Model 

(GRIM), an industry cash-flow model 

with inputs specific to this rulemaking. 

The key GRIM inputs are data on the 

industry cost structure, product costs, 

shipments, and assumptions about 

markups and conversion expenditures. 

The key output is the industry net 

present value (INPV). Different sets of 

assumptions (markup scenarios) will 

produce different results. The 

qualitative part of the MIA addresses 

factors such as product characteristics, 

impacts on particular subgroups of 

firms, and important market and 

product trends. The complete MIA is 

outlined in chapter 12 of the final rule 

TSD. 

For this rulemaking, DOE considers 

the ‘‘furnace fan industry’’ to consist of 

manufacturers who assemble furnace 

fans as a component of the HVAC 

products addressed in this rulemaking. 

DOE conducted the MIA for this 

rulemaking in three phases. In Phase 1 

of the MIA, DOE prepared a profile of 

the residential furnace fans industry 

that includes a top-down cost analysis 

of manufacturers used to derive 

preliminary financial inputs for the 

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

administration (SG&A) expenses; 

research and development (R&D) 

expenses; and tax rates). DOE used 

public sources of information, including 

company SEC 10–K filings,46 corporate 

annual reports, the U.S. Census 

Bureau’s Economic Census,47 and 

Hoover’s reports.48

In Phase 2 of the MIA, DOE prepared 

an industry cash-flow analysis to 

quantify the potential impacts of a new 

energy conservation standard. In 

general, energy conservation standards 

can affect manufacturer cash flow in 

three distinct ways: (1) Create a need for 

increased investment; (2) raise 

production costs per unit; and (3) alter 

revenue due to higher per-unit prices 

and possible changes in sales volumes. 

In Phase 3 of the MIA, DOE 

conducted structured, detailed 

interviews with a representative crosssection of manufacturers. During these 

interviews, DOE discussed engineering, 

manufacturing, procurement, and 

financial topics to validate assumptions 

used in the GRIM and to identify key 

issues or concerns. Section IV.J.4 of the 

NOPR contains a description of the key 

issues manufacturers raised during the 

interviews. 78 FR 64068, 64104–05 (Oct. 

25, 2013). 

Additionally, in Phase 3, DOE 

evaluated subgroups of manufacturers 

that may be disproportionately 

impacted by new standards or that may 

not be accurately represented by the 

average cost assumptions used to 

develop the industry cash-flow analysis. 

For example, small manufacturers, 

niche players, or manufacturers 

exhibiting a cost structure that largely 

differs from the industry average could 

be more negatively affected. DOE 

identified one subgroup (i.e., small 

manufacturers) for a separate impact 

analysis. 

DOE applied the small business size 

standards published by the Small 

Business Administration (SBA) to 

determine whether a company is 

considered a small business. 65 FR 

30836, 30848 (May 15, 2000), as 

amended at 65 FR 53533, 53544 (Sept. 

5, 2000) and codified at 13 CFR part 

121. To be categorized as a small 

business under North American 

Industry Classification System (NAICS) 

code 333415, ‘‘Air-Conditioning and 

Warm Air Heating Equipment and 

Commercial and Industrial Refrigeration 

Equipment Manufacturing,’’ a 

residential furnace fan manufacturer 

and its affiliates may employ a 

maximum of 750 employees. The 750- 

employee threshold includes all 

employees in a business’s parent 

company and any other subsidiaries. 

Based on this classification, DOE 

identified 15 residential furnace fan 

manufacturers that qualify as small 

businesses. The residential furnace fan 

small manufacturer subgroup is 

discussed in chapter 12 of the final rule 

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

document. 

2. Government Regulatory Impact Model 

DOE uses the GRIM to quantify the 

changes in cash flow due to new 

standards that result in a higher or 

lower industry value. The GRIM 

analysis uses a standard, annual cashflow analysis that incorporates 

manufacturer costs, markups, 

shipments, and industry financial 

information as inputs. The GRIM model 

changes in costs, distribution of 

shipments, investments, and 

manufacturer margins that could result 

from new energy conservation 

standards. The GRIM spreadsheet uses 

the inputs to arrive at a series of annual 

cash flows, beginning in 2014 and 

continuing to 2048. DOE calculated 

INPVs by summing the stream of annual 

discounted cash flows during this 

period. For residential furnace fan 

manufacturers, DOE used a real 

discount rate of 7.8 percent, which was 

derived from industry financials and 

then modified according to feedback 

received during manufacturer 

interviews. 

The GRIM calculates cash flows using 

standard accounting principles and 

compares changes in INPV between a 

base case and each standards case. The 

difference in INPV between the base 

case and a standards case represents the 

financial impact of the new energy 

conservation standard on 

manufacturers. As discussed previously, 

DOE collected this information on the 

critical GRIM inputs from a number of 

sources, including publicly-available 

data and interviews with a number of 

manufacturers (described in the next 

section). The GRIM results are shown in 

section V.B.2.a. Additional details about 

the GRIM, the discount rate, and other 

financial parameters can be found in 

chapter 12 of the final rule TSD. 

a. Government Regulatory Impact Model 

Key Inputs 

Manufacturer Production Costs 

Manufacturing a higher-efficiency 

product is typically more expensive 

than manufacturing a baseline product 

due to the use of more complex 

components, which are typically more 

costly than baseline components. The 

changes in the MPCs of the analyzed 

products can affect the revenues, gross 

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margins, and cash flow of the industry, 

making these product cost data key 

GRIM inputs for DOE’s analysis. 

In the MIA, DOE used the MPCs for 

each considered efficiency level 

calculated in the engineering analysis, 

as described in section IV.C and further 

detailed in chapter 5 of the final rule 

TSD. In addition, DOE used information 

from its teardown analysis, described in 

chapter 5 of the TSD, to disaggregate the 

MPCs into material, labor, and overhead 

costs. To calculate the MPCs for 

equipment above the baseline, DOE 

added the incremental material, labor, 

and overhead costs from the engineering 

cost-efficiency curves to the baseline 

MPCs. These cost breakdowns and 

product markups were validated and 

revised with manufacturers during 

manufacturer interviews. 

Shipments Forecast 

The GRIM estimates manufacturer 

revenues based on total unit shipment 

forecasts and the distribution of these 

values by efficiency level. Changes in 

sales volumes and efficiency mix over 

time can significantly affect 

manufacturer finances. For this analysis, 

the GRIM uses the NIA’s annual 

shipment forecasts derived from the 

shipments analysis from 2014 (the base 

year) to 2048 (the end year of the 

analysis period). See chapter 9 of the 

final rule TSD for additional details. 

Product and Capital Conversion Costs 

New energy conservation standards 

would cause manufacturers to incur 

one-time conversion costs to bring their 

production facilities and product 

designs into compliance. DOE evaluated 

the level of conversion-related 

expenditures that would be needed to 

comply with each considered efficiency 

level in each product class. For the MIA, 

DOE classified these conversion costs 

into two major groups: (1) Product 

conversion costs; and (2) capital 

conversion costs. Product conversion 

costs are one-time investments in 

research, development, testing, 

marketing, and other non-capitalized 

costs necessary to make product designs 

comply with the new energy 

conservation standard. Capital 

conversion costs are one-time 

investments in property, plant, and 

equipment necessary to adapt or change 

existing production facilities such that 

new product designs can be fabricated 

and assembled. 

To evaluate the level of capital 

conversion expenditures manufacturers 

would likely incur to comply with new 

energy conservation standards, DOE 

used manufacturer interviews to gather 

data on the anticipated level of capital 

investment that would be required at 

each efficiency level. DOE validated 

manufacturer comments through 

estimates of capital expenditure 

requirements derived from the product 

teardown analysis and engineering 

analysis described in chapter 5 of the 

TSD. 

DOE assessed the product conversion 

costs at each considered efficiency level 

by integrating data from quantitative 

and qualitative sources. DOE considered 

market-share-weighted feedback 

regarding the potential costs of each 

efficiency level from multiple 

manufacturers to determine conversion 

costs such as R&D expenditures and 

certification costs. Manufacturer data 

were aggregated to better reflect the 

industry as a whole and to protect 

confidential information. 

In general, DOE assumes that all 

conversion-related investments occur 

between the year of publication of the 

final rule and the year by which 

manufacturers must comply with the 

new standard. The investment figures 

used in the GRIM can be found in 

section IV.J.2 of this notice. For 

additional information on the estimated 

product and capital conversion costs, 

see chapter 12 of the final rule TSD. 

b. Government Regulatory Impact Model 

Scenarios 

Shipment Scenarios 

In the NIA, DOE modeled shipments 

with a roll-up scenario to represent 

possible standards-case efficiency 

distributions for the years beginning 

2019 (the year that compliance with 

new standards would be required) 

through 2048 (the end of the analysis 

period). The roll-up scenario represents 

the case in which all shipments in the 

base case that do not meet the new 

standard would roll up to meet the new 

standard level, with the efficiency of 

products already at the new standard 

level remaining unchanged. Consumers 

in the base case who purchase products 

above the standard level are not affected 

as they are assumed to continue to 

purchase the same product in the 

standards case. See chapter 9 of the final 

rule TSD for more information. 

Markup Scenarios 

As discussed above, MSPs include 

direct manufacturing production costs 

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

estimated in DOE’s MPCs) and all nonproduction costs (i.e., SG&A, R&D, and 

interest), along with profit. To calculate 

the MSPs in the GRIM, DOE applied 

non-production cost markups to the 

MPCs estimated in the engineering 

analysis for each product class and 

efficiency level. Modifying these 

markups in the standards case yields 

different sets of impacts on 

manufacturers. For the MIA, DOE 

modeled two standards-case markup 

scenarios to represent the uncertainty 

regarding the potential impacts on 

prices and profitability for 

manufacturers following the 

implementation of new energy 

conservation standards: (1) A 

preservation of gross margin percentage 

markup scenario; and (2) a preservation 

of per unit operating profit markup 

scenario. These scenarios lead to 

different markups values that, when 

applied to the inputted MPCs, result in 

varying revenue and cash flow impacts. 

Under the preservation of gross 

margin percentage scenario, DOE 

applied a single uniform ‘‘gross margin 

percentage’’ markup across all efficiency 

levels, which assumes that 

manufacturers would be able to 

maintain the same amount of profit as 

a percentage of revenues at all efficiency 

levels within a product class. As 

production costs increase with 

efficiency, this scenario implies that the 

absolute dollar markup will increase as 

well. Based on publicly-available 

financial information for manufacturers 

of residential furnace fans and 

comments from manufacturer 

interviews, DOE assumed the nonproduction cost markup—which 

includes SG&A expenses, R&D 

expenses, interest, and profit—to be the 

following for each residential furnace 

fan product class: 

TABLE IV.11—MANUFACTURER MARKUP BY RESIDENTIAL FURNACE FAN PRODUCT CLASS

Product class Markup 

Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG–NC) ....................................................................................................... 1.30 

Non-Weatherized, Condensing Gas Furnace Fan (NWG–C) ................................................................................................................. 1.31 

Weatherized, Non-condensing Gas Furnace Fan (WG–NC) .................................................................................................................. 1.27 

Non-Weatherized, Non-condensing Oil Furnace Fan (NWO–NC) .......................................................................................................... 1.35 

Electric Furnace/Modular Blower Fan (EF/MB) ....................................................................................................................................... 1.19 

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TABLE IV.11—MANUFACTURER MARKUP BY RESIDENTIAL FURNACE FAN PRODUCT CLASS—Continued 

Product class Markup 

Mobile Home Non-Weatherized, Non-condensing Gas Furnace Fan (MH–NWG–NC) ......................................................................... 1.25 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan (MH–NWG–C) ................................................................................... 1.25 

Mobile Home Electric Furnace/Modular Blower Fan (MH–EF/MB) ........................................................................................................ 1.15 

Because this markup scenario 

assumes that manufacturers would be 

able to maintain their gross margin 

percentage markups as production costs 

increase in response to a new energy 

conservation standard, it represents a 

high bound to industry profitability. 

In the preservation of per unit 

operating profit scenario, manufacturer 

markups are set so that operating profit 

one year after the compliance date of the 

new energy conservation standard is the 

same as in the base case on a per unit 

basis. Under this scenario, as the costs 

of production increase under a 

standards case, manufacturers are 

generally required to reduce their 

markups to a level that maintains basecase operating profit per unit. The 

implicit assumption behind this markup 

scenario is that the industry can only 

maintain its operating profit in absolute 

dollars per unit after compliance with 

the new standard is required. Therefore, 

operating margin in percentage terms is 

squeezed (reduced) between the base 

case and standards case. DOE adjusted 

the manufacturer markups in the GRIM 

at each TSL to yield approximately the 

same earnings before interest and taxes 

in the standards case as in the base case. 

This markup scenario represents a low 

bound to industry profitability under a 

new energy conservation standard. 

3. Discussion of Comments 

During the NOPR public meeting, 

interested parties commented on the 

assumptions and results of the NOPR 

analysis TSD. Oral and written 

comments addressed several topics, 

including conversion costs, cumulative 

regulatory burdens, scope of MIA 

coverage, markups analysis, 

employment impacts, consumer utility 

impacts, and impacts on small 

businesses. 

a. Conversion Costs 

Several manufacturers expressed 

concern regarding the DOE’s estimates 

of the capital and product conversion 

costs, including costs relating to testing 

and certification. 

Regarding capital conversion costs 

associated with a furnace fans standard, 

Goodman commented that DOE’s 

estimate of zero capital conversion costs 

at TSL 4 does not properly reflect 

feedback from manufacturer interviews. 

(Goodman, No. 102 at p. 10) AHRI 

stated that the technology option 

associated with TSL 4 would necessitate 

changes in manufacturers’ assembly and 

subassembly production lines, 

including the modification and/or 

elimination of current fan housings, 

heat exchanger types, and furnace 

cabinet sizes, at a cost of $103 million 

for the industry. (AHRI, No. 98 at p. 10) 

Johnson Controls commented that 

compliance with the proposed standard 

would likely require them to make a 

capital investment ranging from $2.8 

million to $4 million. (JCI, No. 95 at p. 

2) 

In the engineering analysis, most of 

the technology options being considered 

require only a change in the type of 

motor used. At the NOPR stage, DOE 

tentatively concluded that TSLs 1 

through 5 would not require 

manufacturers to incur capital 

expenditures for new tooling or 

equipment. However, in response to the 

above-mentioned public comments 

received during the NOPR period, DOE 

has revised its methodology for 

estimating capital conversion costs at all 

TSLs for the final rule. DOE 

incorporated all capital conversion cost 

values submitted by manufacturers 

during the course of MIA interviews and 

used a product listing weighted-average 

of feedback (based on basic model 

listings in the AHRI directory) to 

determine conversion costs for the 

industry. As a result, capital conversion 

costs were revised upward at all TSLs, 

as shown in Table IV.12. 

TABLE IV.12—FINAL RULE CAPITAL CONVERSION COSTS (CCC) 

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

Total Industry CCCs ($ millions) .............................................................. 8.8 11.1 11.8 15.1 15.7 134.7 

DOE notes that the conversion costs 

submitted by AHRI and Johnson 

Controls are generally consistent with 

DOE’s estimates of conversion costs at 

TSL 6 in the final rule. However, 

without a more detailed breakdown of 

the conversion costs by TSL from those 

stakeholders, it was not feasible for DOE 

to determine the discrepancies in 

capital conversion cost values or to 

incorporate their feedback into the 

GRIM model. 

With regards to product conversion 

costs, including costs associated with 

compliance, certification, and 

enforcement (CC&E), both Trane and 

Johnson Controls provided their own 

estimates in support of the notion that 

there will be significant testing burden 

associated with standards compliance. 

(Trane, No. 107 at pp. 2, 6, and JCI, No. 

95 at p. 8) Goodman also stated that 

investments in additional testing 

equipment may be required in order to 

keep pace with current and future 

testing requirements. (Goodman, No. 

102 at p. 11) AHRI and multiple 

manufacturers commented that the 

performance standard associated with 

TSL 4 would require total industry 

product conversion costs of $6.2 

million. (AHRI, No. 98 at p. 10) 

DOE acknowledges manufacturers’ 

concerns regarding product conversion 

cost estimates, including those relating 

to testing and certification. Similar to 

the capital conversion cost analysis, 

DOE refined its final rule modeling of 

product conversion costs to better 

reflect information received during 

manufacturer interviews. DOE used a 

product listing weighted-average (based 

on basic model listings in the AHRI 

directory) to extrapolate individual 

manufacturer feedback to an industry 

value for each efficiency level and for 

each product class. Additionally, for the 

final rule, DOE explicitly incorporated 

certification costs into the product 

conversion cost estimates used in the 

GRIM. These certification costs occur in 

the base case and apply in the standards 

cases. DOE modeled testing and 

certification costs under the assumption 

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that larger manufacturers have would 

conduct all FER testing in-house, while 

small manufacturers would outsource 

all certification testing. DOE assumed a 

cost of $175 per test per basic model for 

large manufacturers (derived from the 

test procedure estimate of a maximum 

of 4 hours per test) (79 FR 500 (Jan. 3, 

2014)) and a cost of $2,000 per test per 

basic model for small manufacturers (77 

FR 28674 (May 15, 2012)). See Table 

IV.13 and Table IV.14 below for a 

summary of testing and certification 

cost calculations and overall product 

conversion costs. Conversion costs are 

discussed in detail in section V.B.2.a of 

today’s document and in chapter 12 of 

the final rule TSD. 

TABLE IV.13—TESTING AND CERTIFICATION COSTS

Value 

General assumptions: 

[a] Number of FER tests required per Basic Model ......................................................................................................................... 2 

[b] Total Industry Number of Basic Models 1 ................................................................................................................................... 2,254 

[c] Number of Basic Models for Large Manufacturers ..................................................................................................................... 1,943 

[d] Number of Basic Models for Small Manufacturers ..................................................................................................................... 311 

Large manufacturer assumptions: 

[e] Labor rate ($/hr) 2 ........................................................................................................................................................................ 43.73 

[f] Time required per test (hours) 3 ................................................................................................................................................... 4 

Small manufacturer assumptions: 

[g] Cost per FER test (outsource) ($) 4 = ......................................................................................................................................... $2,000 

[h] FER costs per model for Large Manufacturer ($) = [a]*[e]*[f] .................................................................................................... $350 

[i] FER costs per model for Small Manufacturer ($) = [a]*[g] .......................................................................................................... $4,000 

Total Industry FER costs ($ millions) = [h]*[c] + [i]*[d] ..................................................................................................................... $1.9 

Total Industry FER costs rescaled to account for EF/MB and MH–EF/MB product classes ($ millions) 5 ..................................... $2.2 

1AHRI Directory: Residential Furnaces. 

2Bureau of Labor Statistics, 2012 mean hourly wage for all engineers. 

3 2012–05–15 Test Procedures for Residential Furnace Fans; Notice of proposed rulemaking, section IV, part B. 

4 2012–05–15 Test Procedures for Residential Furnace Fans; Notice of proposed rulemaking, section IV, part B. 

5The AHRI residential furnaces database does not contain electric furnaces/modular blowers. In order to account for CC&E costs relates to 

these products (standard and MH), DOE rescaled the $1.9 value by 12%, which is the estimated proportion of shipments for these two categories combined. $2.2 is the value used in the GRIM. 

TABLE IV.14—PRODUCT CONVERSION COSTS

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

Total Number of Basic Models 1 ............................ 2,254 .................. .................. .................. .................. .................. ..................

Average Testing and Certification Costs + R&D 

Costs per Basic Model ($) ................................. 853 8,449 10,577 11,356 11,434 12,157 13,182 

Total Industry PCCs ($ millions) ............................ 2.2 18.8 23.6 25.3 25.5 27.1 29.4 

1AHRI Directory: Residential Furnaces. 

b. Cumulative Regulatory Burden 

Interested parties expressed concern 

over the cumulative regulatory burden 

that would result from a residential 

furnace fan energy conservation 

standard. AHRI, Morrison, and Lennox 

commented that DOE did not account 

for the cumulative impacts of additional 

DOE regulations, including energy 

conservation standards or potential 

standards for commercial and industrial 

fans and blowers, commercial package 

air conditioners and heat pumps, and 

commercial warm air furnaces. The 

three stakeholders also asserted that 

DOE did not address testing burdens 

associated with the recently finalized 

test procedures for two-stage and 

modulating condensing furnaces and 

boilers, and potential updates to test 

procedures for residential furnaces and 

boilers. (AHRI, No. 98 at p. 8–9; 

Morrison, No. 108 at p. 6; Lennox, No. 

100 at p. 8) Rheem argued that DOE 

failed to address cumulative burdens 

relating to regulations for water heaters, 

boilers, pool heaters, and commercial 

refrigeration equipment. (Rheem, No. 83 

at p. 14) 

DOE notes that the energy 

conservation standard rulemakings for 

commercial and industrial fans and 

blowers, commercial package air 

conditioners and heat pumps, 

commercial warm air furnaces, water 

heaters, residential boilers, commercial 

boilers, and pool heaters are all 

regulation currently in progress. No 

standards have been proposed, and no 

final regulations have been issued for 

these rulemakings. It is DOE’s policy not 

to include the impacts of regulatory 

proposals until the analyses are 

complete and the standards are 

finalized. Until such rulemaking is 

complete, it is unclear what, if any, 

requirements will be adopted for the 

products in question. Consequently, it 

would be speculative to try to include 

incomplete regulatory actions in an 

assessment of cumulative regulatory 

burden. With regard to the test 

procedure final rule for residential 

furnaces and boilers published on July 

10, 2013, the changes have a compliance 

date of January 6, 2014. 78 FR 41265. 

Because the regulation goes into effect 

before 2016, it is outside of the 3-year 

window set for consideration in the 

cumulative regulatory burden analysis. 

With regard to the commercial 

refrigeration equipment (CRE) energy 

conservation standard rulemaking, at 

the time of the residential furnace fan 

rulemaking NOPR publication, the final 

rule for CRE standards had not yet been 

published. The final rule for CRE 

standards was published on March 28, 

2014 and is now included in the final 

rule cumulative regulatory burden 

review in section V.B.2.e. 79 FR 17725. 

Johnson Controls commented that 

DOE should consider the cumulative 

impacts of State or local weatherization 

programs that may be restrictive on 

HVAC equipment selections, as well as 

building code standards at State, 

national, and international levels. In 

addition, JCI believes DOE should 

include the impact of commercial 

product energy efficiency standards, 

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alternate refrigeration requirements, and 

modifications to existing or the 

generation of new building performance 

standards, such as ASHRAE standards. 

(JCI, No. 95 at p. 7). 

DOE considers cumulative regulatory 

burden pursuant to the directions in the 

Process Rule (10 CFR part 430, subpart 

C, appendix A). DOE notes that States 

and localities are generally preempted 

from requiring HVAC standards beyond 

the Federal minimum through building 

codes or other regulatory requirements. 

Once finalized, Federal commercial 

energy efficiency standards, alternative 

refrigeration requirements, and 

ASHRAE 90.1 standards that go into 

effect within 3 years of the effective date 

of today’s standard are considered in the 

cumulative regulatory burden analysis. 

AHRI and Morrison commented that 

DOE failed to provide quantitative 

estimates of the incremental burden 

imposed by the additional DOE 

standards impacting furnace fan 

manufacturers. As a result, both parties 

do not feel that such impacts were 

adequately reflected in the GRIM. 

(AHRI, No. 98 at p. 9, and Morrison, No. 

108 at p. 7). 

In the final rule cumulative regulatory 

burden section, DOE has provided an 

explicit review of the conversion costs 

associated with DOE energy 

conservation standards that impact the 

manufacturers covered under the 

residential furnace fan rulemaking. For 

more information, please see section 

V.B.2.e of this document. 

c. Scope of MIA Coverage 

AHRI and Rheem commented that 

impacts on motor manufacturers should 

be included in the manufacturing 

impact analysis. (AHRI, No. 43 at p. 151, 

and Rheem, No. 83 at p. 6) 

DOE’s manufacturer impact analysis 

focuses on the manufacturers that have 

the direct burden of complying with the 

energy conservation standard. In this 

rulemaking, the manufacturer of the 

residential furnace has the burden of 

certifying and labeling the furnace fan 

performance. Motors manufacturers are 

a component supplier but do not have 

a direct compliance burden associated 

with this rule. 

d. Markups Analysis 

AHRI provided comments relating to 

both markup scenarios used in the 

GRIM. With regards to the preservation 

of gross margin percentage markup 

scenario, AHRI commented that it is 

unreasonable for DOE to assume that, as 

manufacturer production costs increase 

in response to an energy conservation 

standard, manufacturers would be able 

to maintain the same gross margin 

percentage markup as the base case. 

(AHRI, No. 98 at p. 10) AHRI continued 

by commenting that the preservation of 

operating profit scenario is also 

inaccurate since it implies that 

manufacturer markups are set so that 

operating profit one year after the 

compliance date of the new energy 

conservation standards is the same as in 

the base case. AHRI believes that the 

one year time period is an extremely 

optimistic assumption and that a fiveyear time period would be a more 

realistic average for the industry. (AHRI, 

No. 98 at p. 10) 

DOE intends for the preservation of 

gross margin percentage and 

preservation of per-unit operating profit 

markup scenarios to represent the upper 

and lower bounds for the performance 

of the industry as a result of new 

standards. The preservation of gross 

margin percentage scenario assumes 

that manufacturers are able to pass on 

all increases in MPC that result from 

standards to their first customers. 

Additionally, the scenario assumes 

manufacturers are able to maintain the 

existing markup on the incremental 

manufacturer production costs that 

result from the standard, thereby 

allowing manufacturers to recover 

portions of their conversion cost 

investments. The preservation of perunit operating profit scenario assumes 

that manufacturers are not able to 

generate greater operating profit per unit 

sold in the standards case. Additionally, 

the scenario assumes that manufacturers 

are not able to recover any of their 

conversion cost investments. By 

applying these two scenarios, DOE 

models examine the range of potential 

industry impacts that reflect 

manufacturers’ varying ability to pass 

costs on to customers and recover 

conversion costs. The scenario 

described by AHRI appears to relate to 

manufacturers’ ability to recover 

conversion costs, which is likely not 

possible by one year following the 

standard year. However, the 

preservation of operating profit per-unit 

markup scenario assumes only that 

manufacturers will maintain the same 

annual operating profit as in the base 

case in the year after the standards go 

into effect. DOE believes that 

manufacturers’ annual operating profit 

will be relatively constant in the years 

following the standard, and, 

accordingly, the choice between a oneyear and five-year time horizon for this 

scenario is arbitrary. 

e. Employment Impacts 

AHRI and EEI commented that it is 

unrealistic to assume there would be no 

reductions in domestic production 

employment at TSLs 1 through 5. This 

is because labor costs will increase with 

higher design options, and, 

subsequently, manufacturers will try to 

compensate by reducing labor. (AHRI, 

No. 98 at p. 10 and EEI, No. 43 at p. 349) 

Additionally, AHRI commented that 

subsection 12.7.1 in the NOPR TSD 

accounts for line-supervisors as 

production workers who contribute 

towards the manufacture of furnace 

fans, but should also account for 

engineers and managers in supervisory 

roles who may not be involved in the 

day-to-day assembly line operations. 

(AHRI, No. 98 at p. 11) 

At the NOPR stage, DOE’s 

employment analysis only provided an 

upper bound to employment changes. 

These upper bound impacts were 

directly correlated to changes in 

shipments and changes in per-unit labor 

inputs. For the final rule, DOE uses the 

same employment model to determine 

the upper bound of employment 

impacts. At the lower bound, DOE 

models the scenario in which all 

production moves to lower production 

cost countries. In reference to AHRI’s 

second comment, DOE does account for 

non-production workers in the GRIM 

and presents these results along with 

revised estimates of domestic 

production employment in chapter 12 of 

the final rule TSD. 

f. Consumer Utility 

Morrison commented in support of 

DOE’s previously-stated concern 

relating to the use of multiple rating 

systems on a given product. Morrison 

emphasized that this would indeed lead 

to consumer confusion. (Morrison, No. 

108 at p. 2) 

DOE understands manufacturer 

concern relating to multiple ratings. 

However, DOE is required by legislation 

to set a separate standard and an 

associated metric for the covered 

product, furnace fans. 

g. Small Businesses 

In reference to the Regulatory 

Flexibility Analysis contained in the 

NOPR, Mortex expressed concern that 

DOE significantly underestimated 

capital and product conversion costs. 

According to Mortex, even at the 

underestimated level, the calculated 

impact to small businesses (conversion 

costs of 5.1 percent of annual revenues) 

would be highly detrimental. (Mortex, 

No. 104 at pp. 2–3) 

DOE has revised its analysis of 

conversion costs for the final rule. The 

increase in conversion costs is reflected 

in the Final Regulatory Flexibility 

Analysis (FRFA), in section VI.B of this 

notice. To help portray the magnitude of 

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49Forster, P., V. Ramaswamy, P. Artaxo, T. 

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

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

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

Atmospheric Constituents and in Radiative Forcing. 

In Climate Change 2007: The Physical Science 

Basis. Contribution of Working Group I to the 

Fourth Assessment Report of the Intergovernmental 

Panel on Climate Change. S. Solomon, D. Qin, M. 

Manning, Z. Chen, M. Marquis, K.B. Averyt, M. 

Tignor and H.L. Miller, Editors (2007) Cambridge 

University Press, Cambridge, United Kingdom and 

New York, NY, USA. p. 212. 

50See North Carolina v. EPA, 550 F.3d 1176 (D.C. 

Cir. 2008); North Carolina v. EPA, 531 F.3d 896 

(D.C. Cir. 2008). 

51See EME Homer City Generation, LP v. EPA, 

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

U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702 

(U.S. June 24, 2013) (No. 12–1182). 

the conversion costs relative to the size 

of the average small business, the 

conversion costs (which are invested 

over a five-year period) are compared to 

the financial metric of a single year’s 

operation. 

K. Emissions Analysis 

In the emissions analysis, DOE 

estimated the reduction in power sector 

emissions of carbon dioxide (CO2), 

nitrogen oxides (NOX), sulfur dioxide 

(SO2), and mercury (Hg) from potential 

energy conservation standards for the 

considered products (here, furnace 

fans). In addition to estimating impacts 

of standards on power sector emissions, 

DOE estimated emissions impacts in 

production activities (extracting, 

processing, and transporting fuels) that 

provide the energy inputs to power 

plants. These are referred to as 

‘‘upstream’’ emissions. Together, these 

emissions account for the full-fuel-cycle 

(FFC). In accordance with DOE’s FFC 

Statement of Policy (76 FR 51281 

(August 18, 2011) as amended at 77 FR 

49701 (August 17, 2012)), this FFC 

analysis also includes impacts on 

emissions of methane (CH4) and nitrous 

oxide (N2O), both of which are 

recognized as greenhouse gases. 

DOE primarily conducted the 

emissions analysis using emissions 

factors for CO2 and most of the other 

gases derived from data in AEO 2013, 

supplemented by data from other 

sources. DOE developed separate 

emissions factors for power sector 

emissions and upstream emissions. The 

method that DOE used to derive 

emissions factors is described in chapter 

13 of the final rule TSD. 

For CH4 and N2O, DOE calculated 

emissions reduction in tons and also in 

terms of units of carbon dioxide 

equivalent (CO2eq). Gases are converted 

to CO2eq by multiplying each ton of the 

greenhouse gas by the gas’s global 

warming potential (GWP) over a 100- 

year time horizon. Based on the Fourth 

Assessment Report of the 

Intergovernmental Panel on Climate 

Change,49 DOE used GWP values of 25 

for CH4 and 298 for N2O. 

EIA prepares the Annual Energy 

Outlook using the National Energy 

Modeling System (NEMS). Each annual 

version of NEMS incorporates the 

projected impacts of existing air quality 

regulations on emissions. AEO 2013 

generally represents current legislation 

and environmental regulations, 

including recent government actions, for 

which implementing regulations were 

available as of December 31, 2012. 

SO2 emissions from affected electric 

generating units (EGUs) are subject to 

nationwide and regional emissions capand-trade programs. Title IV of the 

Clean Air Act sets an annual emissions 

cap on SO2 for affected EGUs in the 48 

contiguous States (42 U.S.C. 7651 et 

seq.) and the District of Columbia (DC). 

SO2 emissions from 28 eastern States 

and DC were also limited under the 

Clean Air Interstate Rule (CAIR; 70 FR 

25162 (May 12, 2005)), which created an 

allowance-based trading program. CAIR 

was remanded to the U.S. 

Environmental Protection Agency (EPA) 

by the U.S. Court of Appeals for the 

District of Columbia, but it remained in 

effect.50 See North Carolina v. EPA, 550 

F.3d 1176 (D.C. Cir. 2008); North 

Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 

2008). In 2011, EPA issued a 

replacement for CAIR, the Cross-State 

Air Pollution Rule (CSAPR). 76 FR 

48208 (August 8, 2011). On August 21, 

2012, the DC Circuit issued a decision 

to vacate CSAPR.51 The court ordered 

EPA to continue administering CAIR. 

The AEO 2013 emissions factors used 

for today’s final rule assume that CAIR 

remains a binding regulation through 

2040. 

The attainment of emissions caps is 

typically flexible among EGUs and is 

enforced through the use of tradable 

emissions allowances. Under existing 

EPA regulations, any excess SO2

emissions allowances resulting from the 

lower electricity demand caused by the 

adoption of a new or amended 

efficiency standard could be used to 

allow offsetting increases in SO2

emissions by any regulated EGU. In past 

rulemakings, DOE recognized that there 

was uncertainty about the effects of 

efficiency standards on SO2 emissions 

covered by the existing cap-and-trade 

system, but it concluded that negligible 

reductions in power sector SO2

emissions would occur as a result of 

standards. 

Beginning in 2015, however, SO2

emissions will fall as a result of the 

Mercury and Air Toxics Standards 

(MATS) for power plants. 77 FR 9304 

(Feb. 16, 2012). In the final MATS rule, 

EPA established a standard for hydrogen 

chloride as a surrogate for acid gas 

hazardous air pollutants (HAP), and also 

established a standard for SO2 (a nonHAP acid gas) as an alternative 

equivalent surrogate standard for acid 

gas HAP. The same controls are used to 

reduce HAP and non-HAP acid gas; 

thus, SO2 emissions will be reduced as 

a result of the control technologies 

installed on coal-fired power plants to 

comply with the MATS requirements 

for acid gas. AEO2013 assumes that, in 

order to continue operating, coal plants 

must have either flue gas 

desulfurization or dry sorbent injection 

systems installed by 2015. Both 

technologies, which are used to reduce 

acid gas emissions, also reduce SO2

emissions. Under the MATS, NEMS 

shows a reduction in SO2 emissions 

when electricity demand decreases (e.g., 

as a result of energy efficiency 

standards). Emissions will be far below 

the cap that would be established by 

CAIR, so it is unlikely that excess SO2

emissions allowances resulting from the 

lower electricity demand would be 

needed or used to allow offsetting 

increases in SO2 emissions by any 

regulated EGU. Therefore, DOE believes 

that energy efficiency standards will 

reduce SO2 emissions in 2015 and 

beyond. 

CAIR established a cap on NOX

emissions in 28 eastern States and the 

District of Columbia. Energy 

conservation standards are expected to 

have little effect on NOX emissions in 

those States covered by CAIR because 

excess NOX emissions allowances 

resulting from the lower electricity 

demand could be used to allow 

offsetting increases in NOX emissions. 

However, standards would be expected 

to reduce NOX emissions in the States 

not affected by the caps, so DOE 

estimated NOX emissions reductions 

from the standards considered in 

today’s final rule for these States. 

The MATS limit mercury emissions 

from power plants, but they do not 

include emissions caps, and, as such, 

DOE’s energy conservation standards 

would likely reduce Hg emissions. DOE 

estimated mercury emissions reduction 

using emissions factors based on AEO 

2013, which incorporates the MATS. 

JCI and EEI stated that DOE did not 

consider the impact of the EPA 

rulemakings on new and existing power 

plants, which likely will materially 

affect the projections of CO2 emissions 

reductions on which the DOE’s SCC 

benefit calculations are based. (JCI, No. 

95 at p. 10–11; EEI, No. 87 at p. 9) 

Consistent with past practice, DOE has 

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52See Assumptions to AEO 2013 (Available at: 

http://www.eia.gov/forecasts/aeo/assumptions/). 

53National Research Council. Hidden Costs of 

Energy: Unpriced Consequences of Energy 

Production and Use (2009) National Academies 

Press: Washington, DC. 

concluded that it would not be 

appropriate for its analysis to assume 

implementation of regulations that are 

not in effect at this time. The shape of 

any final EPA regulations is uncertain, 

as is the outcome of potential legal 

challenges to those regulations. 

EEI stated that, to be consistent with 

other rulemakings, DOE should use 

modeling that calculates no emissions 

reductions as a result of efficiency 

standards where such emissions are 

capped by State, regional, or Federal 

regulations. In particular, DOE should 

eliminate any estimated CO2 reductions 

in California and in the Northeastern/

Mid-Atlantic states that participate in 

the Regional Greenhouse Gas Initiative 

(RGGI). (EEI, No. 87 at p. 10) Morrison 

stated that different agencies 

simultaneously addressing similar 

sources of CO2 emissions should not 

double-count emissions reductions. 

(Morrison, No. 108 at p. 10) 

As stated above, DOE based its 

emissions analysis on AEO 2013, which 

represents current legislation and 

environmental regulations, including 

recent government actions, for which 

implementing regulations were 

available as of December 31, 2012. AEO 

2013 accounts for the implementation of 

regional and State air emissions 

regulations, including those cited by 

EEI.52 Its analysis also considers the 

impact of caps set by Federal 

regulations, as discussed above. 

Consequently, the emissions reductions 

estimated to result from today’s 

standards are over and above any 

reductions attributable to other State, 

regional, or Federal regulations. 

EEI stated that DOE’s analysis 

significantly overestimates the future 

emissions from power plants, as coalfired power plants are being retired and 

large amounts of wind and solar 

capacity are being added. It stated that 

due to these factors, along with EPA 

regulations, there will be a significant 

reduction in the baseline emissions 

from power plants and a reduced 

emissions impact from any efficiency 

standard. (EEI, No. 87 at p. 9) 

DOE bases its emissions analysis on 

the latest projections from the AEO, 

which consider retirement of coal-fired 

power plants, addition of wind and 

solar capacity, and current EPA 

regulations. Decline in baseline 

emissions from power plants does not 

mean that there would be reduced 

impact from any efficiency standard, 

however. The impact of standards on 

electricity demand takes place at the 

margin, and DOE’s analysis endeavors 

to reflect this marginal impact. 

EEI stated that it is not clear how or 

why the power plant emissions factors 

would increase for any regulated 

emission (SO2, NOX, Hg, and CO2) after 

2025 or 2030, based on current trends 

and Federal and State regulations. (EEI, 

No. 87 at p. 10) DOE agrees that average 

power plant emissions factors for the 

Nation as a whole would likely not 

increase after 2025 or 2030. DOE’s 

analysis uses marginal emissions 

factors, however, which depend on 

changes to the mix of generation 

capacity by fuel type induced by a 

marginal reduction in electricity 

demand for a particular end use (e.g., 

residential heating). The behavior of 

marginal emissions factors can be 

significantly different from the behavior 

of average emissions factors. Marginal 

emissions factors are very sensitive to 

shifts in the capacity mix relative to the 

AEO reference case, whereas average 

emissions factors are not affected by 

these small shifts. 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

As part of the development of the 

standards in this final rule, DOE 

considered the estimated monetary 

benefits from the reduced emissions of 

CO2 and NOX that are expected to result 

from each of the TSLs considered. In 

order to make this calculation analogous 

to the calculation of the NPV of 

consumer benefit, DOE considered the 

reduced emissions expected to result 

over the lifetime of equipment shipped 

in the forecast period for each TSL. This 

section summarizes the basis for the 

monetary values used for each of these 

emissions and presents the values 

considered in this final rule. 

For today’s final rule, DOE is relying 

on a set of values for the SCC that was 

developed by a Federal interagency 

process. The basis for these values is 

summarized below, and a more detailed 

description of the methodologies used is 

provided as an appendix to chapter 14 

of the final rule TSD. 

1. Social Cost of Carbon 

The SCC is an estimate of the 

monetized damages associated with an 

incremental increase in carbon 

emissions in a given year. It is intended 

to include (but is not limited to) changes 

in net agricultural productivity, human 

health, property damages from 

increased flood risk, and the value of 

ecosystem services. Estimates of the 

SCC are provided in dollars per metric 

ton of carbon dioxide. A domestic SCC 

value is meant to reflect the value of 

damages in the United States resulting 

from a unit change in carbon dioxide 

emissions, while a global SCC value is 

meant to reflect the value of damages 

worldwide. 

Under section 1(b) of Executive Order 

12866, agencies must, to the extent 

permitted by law, ‘‘assess both the costs 

and the benefits of the intended 

regulation and, recognizing that some 

costs and benefits are difficult to 

quantify, propose or adopt a regulation 

only upon a reasoned determination 

that the benefits of the intended 

regulation justify its costs.’’ The purpose 

of the SCC estimates presented here is 

to allow agencies to incorporate the 

monetized social benefits of reducing 

CO2 emissions into cost-benefit analyses 

of regulatory actions. The estimates are 

presented with an acknowledgement of 

the many uncertainties involved and 

with a clear understanding that they 

should be updated over time to reflect 

increasing knowledge of the science and 

economics of climate impacts. 

As part of the interagency process that 

developed these SCC estimates, 

technical experts from numerous 

agencies met on a regular basis to 

consider public comments, explore the 

technical literature in relevant fields, 

and discuss key model inputs and 

assumptions. The main objective of this 

process was to develop a range of SCC 

values using a defensible set of input 

assumptions grounded in the existing 

scientific and economic literatures. In 

this way, key uncertainties and model 

differences transparently and 

consistently inform the range of SCC 

estimates used in the rulemaking 

process. 

Monetizing Carbon Dioxide Emissions 

When attempting to assess the 

incremental economic impacts of carbon 

dioxide emissions, the analyst faces a 

number of challenges. A report from the 

National Research Council 53 points out 

that any assessment will suffer from 

uncertainty, speculation, and lack of 

information about: (1) Future emissions 

of GHGs; (2) the effects of past and 

future emissions on the climate system; 

(3) the impact of changes in climate on 

the physical and biological 

environment; and (4) the translation of 

these environmental impacts into 

economic damages. As a result, any 

effort to quantify and monetize the 

harms associated with climate change 

will raise questions of science, 

economics, and ethics and should be 

viewed as provisional. 

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54 It is recognized that this calculation for 

domestic values is approximate, provisional, and 

highly speculative. There is no a priori reason why 

domestic benefits should be a constant fraction of 

net global damages over time. 

55Social Cost of Carbon for Regulatory Impact 

Analysis Under Executive Order 12866. Interagency 

Working Group on Social Cost of Carbon, United 

States Government (February 2010) (Available at: 

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

inforeg/for-agencies/Social-Cost-of-Carbon-forRIA.pdf). 

Despite the limits of both 

quantification and monetization, SCC 

estimates can be useful in estimating the 

social benefits of reducing CO2

emissions. The agency can estimate the 

benefits from reduced (or costs from 

increased) emissions in any future year 

by multiplying the change in emissions 

in that year by the SCC values 

appropriate for that year. The net 

present value of the benefits can then be 

calculated by multiplying each of these 

future benefits by an appropriate 

discount factor and summing across all 

affected years. 

It is important to emphasize that the 

interagency process is committed to 

updating these estimates as the science 

and economic understanding of climate 

change and its impacts on society 

improves over time. In the meantime, 

the interagency group will continue to 

explore the issues raised by this analysis 

and consider public comments as part of 

the ongoing interagency process. 

Development of Social Cost of Carbon 

Values 

In 2009, an interagency process was 

initiated to offer a preliminary 

assessment of how best to quantify the 

benefits from reducing carbon dioxide 

emissions. To ensure consistency in 

how benefits are evaluated across 

Federal agencies, the Administration 

sought to develop a transparent and 

defensible method, specifically 

designed for the rulemaking process, to 

quantify avoided climate change 

damages from reduced CO2 emissions. 

The interagency group did not 

undertake any original analysis. Instead, 

it combined SCC estimates from the 

existing literature to use as interim 

values until a more comprehensive 

analysis could be conducted. The 

outcome of the preliminary assessment 

by the interagency group was a set of 

five interim values: Global SCC 

estimates for 2007 (in 2006$) of $55, 

$33, $19, $10, and $5 per metric ton of 

CO2. These interim values represented 

the first sustained interagency effort 

within the U.S. government to develop 

an SCC for use in regulatory analysis. 

The results of this preliminary effort 

were presented in several proposed and 

final rules. 

Current Approach and Key 

Assumptions 

After the release of the interim values, 

the interagency group reconvened on a 

regular basis to generate improved SCC 

estimates. Specially, the group 

considered public comments and 

further explored the technical literature 

in relevant fields. The interagency group 

relied on three integrated assessment 

models commonly used to estimate the 

SCC: the FUND, DICE, and PAGE 

models. These models are frequently 

cited in the peer-reviewed literature and 

were used in the last assessment of the 

Intergovernmental Panel on Climate 

Change (IPCC). Each model was given 

equal weight in the SCC values that 

were developed. 

Each model takes a slightly different 

approach to model how changes in 

emissions result in changes in economic 

damages. A key objective of the 

interagency process was to enable a 

consistent exploration of the three 

models, while respecting the different 

approaches to quantifying damages 

taken by the key modelers in the field. 

An extensive review of the literature 

was conducted to select three sets of 

input parameters for these models: 

climate sensitivity, socio-economic and 

emissions trajectories, and discount 

rates. A probability distribution for 

climate sensitivity was specified as an 

input into all three models. In addition, 

the interagency group used a range of 

scenarios for the socio-economic 

parameters and a range of values for the 

discount rate. All other model features 

were left unchanged, relying on the 

model developers’ best estimates and 

judgments. 

The interagency group selected four 

sets of SCC values for use in regulatory 

analyses. Three sets of values are based 

on the average SCC from the three IAMs, 

at discount rates of 2.5, 3, and 5 percent. 

The fourth set, which represents the 

95th percentile SCC estimate across all 

three models at a 3-percent discount 

rate, was included to represent higherthan-expected impacts from temperature 

change further out in the tails of the 

SCC distribution. The values grow in 

real terms over time. Additionally, the 

interagency group determined that a 

range of values from 7 percent to 23 

percent should be used to adjust the 

global SCC to calculate domestic 

effects,54 although preference is given to 

consideration of the global benefits of 

reducing CO2 emissions. Table IV.15 

presents the values in the 2010 

interagency group report,55 which is 

reproduced in appendix 14A of the DOE 

final rule TSD. 

TABLE IV.15—ANNUAL SCC VALUES FROM 2010 INTERAGENCY REPORT, 2010–2050 

[2007$ per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th percentile 

2010 ......................................................................................... 4.7 21.4 35.1 64.9 

2015 ......................................................................................... 5.7 23.8 38.4 72.8 

2020 ......................................................................................... 6.8 26.3 41.7 80.7 

2025 ......................................................................................... 8.2 29.6 45.9 90.4 

2030 ......................................................................................... 9.7 32.8 50.0 100.0 

2035 ......................................................................................... 11.2 36.0 54.2 109.7 

2040 ......................................................................................... 12.7 39.2 58.4 119.3 

2045 ......................................................................................... 14.2 42.1 61.7 127.8 

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

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56Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive 

Order 12866, Interagency Working Group on Social 

Cost of Carbon, United States Government (May 

2013; revised November 2013) (Available at: 

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

assets/inforeg/technical-update-social-cost-ofcarbon-for-regulator-impact-analysis.pdf). 

The SCC values used for today’s 

notice were generated using the most 

recent versions of the three integrated 

assessment models that have been 

published in the peer-reviewed 

literature.56

Table IV.16 shows the updated sets of 

SCC estimates in 5-year increments from 

2010 to 2050. The full set of annual SCC 

estimates between 2010 and 2050 is 

reported in appendix 14B of the DOE 

final rule TSD. The central value that 

emerges is the average SCC across 

models at the 3-percent discount rate. 

However, for purposes of capturing the 

uncertainties involved in regulatory 

impact analysis, the interagency group 

emphasizes the importance of including 

all four sets of SCC values. 

TABLE IV.16—ANNUAL SCC VALUES FROM 2013 INTERAGENCY REPORT, 2010–2050 

[2007$ per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th percentile 

2010 ......................................................................................... 11 32 51 89 

2015 ......................................................................................... 11 37 57 109 

2020 ......................................................................................... 12 43 64 128 

2025 ......................................................................................... 14 47 69 143 

2030 ......................................................................................... 16 52 75 159 

2035 ......................................................................................... 19 56 80 175 

2040 ......................................................................................... 21 61 86 191 

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

2050 ......................................................................................... 26 71 97 220 

It is important to recognize that a 

number of key uncertainties remain, and 

that current SCC estimates should be 

treated as provisional and revisable 

because they will evolve with improved 

scientific and economic understanding. 

The interagency group also recognizes 

that the existing models are imperfect 

and incomplete. The 2009 National 

Research Council report mentioned 

above points out that there is tension 

between the goal of producing 

quantified estimates of the economic 

damages from an incremental ton of 

carbon and the limits of existing efforts 

to model these effects. There are a 

number of analytical challenges that are 

being addressed by the research 

community, including research 

programs housed in many of the Federal 

agencies participating in the interagency 

process to estimate the SCC. The 

interagency group intends to 

periodically review and reconsider 

those estimates to reflect increasing 

knowledge of the science and 

economics of climate impacts, as well as 

improvements in modeling. 

In summary, in considering the 

potential global benefits resulting from 

reduced CO2 emissions, DOE used the 

values from the 2013 interagency report 

adjusted to 2013$ using the GDP price 

deflator. For each of the four sets of SCC 

values, the values for emissions in 2015 

were $12.0, $40.5, $62.4, and $119 per 

metric ton avoided (values expressed in 

2013$). DOE derived values after 2050 

using the relevant growth rates for the 

2040–2050 period in the interagency 

update. 

DOE multiplied the CO2 emissions 

reduction estimated for each year by the 

SCC value for that year in each of the 

four cases. To calculate a present value 

of the stream of monetary values, DOE 

discounted the values in each of the 

four cases using the specific discount 

rate that had been used to obtain the 

SCC values in each case. 

In responding to the NOPR, many 

commenters questioned the scientific 

and economic basis of the SCC values. 

A number of stakeholders stated that 

DOE should not use SCC values to 

establish monetary figures for emissions 

reductions until the SCC undergoes a 

more rigorous notice, review, and 

comment process. (Morrison, No. 108 at 

p. 9; JCI, No. 95 at p. 10; AHRI, No. 98 

at pp. 12–13; The Associations, No. 99 

at p. 2; NAM, No. 84 at p. 1–2; Cato 

Institute, No. 81 at p. 2) Ingersoll Rand 

agrees with AHRI’s comments. (Ingersoll 

Rand, No. 107 at p. 11) Rheem stated 

that the Federal Interagency Working 

Group has failed to disclose and 

quantify key uncertainties to inform 

decision makers and the public about 

the effects and uncertainties of 

alternative regulatory actions, as 

required by OMB. (Rheem, No. 83 at p. 

9) NAM stated that the SCC estimates 

were developed without sufficient 

transparency, inadequate supporting 

information related to assumptions and 

other data, and a failure to peer-review 

critical model inputs. (NAM, No. 84 at 

pp. 1–2) Morrison stated that the SCC 

estimates are the product of an opaque 

process and that any pretensions to their 

supposed accuracy are unsupportable. 

(Morrison, No. 108 at p. 9) JCI stated 

that the SCC has not been adequately 

noticed and reviewed before being used 

in this NOPR or any other rulemaking. 

JCI added that it is aware that the SCC 

process is undergoing a current review 

and comment process, which has the 

potential for significant changes in how 

those SCC calculations are used in any 

rulemakings. (JCI, No. 95 at p. 10) 

Rheem stated that even if the SCC 

estimate development process were 

transparent, rigorous, and peerreviewed, the modeling conducted in 

this effort does not offer a reasonably 

acceptable range of accuracy for use in 

policymaking. (Rheem, No. 83 at p. 9) 

In conducting the interagency process 

that developed the SCC values, 

technical experts from numerous 

agencies met on a regular basis to 

consider public comments, explore the 

technical literature in relevant fields, 

and discuss key model inputs and 

assumptions. Key uncertainties and 

model differences transparently and 

consistently inform the range of SCC 

estimates. These uncertainties and 

model differences are discussed in the 

interagency working group’s reports, 

which are reproduced in appendix 14A 

and 14B of the final rule TSD, as are the 

major assumptions. The 2010 SCC 

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57See https://www.directives.doe.gov/directivesdocuments/0411.2-APolicy. 

values have been used in a number of 

Federal rulemakings in which the 

public had opportunity to comment. In 

November 2013, the OMB announced a 

new opportunity for public comment on 

the TSD underlying the revised SCC 

estimates. See 78 FR 70586 (Nov. 26, 

2013). OMB is currently reviewing 

comments and considering whether 

further revisions to the 2013 SCC 

estimates are warranted. DOE stands 

ready to work with OMB and the other 

members of the interagency working 

group on further review and revision of 

the SCC estimates as appropriate. 

NAM stated that in using the SCC 

estimates, DOE fails to adhere to its own 

guidelines for ensuring and maximizing 

the quality, objectivity, utility, and 

integrity of information disseminated by 

the DOE. (NAM, No. 84 at pp. 1–2) DOE 

has sought to ensure that the data and 

research used to support its policy 

decisions—including the SCC values— 

are of high scientific and technical 

quality and objectivity, as called for by 

the Secretarial Policy Statement on 

Scientific Integrity.57 See section VI.J for 

DOE’s evaluation of today’s final rule 

and supporting analyses under the DOE 

and OMB information quality 

guidelines. 

Rheem stated that the modeling 

systems used for the SCC estimates and 

the subsequent analyses were not 

subject to peer review as appropriate. 

(Rheem, No. 83 at p. 9) The Cato 

Institute stated that the determination of 

the SCC is discordant with the best 

scientific literature on the equilibrium 

climate sensitivity and the fertilization 

effect of carbon dioxide—two critically 

important parameters for establishing 

the net externality of carbon dioxide 

emissions. (Cato Institute, No. 81 at p. 

2) 

The three integrated assessment 

models used to estimate the SCC are 

frequently cited in the peer-reviewed 

literature and were used in the last 

assessment of the IPCC. In addition, 

new versions of the models that were 

used in 2013 to estimate revised SCC 

values were published in the peerreviewed literature (see appendix 14B of 

the final rule TSD). The revised 

estimates that were issued in November 

2013 are based on the best available 

scientific information on the impacts of 

climate change. The issue of 

equilibrium climate sensitivity is 

addressed in section 14A.4 of appendix 

14A in the final rule TSD. The EPA, in 

collaboration with other Federal 

agencies, continues to investigate 

potential improvements to the way in 

which economic damages associated 

with changes in CO2 emissions are 

quantified. 

Morrison stated that the CO2

emissions reductions benefits are 

overestimated, because the SCC values 

do not account for any prior changes 

that impact the baseline emissions 

trends in previous years. According to 

the commenter, DOE fails to take into 

consideration EPA regulations of 

greenhouse gas emissions from power 

plants, which would affect the SCC 

values. (Morrison, No. 108 at p. 10) 

The SCC values are based on 

projections of global GHG emissions 

over many decades. Such projections 

are influenced by many factors, 

particularly economic growth rates and 

prices of different energy sources. In the 

context of these projections, the 

proposed EPA regulations of greenhouse 

gas emissions from new power plants 

are a minor factor. In any case, it would 

not be appropriate for DOE to account 

for regulations that are not currently in 

effect, because whether such regulations 

will be adopted and their final form are 

matters of speculation at this time. 

Miller stated that the Department 

appears to violate the directive in OMB 

Circular A–4, which states: ‘‘The 

analysis should focus on benefits and 

costs that accrue to citizens and 

residents of the United States. Where 

the agency chooses to evaluate a 

regulation that is likely to have effects 

beyond the borders of the United States, 

these effects should be reported 

separately.’’ Miller stated that instead of 

focusing on domestic benefits and 

separately reporting any international 

effects, the Department focused on 

much-larger global benefits in the text of 

the proposed rule and separately 

reported the (much smaller) domestic 

effects in a chapter of the TSD. (Miller, 

No. 79 at pp. 6–7) Similarly, Rheem 

stated that by presenting only global 

SCC estimates and downplaying 

domestic SCC estimates in 2013, the 

IWG has severely limited the utility of 

the SCC for use in benefit-cost analysis 

and policymaking. (Rheem, No. 83 at 

p. 9) Mercatus stated that OMB 

guidelines specifically require that 

benefit-cost analysis of Federal 

regulations be reported for domestic 

estimates, with global estimates being 

optional. Mercatus argued that by using 

the global estimate at a three-percent 

discount rate, DOE inflated the benefits 

of reducing carbon emissions by almost 

double compared to using a domestic 

SCC at five percent. (Mercatus, No. 82 

at pp. 7–8) EEI stated that the use of 

global SCC values, which are estimates 

that are based on many global 

assumptions and are subject to a great 

deal of uncertainty, may be important in 

assessing the overall costs and benefits 

of particular regulations, but using these 

values in the context of setting energy 

conservation standards is problematic, 

as the geographic and temporal scales of 

the LCC and SCC values are very 

different. (EEI, No. 87 at p. 10–11) 

Although the relevant analyses 

address both domestic and global 

impacts, the interagency group has 

determined that it is appropriate to 

focus on a global measure of SCC 

because of the distinctive nature of the 

climate change problem, which is 

highly unusual in at least two respects. 

First, it involves a global externality: 

Emissions of most greenhouse gases 

contribute to damages around the world 

when they are emitted in the United 

States. Second, climate change presents 

a problem that the United States alone 

cannot solve. The issue of global versus 

domestic measures of the SCC is further 

discussed in appendix 14A of the final 

rule TSD. 

NAM stated that under DOE’s 

analysis, the cost-benefit results and the 

proposed rule are legally sufficient 

without the inclusion of the SCC 

estimate. (NAM, No. 84 at p. 3) In 

contrast, JCI stated that the monetary 

value of the CO2 emissions reduction 

plays a significant role in DOE’s 

justification to set the TSL 4 levels as 

the national standards. (JCI, No. 95 at 

p. 10) 

DOE disagrees with NAM’s 

assessment, which suggests that 

consideration of the SCC in the context 

of this rulemaking is somehow 

unnecessary or unimportant. When 

selecting a proposed standard level or 

adopting a final standard level, DOE 

considers and carefully weighs all 

relevant factors. Thus, the monetary 

value of the CO2 emissions reduction 

did play a role in DOE’s decision to 

propose TSL 4 (and to adopt TSL 4 in 

today’s notice), as appropriate. DOE has 

determined that today’s standards are 

expected to achieve the maximum 

improvement in energy efficiency that is 

technologically feasible and 

economically justified, with or without 

consideration of the economic benefits 

associated with reduced CO2 emissions. 

Morrison stated that DOE does not 

conduct the cost-benefit analysis for 

NPV and SCC values over the same time 

frame and within the same scope, an 

important principle of cost-benefit 

analysis. (Morrison, No. 108 at p. 9) 

For the analysis of national impacts of 

standards, DOE considers the lifetime 

impacts of equipment shipped in a 30- 

year period. With respect to energy and 

energy cost savings, impacts continue 

past 30 years until all of the equipment 

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58 DOE/EIA approves use of the name NEMS to 

describe only an official version of the model 

without any modification to code or data. Because 

this analysis entails some minor code modifications 

and the model is run under various policy scenarios 

that are variations on DOE/EIA assumptions, DOE 

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

Building Technologies Program, under whose aegis 

this work has been performed). 

59 GE Industrial Systems, GE ECM 2.3 Series 

motors datasheet (Available at: http://

www.columbiaheating.com/page_images/file/GET8068.pdf). 

60Farmer, C., Hines, P., Dowds, J., Blumsack, S., 

Modeling the Impact of Increasing PHEV Loads on 

the Distribution Infrastructure, Proceedings of the 

43rd International Conference on System Sciences 

(2010). 

61NEMA. NEMA TP 1–2002: Guide for 

Determining Energy Efficiency for Distribution 

Transformers. 

62NEMA Standards Publication TP 1–2002: 

Guide for Determining Energy Efficiency for 

Distribution Transformers (Available at: https://

www.nema.org/Standards/Pages/Guide-forDetermining-Energy-Efficiency-for-DistributionTransformers.aspx?#download). 

shipped in the 30-year period is retired. 

With respect to the valuation of CO2

emissions reductions, the SCC estimates 

developed by the interagency working 

group are meant to represent the full 

discounted value (using an appropriate 

range of discount rates) of emissions 

reductions occurring in a given year. 

DOE is thus comparing the costs of 

achieving the emissions reductions in 

each year of the analysis, with the 

carbon reduction value of the emissions 

reductions in those same years. Neither 

the costs nor the benefits of emissions 

reductions outside the analytic time 

frame are included in the analysis. 

M. Utility Impact Analysis 

The utility impact analysis estimates 

several effects on the power generation 

industry that would result from the 

adoption of new or amended energy 

conservation standards. In the utility 

impact analysis, DOE analyzes the 

changes in electric installed capacity 

and generation that result for each trial 

standard level. The utility impact 

analysis uses a variant of NEMS, which 

is a public domain, multi-sectored, 

partial equilibrium model of the U.S. 

energy sector. DOE uses a variant of this 

model, referred to as NEMS–BT,58 to 

account for selected utility impacts of 

new or amended energy conservation 

standards. DOE’s analysis consists of a 

comparison between model results for 

the most recent AEO Reference Case and 

for cases in which energy use is 

decremented to reflect the impact of 

potential standards. The energy savings 

inputs associated with each TSL come 

from the NIA. Chapter 15 of the final 

rule TSD describes the utility impact 

analysis in further detail. 

EEI stated that it is not possible under 

most operational scenarios to increase 

electric capacity and decrease the 

amount of electric generation, as is 

indicated by DOE’s analysis. (EEI, No. 

87 at p. 8) In response, it would appear 

that the commenter has misinterpreted 

Table 15.3.1 in the NOPR TSD. The 

figure shows the capacity reduction as 

a positive value; it is not an increase as 

it might appear at first glance. 

EEI stated that it is ironic that DOE is 

showing that an estimated reduction of 

renewable power plants provides an 

economic benefit to the United States. 

(EEI, No. 87 at p. 9) DOE reports the 

projected changes in the installed 

capacity of different types of power 

plants resulting from potential 

standards. Since the change in demand 

occurs at the margin, it is not surprising 

that plant types with relatively high first 

cost (such as solar and wind power) 

would be affected by standards. When 

assessing the energy savings associated 

with energy conservation standards, 

DOE does not claim that any particular 

changes in installed capacity of different 

types of power plants provide an 

economic benefit to the Nation relative 

to other types of power plant facilities. 

EEI stated that the analysis appears to 

ignore the impacts of renewable 

portfolio standards in 29 States and the 

District of Columbia (as well as the 

renewable power goals in 8 other 

States). (EEI, No. 87 at p. 9) DOE 

disagrees with EEI’s assertion regarding 

DOE’s consideration of renewable 

portfolio standards. In the utility impact 

analysis, DOE used the projections of 

electricity generation by plant type in 

AEO 2013. These projections account 

for the estimated impacts of all 

renewable portfolio standards that were 

in place at the end of 2012. 

Several stakeholders stated that DOE 

did not adequately consider power 

quality issues, specifically that DOE did 

not account for the effect of such a large 

number of non-linear power supplies 

(constant-torque BPM motors and multistaging controls) without power factor 

correction on the grid. Several of them 

stated that the non-linear loads 

produced by constant-torque and 

constant-airflow BPM motors tend to 

cause harmonic distortions in both 

voltage and current, and could 

potentially cause voltage control 

problems within a power grid system. 

(JCI, No. 95 at p. 9; Morrison, No. 108 

at p. 7; AHRI, No. 98 at p. 11) JCI stated 

that the Electric Power Research 

Institute suggests that while harmonic 

emissions from a single system may not 

have a major impact on the grid, the 

cumulative impact of millions of 

furnaces could be significant on the grid 

systems within the U.S. (JCI, No. 95 at 

p. 9) Southern Company stated that the 

BPM motors considered in this 

rulemaking typically have poor power 

factors and emit strong 3rd and 5th 

order harmonics, which is likely to 

cause problems with utility systems at 

a future date when most of the older 

equipment has been retired and 

replaced by BPM motors. (Southern 

Company, No. 85 at p. 4) JCI, Morrison, 

and AHRI stated that the mitigation 

costs associated with harmonic 

distortions would have a significant 

impact on consumers, especially related 

to failure rates, maintenance and repair 

costs, and the overall economic analysis 

for life-cycle costs. (JCI, No. 95 at p. 9; 

Morrison, No. 108 at p. 7; AHRI, No. 98 

at p. 11) Southern Company stated that, 

for furnace fans with BPM motors, DOE 

could assume a percentage of 

households would require wiring 

upgrades and some additional costs to 

either the utility or the homeowner for 

filtering of harmonics or power factor 

correction. (Southern Company, No. 85 

at p. 4) APGA stated that DOE should 

include the cost of installation of 

harmonic filters in the LCC analysis and 

recalculate the economic justification of 

design options incorporating ECM 

motors. (APGA, No. 110 at p. 3) 

Regarding these comments, DOE notes 

that a number of studies assume that 

output from BPM motors is constant at 

full load at time of use, similar to 

operation of PSC motors. However, BPM 

motors are specifically designed to 

accommodate reduced-load operation, 

and, therefore, most of the time, they 

will operate at part load (i.e., at lower 

speeds and higher efficiency). The 

current of a BPM motor at lower-speed 

operation is significantly lower than a 

PSC motor at normal operation; 

therefore, total current contribution will 

not exceed the existing system grid 

capacity. In addition, the harmonic 

contribution is a small part of total 

circuit loading, at the lower current 

levels. For example, motor performance 

data from GE 59 shows an increase in 

power of 133 volt-amperes (VA) from a 

1⁄3 HP PSC to BPM at full output. On 

average, 5 to 20 residential customers 

are served per distribution transformer, 

which are normally rated between 15 

and 50 kVA.60 61 An increase of this 

current would result in an increase in 

loading less than 3 percent at the 

extreme case. (The extreme case is all 

HVAC at full load concurrently, served 

by the same distribution transformer.) 

The transformers are normally rated 

approximately 30 percent to 50 percent 

above predicted peak load.62 In this 

case, the increased current draw (VA) 

would have negligible impact. Measured 

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63 Gusdorf, J., M. Swinton, C. Simpson, E. Enchev, 

S. Hayden, D. Furdas, and B. Castellan, Saving 

Electricity and Reducing GHG Emissions with ECM 

Furnace Motors: Results from the CCHT and 

Projections to Various Houses and Locations (2004) 

ACEEE Proceedings (Available at: http://aceee.org/ 

files/proceedings/2004/data/papers/SS04_Panel1_

Paper12.pdf). 

64Taylor Engineering LLC, ASHRAE 6 ECM 

Motors, August 17th CEC Workshop (2011) 

California Statewide Utility Code and Standard 

Program (Available at: http://www.energy.ca.gov/

title24/2013standards/prerulemaking/documents/

2011-08-17_workshop/presentations/

08%20EC%20Motors.pdf). 

65Sharma, H. M. Rylander, and D. Dorr, Grid 

Impacts due to Increased Penetration of Newer 

Harmonic Sources, Proceedings of IEEE Rural 

Electric Power Conference (April 2013) pp. B5–1— 

B5–5 (Available at: http://ieeexplore.ieee.org/

stamp/stamp.jsp?tp=&arnumber=6681854). 

66 IEEE Standard 519–1992—IEEE Recommended 

Practices and Requirements for Harmonic Control 

in Electric Power Systems (April 9 1993) pp. 1–112 

(Available at: http://ieeexplore.ieee.org/stamp/

stamp.jsp?tp=&arnumber=210894). 

67Fluke Corporation, Generator power quality 

and furnaces: The effects of harmonic distortion 

(2009) (Available at: http://support.fluke.com/findsales/Download/Asset/3497420_6112_ENG_A_

W.PDF). 

68 Id. 

69See Bureau of Economic Analysis, ‘‘Regional 

Multipliers: A User Handbook for the Regional 

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

Department of Commerce (1992). 

70 J. M. Roop, M. J. Scott, and R. W. Schultz, 

ImSET 3.1: Impact of Sector Energy Technologies, 

PNNL–18412, Pacific Northwest National 

Laboratory (2009) (Available at: www.pnl.gov/main/ 

publications/external/technical_reports/PNNL18412.pdf). 

performance data 63 show a decrease in 

current drawn for cooling functionality 

(152 VA) and an increase for heating 

functionality (32 VA) from PSC to 

equivalent BPM, confirming the small 

BPM loading impact. In addition, an 

evaluation of increased penetration of 

BPM motors in commercial buildings 

was presented at the ASHRAE 6 ECM 

Motor Workshop at the CEC, which 

reviewed California Utility Codes with 

regards to the BPM-specific issue.64 It 

was stated in this study that while the 

power factor could be reduced to 50 

percent, a BPM motor will have a lower 

current draw than a PSC motor at 100 

percent power factor due to efficiency 

gains. 

Regarding the EPRI study 65

referenced in the JCI comment, DOE 

noticed that the power factor impacts 

are associated with several types of 

loads becoming common in the modern 

household: Low power factor lighting, 

modern entertainment systems, and 

electric vehicle chargers, as well as 

HVAC with BPM motors. This reference 

indicates that the power quality issues 

caused by the BPM motors are a small 

contributor to the total harmonic 

distortion experienced at the utility 

level compared to all contributing loads. 

The study indicated that for devices 

with an existing 3rd harmonic 

resonance, the contribution of all new 

devices would require filtering; 

however, this correction is not 

attributed to the high penetration of EC 

motors alone. The BPM’s third 

harmonic distortion contributed a 1.5- 

percent current increase to the circuit. 

The study showed the overall impact on 

the 3rd, 5th, 7th order and included in 

total harmonic distortion (THD) was 

within 0.1 percent of the original 

harmonic profile applied to the studied 

feeder. In summary, the impact of 

introducing BPM motors for HVAC 

under a high penetration scenario on a 

residential line was negligible. 

With regards to household power 

quality, furnaces have a minimum basic 

electrical requirement for THD of 5 

percent, and individual harmonic 

distortion of 3 percent.66 67 Furnaces 

supplied with voltages with harmonic 

distortion greater than 8 percent THD 

may not be operated.68 The EPRI study, 

which simulates a harmonic spectrum 

of a large number of BPM-based HVAC, 

shows that the BPM-related harmonic 

distortions are within the 5 percent THD 

limit, and within the 3 percent 

individual harmonic limit. Therefore, 

DOE concludes the BPM-related 

harmonic distortions would not cause 

the problems cited by the commenters. 

In addition to the analysis described 

above, DOE used NEMS–BT, along with 

EIA data on the capital cost of various 

power plant types, to estimate the 

reduction in national expenditures for 

electricity generating capacity due to 

potential residential furnace fan 

standards. The method used and the 

results are described in chapter 15 of the 

final rule TSD. 

N. Employment Impact Analysis 

Employment impacts from new or 

amended energy conservation standards 

include direct and indirect impacts. 

Direct employment impacts are any 

changes in the number of employees of 

manufacturers of the products subject to 

standards; the MIA addresses those 

impacts. Indirect employment impacts 

are changes in national employment 

that occur due to the shift in 

expenditures and capital investment 

caused by the purchase and operation of 

more-efficient appliances. Indirect 

employment impacts from standards 

consist of the jobs created or eliminated 

in the national economy due to: (1) 

Reduced spending by end users on 

energy; (2) reduced spending on new 

energy supply by the utility industry; (3) 

increased consumer spending on the 

purchase of new products; and (4) the 

effects of those three factors throughout 

the economy. 

One method for assessing the possible 

effects on the demand for labor of such 

shifts in economic activity is to compare 

sector employment statistics developed 

by the Labor Department’s Bureau of 

Labor Statistics (BLS). BLS regularly 

publishes its estimates of the number of 

jobs per million dollars of economic 

activity in different sectors of the 

economy, as well as the jobs created 

elsewhere in the economy by this same 

economic activity. Data from BLS 

indicate that expenditures in the utility 

sector generally create fewer jobs (both 

directly and indirectly) than 

expenditures in other sectors of the 

economy.69 There are many reasons for 

these differences, including wage 

differences and the fact that the utility 

sector is more capital-intensive and less 

labor-intensive than other sectors. 

Energy conservation standards have the 

effect of reducing consumer utility bills. 

Because reduced consumer 

expenditures for energy likely lead to 

increased expenditures in other sectors 

of the economy, the general effect of 

efficiency standards is to shift economic 

activity from a less labor-intensive 

sector (i.e., the utility sector) to more 

labor-intensive sectors (e.g., the retail 

and service sectors). Thus, based on the 

BLS data alone, DOE believes net 

national employment may increase 

because of shifts in economic activity 

resulting from energy conservation 

standards for residential furnace fans. 

For the standard levels considered in 

today’s document, DOE estimated 

indirect national employment impacts 

using an input/output model of the U.S. 

economy called Impact of Sector Energy 

Technologies version 3.1.1 (ImSET).70

ImSET is a special-purpose version of 

the ‘‘U.S. Benchmark National InputOutput’’ (I–O) model, which was 

designed to estimate the national 

employment and income effects of 

energy-saving technologies. The ImSET 

software includes a computer-based I–O 

model having structural coefficients that 

characterize economic flows among the 

187 sectors. ImSET’s national economic 

I–O structure is based on a 2002 U.S. 

benchmark table, specially aggregated to 

the 187 sectors most relevant to 

industrial, commercial, and residential 

building energy use. DOE notes that 

ImSET is not a general equilibrium 

forecasting model, and understands the 

uncertainties involved in projecting 

employment impacts, especially 

changes in the later years of the 

analysis. Because ImSET does not 

incorporate price changes, the 

employment effects predicted by ImSET 

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may over-estimate actual job impacts 

over the long run. For the final rule, 

DOE used ImSET only to estimate shortterm (2019 and 2024) employment 

impacts. 

For more details on the employment 

impact analysis, see chapter 16 of the 

final rule TSD. 

O. Comments on Proposed Standards 

NEEP, CA IOUs, and the Joint 

Advocates support the selection of 

DOE’s proposed trial standard level, 

given the limited impact on furnace fan 

manufacturers, positive benefits to 

consumers, and substantial energy 

savings. (NEEP, No. 109 at p. 2; CA 

IOUs, No. 106 at p. 2; Joint Advocates, 

No. 105 at p. 1) 

A number of stakeholders disagreed 

with the proposed selection of TSL 4. 

Rheem argued that TSL 4 is not 

economically justified. (Rheem, No. 83 

at p. 7) Lennox stated that because TSL 

4 likely has costs that are understated, 

and overly optimistic efficiency 

projections, DOE should not pursue TSL 

4, and instead adopt standards based on 

a less-stringent, less-costly technology. 

(Lennox, No. 100 at p. 2) EEI suggested 

the adoption of TSL 1 or TSL 2 to 

conserve energy, minimize economic 

harm to consumers, and minimize the 

possible negative impacts on the electric 

grid from the motors that would be able 

to meet the proposed standard. (EEI, No. 

87 at p. 2) 

DOE has addressed specific issues 

regarding costs, efficiency projections, 

and possible negative impacts on the 

electric grid in previous parts of section 

IV of this document. DOE addresses the 

economic justification for today’s 

standards in section V.C of this 

document. 

Southern Company believes that 

under TSL 4, too large a proportion of 

consumers have net costs. Southern 

Company would prefer that a 

substantial majority of consumers derive 

benefits from a proposed rule. (Southern 

Company, No. 85 at p. 3) EEI also stated 

that a much higher percentages of 

consumers will experience a net cost 

than is the case with many other DOE 

energy conservation standards. (EEI, No. 

87 at p. 2) The Mercatus Center stated 

that the proposed rule will confer net 

benefits on a majority of the consumers 

for only one product class (i.e., nonweatherized, non-condensing gas 

furnace fans). It added that the aggregate 

financial benefits to consumers are not 

spread uniformly over the population, 

but instead are mostly concentrated in 

a minority of households. (Mercatus 

Center, No. 82 at p. 7) 

As shown in Table V.31 of today’s 

final rule, more consumers would have 

a net benefit from standards at TSL 4 

than would have a net cost for all of the 

considered product classes. For the two 

largest product classes (non-weatherized 

non-condensing gas furnace fans and 

non-weatherized condensing gas 

furnace fans), nearly twice as many 

consumers would have a net benefit 

from standards at TSL 4 as would have 

a net cost. 

The Mercatus Center stated that seven 

out of eight proposed standards at TSL 

4 fail the rebuttable payback period 

benchmark, thereby making it difficult 

for DOE to demonstrate economic 

justification for the proposed rule. 

(Mercatus Center, No. 82 at p. 6) In 

response, the commenter has 

misinterpreted the role of the rebuttable 

payback period presumption. As 

discussed in section III.E.2, EPCA 

provides that a rebuttable presumption 

is established that an energy 

conservation standard is economically 

justified if the additional cost to the 

consumer of a product that meets the 

standard is less than three times the 

value of the first year’s energy savings 

resulting from the standard, as 

calculated under the applicable DOE 

test procedure. (42 U.S.C. 

6295(o)(2)(B)(iii)) To determine 

economic justification, DOE routinely 

conducts an analysis that considers the 

full range of impacts, including those to 

consumers, manufacturers, the Nation, 

and the environment, as required under 

42 U.S.C. 6295(o)(2)(B)(i). The results of 

this analysis serve as the basis for DOE 

to definitively evaluate the economic 

justification for a potential standard 

level, thereby supporting or rebutting 

the results of any preliminary 

determination of economic justification. 

Rheem and Miller stated that the 

proposed standard may act as a transfer 

payment from lower-income 

households, who are more likely to bear 

net costs as a result of this rule, to 

higher-income households; and that 

higher-priced furnace fans resulting 

from this rule will be out of reach for 

some consumers. They stated that these 

distributive impacts necessitate close 

scrutiny from the Department in order 

to determine whether the proposed 

standards will actually improve social 

welfare. (Rheem, No. 83 at p. 14; Miller, 

No. 79 at p. 14) 

DOE’s consumer subgroup analysis 

indicates that, for non-weatherized gas 

furnace fans, lower-income households 

would have positive average LCC 

savings and median PBPs less than five 

years (see section V.B.1). Furthermore, 

many lower-income households rent 

rather than own their dwelling, and are 

responsible for utility bills but not for 

purchase of a furnace. To the extent that 

there is delay in the landlords’ passing 

of extra costs into the rent, consumers 

that rent will benefit more those who 

own, all else being equal. 

Ingersoll Rand stated that 

promulgating a rule at TSL4 would force 

the future generation of furnaces sold in 

the U.S. to be less reliable than many of 

those on the market today as a result of 

eliminating PSC motors from the 

market. (Ingersoll Rand, No. 107 at p. 7) 

DOE notes that furnace fans meeting 

today’s standards are already widely 

available as a substitute for units with 

baseline motors. DOE evaluated issues 

related to reliability, as discussed in 

section IV.F.2, and concluded that the 

benefits to consumers outweigh any 

costs related to reliability that may be 

associated with products meeting the 

standards. 

V. Analytical Results and Conclusions 

This section addresses the results 

from DOE’s analyses with respect to 

potential energy conservation standards 

for residential furnace fans. It addresses 

the TSLs examined by DOE, the 

projected impacts of each of these levels 

if adopted as energy conservation 

standards for furnace fans, and the 

standard levels ultimately adopted by 

DOE in today’s final rule. Additional 

details regarding DOE’s analyses are 

contained in the TSD supporting this 

document. 

A. Trial Standard Levels 

DOE developed trial standard levels 

(TSLs) that combine efficiency levels for 

each product class of residential furnace 

fans. Table V.1 presents the efficiency 

levels for each product class in each 

TSL. TSL 6 consists of the max-tech 

efficiency levels. TSL 5 consists of those 

efficiency levels that provide the 

maximum NPV using a 7-percent 

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

results). TSL 4 consists of those 

efficiency levels that provide the highest 

NPV using a 7-percent discount rate, 

and that also result in a higher 

percentage of consumers that receive an 

LCC benefit than experience an LCC loss 

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

3 uses efficiency level 3 for all product 

classes. TSL 2 consists of efficiency 

levels that are the same as TSL 3 for 

non-weatherized gas furnace fans, 

weatherized gas furnace fans, and 

electric furnace fans, but are at 

efficiency level 1 for oil-fired furnace 

fans and mobile home furnace fans. TSL 

1 consists of the most common 

efficiency levels in the current market. 

In summary, Table V.1 presents the six 

TSLs which DOE has identified for 

residential furnace fans, including the 

efficiency level associated with each 

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38184 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

TSL, the technology options anticipated 

to achieve those levels, and the 

expected resulting percentage reduction 

in FER from the baseline corresponding 

to each efficiency level. 

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

Product class 

Trial standard levels 

(Efficiency level) * 

1 2 3 4 5 6 

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

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

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

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

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

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

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

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

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

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

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Consumers 

Life-Cycle Cost and Payback Period 

To evaluate the economic impact of 

the considered efficiency levels on 

consumers, DOE conducted an LCC 

analysis for each efficiency level. Moreefficient residential furnace fans would 

affect these consumers in two ways: (1) 

Annual operating expense would 

decrease; and (2) purchase price would 

increase. Inputs used for calculating the 

LCC include total installed costs (i.e., 

equipment price plus installation costs), 

operating expenses (i.e., energy costs, 

repair costs, and maintenance costs), 

product lifetime, and discount rates. 

The output of the LCC model is a 

mean LCC savings (or cost) for each 

product class, relative to the base-case 

efficiency distribution for residential 

furnace fans. The LCC analysis also 

provides information on the percentage 

of consumers for whom an increase in 

the minimum efficiency standard would 

have a positive impact (net benefit), a 

negative impact (net cost), or no impact. 

DOE also performed a PBP analysis as 

part of the LCC analysis. The PBP is the 

number of years it would take for the 

consumer to recover the increased costs 

of higher-efficiency products as a result 

of energy savings based on the operating 

cost savings. The PBP is an economic 

benefit-cost measure that uses benefits 

and costs without discounting. Chapter 

8 of the final rule TSD provides detailed 

information on the LCC and PBP 

analyses. 

DOE’s LCC and PBP analyses provide 

five key outputs for each efficiency level 

above the baseline, as reported in Table 

V.2 through Table V.9 for the 

considered TSLs. (Results for all 

efficiency levels are reported in chapter 

8 of the final rule TSD.) These outputs 

include the proportion of residential 

furnace fan purchases in which the 

purchase of a furnace fan compliant 

with the new energy conservation 

standard creates a net LCC increase, no 

impact, or a net LCC savings for the 

consumer. Another output is the average 

LCC savings from standards-compliant 

products, as well as the median PBP for 

the consumer investment in standardscompliant products. Savings are 

measured relative to the base-case 

efficiency distribution (see section 

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

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

Efficiency level TSL 

Life-cycle cost 

2013$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2013$ 

Percent of consumers that 

experience 

Net 

cost 

No 

impact 

Net 

benefit 

Baseline ............................... .............. $347 $2,194 $2,541 $0 0 100 0 ................

1 ........................................... 1 ........... 359 1,933 2,292 85 1 68 30 1.1 

2 ........................................... .............. 408 1,655 2,063 263 25 25 50 3.8 

3 ........................................... 2, 3 ....... 423 1,367 1,791 471 17 25 58 2.6 

4 ........................................... 4, 5 ....... 501 1,249 1,750 506 30 14 56 5.4 

5 ........................................... .............. 658 1,244 1,902 373 47 12 41 10.6 

6 ........................................... 6 ........... 694 1,150 1,844 431 50 0 50 10.2 

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

Efficiency level TSL 

Life-cycle cost 

2013$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2013$ 

Percent of consumers that 

experience 

Net 

cost 

No 

impact 

Net 

benefit 

Baseline ............................... .............. $343 $2,134 $2,478 $0 0 100 0 ................

1 ........................................... 1 ........... 355 1,909 2,264 58 1 75 24 1.2 

2 ........................................... .............. 403 1,666 2,070 182 21 41 38 4.2 

3 ........................................... 2, 3 ....... 416 1,402 1,818 335 11 41 48 2.9 

4 ........................................... 4, 5 ....... 493 1,319 1,812 341 23 34 43 5.8 

5 ........................................... .............. 652 1,334 1,987 219 42 29 30 12.0 

6 ........................................... 6 ........... 687 1,250 1,937 268 51 0 49 11.0 

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

Efficiency level TSL 

Life-cycle cost 

2013$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2013$ 

Percent of consumers that 

experience 

Net 

cost 

No 

Impact 

Net 

benefit 

Baseline ............................... .............. $333 $2,667 $3,000 $0 0 100 0 ................

1 ........................................... 1 ........... 345 2,329 2,674 67 0 81 19 0.7 

2 ........................................... .............. 393 2,025 2,418 189 8 56 36 3.2 

3 ........................................... 2, 3 ....... 406 1,609 2,015 378 3 56 41 1.8 

4 ........................................... 4, 5 ....... 481 1,434 1,914 447 16 33 51 4.4 

5 ........................................... .............. 633 1,476 2,109 304 38 27 35 10.3 

6 ........................................... 6 ........... 668 1,354 2,022 391 41 0 59 8.2 

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

Efficiency level TSL 

Life-cycle cost 

2013$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2013$ 

Percent of consumers that 

experience 

Net 

cost 

No 

impact 

Net 

benefit 

Baseline ............................... .............. $417 $2,510 $2,927 $0 0 100 0 ................

1 ........................................... 1, 2, 4 ... 427 2,356 2,783 46 13 71 17 1.7 

2 ........................................... .............. 501 2,090 2,592 181 46 28 26 10.3 

3 ........................................... 3, 5 ....... 507 1,979 2,486 259 44 28 28 4.6 

4 ........................................... .............. 589 1,920 2,509 244 48 28 24 8.1 

5 ........................................... .............. 813 1,922 2,736 80 56 28 16 18.3 

6 ........................................... 6 ........... 863 1,873 2,736 80 78 0 22 18.6 

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

Efficiency level TSL 

Life-cycle cost 

2013$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2013$ 

Percent of consumers that 

experience 

Net 

cost 

No 

impact 

Net 

benefit 

Baseline ............................... .............. $244 $1,211 $1,455 $0 0 100 0 ................

1 ........................................... 1 ........... 255 1,079 1,335 29 4 73 22 1.9 

2 ........................................... .............. 299 941 1,241 88 27 37 36 6.2 

3 ........................................... 2, 3 ....... 292 797 1,089 181 17 37 45 2.6 

4 ........................................... 4, 5 ....... 309 747 1,055 204 23 25 51 3.2 

5 ........................................... .............. 444 796 1,240 66 48 25 27 12.0 

6 ........................................... 6 ........... 477 748 1,225 81 60 0 39 11.5 

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

Efficiency level TSL 

Life-cycle cost 

2013$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2013$ 

Percent of consumers that 

experience 

Net 

cost 

No 

impact 

Net 

benefit 

Baseline ............................... .............. $256 $1,118 $1,374 $0 0 100 0 ................

1 ........................................... 1, 2, 4 ... 268 1,026 1,293 36 10 56 34 2.7 

2 ........................................... .............. 313 930 1,243 87 62 0 38 10.2 

3 ........................................... 3, 5 ....... 318 867 1,185 144 55 0 45 6.8 

4 ........................................... .............. 390 831 1,222 108 67 0 33 12.7 

5 ........................................... .............. 530 853 1,383 (54) 81 0 19 24.3 

6 ........................................... 6 ........... 563 824 1,388 (58) 80 0 20 24.4 

* Parentheses indicate negative values. 

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

Efficiency level TSL 

Life-cycle cost 

2013$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2013$ 

Percent of consumers that 

experience 

Net 

cost 

No 

impact 

Net 

benefit 

Baseline ............................... .............. $274 $1,283 $1,556 $0 0 100 0 ................

1 ........................................... 1, 2, 4 ... 285 1,170 1,454 35 5 68 27 2.3 

2 ........................................... .............. 330 1,061 1,391 79 43 29 28 9.7 

3 ........................................... 3, 5 ....... 339 977 1,316 133 37 29 33 6.6 

4 ........................................... .............. 411 936 1,347 103 66 4 29 15.8 

5 ........................................... .............. 558 953 1,510 (53) 80 4 16 33.3 

6 ........................................... 6 ........... 591 917 1,508 (51) 82 0 18 31.3 

* Parentheses indicate negative values. 

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

Efficiency level TSL 

Life-cycle cost 

2013$ 

Life-cycle cost savings 

Median 

payback 

period 

years Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2013$ 

Percent of consumers that 

experience 

Net 

cost 

No 

impact 

Net 

benefit 

Baseline ............................... .............. $194 $643 $837 $0 0 100 0 ................

1 ........................................... 1, 2 ....... 204 575 778 19 7 71 22 2.1 

2 ........................................... .............. 245 531 777 20 36 38 26 8.9 

3 ........................................... 3 ........... 237 466 702 70 26 38 37 3.6 

4 ........................................... 4, 5 ....... 251 433 685 85 32 26 43 4.1 

5 ........................................... .............. 375 487 862 (48) 57 26 18 15.0 

6 ........................................... 6 ........... 406 462 868 (54) 75 0 25 14.9 

* Parentheses indicate negative values. 

Consumer Subgroup Analysis 

DOE estimated the impacts of the 

considered efficiency levels (TSLs) on 

the following consumer subgroups: (1) 

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

consumer subgroup analysis indicate 

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

households experience lower average 

LCC savings and longer payback periods 

than consumers overall, with the 

difference being larger for low-income 

households. The difference between the 

two subgroups and all consumers is 

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

V.10) than for non-weatherized, 

condensing gas furnace fans (see Table 

V.11). Chapter 11 of the final rule TSD 

provides more detailed discussion on 

the consumer subgroup analysis and 

results for the other product classes. 

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TABLE V.10—COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS WITH ALL CONSUMERS, NON-WEATHERIZED, NONCONDENSING GAS FURNACE FANS

Efficiency level 

Average life-cycle cost savings 

(2013$) 

Median payback period 

(years) 

TSL Senior-only Low-income All 

consumers Senior-only Low-income All consumers 

1 ................................................................. 1 ............... $65 $48 $85 1.6 1.7 1.1 

2 ................................................................. .................. 209 133 263 5.2 6.3 3.8 

3 ................................................................. 2, 3 .......... 366 251 471 3.7 3.6 2.6 

4 ................................................................. 4, 5 .......... 373 234 506 7.6 7.8 5.4 

5 ................................................................. .................. 226 77 373 14.5 15.9 10.6 

6 ................................................................. 6 ............... 264 96 431 13.7 15.3 10.2 

TABLE V.11—COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS WITH ALL CONSUMERS, NON-WEATHERIZED, 

CONDENSING GAS FURNACE FANS

Efficiency level 

Average life-cycle cost savings 

(2013$) 

Median payback period 

(years) 

TSL Senior-only Low-income All 

consumers Senior-only Low-income All consumers 

1 ................................................................. 1 ............... $49 $38 $58 1.5 2.0 1.2 

2 ................................................................. .................. 155 121 182 5.5 7.1 4.2 

3 ................................................................. 2, 3 .......... 288 230 335 3.7 4.4 2.9 

4 ................................................................. 4, 5 .......... 275 202 341 7.5 9.7 5.8 

5 ................................................................. .................. 141 66 219 15.4 19.5 12.0 

6 ................................................................. 6 ............... 178 90 268 12.2 17.0 11.0 

Rebuttable Presumption Payback 

As discussed in section III.E.2, EPCA 

provides a rebuttable presumption that, 

in essence, an energy conservation 

standard is economically justified if the 

increased purchase cost for a product 

that meets the standard is less than 

three times the value of the first-year 

energy savings resulting from the 

standard. However, DOE routinely 

conducts a full economic analysis that 

considers the full range of impacts, 

including those to the consumer, 

manufacturer, Nation, and environment, 

as required under 42 U.S.C. 

6295(o)(2)(B)(i). The results of this 

analysis serve as the basis for DOE to 

definitively evaluate the economic 

justification for a potential standard 

level, thereby supporting or rebutting 

the results of any preliminary 

determination of economic justification. 

For comparison with the more detailed 

analytical results, DOE calculated a 

rebuttable presumption payback period 

for each TSL. Table V.12 shows the 

rebuttable presumption payback results 

to determine whether any of them meet 

the rebuttable presumption conditions 

for the residential furnace fans product 

classes. 

TABLE V.12—REBUTTABLE PRESUMPTION PAYBACK PERIODS FOR RESIDENTIAL FURNACE FAN PRODUCT CLASSES

Product class 

Rebuttable presumption payback 

(years) 

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

Non-Weatherized, Non-Condensing Gas Furnace Fan .......................... 3.3 5.3 5.3 10.3 10.3 19.4 

Non-Weatherized, Condensing Gas Furnace Fan .................................. 3.1 4.9 4.9 9.6 9.6 18.2 

Weatherized Non-Condensing Gas Furnace Fan ................................... 3.0 4.8 4.8 9.4 9.4 17.6 

Non-Weatherized, Non-Condensing Oil Furnace Fan ............................. 2.3 2.3 5.9 2.3 5.9 19.8 

Non-Weatherized Electric Furnace/Modular Blower Fan ........................ 3.2 5.1 5.1 5.8 5.8 15.4 

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan .... 3.8 3.8 6.1 3.8 6.1 22.1 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan ............ 3.5 3.5 5.7 3.5 5.7 20.9 

Mobile Home Electric Furnace/Modular Blower Fan ............................... 4.3 4.3 6.8 7.7 7.7 20.2 

2. Economic Impact on Manufacturers 

As noted above, DOE performed an 

MIA to estimate the impact of new 

energy conservation standards on 

manufacturers of residential furnace 

fans. The following section describes 

the expected impacts on manufacturers 

at each considered TSL. Chapter 12 of 

the final rule TSD explains the analysis 

in further detail. 

Industry Cash-Flow Analysis Results 

Table V.13 and Table V.14 depict the 

financial impacts (represented by 

changes in INPV) of new energy 

standards on manufacturers of 

residential furnace fans, as well as the 

conversion costs that DOE expects 

manufacturers would incur for all 

product classes at each TSL. To evaluate 

the range of cash flow impacts on the 

residential furnace fans industry, DOE 

modeled two different mark-up 

scenarios using different assumptions 

that correspond to the range of 

anticipated market responses to 

potential new energy conservation 

standards: (1) The preservation of gross 

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margin percentage; and (2) the 

preservation of per-unit operating profit. 

Each of these scenarios is discussed 

immediately below. 

To assess the lower (less severe) end 

of the range of potential impacts, DOE 

modeled a preservation of gross margin 

percentage markup scenario, in which a 

uniform ‘‘gross margin percentage’’ 

markup is applied across all potential 

efficiency levels. In this scenario, DOE 

assumed that a manufacturer’s absolute 

dollar markup would increase as 

production costs increase in the 

standards case. 

To assess the higher (more severe) end 

of the range of potential impacts, DOE 

modeled the preservation of per-unit 

operating profit markup scenario, which 

assumes that manufacturers would be 

able to earn the same operating margin 

in absolute dollars per-unit in the 

standards case as in the base case. In 

this scenario, while manufacturers make 

the necessary investments required to 

convert their facilities to produce new 

standards-compliant products, operating 

profit does not change in absolute 

dollars per unit and decreases as a 

percentage of revenue. 

The set of results below shows 

potential INPV impacts for residential 

furnace fan manufacturers; Table V.13 

reflects the lower bound of impacts, and 

Table V.14 represents the upper bound. 

Each of the modeled scenarios results 

in a unique set of cash flows and 

corresponding industry values at each 

TSL. In the following discussion, the 

INPV results refer to the difference in 

industry value between the base case 

and each standards case that results 

from the sum of discounted cash flows 

from the base year 2014 through 2048, 

the end of the analysis period. To 

provide perspective on the short-run 

cash flow impact, DOE includes in the 

discussion of the results below a 

comparison of free cash flow between 

the base case and the standards case at 

each TSL in the year before new 

standards would take effect. This figure 

provides an understanding of the 

magnitude of the required conversion 

costs relative to the cash flow generated 

by the industry in the base case. 

TABLE V.13—MANUFACTURER IMPACT ANALYSIS FOR RESIDENTIAL FURNACE FANS—PRESERVATION OF GROSS MARGIN

PERCENTAGE MARKUP SCENARIO * 

Units Base 

case 

Trial standard level 

1 2 3 4 5 6 

INPV .................................................................. $M ........ 349.6 336.6 360.0 359.1 397.8 397.6 422.4 

Change in INPV ................................................. $M ........

(%) .......

................

................

(13.0) 

(3.7) 

10.4 

3.0 

9.4 

2.7 

48.2 

13.8 

48.0 

13.7 

72.8 

20.8 

Product Conversion Costs ................................. $M ........ 2.2 18.8 23.6 25.3 25.5 27.1 29.4 

Capital Conversion Costs .................................. $M ........ ................ 8.8 11.1 11.8 15.1 15.7 134.7 

Total Conversion Costs ..................................... $M ........ 2.2 27.7 34.7 37.1 40.6 42.8 164.2 

Free Cash Flow (2018) ..................................... $M ........ 20.3 11.3 8.8 8.0 6.4 5.6 (48.6) 

Free Cash Flow (change from Base Case) 

(2018).

% .......... 0.0 (44.5) (56.7) (60.8) (68.3) (72.2) (339.8) 

* Values in parentheses are negative values. All values have been rounded to the nearest tenth. 

M = millions. 

TABLE V.14—MANUFACTURER IMPACT ANALYSIS FOR RESIDENTIAL FURNACE FANS—PRESERVATION OF OPERATING

PROFIT MARKUP SCENARIO * 

Units Base 

case 

Trial standard level 

1 2 3 4 5 6 

INPV .................................................................. $M ........ 349.6 332.3 313.2 311.0 290.6 288.8 147.2 

Change in INPV ................................................. $M ........

(%) .......

................

................

(17.3) 

(5.0) 

(36.4) 

(10.4) 

(38.6) 

(11.0) 

(59.0) 

(16.9) 

(60.8) 

(17.4) 

(202.5) 

(57.9) 

Product Conversion Costs ................................. $M ........ 2.2 18.8 23.6 25.3 25.5 27.1 29.4 

Capital Conversion Costs .................................. $M ........ ................ 8.8 11.1 11.8 15.1 15.7 134.7 

Total Conversion Costs ..................................... $M ........ 2.2 27.7 34.7 37.1 40.6 42.8 164.2 

Free Cash Flow ................................................. $M ........ 20.3 11.3 8.8 8.0 6.4 5.6 (48.6) 

Free Cash Flow (change from Base Case) ...... % .......... 0.0 (44.5) (56.7) (60.8) (68.3) (72.2) (339.8) 

* Values in parentheses are negative values. All values have been rounded to the nearest tenth. 

M = millions. 

TSL 1 represents the most common 

efficiency levels in the current market 

for all product classes. At TSL 1, DOE 

estimates impacts on INPV for 

residential furnace fan manufacturers to 

range from ¥$17.3 million to ¥$13.0 

million, or a change in INPV of ¥5.0 

percent to ¥3.7 percent. At this 

potential standard level, industry free 

cash flow is estimated to decrease by as 

much as 44.5 percent to $11.3 million, 

compared to the base-case value of 

$20.3 million in the year before the 

compliance date (2018). DOE anticipates 

industry conversion costs totaling $27.7 

million at TSL 1. 

TSL 2 represents EL 1 for the oil and 

mobile home product classes, and EL 3 

for all other product classes. At TSL 2, 

DOE estimates impacts on INPV for 

residential furnace fan manufacturers to 

range from ¥$36.4 million to $10.4 

million, or a change in INPV of ¥10.4 

percent to 3.0 percent. At this potential 

standard level, industry free cash flow 

is estimated to decrease by as much as 

56.7 percent to $8.8 million, compared 

to the base-case value of $20.3 million 

in the year before the compliance date 

(2018). DOE anticipates industry 

conversion costs of $34.7 million at TSL 

2. 

TSL 3 represents EL 3 for all product 

classes. At TSL 3, DOE estimates 

impacts on INPV for residential furnace 

fan manufacturers to range from ¥$38.6 

million to $9.4 million, or a change in 

INPV of ¥11.0 percent to 2.7 percent. 

At this potential standard level, 

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

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

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

industry free cash flow is estimated to 

decrease by as much as 60.8 percent to 

$8.0 million, compared to the base-case 

value of $20.3 million in the year before 

the compliance date (2018). DOE 

anticipates industry conversion costs of 

$37.1 million at TSL 3. 

TSL 4 represents the efficiency levels 

that provide the highest NPV using a 7- 

percent discount rate, and that also 

result in a higher percentage of 

consumers receiving an LCC benefit 

rather than an LCC loss. At TSL 4, DOE 

estimates impacts on INPV for 

residential furnace fan manufacturers to 

range from ¥$59.0 million to $48.2 

million, or a change in INPV of ¥16.9 

percent to 13.8 percent. At this potential 

standard level, industry free cash flow 

is estimated to decrease by as much as 

68.3 percent to $6.4 million, compared 

to the base-case value of $20.3 million 

in the year before the compliance date 

(2018). DOE anticipates industry 

conversion costs totaling $40.6 million 

at TSL 4. 

TSL 5 represents the efficiency levels 

that provide the maximum NPV using a 

7-percent discount rate. At TSL 5, DOE 

estimates impacts on INPV for 

residential furnace fan manufacturers to 

range from ¥$60.8 million to $48.0 

million, or a change in INPV of ¥17.4 

percent to 13.7 percent. At this potential 

standard level, industry free cash flow 

is estimated to decrease by as much as 

72.2 percent to $5.6 million, compared 

to the base-case value of $20.3 million 

in the year before the compliance date 

(2018). DOE anticipates industry 

conversion costs of $42.8 million at TSL 

5. 

TSL 6 represents the max-tech 

efficiency level for all product classes. 

At TSL 6, DOE estimates impacts on 

INPV for residential furnace fan 

manufacturers to range from ¥$202.5 

million to $72.8 million, or a change in 

INPV of ¥57.9 percent to 20.8 percent. 

At this potential standard level, 

industry free cash flow is estimated to 

decrease by as much as 339.8 percent to 

¥$48.6 million, compared to the basecase value of $20.3 million in the year 

before the compliance date (2018). DOE 

anticipates industry conversion costs 

totaling $164.2 million at TSL 6. 

DOE anticipates very high capital 

conversion costs at TSL 6 because 

manufacturers would need to make 

significant changes to their 

manufacturing equipment and 

production processes in order to 

accommodate the use of backwardinclined impellers. This design option 

would require modifying, or potentially 

eliminating, current fan housings. DOE 

also anticipates high product conversion 

costs to develop new designs with 

backward-inclined impellers for all their 

products. Some manufacturers may also 

have stranded assets from specialized 

machines for building fan housing that 

can no longer be used. 

Impacts on Employment 

To quantitatively assess the impacts 

of energy conservation standards on 

direct employment in the residential 

furnace fan industry, DOE used the 

GRIM to estimate the domestic labor 

expenditures and number of employees 

in the base case and at each TSL from 

2014 through 2048. DOE used statistical 

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

Annual Survey of Manufacturers 

(ASM),71 the results of the engineering 

analysis, and interviews with 

manufacturers to determine the inputs 

necessary to calculate industry-wide 

labor expenditures and domestic 

employment levels. Labor expenditures 

related to manufacturing of the product 

are a function of the labor intensity of 

the product, the sales volume, and an 

assumption that wages remain fixed in 

real terms over time. The total labor 

expenditures in each year are calculated 

by multiplying the MPCs by the labor 

percentage of MPCs. 

The total labor expenditures in the 

GRIM were then converted to domestic 

production employment levels by 

dividing production labor expenditures 

by the annual payment per production 

worker (production worker hours times 

the labor rate found in the U.S. Census 

Bureau’s 2011 ASM). The estimates of 

production workers in this section cover 

workers, including line-supervisors who 

are directly involved in fabricating and 

assembling a product within the 

manufacturing facility. Workers 

performing services that are closely 

associated with production operations, 

such as materials handling tasks using 

forklifts, are also included as production 

labor. DOE’s estimates only account for 

production workers who manufacture 

the specific products covered by this 

rulemaking. 

The total direct employment impacts 

calculated in the GRIM are the sum of 

the changes in the number of 

production workers resulting from the 

new energy conservation standards for 

residential furnace fans, as compared to 

the base case. 

TABLE V.15—POTENTIAL CHANGES IN THE NUMBER OF FURNACE FAN INDUSTRY EMPLOYMENT IN 2019 

Trial standard level * 

Base case 1 2 3 4 5 6 

Total Number of Domestic Production Workers 

in 2019 (assuming no changes in production 

locations).

303 303 ......... 303 ......... 303 ......... 301 .............. 301 .............. 349. 

Total Number of Domestic Non-Production 

Workers in 2019.

107 107 ......... 107 ......... 107 ......... 106 .............. 106 .............. 123. 

Range of Potential Changes in Domestic 

Workers in 2019 **.

.................. (410) to 0 (410) to 0 (410) to 0 (410) to (3) .. (410) to (3) .. (410) to 62. 

* Numbers in parentheses represent negative values. 

** DOE presents a range of potential employment impacts, where the lower range represents the scenario in which all domestic manufacturers 

move production to other countries. 

The employment impacts shown in 

Table V.15 represent the potential 

production and non-production 

employment changes that could result 

following the compliance date of a new 

energy conservation standard for 

residential furnace fans. The upper end 

of the results in the table estimates the 

maximum increase in the number of 

production and non-production workers 

after the implementation of new energy 

conservation standards, and it assumes 

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that manufacturers would continue to 

produce the same scope of covered 

products within the United States. The 

lower end of the range indicates the 

total number of U.S. production and 

non-production workers in the industry 

who could lose their jobs if all existing 

production were moved outside of the 

United States or if companies exited the 

market. This scenario is highly 

conservative. Even if all production was 

relocated overseas, manufacturers 

would likely maintain large portions of 

domestic non-production staff (e.g., 

sales, marketing, technical, and 

management employees). The industry 

did not provide sufficient information 

for DOE fully quantify the percentage of 

the non-production workers that would 

leave the country or be eliminated at 

each evaluated standard level. 

For residential furnace fans, DOE does 

not expect significant changes in 

domestic employment levels from 

baseline to TSL 5. Based on the 

engineering analysis, DOE has 

concluded that most product lines could 

be converted to meet the standard with 

changes in motor technology and the 

application of multi-staging designs. 

While such designs require more 

controls and have more complex 

assembly, DOE does not believe the perunit labor requirements for the furnace 

fan assembly would change 

significantly. 

The only standard level at which 

significant changes in employment 

would be expected is at TSL 6, the maxtech level. At TSL 6, DOE estimates 

increases in labor costs because 

backwards-inclined impeller assemblies 

are heavier and require more robust 

mounting approaches than are currently 

used for forward-curved impeller 

assemblies. Backward-inclined impeller 

assemblies could require manufacturers 

to adjust their assembly processes, with 

the potential for increases in per-unit 

labor requirements. However, DOE 

received limited feedback from 

manufacturers regarding the labor 

required to produce furnace fans with 

backward-curved impellers, because 

they generally do not have any 

experience in working with this design 

option. 

DOE notes that the employment 

impacts discussed here are independent 

of the indirect employment impacts to 

the broader U.S. economy, which are 

documented in chapter 15 of the final 

rule TSD. 

Impacts on Manufacturing Capacity 

According to the residential furnace 

fan manufacturers interviewed, the new 

energy conservation standards being 

adopted in today’s final rule would not 

significantly affect manufacturers’ 

production capacity, or throughput 

levels. Some manufacturers noted in 

interviews that testing resources could 

potentially be a bottleneck to the 

conversion process and cited the 

potential need for adding in-house 

testing capacity. However, in written 

comments, stakeholders generally 

agreed that a five-year lead time 

between the publication date and 

compliance date is appropriate for this 

rulemaking. 

Impacts on Subgroups of Manufacturers 

Small manufacturers, niche 

equipment manufacturers, and 

manufacturers exhibiting a cost 

structure substantially different from the 

industry average could be affected 

disproportionately. As discussed in 

section IV.J, using average cost 

assumptions developed for an industry 

cash-flow estimate is inadequate to 

assess differential impacts among 

manufacturer subgroups. 

For the residential furnace fans 

industry, DOE identified and evaluated 

the impact of new energy conservation 

standards on one subgroup, specifically 

small manufacturers. The SBA defines a 

‘‘small business’’ as having 750 

employees or less for NAICS 333415, 

‘‘Air-Conditioning and Warm Air 

Heating Equipment and Commercial 

and Industrial Refrigeration Equipment 

Manufacturing.’’ Based on this 

definition, DOE identified 15 

manufacturers in the residential furnace 

fans industry that qualify as small 

businesses. For a discussion of the 

impacts on the small manufacturer 

subgroup, see the regulatory flexibility 

analysis in section VI.B of this notice 

and chapter 12 of the final rule TSD. 

Cumulative Regulatory Burden 

While any one regulation may not 

impose a significant burden on 

manufacturers, the combined effects of 

recent or impending regulations may 

have serious consequences for some 

manufacturers, groups of manufacturers, 

or an entire industry. Assessing the 

impact of a single regulation may 

overlook this cumulative regulatory 

burden. In addition to energy 

conservation standards, other 

regulations can significantly affect 

manufacturers’ financial operations. 

Multiple regulations affecting the same 

manufacturer can strain profits and lead 

companies to abandon product lines or 

markets with lower expected future 

returns than competing products. For 

these reasons, DOE conducts an analysis 

of cumulative regulatory burden as part 

of its rulemakings pertaining to 

appliance efficiency. 

During previous stages of this 

rulemaking, DOE identified a number of 

requirements in addition to new energy 

conservation standards for residential 

furnace fans. The following section 

briefly summarizes those identified 

regulatory requirements and addresses 

comments DOE received with respect to 

cumulative regulatory burden, as well as 

other key related concerns that 

manufacturers raised during interviews. 

While the cumulative regulatory 

burden analysis contained in the NOPR 

reflects manufacturers’ concerns 

regarding CC&E costs, DOE has decided 

to exclude CC&E costs from the 

cumulative burden analysis for the final 

rule. The furnace fan test procedure 

changed from the NOPR to the final 

rule. Much of the concern relating to 

CC&E costs expressed by stakeholders, 

and summarized in the NOPR, had to do 

with the old test procedure. The new 

test procedure reduces burden 

substantially. Also, for the final rule, 

CC&E costs have been explicitly 

incorporated into product conversion 

costs inputted into the GRIM, so they 

are no longer considered separately in 

the cumulative regulatory burdens 

section. 

DOE Energy Conservation Standards 

Companies that produce a wide range 

of regulated products and equipment 

may face more capital and product 

development expenditures than 

competitors with a narrower scope of 

products and equipment. Many furnace 

fan manufacturers also produce other 

residential and commercial equipment. 

In addition to the amended energy 

conservation standards for furnace fans, 

these manufacturers contend with 

several other Federal regulations and 

pending regulations that apply to other 

products and equipment. DOE 

recognizes that each regulation can 

significantly affect a manufacturer’s 

financial operations. Multiple 

regulations affecting the same 

manufacturer can quickly strain 

manufacturers’ profits and possibly 

cause an exit from the market. Table 

V.16 lists the other DOE energy 

conservation standards that could also 

affect manufacturers of furnace fans in 

the 3 years leading up to and after the 

compliance date of the new energy 

conservation standards for this 

equipment. Additionally, at the request 

of stakeholders, DOE has listed several 

DOE rulemakings in the table below that 

are currently in process but that have 

not been finalized. 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38191 

TABLE V.16—OTHER DOE REGULATIONS IMPACTING FURNACE FAN MANUFACTURERS

Regulation Compliance 

year 

Number of 

impacted 

companies 

Estimated total industry 

conversion costs 

Commercial Refrigeration Equipment ..................................................................... 2017 4 $184.0 million (2012$). 

Commercial Packaged Air-Conditioning and Heating Equipment .......................... * 2018 24 N/A.** 

Commercial/Industrial Fans and Blowers ............................................................... * 2019 29 N/A.** 

Residential Boilers .................................................................................................. * 2019 9 N/A.** 

Residential Non-Weatherized Gas Furnaces ......................................................... n/a 38 N/A.** 

* The dates listed are an approximation. The exact dates are pending final DOE action. 

** For energy conservation standards that have not been issued, DOE does not have finalized industry conversion cost data available. 

EPA ENERGY STAR 

During interviews, some 

manufacturers stated that ENERGY 

STAR specifications for residential 

furnaces, central air conditioners, and 

heat pumps would be a source of 

cumulative regulatory burden. ENERGY 

STAR specifications are as follows: 

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

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

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

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

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

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

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

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

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

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

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

mode. 

DOE realizes that the cumulative 

effect of several regulations on an 

industry may significantly increase the 

burden faced by manufacturers that 

need to comply with multiple 

regulations and certification programs 

from different organizations and levels 

of government. However, DOE notes 

that certain standards, such as ENERGY 

STAR, are optional for manufacturers. 

As they are voluntary standards, they 

are not considered by DOE to be part of 

manufacturers’ cumulative regulatory 

burden. 

DOE discusses these and other 

requirements (e.g., Canadian Energy 

Efficiency Regulations, California Title 

24, Low NOX requirements), and 

includes the full details of the 

cumulative regulatory burden analysis, 

in chapter 12 of the final rule TSD. DOE 

also discusses the impacts on the small 

manufacturer subgroup in the regulatory 

flexibility analysis in section VI.B of 

this final rule. 

3. National Impact Analysis 

Significance of Energy Savings 

For each TSL, DOE projected energy 

savings for residential furnace fans 

purchased in the 30-year period that 

begins in the first full year of 

compliance with amended standards 

(2019–2048). The savings are measured 

over the entire lifetime of products 

purchased in the 30-year period. DOE 

quantified the energy savings 

attributable to each TSL as the 

difference in energy consumption 

between each standards case and the 

base case. Table V.18 presents the 

estimated primary energy savings for 

each considered TSL, and Table V.19 

presents the estimated FFC energy 

savings for each considered TSL. The 

energy savings in the tables below are 

net savings that reflect the subtraction of 

the additional gas or oil used by the 

furnace associated with higherefficiency furnace fans. The approach 

for estimating national energy savings is 

further described in section IV.H.1. 

The difference between primary 

energy savings and FFC energy savings 

for all TSLs is small (less than 1 

percent), because the upstream energy 

savings associated with the electricity 

savings are partially or fully offset by 

the upstream energy use from the 

additional gas or oil used by the furnace 

due to higher-efficiency furnace fans. 

TABLE V.18—CUMULATIVE NATIONAL PRIMARY ENERGY SAVINGS FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2048 

Product class 

Trial standard level 

1 2 3 4 5 6 

quads 

Non-Weatherized, Non-Condensing Gas Furnace Fan .. 0.296 1.341 1.341 1.796 1.796 2.426 

Non-Weatherized, Condensing Gas Furnace Fan .......... 0.278 1.188 1.188 1.614 1.614 2.324 

Weatherized Non-Condensing Gas Furnace Fan ........... 0.048 0.224 0.224 0.330 0.330 0.462 

Non-Weatherized, Non-Condensing Oil Furnace Fan ..... 0.006 0.006 0.022 0.006 0.022 0.046 

Non-Weatherized Electric Furnace/Modular Blower Fan 0.032 0.143 0.143 0.193 0.193 0.264 

Mobile Home Non-Weatherized, Non-Condensing Gas 

Furnace Fan ................................................................. 0.009 0.009 0.023 0.009 0.023 0.053 

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38192 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

72U.S. Office of Management and Budget, 

‘‘Circular A–4: Regulatory Analysis’’ (Sept. 17, 

2003) (Last accessed September 17, 2013 from 

http://www.whitehouse.gov/omb/circulars_a004_a4/.) 

73Section 325(m) of EPCA requires DOE to review 

its standards at least once every 6 years, and 

requires, for certain products, a 3-year period after 

any new standard is promulgated before 

compliance is required, except that in no case may 

any new standards be required within 6 years of the 

compliance date of the previous standards. While 

adding a 6-year review to the 3-year compliance 

period adds up to 9 years, DOE notes that it may 

undertake reviews at any time within the 6-year 

period and that the 3-year compliance date may 

yield to the 6-year backstop. A 9-year analysis 

period may not be appropriate given the variability 

that occurs in the timing of standards reviews and 

the fact that for some consumer products, the 

compliance period is 5 years rather than 3 years. 

TABLE V.18—CUMULATIVE NATIONAL PRIMARY ENERGY SAVINGS FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2048—Continued 

Product class 

Trial standard level 

1 2 3 4 5 6 

quads 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan ...................................................................... 0.001 0.001 0.003 0.001 0.003 0.008 

Mobile Home Electric Furnace/Modular Blower Fan ....... 0.009 0.009 0.030 0.044 0.044 0.055 

Total—All Classes .................................................... 0.679 2.922 2.974 3.994 4.024 5.639 

Note: Components may not sum to total due to rounding. 

TABLE V.19—CUMULATIVE NATIONAL FULL-FUEL-CYCLE ENERGY SAVINGS FOR TRIAL STANDARD LEVELS FOR

RESIDENTIAL FURNACE FANS SOLD IN 2019–2048 

Product class 

Trial standard level 

1 2 3 4 5 6 

quads 

Non-Weatherized, Non-Condensing Gas Furnace Fan .. 0.297 1.338 1.338 1.793 1.793 2.428 

Non-Weatherized, Condensing Gas Furnace Fan .......... 0.278 1.176 1.176 1.604 1.604 2.314 

Weatherized Non-Condensing Gas Furnace Fan ........... 0.048 0.225 0.225 0.331 0.331 0.463 

Non-Weatherized, Non-Condensing Oil Furnace Fan ..... 0.006 0.006 0.020 0.006 0.020 0.044 

Non-Weatherized Electric Furnace/Modular Blower Fan 0.032 0.145 0.145 0.196 0.196 0.268 

Mobile Home Non-Weatherized, Non-Condensing Gas 

Furnace Fan ................................................................. 0.009 0.009 0.022 0.009 0.022 0.052 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan ...................................................................... 0.001 0.001 0.003 0.001 0.003 0.008 

Mobile Home Electric Furnace/Modular Blower Fan ....... 0.010 0.010 0.030 0.045 0.045 0.056 

Total—All Classes .................................................... 0.680 2.909 2.958 3.986 4.014 5.635 

Note: Components may not sum to total due to rounding. 

OMB Circular A–4 72 requires 

agencies to present analytical results, 

including separate schedules of the 

monetized benefits and costs that show 

the type and timing of benefits and 

costs. Circular A–4 also directs agencies 

to consider the variability of key 

elements underlying the estimates of 

benefits and costs. For this rulemaking, 

DOE undertook a sensitivity analysis 

using nine, rather than 30, years of 

product shipments. The choice of a ninyear period is a proxy for the timeline 

in EPCA for the review of certain energy 

conservation standards and potential 

revision of and compliance with such 

revised standards.73 The review 

timeframe established in EPCA is 

generally not synchronized with the 

product lifetime, product manufacturing 

cycles, or other factors specific to 

residential furnace fans. Thus, such 

results are presented for informational 

purposes only and are not indicative of 

any change in DOE’s analytical 

methodology. The NES results based on 

a 9-year analytical period are presented 

in Table V.20. The impacts are counted 

over the lifetime of products purchased 

in 2019–2027. 

TABLE V.20—CUMULATIVE NATIONAL PRIMARY ENERGY SAVINGS FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2027 

Product class 

Trial standard level 

1 2 3 4 5 6 

quads 

Non-Weatherized, Non-Condensing Gas Furnace Fan .. 0.099 0.454 0.454 0.611 0.611 0.838 

Non-Weatherized, Condensing Gas Furnace Fan .......... 0.075 0.316 0.316 0.429 0.429 0.612 

Weatherized Non-Condensing Gas Furnace Fan ........... 0.016 0.075 0.075 0.108 0.108 0.150 

Non-Weatherized, Non-Condensing Oil Furnace Fan ..... 0.002 0.002 0.009 0.002 0.009 0.020 

Non-Weatherized Electric Furnace/Modular Blower Fan 0.009 0.043 0.043 0.058 0.058 0.080 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38193 

74OMB Circular A–4, section E (Sept. 17, 2003) 

(Available at: http://www.whitehouse.gov/omb/

circulars_a004_a-4). 

TABLE V.20—CUMULATIVE NATIONAL PRIMARY ENERGY SAVINGS FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2027—Continued 

Product class 

Trial standard level 

1 2 3 4 5 6 

quads 

Mobile Home Non-Weatherized, Non-Condensing Gas 

Furnace Fan ................................................................. 0.003 0.003 0.007 0.003 0.007 0.018 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan ...................................................................... 0.000 0.000 0.001 0.000 0.001 0.002 

Mobile Home Electric Furnace/Modular Blower Fan ....... 0.003 0.003 0.009 0.013 0.013 0.017 

Total—All Classes .................................................... 0.207 0.897 0.914 1.225 1.236 1.737 

Note: Components may not sum to total due to rounding. 

Net Present Value of Consumer Costs 

and Benefits 

DOE estimated the cumulative NPV of 

the total costs and savings for 

consumers that would result from the 

TSLs considered for residential furnace 

fans. In accordance with OMB’s 

guidelines on regulatory analysis,74

DOE calculated NPV using both a 7- 

percent and a 3-percent real discount 

rate. Table V.21 shows the consumer 

NPV results for each TSL considered for 

residential furnace fans. In each case, 

the impacts cover the lifetime of 

products purchased in 2019–2048. 

TABLE V.21—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFIT FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2048 

Product class 

Discount 

rate 

% 

Trial standard level 

1 2 3 4 5 6 

billion 2013$ * 

Non-Weatherized, Non-Condensing 

Gas Furnace Fan ............................... 3 2.150 12.031 12.031 13.309 13.309 11 .943 

Non-Weatherized, Condensing Gas 

Furnace Fan ....................................... 1.842 10.769 10.769 11.444 11.444 10 .156 

Weatherized Non-Condensing Gas Furnace Fan ............................................ 0.335 1.849 1.849 2.288 2.288 2 .082 

Non-Weatherized, Non-Condensing Oil 

Furnace Fan ....................................... 0.028 0.028 0.154 0.028 0.154 0 .078 

Non-Weatherized Electric Furnace/Modular Blower Fan .................................. 0.215 1.237 1.237 1.480 1.480 0 .615 

Mobile Home Non-Weatherized, NonCondensing Gas Furnace Fan ........... 0.045 0.045 0.171 0.045 0.171 (0 .039) 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan ................. 0.007 0.007 0.025 0.007 0.025 (0 .005) 

Mobile Home Electric Furnace/Modular 

Blower Fan ......................................... 0.047 0.047 0.168 0.209 0.209 (0 .099) 

Total—All Classes .......................... 4.668 26.013 26.403 28.810 29.079 24 .731 

Non-Weatherized, Non-Condensing 

Gas Furnace Fan ............................... 7 0.823 4.502 4.502 4.713 4.713 3 .381 

Non-Weatherized, Condensing Gas 

Furnace Fan ....................................... 0.677 3.856 3.856 3.876 3.876 2 .686 

Weatherized Non-Condensing Gas Furnace Fan ............................................ 0.129 0.702 0.702 0.825 0.825 0 .604 

Non-Weatherized, Non-Condensing Oil 

Furnace Fan ....................................... 0.012 0.012 0.061 0.012 0.061 0 .006 

Non-Weatherized Electric Furnace/Modular Blower Fan .................................. 0.078 0.438 0.438 0.515 0.515 0 .014 

Mobile Home Non-Weatherized, NonCondensing Gas Furnace Fan ........... 0.017 0.017 0.058 0.017 0.058 (0 .071) 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan ................. 0.003 0.003 0.008 0.003 0.008 (0 .010) 

Mobile Home Electric Furnace/Modular 

Blower Fan ......................................... 0.017 0.017 0.054 0.065 0.065 (0 .102) 

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38194 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

TABLE V.21—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFIT FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2048—Continued 

Product class 

Discount 

rate 

% 

Trial standard level 

1 2 3 4 5 6 

billion 2013$ * 

Total—All Classes .......................... 1.754 9.545 9.679 10.024 10.120 6 .509 

* Numbers in parentheses indicate negative NPV. 

The NPV results based on the 

aforementioned 9-year analytical period 

are presented in Table V.22. The 

impacts are counted over the lifetime of 

products purchased in 2019–2027. As 

mentioned previously, this information 

is presented for informational purposes 

only and is not indicative of any change 

in DOE’s analytical methodology or 

decision criteria. 

TABLE V.22—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFIT FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL

FURNACE FANS SOLD IN 2019–2027 

Product class 

Discount 

rate 

% 

Trial standard level 

1 2 3 4 5 6 

billion 2013$ * 

Non-Weatherized, Non-Condensing 

Gas Furnace Fan ............................... 3 0.893 5.028 5.028 5.527 5.527 4 .908 

Non-Weatherized, Condensing Gas 

Furnace Fan ....................................... 0.652 3.784 3.784 4.005 4.005 3 .550 

Weatherized Non-Condensing Gas Furnace Fan ............................................ 0.139 0.777 0.777 0.945 0.945 0 .864 

Non-Weatherized, Non-Condensing Oil 

Furnace Fan ....................................... 0.015 0.015 0.082 0.015 0.082 0 .064 

Non-Weatherized Electric Furnace/Modular Blower Fan .................................. 0.080 0.463 0.463 0.549 0.549 0 .217 

Mobile Home Non-Weatherized, NonCondensing Gas Furnace Fan ........... 0.019 0.019 0.073 0.019 0.073 (0 .012) 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan ................. 0.003 0.003 0.010 0.003 0.010 (0 .001) 

Mobile Home Electric Furnace/Modular 

Blower Fan ......................................... 0.017 0.017 0.061 0.074 0.074 (0 .052) 

Total—All Classes .......................... 1.819 10.106 10.278 11.137 11.266 9 .537 

Non-Weatherized, Non-Condensing 

Gas Furnace Fan ............................... 7 0.444 2.433 2.433 2.531 2.531 1 .799 

Non-Weatherized, Condensing Gas 

Furnace Fan ....................................... 0.325 1.840 1.840 1.845 1.845 1 .290 

Weatherized Non-Condensing Gas Furnace Fan ............................................ 0.070 0.384 0.384 0.446 0.446 0 .333 

Non-Weatherized, Non-Condensing Oil 

Furnace Fan ....................................... 0.008 0.008 0.040 0.008 0.040 0 .015 

Non-Weatherized Electric Furnace/Modular Blower Fan .................................. 0.039 0.220 0.220 0.257 0.257 0 .001 

Mobile Home Non-Weatherized, NonCondensing Gas Furnace Fan ........... 0.009 0.009 0.033 0.009 0.033 (0 .037) 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan ................. 0.001 0.001 0.004 0.001 0.004 (0 .005) 

Mobile Home Electric Furnace/Modular 

Blower Fan ......................................... 0.008 0.008 0.026 0.031 0.031 (0 .059) 

Total—All Classes .......................... 0.905 4.904 4.980 5.128 5.186 3 .338 

* Numbers in parentheses indicate negative NPV. 

As noted in section IV.H.2, DOE 

assumed no change in residential 

furnace fan prices over the 2019–2048 

period. In addition, DOE conducted a 

sensitivity analysis using alternative 

price trends: One in which prices 

decline over time, and one in which 

prices increase over time. These price 

trends, and the NPV results from the 

associated sensitivity cases, are 

described in appendix 10–C of the final 

rule TSD. 

Indirect Impacts on Employment 

DOE expects energy conservation 

standards for residential furnace fans to 

reduce energy costs for consumers, with 

the resulting net savings being 

redirected to other forms of economic 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38195 

activity. Those shifts in spending and 

economic activity could affect the 

demand for labor. As described in 

section IV.N, DOE used an input/output 

model of the U.S. economy to estimate 

indirect employment impacts of the 

TSLs that DOE considered in this 

rulemaking. DOE understands that there 

are uncertainties involved in projecting 

employment impacts, especially 

changes in the later years of the 

analysis. Therefore, DOE generated 

results for near-term time frames (2019 

and 2024), where these uncertainties are 

reduced. 

The results suggest that today’s 

standards would be likely to have 

negligible impact on the net demand for 

labor in the economy. The net change in 

jobs is so small that it would be 

imperceptible in national labor statistics 

and might be offset by other, 

unanticipated effects on employment. 

Chapter 16 of the final rule TSD 

presents more detailed results about 

anticipated indirect employment 

impacts. 

4. Impact on Product Utility or 

Performance 

DOE has concluded that the standards 

it is adopting in this final rule would 

not lessen the utility or performance of 

residential furnace fans. 

5. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider any 

lessening of competition that is likely to 

result from standards. It also directs the 

Attorney General of the United States 

(Attorney General) to determine the 

impact, if any, of any lessening of 

competition likely to result from a 

proposed standard and to transmit such 

determination in writing to the 

Secretary within 60 days of the 

publication of a proposed rule, together 

with an analysis of the nature and 

extent of the impact. (42 U.S.C. 

6295(o)(2)(B)(i)(V) and (ii)) 

To assist the Attorney General in 

making such a determination for today’s 

standards, DOE provided the 

Department of Justice (DOJ) with copies 

of the NOPR and the TSD for review. In 

its assessment letter responding to DOE, 

DOJ concluded that the proposed energy 

conservation standards for residential 

furnace fans are unlikely to have a 

significant adverse impact on 

competition. DOE is publishing the 

Attorney General’s assessment at the 

end of this final rule. 

6. Need of the Nation To Conserve 

Energy 

An improvement in the energy 

efficiency of the products subject to this 

rule is likely to improve the security of 

the nation’s energy system by reducing 

overall demand for energy. Reduction in 

the growth of electricity demand 

resulting from energy conservation 

standards may also improve the 

reliability of the electricity system. 

Reductions in national electric 

generating capacity estimated for each 

considered TSL are reported in chapter 

15 of the final rule TSD. 

Energy savings from standards for the 

residential furnace fan products covered 

in today’s final rule could also produce 

environmental benefits in the form of 

reduced emissions of air pollutants and 

greenhouse gases associated with 

electricity production. Table V.23 

provides DOE’s estimate of cumulative 

emissions reductions projected to result 

from the TSLs considered in this 

rulemaking. The table includes both 

power sector emissions and upstream 

emissions. The emissions were 

calculated using the multipliers 

discussed in section IV.K. DOE reports 

annual emissions reductions for each 

TSL in chapter 13 of the final rule TSD. 

As discussed in section IV.K, DOE did 

not include NOX emissions reduction 

from power plants in States subject to 

CAIR, because an energy conservation 

standard would not affect the overall 

level of NOX emissions in those States 

due to the emissions caps mandated by 

CAIR. For SO2, under the MATS, 

projected emissions will be far below 

the cap established by CAIR, so it is 

unlikely that excess SO2 emissions 

allowances resulting from lower 

electricity demand would be needed or 

used to permit offsetting increases in 

SO2 emissions by any regulated EGU. 

Therefore, DOE believes that efficiency 

standards will reduce SO2 emissions. 

TABLE V.23—CUMULATIVE EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR RESIDENTIAL FURNACE FANS

TSL 

1 2 3 4 5 6 

Primary Energy Emissions * 

CO2 (million metric tons) ...................................... 29 .3 124 .5 126 .3 171 .1 172 .0 241 .5 

SO2 (thousand tons) ............................................ 38 .1 174 .3 178 .0 232 .5 235 .2 323 .5 

NOX (thousand tons) ........................................... (5 .2) (32 .4) (33 .8) (38 .7) (40 .2) (51 .1) 

Hg (tons) .............................................................. 0 .1 0 .3 0 .3 0 .4 0 .4 0 .5 

N2O (thousand tons) ............................................ 1 .0 4 .5 4 .6 6 .0 6 .1 8 .4 

CH4 (thousand tons) ............................................ 5 .2 23 .4 23 .9 31 .3 31 .6 43 .7 

Upstream Emissions 

CO2 (million metric tons) ...................................... 1 .7 6 .7 6 .7 9 .6 9 .5 13 .7 

SO2 (thousand tons) ............................................ 0 .5 2 .4 2 .4 3 .2 3 .2 4 .4 

NOX (thousand tons) ........................................... 22 .5 84 .9 85 .0 122 .8 122 .0 177 .5 

Hg (tons) .............................................................. 0 .0 0 .0 0 .0 0 .0 0 .0 0 .0 

N2O (thousand tons) ............................................ 0 .0 0 .1 0 .1 0 .1 0 .1 0 .2 

CH4 (thousand tons) ............................................ 127 .0 447 .7 455 .4 663 .7 666 .1 984 .3 

Total FFC Emissions 

CO2 (million metric tons) ...................................... 31 .0 131 .2 133 .1 180 .6 181 .5 255 .2 

SO2 (thousand tons) ............................................ 38 .6 176 .7 180 .4 235 .7 238 .4 327 .9 

NOX (thousand tons) ........................................... 17 .2 52 .6 51 .2 84 .0 81 .8 126 .4 

Hg (tons) .............................................................. 0 .1 0 .3 0 .3 0 .4 0 .4 0 .5 

N2O (thousand tons) ............................................ 1 .0 4 .6 4 .7 6 .2 6 .2 8 .6 

N2O thousand tons CO2eq ** ............................... 302 .2 1378 .9 1402 .4 1843 .7 1859 .3 2569 .2 

CH4 (thousand tons) ............................................ 132 .1 471 .1 479 .3 695 .0 697 .7 1028 .0 

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TABLE V.23—CUMULATIVE EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR RESIDENTIAL FURNACE FANS— 

Continued 

TSL 

1 2 3 4 5 6 

CH4 million tons CO2eq ** .................................... 3303 .3 11778 11982 17375 17442 25700 

* Includes emissions from additional gas use associated with more-efficient furnace fans. 

** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). 

Note: Parentheses indicate negative values. 

As part of the analysis for this final 

rule, DOE estimated monetary benefits 

likely to result from the reduced 

emissions of CO2 and NOX estimated for 

each of the TSLs considered for 

residential furnace fans. As discussed in 

section IV.L, for CO2, DOE used four 

sets of values for the SCC developed by 

an interagency process. Three sets of 

values are based on the average SCC 

from three integrated assessment 

models, at discount rates of 2.5 percent, 

3 percent, and 5 percent. The fourth set 

represents the 95th-percentile SCC 

estimate across all three models at a 3- 

percent discount rate. The SCC values 

for CO2 emissions reductions in 2015, 

expressed in 2013$, are $12.0/ton, 

$40.5/ton, $62.4/ton, and $119/ton. The 

values for later years are higher due to 

increasing damages as the magnitude of 

projected climate change increases. 

Table V.24 presents the global value of 

CO2 emissions reductions at each TSL. 

DOE calculated domestic values as a 

range from 7 percent to 23 percent of the 

global values, and these results are 

presented in chapter 14 of the final rule 

TSD. 

TABLE V.24—GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR RESIDENTIAL

FURNACE FANS

TSL 

SCC Case * 

5% discount 

rate, average 

3% discount 

rate, average 

2.5% discount 

rate, average 

3% discount 

rate, 95th 

percentile 

million 2013$ 

Primary Energy Emissions ** 

1 ....................................................................................................................... 184 880 1,409 2,722 

2 ....................................................................................................................... 785 3,755 6,007 11,612 

3 ....................................................................................................................... 797 3,811 6,096 11,784 

4 ....................................................................................................................... 1,077 5,152 8,245 15,934 

5 ....................................................................................................................... 1,083 5,181 8,291 16,023 

6 ....................................................................................................................... 1,517 7,265 11,628 22,467 

Upstream Emissions 

1 ....................................................................................................................... 10.2 50.1 81 155 

2 ....................................................................................................................... 40.0 196 315 607 

3 ....................................................................................................................... 40.0 196 316 608 

4 ....................................................................................................................... 57.0 279 449 866 

5 ....................................................................................................................... 56.6 278 447 861 

6 ....................................................................................................................... 81.7 401 644 1,241 

Total FFC Emissions 

1 ....................................................................................................................... 194 930 1,489 2,878 

2 ....................................................................................................................... 825 3,951 6,323 12,219 

3 ....................................................................................................................... 837 4,007 6,412 12,392 

4 ....................................................................................................................... 1,134 5,432 8,694 16,799 

5 ....................................................................................................................... 1,140 5,459 8,737 16,884 

6 ....................................................................................................................... 1,599 7,666 12,272 23,709 

* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119 per metric ton (2013$). The 

values are for CO2 only (i.e., not CO2eq of other greenhouse gases). 

** Includes site emissions from additional use of natural gas associated with more-efficient furnace fans. 

DOE is well aware that scientific and 

economic knowledge about the 

contribution of CO2 and other 

greenhouse gas (GHG) emissions to 

changes in the future global climate and 

the potential resulting damages to the 

world economy continues to evolve 

rapidly. Thus, any value placed in this 

rulemaking on reducing CO2 emissions 

is subject to change. DOE, together with 

other Federal agencies, will continue to 

review various methodologies for 

estimating the monetary value of 

reductions in CO2 and other GHG 

emissions. This ongoing review will 

consider the comments on this subject 

that are part of the public record for this 

and other rulemakings, as well as other 

methodological assumptions and issues. 

However, consistent with DOE’s legal 

obligations, and taking into account the 

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uncertainty involved with this 

particular issue, DOE has included in 

this final rule the most recent values 

and analyses resulting from the 

interagency review process. 

DOE also estimated a range for the 

cumulative monetary value of the 

economic benefits associated with NOX

emissions reductions anticipated to 

result from standards for the residential 

furnace fan products that are the subject 

of this final rule. The dollar-per-ton 

values that DOE used are discussed in 

section IV.L. Table V.25 presents the 

present value of cumulative NOX

emissions reductions for each TSL 

calculated using the average dollar-perton values and 7-percent and 3-percent 

discount rates. 

TABLE V.25—PRESENT VALUE OF NOX EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR RESIDENTIAL FURNACE

FANS

TSL 3% Discount rate 7% Discount rate 

million 2013$ 

Power Sector and Site Emissions * 

1 ............................................................................................................................................................... (3 .8) 0 .0 

2 ............................................................................................................................................................... (27 .1) (3 .7) 

3 ............................................................................................................................................................... (28 .6) (4 .1) 

4 ............................................................................................................................................................... (31 .0) (2 .8) 

5 ............................................................................................................................................................... (32 .5) (3 .3) 

6 ............................................................................................................................................................... (39 .4) (2 .1) 

Upstream Emissions 

1 ............................................................................................................................................................... 25 .9 10 .2 

2 ............................................................................................................................................................... 98 .1 38 .7 

3 ............................................................................................................................................................... 98 .3 38 .8 

4 ............................................................................................................................................................... 141 .8 55 .9 

5 ............................................................................................................................................................... 140 .9 55 .6 

6 ............................................................................................................................................................... 205 .5 81 .4 

Total FFC Emissions ** 

1 ............................................................................................................................................................... 22 .1 10 .2 

2 ............................................................................................................................................................... 71 .0 35 .1 

3 ............................................................................................................................................................... 69 .7 34 .7 

4 ............................................................................................................................................................... 110 .8 53 .1 

5 ............................................................................................................................................................... 108 .4 52 .3 

6 ............................................................................................................................................................... 166 .1 79 .3 

* Includes site emissions from additional use of natural gas associated with more-efficient furnace fans. 

** Components may not sum to total due to rounding. 

Note: Parentheses indicate negative values. 

The NPV of the monetized benefits 

associated with emissions reductions 

can be viewed as a complement to the 

NPV of the consumer savings calculated 

for each TSL considered in this 

rulemaking. Table V.26 presents the 

NPV values that result from adding the 

estimates of the potential economic 

benefits resulting from reduced fullfuel-cycle CO2 and NOX emissions in 

each of four valuation scenarios to the 

NPV of consumer savings calculated for 

each TSL considered in this rulemaking, 

at both a 7-percent and a 3-percent 

discount rate. The CO2 values used in 

the columns of each table correspond to 

the four scenarios for the valuation of 

CO2 emission reductions discussed 

above. 

TABLE V.26—POTENTIAL STANDARDS FOR RESIDENTIAL FURNACE FANS: NET PRESENT VALUE OF CONSUMER SAVINGS

COMBINED WITH PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS

TSL 

Consumer NPV at 3% Discount Rate added with: 

SCC Case $12.0/

metric ton CO2* 

and low value for 

NOX** 

SCC Case $40.5/

metric ton CO2* 

and medium value 

for NOX** 

SCC Case $62.4/

metric ton CO2* 

and medium value 

for NOX** 

SCC Case $119/

metric ton CO2* 

and high value for 

NOX** 

billion 2013$ 

1 ............................................................................................... 4.9 5.6 6.2 7.6 

2 ............................................................................................... 26.9 30.0 32.4 38.3 

3 ............................................................................................... 27.3 30.5 32.9 38.9 

4 ............................................................................................... 30.1 34.4 37.6 45.7 

5 ............................................................................................... 30.3 34.6 37.9 46.1 

6 ............................................................................................... 26.5 32.6 37.2 48.6 

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38198 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

TSL 

Consumer NPV at 7% Discount Rate added with: 

SCC Case $12.0/

metric ton CO2* 

and low value for 

NOX** 

SCC Case $40.5/

metric ton CO2* 

and medium value 

for NOX** 

SCC Case $62.4/

metric ton CO2* 

and medium value 

for NOX** 

SCC Case $119/

metric ton CO2* 

and high value for 

NOX** 

billion 2013$ 

1 ............................................................................................... 2.0 2.7 3.3 4.6 

2 ............................................................................................... 10.4 13.5 15.9 21.8 

3 ............................................................................................... 10.6 13.7 16.1 22.1 

4 ............................................................................................... 11.2 15.5 18.8 26.9 

5 ............................................................................................... 11.3 15.6 18.9 27.1 

6 ............................................................................................... 8.2 14.3 18.9 30.3 

* These label values represent the global SCC in 2015, in 2013$. 

** Low Value corresponds to $476 per ton of NOX emissions. Medium Value corresponds to $2,684 per ton, and High Value corresponds to 

$4,893 per ton. 

Although adding the value of 

consumer savings to the values of 

emission reductions provides a valuable 

perspective, two issues should be 

considered. First, the national operating 

cost savings are domestic U.S. consumer 

monetary savings that occur as a result 

of market transactions, while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and the SCC are 

performed with different methods that 

use quite different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

products shipped in 2019–2048. The 

SCC values, on the other hand, reflect 

the present value of future climaterelated impacts resulting from the 

emission of one metric ton of CO2 in 

each year. Because of the long residence 

time of CO2 in the atmosphere, these 

impacts continue well beyond 2100. 

7. Other Factors 

The Secretary of Energy, in 

determining whether a standard is 

economically justified, may consider 

any other factors that the Secretary 

deems to be relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VI)) No other factors 

were considered in this analysis. 

C. Conclusions 

When considering proposed 

standards, the new or amended energy 

conservation standard that DOE adopts 

for any type (or class) of covered 

product shall be designed to achieve the 

maximum improvement in energy 

efficiency that the Secretary determines 

is technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A)) In determining whether a 

standard is economically justified, the 

Secretary must determine whether the 

benefits of the standard exceed its 

burdens by, to the greatest extent 

practicable, considering the seven 

statutory factors discussed previously. 

(42 U.S.C. 6295(o)(2)(B)(i)) The new or 

amended standard must also result in 

significant conservation of energy. (42 

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

For today’s final rule, DOE considered 

the impacts of standards at each TSL, 

beginning with the maximum 

technologically feasible level, to 

determine whether that level was 

economically justified. Where the maxtech level was not justified, DOE then 

considered the next most efficient level 

and undertook the same evaluation until 

it reached the highest efficiency level 

that is both technologically feasible and 

economically justified and saves a 

significant amount of energy. 

To aid the reader in understanding 

the benefits and/or burdens of each TSL, 

tables in this section summarize the 

quantitative analytical results for each 

TSL, based on the assumptions and 

methodology discussed herein. The 

efficiency levels contained in each TSL 

are described in section V.A. In addition 

to the quantitative results presented in 

the tables, DOE also considers other 

burdens and benefits that affect 

economic justification. These include 

the impacts on identifiable subgroups of 

consumers who may be 

disproportionately affected by a national 

standard, and impacts on employment. 

Section V.B.1.b presents the estimated 

impacts of each TSL for these 

subgroups. DOE discusses the impacts 

on direct employment in residential 

furnace fan manufacturing in section 

V.B.2.b, and discusses the indirect 

employment impacts in section V.B.3.c. 

DOE also notes that the economics 

literature provides a wide-ranging 

discussion of how consumers trade off 

upfront costs and energy savings in the 

absence of government intervention. 

Much of this literature attempts to 

explain why consumers appear to 

undervalue energy efficiency 

improvements. There is evidence that 

consumers undervalue future energy 

savings as a result of: (1) A lack of 

information; (2) a lack of sufficient 

salience of the long-term or aggregate 

benefits; (3) a lack of sufficient savings 

to warrant delaying or altering 

purchases; (4) excessive focus on the 

short term, in the form of inconsistent 

weighting of future energy cost savings 

relative to available returns on other 

investments; (5) computational or other 

difficulties associated with the 

evaluation of relevant tradeoffs; and (6) 

a divergence in incentives (for example, 

renter versus owner or builder versus 

purchaser). Other literature indicates 

that with less than perfect foresight and 

a high degree of uncertainty about the 

future, consumers may trade off at a 

higher than expected rate between 

current consumption and uncertain 

future energy cost savings. This 

undervaluation suggests that regulation 

that promotes energy efficiency can 

produce significant net private gains (as 

well as producing social gains by, for 

example, reducing pollution). 

In DOE’s current regulatory analysis, 

potential changes in the benefits and 

costs of a regulation due to changes in 

consumer purchase decisions are 

included in two ways. First, if 

consumers forego a purchase of a 

product in the standards case, this 

decreases sales for product 

manufacturers and the cost to 

manufacturers is included in the MIA. 

Second, DOE accounts for energy 

savings attributable only to products 

actually used by consumers in the 

standards case; if a standard decreases 

the number of products purchased by 

consumers, this decreases the potential 

energy savings from an energy 

conservation standard. DOE provides 

estimates of changes in the volume of 

product purchases in chapter 9 of the 

final rule TSD. DOE’s current analysis 

does not explicitly control for 

heterogeneity in consumer preferences, 

preferences across subcategories of 

products or specific features, or 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38199 

75P.C. Reiss and M.W. White, Household 

Electricity Demand, Revisited, Review of Economic 

Studies (2005) 72, 853–883. 

76Alan Sanstad, Notes on the Economics of 

Household Energy Consumption and Technology 

Choice. Lawrence Berkeley National Laboratory 

(2010) (Available at: http://www1.eere.energy.gov/

buildings/appliance_standards/pdfs/consumer_ee_

theory.pdf (Last accessed May 3, 2013). 

consumer price sensitivity variation 

according to household income.75

While DOE is not prepared at present 

to provide a fuller quantifiable 

framework for estimating the benefits 

and costs of changes in consumer 

purchase decisions due to an energy 

conservation standard, DOE is 

committed to developing a framework 

that can support empirical quantitative 

tools for improved assessment of the 

consumer welfare impacts of appliance 

standards. DOE has posted a paper that 

discusses the issue of consumer welfare 

impacts of appliance standards, and 

potential enhancements to the 

methodology by which these impacts 

are defined and estimated in the 

regulatory process.76 DOE welcomes 

comments on how to more fully assess 

the potential impact of energy 

conservation standards on consumer 

choice and how to quantify this impact 

in its regulatory analysis. 

1. Benefits and Burdens of Trial 

Standard Levels Considered for 

Residential Furnace Fans 

Table V.27 through Table V.29 

summarize the quantitative impacts 

estimated for each TSL for residential 

furnace fans. The national impacts are 

measured over the lifetime of furnace 

fans purchased in the 30-year period 

that begins in the first full year of 

compliance with amended standards 

(2019–2048). The energy savings, 

emissions reductions, and value of 

emissions reductions refer to full-fuelcycle results. Results that refer to 

primary energy savings are presented in 

chapter 10 of the final rule TSD. 

TABLE V.27—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL FURNACE FAN STANDARDS: NATIONAL IMPACTS

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

National Full-Fuel-Cycle Energy Savings quads 

0.680 2.909 2.958 3.986 4.014 5.635 

NPV of Consumer Benefits 2013$ billion 

3% discount rate .................... 4.668 26.013 26.403 28.810 29.079 24.731 

7% discount rate .................... 1.754 9.545 9.679 10.024 10.120 6.509 

Cumulative Emissions Reduction (FFC Emissions) 

CO2 million metric tons .......... 31.0 131.2 133.1 180.6 181.5 255.2 

SO2 thousand tons ................. 38.6 176.7 180.4 235.7 238.4 327.9 

NOX thousand tons ................ 17.2 52.6 51.2 84.0 81.8 126.4 

Hg tons ................................... 0.1 0.3 0.3 0.4 0.4 0.5 

N2O thousand tons ................ 1.0 4.6 4.7 6.2 6.2 8.6 

N2O thousand tons CO2eq * .. 302.2 1378.9 1402.4 1843.7 1859.3 2569.2 

CH4 thousand tons ................. 132.1 471.1 479.3 695.0 697.7 1028.0 

CH4 million tons CO2eq * ....... 3303 11778 11982 17375 17442 25700 

Value of Emissions Reduction (FFC Emissions) 2013$ billion 

CO2 ** ..................................... 0.194 to 2.878 0.825 to 12.219 0.837 to 12.392 1.134 to 16.799 1.140 to 16.884 1.599 to 23.709 

NOX—3% discount rate ......... 0.0221 0.0710 0.0697 0.1108 0.1084 0.1661 

NOX—7% discount rate ......... 0.0102 0.0351 0.0347 0.0531 0.0523 0.0793 

* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). 

** Range of the economic value of CO2 reductions is based on interagency estimates of the global benefit of reduced CO2 emissions. 

TABLE V.28—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL FURNACE FAN STANDARDS: MANUFACTURER AND

AVERAGE OR MEDIAN CONSUMER IMPACTS

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

Manufacturer Impacts 

Industry NPV (baseline value is 349.6) (2013$ in millions) ........ 332.3 to 

336.6 

313.2 to 

360.0 

311.0 to 

359.1 

290.6 to 

397.8 

288.8 to 

397.6 

147.2 to 

422.4 

Change in Industry NPV (% change) .......................................... (5.0) to 

(3.7) 

(10.4) to 

3.0 

(11.0) to 

2.7 

(16.9) to 

13.8 

(17.4) to 

13.7 

(57.9) to 

20.8 

Consumer Average LCC Savings (2013$) 

Non-Weatherized, Non-condensing Gas Furnace Fan ............... $85 $471 $471 $506 $506 $431 

Non-Weatherized, Condensing Gas Furnace Fan ...................... $58 $335 $335 $341 $341 $268 

Weatherized Non-Condensing Gas Furnace Fan ....................... $67 $378 $378 $447 $447 $391 

Non-Weatherized, Non-Condensing Oil Furnace Fan ................. $46 $46 $259 $46 $259 $80 

Non-Weatherized Electric Furnace/Modular Blower Fan ............ $29 $181 $181 $204 $204 $81 

Mobile Home Non-Weatherized, Non-condensing Gas Furnace 

Fan ........................................................................................... $36 $36 $144 $36 $144 ($58) 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan $35 $35 $133 $35 $133 ($51) 

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TABLE V.28—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL FURNACE FAN STANDARDS: MANUFACTURER AND

AVERAGE OR MEDIAN CONSUMER IMPACTS—Continued 

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

Mobile Home Electric Furnace/Modular Blower Fan ................... $19 $19 $70 $85 $85 ($54) 

Consumer Median PBP (years) 

Non-Weatherized, Non-condensing Gas Furnace Fan ............... 1.12 2.60 2.60 5.41 5.41 10.16 

Non-Weatherized, Condensing Gas Furnace Fan ...................... 1.18 2.87 2.87 5.78 5.78 11.01 

Weatherized Non-Condensing Gas Furnace Fan ....................... 0.73 1.79 1.79 4.42 4.42 8.19 

Non-Weatherized, Non-Condensing Oil Furnace Fan ................. 1.70 1.70 4.65 1.70 4.65 18.56 

Non-Weatherized Electric Furnace/Modular Blower Fan ............ 1.94 2.64 2.64 3.21 3.21 11.45 

Mobile Home Non-Weatherized, Non-condensing Gas Furnace 

Fan ........................................................................................... 2.72 2.72 6.84 2.72 6.84 24.38 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan 2.31 2.31 6.65 2.31 6.65 31.27 

Mobile Home Electric Furnace/Modular Blower Fan ................... 2.07 2.07 3.58 4.09 4.09 14.90 

Note: Parentheses indicate negative values. 

TABLE V.29—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL FURNACE FAN STANDARDS: DISTRIBUTION OF

CONSUMER LCC IMPACTS

Product Class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Non-Weatherized, Non-Condensing Gas Furnace Fan: 

Net Cost ............................................................................................ 1% 17% 17% 30% 30% 50% 

No Impact ......................................................................................... 68% 25% 25% 14% 14% 0% 

Net Benefit ........................................................................................ 30% 58% 58% 56% 56% 50% 

Non-Weatherized, Condensing Gas Furnace Fan: 

Net Cost ............................................................................................ 1% 11% 11% 23% 23% 51% 

No Impact ......................................................................................... 75% 41% 41% 34% 34% 0% 

Net Benefit ........................................................................................ 24% 48% 48% 43% 43% 49% 

Weatherized Non-Condensing Gas Furnace Fan: 

Net Cost ............................................................................................ 0% 3% 3% 16% 16% 41% 

No Impact ......................................................................................... 81% 56% 56% 33% 33% 0% 

Net Benefit ........................................................................................ 19% 41% 41% 51% 51% 59% 

Non-Weatherized, Non-Condensing Oil Furnace Fan: 

Net Cost ............................................................................................ 13% 13% 44% 13% 44% 78% 

No Impact ......................................................................................... 71% 71% 28% 71% 28% 0% 

Net Benefit ........................................................................................ 17% 17% 28% 17% 28% 22% 

Non-Weatherized Electric Furnace/Modular Blower Fan: 

Net Cost ............................................................................................ 4% 17% 17% 23% 23% 60% 

No Impact ......................................................................................... 73% 37% 37% 25% 25% 0% 

Net Benefit ........................................................................................ 22% 45% 45% 51% 51% 39% 

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan: 

Net Cost ............................................................................................ 10% 10% 55% 10% 55% 80% 

No Impact ......................................................................................... 56% 56% 0% 56% 0% 0% 

Net Benefit ........................................................................................ 34% 34% 45% 34% 45% 20% 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan: 

Net Cost ............................................................................................ 5% 5% 37% 5% 37% 82% 

No Impact ......................................................................................... 68% 68% 29% 68% 29% 0% 

Net Benefit ........................................................................................ 27% 27% 33% 27% 33% 18% 

Mobile Home Electric Furnace/Modular Blower Fan: 

Net Cost ............................................................................................ 7% 7% 26% 32% 32% 75% 

No Impact ......................................................................................... 71% 71% 38% 26% 26% 0% 

Net Benefit ........................................................................................ 22% 22% 37% 43% 43% 25% 

Note: Components may not sum to total due to rounding. 

First, DOE considered TSL 6, which 

would save an estimated total of 5.63 

quads of energy, an amount DOE 

considers significant. TSL 6 has an 

estimated NPV of consumer benefit of 

$6.51 billion using a 7-percent discount 

rate, and $24.7 billion using a 3-percent 

discount rate. 

The cumulative CO2 emissions 

reduction at TSL 6 is 255.2 million 

metric tons. The estimated monetary 

value of the CO2 emissions reductions 

ranges from $1.60 billion to $23.71 

billion. The other emissions reductions 

are 327.9 thousand tons of SO2, 126.4 

thousand tons of NOX, 0.5 tons of Hg, 

8.6 thousand tons of N2O, and 1,028.0 

thousand tons of CH4. 

At TSL 6, the average LCC savings are 

positive for: (1) Non-weatherized, noncondensing gas furnace fans; (2) nonweatherized, condensing gas furnace 

fans; (3) weatherized non-condensing 

gas furnace fans; (4) non-weatherized, 

non-condensing oil furnace fans; and (5) 

non-weatherized electric furnace/

modular blower fans. The LCC savings 

are negative for: (1) Mobile home nonweatherized, non-condensing gas 

furnace fans; (2) mobile home nonweatherized, condensing gas furnace 

fans; and (3) mobile home electric 

furnace/modular blower fans. The 

median payback period is lower than 

the median product lifetime (which is 

21.2 years for gas and electric furnace 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38201 

fans) for all of the product classes 

except for: (1) Mobile home nonweatherized, non-condensing gas 

furnace fans, and (2) mobile home nonweatherized, condensing. The share of 

consumers experiencing an LCC cost 

(increase in LCC) is higher than the 

share experiencing an LCC benefit 

(decrease in LCC) for all of the product 

classes except for weatherized noncondensing gas furnace fans. 

At TSL 6, manufacturers may expect 

diminished profitability due to 

increases in product costs, stranded 

assets, capital investments in equipment 

and tooling, decreases in unit 

shipments, and expenditures related to 

engineering and testing. The projected 

change in INPV ranges from a decrease 

of $202.5 million to an increase of $72.8 

million based on DOE’s manufacturer 

markup scenarios. The upper bound of 

$72.8 million is considered an 

optimistic scenario for manufacturers 

because it assumes manufacturers can 

fully pass on substantial increases in 

product costs and maintain existing 

mark ups. DOE recognizes the risk of 

large negative impacts on industry if 

manufacturers’ expectations concerning 

reduced profit margins are realized. TSL 

6 could reduce INPV in the residential 

furnace fan industry by up to 57.9 

percent if impacts reach the lower 

bound of the range. 

Accordingly, the Secretary concludes 

that at TSL 6 for residential furnace 

fans, the benefits of significant energy 

savings, positive NPV of consumer 

benefit, emission reductions and the 

estimated monetary value of the CO2

emissions reductions, as well as positive 

average LCC savings for most product 

classes would be outweighed by the 

high percentage of consumers that 

would experience an LCC cost in all of 

the product classes, and the substantial 

reduction in INPV for manufacturers. 

Consequently, DOE has concluded that 

TSL 6 is not economically justified. 

Next, DOE considered TSL 5, which 

would save an estimated total of 4.01 

quads of energy, an amount DOE 

considers significant. TSL 5 has an 

estimated NPV of consumer benefit of 

$10.1 billion using a 7-percent discount 

rate, and $29.1 billion using a 3-percent 

discount rate. 

The cumulative CO2 emissions 

reduction at TSL 5 is 181.5 million 

metric tons. The estimated monetary 

value of the CO2 emissions reductions 

ranges from $1.14 billion to $16.88 

billion. The other emissions reductions 

are 238.4 thousand tons of SO2, 81.8 

thousand tons of NOX, 0.4 tons of Hg, 

6.2 thousand tons of N2O, and 697.7 

thousand tons of CH4. 

At TSL 5, the average LCC savings are 

positive for all of the product classes. 

The median payback period is lower 

than the average product lifetime for all 

of the product classes. The share of 

consumers experiencing an LCC benefit 

(decrease in LCC) is higher than the 

share experiencing an LCC cost 

(increase in LCC) for five of the product 

classes (non-weatherized, noncondensing gas furnace fans; nonweatherized, condensing gas furnace 

fans; weatherized non-condensing gas 

furnace fans; non-weatherized electric 

furnace/modular blower fans; and 

mobile home electric furnace/modular 

blower fans), but lower for the other 

three product classes. 

At TSL 5, the projected change in 

INPV ranges from a decrease of $60.8 

million to an increase of $48.0 million. 

At TSL 5, DOE recognizes the risk of 

negative impacts if manufacturers’ 

expectations concerning reduced profit 

margins are realized. If the lower bound 

of the range of impacts is reached, as 

DOE expects, TSL 5 could result in a net 

loss of 17.4 percent in INPV for 

residential furnace fan manufacturers. 

Accordingly, the Secretary concludes 

that at TSL 5 for residential furnace 

fans, the benefits of significant energy 

savings, positive NPV of consumer 

benefit, positive average LCC savings for 

all of the product classes, emission 

reductions and the estimated monetary 

value of the CO2 emissions reductions, 

would be outweighed by the high 

percentage of consumers that would be 

negatively impacted for some of the 

product classes, and the substantial 

reduction in INPV for manufacturers. 

Consequently, DOE has concluded that 

TSL 5 is not economically justified. 

Next, DOE considered TSL 4, which 

would save an estimated total of 3.99 

quads of energy, an amount DOE 

considers significant. TSL 4 has an 

estimated NPV of consumer benefit of 

$10.0 billion using a 7-percent discount 

rate, and $28.8 billion using a 3-percent 

discount rate. 

The cumulative CO2 emissions 

reduction at TSL 4 is 180.6 million 

metric tons. The estimated monetary 

value of the CO2 emissions reductions 

ranges from $1.13 billion to $16.8 

billion. The other emissions reductions 

are 235.7 thousand tons of SO2, 84.0 

thousand tons of NOX, 0.4 tons of Hg, 

6.2 thousand tons of N2O, and 695.0 

thousand tons of CH4. 

At TSL 4, the average LCC savings are 

positive for all of the product classes. 

The median payback period is lower 

than the average product lifetime for all 

of the product classes. The share of 

consumers experiencing an LCC benefit 

(decrease in LCC) is higher than the 

share experiencing an LCC cost 

(increase in LCC) for all of the product 

classes. 

At TSL 4, the projected change in 

INPV ranges from a decrease of $59.0 

million to an increase of $48.2 million. 

At TSL 4, DOE recognizes the risk of 

negative impacts if manufacturers’ 

expectations concerning reduced profit 

margins are realized. If the lower bound 

of the range of impacts is reached, as 

DOE expects, TSL 4 could result in a net 

loss of 16.9 percent in INPV for 

residential furnace fan manufacturers. 

After considering the analysis and 

weighing the benefits and the burdens, 

the Secretary concludes that at TSL 4 for 

residential furnace fans, the benefits of 

significant energy savings, positive NPV 

of consumer benefit, positive average 

LCC savings for all of the product 

classes, emission reductions and the 

estimated monetary value of the CO2

emissions reductions would outweigh 

the reduction in INPV for 

manufacturers. The Secretary has 

concluded that TSL 4 would save a 

significant amount of energy and is 

technologically feasible and 

economically justified. Therefore, DOE 

today is adopting the energy 

conservation standards for residential 

furnace fans at TSL 4. Table V.30 

presents the energy conservation 

standards for residential furnace fans. 

TABLE V.30—ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL FURNACE FANS

Product class Standard: FER * (W/1000 cfm) 

Non-Weatherized, Non-Condensing Gas Furnace Fan ............................................................................................. FER = 0.044 × QMax + 182 

Non-Weatherized, Condensing Gas Furnace Fan .................................................................................................... FER = 0.044 × QMax + 195 

Weatherized Non-Condensing Gas Furnace Fan ..................................................................................................... FER = 0.044 × QMax + 199 

Non-Weatherized, Non-Condensing Oil Furnace Fan ............................................................................................... FER = 0.071 × QMax + 382 

Non-Weatherized Electric Furnace/Modular Blower Fan ........................................................................................... FER = 0.044 × QMax + 165 

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan ...................................................................... FER = 0.071 × QMax + 222 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan .............................................................................. FER = 0.071 × QMax + 240 

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77 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value in 2013, the year used for discounting the 

NPV of total consumer costs and savings, for the 

time-series of costs and benefits using discount 

rates of 3 and 7 percent for all costs and benefits 

except for the value of CO2 reductions. For the 

latter, DOE used a range of discount rates. From the 

present value, DOE then calculated the fixed annual 

payment over a 30-year period, starting in 2013, 

that yields the same present value. The fixed annual 

payment is the annualized value. Although DOE 

calculated annualized values, this does not imply 

that the time-series of cost and benefits from which 

the annualized values were determined would be a 

steady stream of payments. 

TABLE V.30—ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL FURNACE FANS—Continued 

Product class Standard: FER * (W/1000 cfm) 

Mobile Home Electric Furnace/Modular Blower Fan ................................................................................................. FER = 0.044 × QMax + 101 

Mobile Home Weatherized Non-Condensing Gas Furnace Fan ............................................................................... Reserved 

Mobile Home Non-Weatherized Non-Condensing Oil Furnace Fan ......................................................................... Reserved 

* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the final DOE test procedure. 79 FR 500, 524 (Jan. 3, 

2014). 

2. Summary of Benefits and Costs 

(Annualized) of Today’s Standards 

The benefits and costs of today’s 

standards can also be expressed in terms 

of annualized values. The annualized 

monetary values are the sum of: (1) The 

annualized national economic value, 

expressed in 2013$, of the benefits from 

operating products that meet the 

standards (consisting primarily of 

operating cost savings from using less 

energy, minus increases in equipment 

purchase costs, which is another way of 

representing consumer NPV), and (2) 

the monetary value of the benefits of 

emission reductions, including CO2

emission reductions.77 The value of the 

CO2 reductions, otherwise known as the 

Social Cost of Carbon (SCC), is 

calculated using a range of values per 

metric ton of CO2 developed by a recent 

interagency process. 

Although combining the values of 

operating savings and CO2 reductions 

provides a useful perspective, two 

issues should be considered. First, the 

national operating savings are domestic 

U.S. consumer monetary savings that 

occur as a result of market transactions 

while the value of CO2 reductions is 

based on a global value. Second, the 

assessments of operating cost savings 

and SCC are performed with different 

methods that use different time frames 

for analysis. The national operating cost 

savings is measured for the lifetime of 

products shipped in 2019–2048. The 

SCC values, on the other hand, reflect 

the present value of future climaterelated impacts resulting from the 

emission of one metric ton of CO2 in 

each year over a very long period. 

Table V.31 shows the annualized 

values for today’s standards for 

residential furnace fans. The results 

under the primary estimate are as 

follows. (All monetary values below are 

expressed in 2013$.) Using a 7-percent 

discount rate for benefits and costs other 

than CO2 reduction (for which DOE 

used a 3-percent discount rate along 

with the SCC series corresponding to a 

value of $40.5/ton in 2015), the cost of 

the residential furnace fan standards in 

today’s rule is $358 million per year in 

increased equipment costs, while the 

benefits are $1,416 million per year in 

reduced equipment operating costs, 

$312 million in CO2 reductions, and 

$5.61 million in reduced NOX

emissions. In this case, the net benefit 

amounts to $1,376 million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the SCC series 

corresponding to a value of $40.5/ton in 

2015, Table V.31 shows the cost of the 

residential furnace fans standards in 

today’s rule is $355 million per year in 

increased equipment costs, while the 

benefits are $2010 million per year in 

reduced operating costs, $312 million in 

CO2 reductions, and $6.36 million in 

reduced NOX emissions. In this case, the 

net benefit amounts to $1,973 million 

per year. 

TABLE V.31—ANNUALIZED BENEFITS AND COSTS OF STANDARDS (TSL 4) FOR RESIDENTIAL FURNACE FANS

Discount rate Primary 

estimate * 

Low net 

benefits 

estimate 

High net 

benefits 

estimate 

million 2013$/year 

Benefits: 

Consumer Operating Cost Savings ..................................................... 7% 

3% 

1416 

2010 

1167 

1626 

1718 

2467 

CO2 Reduction Monetized Value ($12.0/t case) ** .............................. 5% 90 77 108 

CO2 Reduction Monetized Value ($40.5/t case) ** .............................. 3% 312 268 377 

CO2 Reduction Monetized Value ($62.4/t case) ** .............................. 2.5% 459 393 555 

CO2 Reduction Monetized Value ($119/t case) ** ............................... 3% 965 828 1166 

NOX Reduction Monetized Value (at $2,684/ton) ** ............................ 7% 

3% 

5.61 

6.36 

4.80 

5.35 

6.82 

7.86 

Total Benefits † ................................................................................. 7% plus CO2 range 1,512 to 2,387 1,249 to 2,000 1,833 to 2,891 

7% 1,734 1,439 2,102 

3% plus CO2 range 2,106 to 2,981 1,708 to 2,459 2,583 to 3,641 

3% 2,328 1,899 2,852 

Costs: 

Consumer Incremental Product Costs ................................................. 7% 

3% 

358 

355 

314 

304 

410 

419 

Net Benefits: 

Total † ............................................................................................... 7% plus CO2 range 1,154 to 2,029 935 to 1,685 1,423 to 2,481 

7% 1,376 1,125 1,692 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38203 

TABLE V.31—ANNUALIZED BENEFITS AND COSTS OF STANDARDS (TSL 4) FOR RESIDENTIAL FURNACE FANS—Continued 

Discount rate Primary 

estimate * 

Low net 

benefits 

estimate 

High net 

benefits 

estimate 

million 2013$/year 

3% plus CO2 range 1,750 to 2,625 1,404 to 2,155 2,164 to 3,222 

3% 1,973 1,595 2,433 

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

benefits to consumers which accrue after 2048 from the products purchased in 2019–2048. Costs incurred by manufacturers, some of which may 

be incurred in preparation for the rule, are not directly included, but are indirectly included as part of incremental equipment costs. The Primary, 

Low Benefits, and High Benefits Estimates utilize projections of energy prices and housing starts from the AEO 2013 Reference case, Low Estimate, and High Estimate, respectively. Incremental product costs reflect a constant product price trend in the Primary Estimate, an increasing 

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

** The CO2 values represent global values of the SCC, in 2013$, in 2015 under several scenarios. The first three cases use the averages of

SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC values increase over time. The value for NOX (in 2013$) is the average of the low and 

high values used in DOE’s analysis. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the SCC value of $40.5/t in 2015. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled discount rate, and 

those values are added to the full range of CO2 values. 

VI. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Orders 

12866 and 13563 

Section 1(b)(1) of Executive Order 

12866, ‘‘Regulatory Planning and 

Review,’’ 58 FR 51735 (Oct. 4, 1993), 

requires each agency to identify the 

problem that it intends to address, 

including, where applicable, the failures 

of private markets or public institutions 

that warrant new agency action, as well 

as to assess the significance of that 

problem. The problems that today’s 

standards address, are as follows: 

(1) There is a lack of consumer information 

and/or information processing capability 

about energy efficiency opportunities in the 

home appliance market. 

(2) There is asymmetric information (one 

party to a transaction has more and better 

information than the other) and/or high 

transactions costs (costs of gathering 

information and effecting exchanges of goods 

and services). 

(3) There are external benefits resulting 

from improved energy efficiency of 

residential furnace fans that are not captured 

by the users of such equipment. These 

benefits include externalities related to 

environmental protection and energy security 

that are not reflected in energy prices, such 

as reduced emissions of greenhouse gases. 

In addition, DOE has determined that 

today’s regulatory action is an 

‘‘economically significant regulatory 

action’’ under section 3(f) of Executive 

Order 12866. Accordingly, section 

6(a)(3) of the Executive Order requires 

that DOE prepare a regulatory impact 

analysis (RIA) for this rule and that the 

Office of Information and Regulatory 

Affairs (OIRA) in the OMB review this 

rule. DOE presented to OIRA for review 

the draft rule and other documents 

prepared for this rulemaking, including 

the RIA, and has included these 

documents in the rulemaking record. 

The assessments prepared pursuant to 

Executive Order 12866 can be found in 

the technical support document for this 

rulemaking. 

DOE has also reviewed this regulation 

pursuant to Executive Order 13563, 

issued on January 18, 2011. 76 FR 3281 

(Jan. 21, 2011). Executive Order 13563 

is supplemental to and explicitly 

reaffirms the principles, structures, and 

definitions governing regulatory review 

established in Executive Order 12866. 

To the extent permitted by law, agencies 

are required by Executive Order 13563 

to: (1) Propose or adopt a regulation 

only upon a reasoned determination 

that its benefits justify its costs 

(recognizing that some benefits and 

costs are difficult to quantify); (2) tailor 

regulations to impose the least burden 

on society, consistent with obtaining 

regulatory objectives, taking into 

account, among other things, and to the 

extent practicable, the costs of 

cumulative regulations; (3) select, in 

choosing among alternative regulatory 

approaches, those approaches that 

maximize net benefits (including 

potential economic, environmental, 

public health and safety, and other 

advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify 

performance objectives, rather than 

specifying the behavior or manner of 

compliance that regulated entities must 

adopt; and (5) identify and assess 

available alternatives to direct 

regulation, including providing 

economic incentives to encourage the 

desired behavior, such as user fees or 

marketable permits, or providing 

information upon which choices can be 

made by the public. 

DOE emphasizes as well that 

Executive Order 13563 requires agencies 

to use the best available techniques to 

quantify anticipated present and future 

benefits and costs as accurately as 

possible. In its guidance, the Office of 

Information and Regulatory Affairs has 

emphasized that such techniques may 

include identifying changing future 

compliance costs that might result from 

technological innovation or anticipated 

behavioral changes. For the reasons 

stated in the preamble, DOE believes 

that today’s final rule is consistent with 

these principles, including the 

requirement that, to the extent 

permitted by law, benefits justify costs 

and that net benefits are maximized. 

B. Review Under the Regulatory 

Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of a final regulatory flexibility analysis 

(FRFA) for any rule that by law must be 

proposed for public comment, unless 

the agency certifies that the rule, if 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities. As required by 

Executive Order 13272, ‘‘Proper 

Consideration of Small Entities in 

Agency Rulemaking,’’ 67 FR 53461 

(August 16, 2002), DOE published 

procedures and policies on February 19, 

2003, to ensure that the potential 

impacts of its rules on small entities are 

properly considered during the 

rulemaking process. 68 FR 7990. DOE 

has made its procedures and policies 

available on the Office of the General 

Counsel’s Web site (http://energy.gov/

gc/office-general-counsel). DOE has 

prepared the following FRFA for the 

products that are the subject of this 

rulemaking. 

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38204 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

78See https://www.ahridirectory.org/

ahriDirectory/pages/home.aspx. 

79See http://dsbs.sba.gov/dsbs/search/dsp_

dsbs.cfm. 

80See Hoovers: http://www.hoovers.com./. 

1. Description and Estimated Number of 

Small Entities Regulated 

Methodology for Estimating the Number 

of Small Entities 

For the manufacturers of residential 

furnace fans, the Small Business 

Administration (SBA) has set a size 

threshold, which defines those entities 

classified as ‘‘small businesses’’ for the 

purposes of the statute. DOE used the 

SBA’s small business size standards to 

determine whether any small entities 

would be subject to the requirements of 

the rule. 65 FR 30836, 30848 (May 15, 

2000), as amended at 65 FR 53533, 

53544 (Sept. 5, 2000) and codified at 13 

CFR part 121. The size standards are 

listed by NAICS code and industry 

description and are available at: http:// 

www.sba.gov/sites/default/files/files/

Size_Standards_Table.pdf. Residential 

furnace fan manufacturing is classified 

under NAICS 333415, ‘‘AirConditioning and Warm Air Heating 

Equipment and Commercial and 

Industrial Refrigeration Equipment 

Manufacturing.’’ The SBA sets a 

threshold of 750 employees or less for 

an entity to be considered as a small 

business for this category. 

To estimate the number of companies 

that could be small business 

manufacturers of products covered by 

this rulemaking, DOE conducted a 

market survey using available public 

information to identify potential small 

manufacturers. DOE’s research involved 

public databases (e.g., AHRI Directory,78

the SBA Database 79), individual 

company Web sites, and market 

research tools (e.g., Hoovers Web site 80) 

to create a list of companies that 

manufacture or sell products covered by 

this rulemaking. DOE also asked 

stakeholders and industry 

representatives if they were aware of 

any other small manufacturers during 

manufacturer interviews and at DOE 

public meetings. DOE reviewed 

publicly-available data and contacted 

select companies on its list, as 

necessary, to determine whether they 

met the SBA’s definition of a small 

business manufacturer of covered 

residential furnace fans. DOE screened 

out companies that do not offer 

products covered by this rulemaking, do 

not meet the definition of a ‘‘small 

business,’’ or are foreign owned and 

operated. 

DOE initially identified 38 

manufacturers of residential furnace fan 

products sold in the U.S. DOE then 

determined that 23 were large 

manufacturers or manufacturers that are 

foreign owned and operated. DOE was 

able to determine that 15 domestic 

manufacturers meet the SBA’s 

definition of a ‘‘small business’’ and 

manufacture products covered by this 

rulemaking. 

Manufacturer Participation 

Before issuing this Notice, DOE 

attempted to contact all the small 

business manufacturers of residential 

furnace fans it had identified. One of the 

small businesses consented to being 

interviewed during the MIA interviews. 

DOE also obtained information about 

small business impacts while 

interviewing large manufacturers. 

Industry Structure 

The 15 identified domestic 

manufacturers of residential furnace 

fans that qualify as small businesses 

under the SBA size standard account for 

a small fraction of industry shipments. 

Generally, manufacturers of furnaces are 

also manufacturers of furnace fan 

products. The market for residential gas 

furnaces is almost completely held by 

seven large manufacturers, and small 

manufacturers in total account for only 

1 percent of unit sales in the market. 

These seven large manufacturers also 

control 97 percent of the market for 

central air conditioners. The market for 

mobile home furnaces is primarily held 

by one large manufacturer. In contrast, 

the market for domestic oil furnaces is 

almost entirely comprised of small 

manufacturers. 

Comparison Between Large and Small 

Entities 

Today’s standards for residential 

furnace fans could cause small 

manufacturers to be at a disadvantage 

relative to large manufacturers. One way 

in which small manufacturers could be 

at a disadvantage is that they may be 

disproportionately affected by product 

conversion costs. Product redesign, 

testing, and certification costs tend to be 

fixed per basic model and do not scale 

with sales volume. For each model, 

small businesses must make 

investments in research and 

development to redesign their products, 

but because they have lower sales 

volumes, they must spread these costs 

across fewer units. In addition, because 

small manufacturers have fewer 

engineers than large manufacturers, they 

would need to allocate a greater portion 

of their available resources to meet a 

standard. Since engineers may need to 

spend more time redesigning and testing 

existing models as a result of the new 

standard, they may have less time to 

develop new products. 

Furthermore, smaller manufacturers 

may lack the purchasing power of larger 

manufacturers. For example, since 

motor suppliers give discounts to 

manufacturers based on the number of 

motors they purchase, larger 

manufacturers may have a pricing 

advantage because they have higher 

volume purchases. This purchasing 

power differential between high-volume 

and low-volume orders applies to other 

furnace fan components as well, 

including the impeller fan blade, 

transformer, and capacitor. 

2. Description and Estimate of 

Compliance Requirements 

Since the standard in today’s final 

rule for residential furnace fans could 

cause small manufacturers to be at a 

disadvantage relative to large 

manufacturers, DOE cannot certify that 

today’s standards would not have a 

significant impact on a significant 

number of small businesses, and 

consequently, DOE has prepared this 

FRFA. 

At TSL 4, the level adopted in today’s 

document, DOE estimates capital 

conversion costs of $0.14 million and 

product conversion costs of $0.23 

million over a five-year conversion 

period for a typical small manufacturer. 

This is compared to capital conversion 

costs of $0.59 and product conversion 

costs of $1.00 million over a five-year 

conversion period for a typical large 

manufacturer. These costs and their 

impacts are described in detail below. 

To estimate how small manufacturers 

would be potentially impacted, DOE 

used the market share of small 

manufacturers to estimate the annual 

revenue, earnings before interest and tax 

(EBIT), and research and development 

(R&D) expense for a typical small 

manufacturer. DOE then compared these 

costs to the required product conversion 

costs at each TSL for both an average 

small manufacturer and an average large 

manufacturer. Table VI.1 and VI.2 show 

the capital and product conversion costs 

for a typical small manufacturer versus 

those of a typical large manufacturer. 

Tables VI.3 and VI.4 report the total 

conversion costs as a percentage of 

annual R&D expense, annual revenue, 

and EBIT for a typical small and large 

manufacturer, respectively. In the 

following tables, TSL 4 represents the 

adopted standard. 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38205 

TABLE VI.1—COMPARISON OF TYPICAL SMALL AND LARGE MANUFACTURER’S CAPITAL CONVERSION COSTS

Capital 

conversion 

costs for 

typical small 

manufacturer 

(in 2013$ 

millions) 

Capital 

conversion 

costs for 

typical large 

manufacturer 

(in 2013$ 

millions) 

TSL 1 ....................................................................................................................................................................... 0.08 0.35 

TSL 2 ....................................................................................................................................................................... 0.10 0.44 

TSL 3 ....................................................................................................................................................................... 0.11 0.46 

TSL 4 ....................................................................................................................................................................... 0.14 0.59 

TSL 5 ....................................................................................................................................................................... 0.14 0.62 

TSL 6 ....................................................................................................................................................................... 1.24 5.28 

TABLE VI.2:—COMPARISON OF TYPICAL SMALL AND LARGE MANUFACTURER’S PRODUCT CONVERSION COSTS

Product 

conversion 

costs for 

typical small 

manufacturer 

(in 2013$ 

millions) 

Product 

conversion 

costs for 

typical large 

manufacturer 

(in 2013$ 

millions) 

TSL 1 ....................................................................................................................................................................... 0.17 0.74 

TSL 2 ....................................................................................................................................................................... 0.22 0.93 

TSL 3 ....................................................................................................................................................................... 0.23 0.99 

TSL 4 ....................................................................................................................................................................... 0.23 1.00 

TSL 5 ....................................................................................................................................................................... 0.25 1.06 

TSL 6 ....................................................................................................................................................................... 0.27 1.15 

TABLE VI.3—IMPACTS OF CONVERSION COSTS ON A SMALL MANUFACTURER

Capital conversion cost 

as a percentage of annual 

capital 

expenditures 

Product conversion cost 

as a percentage of annual 

R&D expense 

Total conversion cost as a 

percentage of 

annual 

revenue 

Total conversion cost as a 

percentage of 

annual EBIT 

TSL 1 ............................................................................................................... 69% 185% 5% 72% 

TSL 2 ............................................................................................................... 86% 232% 6% 90% 

TSL 3 ............................................................................................................... 92% 249% 7% 96% 

TSL 4 ............................................................................................................... 117% 250% 8% 105% 

TSL 5 ............................................................................................................... 122% 266% 8% 111% 

TSL 6 ............................................................................................................... 1048% 289% 31% 427% 

TABLE VI.4—IMPACTS OF CONVERSION COSTS ON A LARGE MANUFACTURER

Capital conversion cost 

as a percentage of annual 

capital 

expenditures 

Product conversion cost 

as a percentage of annual 

R&D 

expense 

Total conversion cost as a 

percentage of 

annual 

revenue 

Total conversion cost as a 

percentage of 

annual EBIT 

TSL 1 ............................................................................................................... 3% 8% 0% 3%

TSL 2 ............................................................................................................... 4% 10% 0% 4% 

TSL 3 ............................................................................................................... 4% 11% 0% 4% 

TSL 4 ............................................................................................................... 5% 11% 0% 5% 

TSL 5 ............................................................................................................... 5% 11% 0% 5% 

TSL 6 ............................................................................................................... 45% 12% 1% 18% 

Based on the results in Table VI.1 and 

Table VI.2, DOE understands that the 

potential conversions costs faced by 

small manufacturers may be 

proportionally greater than those faced 

by larger manufacturers. Small 

manufacturers have less engineering 

staff and lower R&D budgets. They also 

have lower capital expenditures 

annually. As a result, the conversion 

costs incurred by a small manufacturer 

would likely be a larger percentage of its 

annual capital expenditures, R&D 

expenses, revenue, and EBIT, than those 

for a large manufacturer. 

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38206 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

3. Duplication, Overlap, and Conflict 

with Other Rules and Regulations 

DOE is not aware of any rules or 

regulations that duplicate, overlap, or 

conflict with the rule being adopted 

today. 

4. Significant Alternatives to the Rule 

The discussion above analyzes 

impacts on small businesses that would 

result from the other TSLs DOE 

considered. Although TSLs lower than 

the proposed TSLs would be expected 

to reduce the impacts on small entities, 

DOE is required by EPCA to establish 

standards that achieve the maximum 

improvement in energy efficiency that is 

technologically feasible and 

economically justified, and result in a 

significant conservation of energy. Thus, 

DOE rejected the lower TSLs. 

In addition to the other TSLs being 

considered, the NOPR TSD includes a 

regulatory impact analysis in chapter 

17. For residential furnace fans, this 

report discusses the following policy 

alternatives: (1) No standard, (2) 

consumer rebates, (3) consumer tax 

credits, (4) manufacturer tax credits, and 

(5) early replacement. DOE does not 

intend to consider these alternatives 

further because they are either not 

feasible to implement without authority 

and funding from Congress, or are 

expected to result in energy savings that 

are much smaller (ranging from less 

than 1 percent to less than 31 percent) 

than those that would be achieved by 

the considered energy conservation 

standards. 

C. Review Under the Paperwork 

Reduction Act 

Manufacturers of furnace fans, or their 

third party representatives, must certify 

to DOE that their products comply with 

any applicable energy conservation 

standard. In certifying compliance, 

manufacturers or their third-party 

representatives must test their 

equipment according to the DOE test 

procedure for furnace fans, including 

any amendments adopted for that test 

procedure. Manufacturers or their thirdparty representatives must then submit 

certification reports and compliance 

statements using DOE’s electronic Webbased tool, the Compliance and 

Certification Management System 

(CCMS), regarding product 

characteristics and energy consumption 

information regarding basic models of 

furnace fans distributed in commerce in 

the U.S. CCMS uses product-specific 

templates that manufacturers are 

required to use when submitting 

certification data to DOE. See http://

www.regulations.doe.gov/ccms. 

The collection-of-information 

requirement for furnace fan certification 

is subject to review and approval by 

OMB under the Paperwork Reduction 

Act (PRA). This requirement has been 

submitted to OMB for approval. Public 

reporting burden for the certification is 

estimated to average 30 hours per 

response, including the time for 

reviewing instructions, searching 

existing data sources, gathering and 

maintaining the data needed, and 

completing and reviewing the collection 

of information. Note that the 

certification and recordkeeping 

requirements for certain consumer 

products in 10 CFR part 430 have 

previously been approved by OMB and 

assigned OMB control number 1910– 

1400; the certification requirement for 

furnace fans will be included in this 

collection once approved by OMB. DOE 

will notify the public of OMB approval 

through a Federal Register notice. 

Public comment is sought regarding: 

whether this proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information shall have practical utility; 

the accuracy of the burden estimate; 

ways to enhance the quality, utility, and 

clarity of the information to be 

collected; and ways to minimize the 

burden of the collection of information, 

including through the use of automated 

collection techniques or other forms of 

information technology. Send comments 

on these or any other aspects of the 

collection of information to the DOE 

program official listed in the ADDRESSES

section above, and email to Chad_S._

Whiteman@omb.eop.gov. 

Notwithstanding any other provision 

of the law, no person is required to 

respond to, nor shall any person be 

subject to a penalty for failure to comply 

with, a collection of information subject 

to the requirements of the PRA, unless 

that collection of information displays a 

currently valid OMB Control Number. 

D. Review Under the National 

Environmental Policy Act of 1969 

Pursuant to the National 

Environmental Policy Act (NEPA) of 

1969, DOE has determined that this rule 

fits within the category of actions 

included in Categorical Exclusion (CX) 

B5.1 and otherwise meets the 

requirements for application of a CX. 

See 10 CFR Part 1021, App. B, B5.1(b); 

1021.410(b) and Appendix B, B(1)–(5). 

The rule fits within the category of 

actions because it is a rulemaking that 

establishes energy conservation 

standards for consumer products or 

industrial equipment, and for which 

none of the exceptions identified in CX 

B5.1(b) apply. Therefore, DOE has made 

a CX determination for this rulemaking, 

and DOE does not need to prepare an 

Environmental Assessment or 

Environmental Impact Statement for 

this rule. DOE’s CX determination for 

this rule is available at http://

cxnepa.energy.gov/. 

E. Review Under Executive Order 13132 

Executive Order 13132, ‘‘Federalism.’’ 

64 FR 43255 (August 10, 1999) imposes 

certain requirements on Federal 

agencies formulating and implementing 

policies or regulations that preempt 

State law or that have Federalism 

implications. The Executive Order 

requires agencies to examine the 

constitutional and statutory authority 

supporting any action that would limit 

the policymaking discretion of the 

States and to carefully assess the 

necessity for such actions. The 

Executive Order also requires agencies 

to have an accountable process to 

ensure meaningful and timely input by 

State and local officials in the 

development of regulatory policies that 

have Federalism implications. On 

March 14, 2000, DOE published a 

statement of policy describing the 

intergovernmental consultation process 

it will follow in the development of 

such regulations. 65 FR 13735. DOE has 

examined this final rule and has 

determined that it would not have a 

substantial direct effect on the States, on 

the relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. EPCA governs and 

prescribes Federal preemption of State 

regulations as to energy conservation for 

the products that are the subject of 

today’s final rule. States can petition 

DOE for exemption from such 

preemption to the extent, and based on 

criteria, set forth in EPCA. (42 U.S.C. 

6297) No further action is required by 

Executive Order 13132. 

F. Review Under Executive Order 12988 

With respect to the review of existing 

regulations and the promulgation of 

new regulations, section 3(a) of 

Executive Order 12988, ‘‘Civil Justice 

Reform,’’ imposes on Federal agencies 

the general duty to adhere to the 

following requirements: (1) Eliminate 

drafting errors and ambiguity; (2) write 

regulations to minimize litigation; (3) 

provide a clear legal standard for 

affected conduct rather than a general 

standard; and (4) promote simplification 

and burden reduction. 61 FR 4729 (Feb. 

7, 1996). Regarding the review required 

by section 3(a), section 3(b) of Executive 

Order 12988 specifically requires that 

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Executive agencies make every 

reasonable effort to ensure that the 

regulation: (1) Clearly specifies the 

preemptive effect, if any; (2) clearly 

specifies any effect on existing Federal 

law or regulation; (3) provides a clear 

legal standard for affected conduct 

while promoting simplification and 

burden reduction; (4) specifies the 

retroactive effect, if any; (5) adequately 

defines key terms; and (6) addresses 

other important issues affecting clarity 

and general draftsmanship under any 

guidelines issued by the Attorney 

General. Section 3(c) of Executive Order 

12988 requires Executive agencies to 

review regulations in light of applicable 

standards in section 3(a) and section 

3(b) to determine whether they are met 

or it is unreasonable to meet one or 

more of them. DOE has completed the 

required review and determined that, to 

the extent permitted by law, this final 

rule meets the relevant standards of 

Executive Order 12988. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA) requires 

each Federal agency to assess the effects 

of Federal regulatory actions on State, 

local, and Tribal governments and the 

private sector. Public Law 104–4, sec. 

201 (codified at 2 U.S.C. 1531). For a 

proposed regulatory action likely to 

result in a rule that may cause the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector of $100 million or more 

in any one year (adjusted annually for 

inflation), section 202 of UMRA requires 

a Federal agency to publish a written 

statement that estimates the resulting 

costs, benefits, and other effects on the 

national economy. (2 U.S.C. 1532(a), (b)) 

The UMRA also requires a Federal 

agency to develop an effective process 

to permit timely input by elected 

officers of State, local, and Tribal 

governments on a ‘‘significant 

intergovernmental mandate,’’ and 

requires an agency plan for giving notice 

and opportunity for timely input to 

potentially affected small governments 

before establishing any requirements 

that might significantly or uniquely 

affect them. On March 18, 1997, DOE 

published a statement of policy on its 

process for intergovernmental 

consultation under UMRA. 62 FR 

12820. DOE’s policy statement is also 

available at http://energy.gov/sites/

prod/files/gcprod/documents/umra_

97.pdf. 

Although today’s final rule, which 

adopts new energy conservation 

standards for residential furnace fans, 

does not contain a Federal 

intergovernmental mandate, it may 

require annual expenditures of $100 

million or more by the private sector. 

Specifically, the final rule could require 

expenditures of $100 million or more, 

including: (1) Investment in research 

and development and in capital 

expenditures by residential furnace fans 

manufacturers in the years between the 

final rule and the compliance date for 

the new standards, and (2) incremental 

additional expenditures by consumers 

to purchase higher-efficiency residential 

furnace fans, starting at the compliance 

date for the applicable standard. 

Section 202 of UMRA authorizes a 

Federal agency to respond to the content 

requirements of UMRA in any other 

statement or analysis that accompanies 

the final rule. 2 U.S.C. 1532(c). The 

content requirements of section 202(b) 

of UMRA relevant to a private sector 

mandate substantially overlap the 

economic analysis requirements that 

apply under section 325(o) of EPCA and 

Executive Order 12866. The 

SUPPLEMENTARY INFORMATION section of 

this final rule and the ‘‘Regulatory 

Impact Analysis’’ section of the TSD for 

this final rule respond to those 

requirements. 

Under section 205 of UMRA, the 

Department is obligated to identify and 

consider a reasonable number of 

regulatory alternatives before 

promulgating a rule for which a written 

statement under section 202 is required. 

2 U.S.C. 1535(a). DOE is required to 

select from those alternatives the most 

cost-effective and least burdensome 

alternative that achieves the objectives 

of the rule unless DOE publishes an 

explanation for doing otherwise, or the 

selection of such an alternative is 

inconsistent with law. As required by 42 

U.S.C. 6295(f) and (o), today’s final rule 

establishes energy conservation 

standards for residential furnace fans 

that are designed to achieve the 

maximum improvement in energy 

efficiency that DOE has determined to 

be both technologically feasible and 

economically justified. A full discussion 

of the alternatives considered by DOE is 

presented in the ‘‘Regulatory Impact 

Analysis’’ section of the TSD for this 

final rule. 

H. Review Under the Treasury and 

General Government Appropriations 

Act, 1999 

Section 654 of the Treasury and 

General Government Appropriations 

Act, 1999 (Pub. L. 105–277) requires 

Federal agencies to issue a Family 

Policymaking Assessment for any rule 

that may affect family well-being. This 

rule would not have any impact on the 

autonomy or integrity of the family as 

an institution. Accordingly, DOE has 

concluded that it is not necessary to 

prepare a Family Policymaking 

Assessment. 

I. Review Under Executive Order 12630 

Pursuant to Executive Order 12630, 

‘‘Governmental Actions and Interference 

with Constitutionally Protected Property 

Rights,’’ 53 FR 8859 (March 18, 1988), 

DOE has determined that this regulation 

would not result in any takings that 

might require compensation under the 

Fifth Amendment to the U.S. 

Constitution. 

J. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

Section 515 of the Treasury and 

General Government Appropriations 

Act, 2001 (44 U.S.C. 3516 note) provides 

for Federal agencies to review most 

disseminations of information to the 

public under information quality 

guidelines established by each agency 

pursuant to general guidelines issued by 

OMB. OMB’s guidelines were published 

at 67 FR 8452 (Feb. 22, 2002), and 

DOE’s guidelines were published at 67 

FR 62446 (Oct. 7, 2002). DOE has 

reviewed today’s final rule under the 

OMB and DOE guidelines and has 

concluded that it is consistent with 

applicable policies in those guidelines. 

K. Review Under Executive Order 13211 

Executive Order 13211, ‘‘Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use,’’ 66 FR 28355 (May 

22, 2001), requires Federal agencies to 

prepare and submit to OIRA at OMB, a 

Statement of Energy Effects for any 

proposed significant energy action. A 

‘‘significant energy action’’ is defined as 

any action by an agency that 

promulgates or is expected to lead to 

promulgation of a final rule, and that: 

(1) Is a significant regulatory action 

under Executive Order 12866, or any 

successor order; and (2) is likely to have 

a significant adverse effect on the 

supply, distribution, or use of energy, or 

(3) is designated by the Administrator of 

OIRA as a significant energy action. For 

any proposed significant energy action, 

the agency must give a detailed 

statement of any adverse effects on 

energy supply, distribution, or use 

should the proposal be implemented, 

and of reasonable alternatives to the 

action and their expected benefits on 

energy supply, distribution, and use. 

DOE has concluded that today’s 

regulatory action, which sets forth 

energy conservation standards for 

residential furnace fans, is not a 

significant energy action because the 

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38208 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 

new standards are not likely to have a 

significant adverse effect on the supply, 

distribution, or use of energy, nor has it 

been designated as such by the 

Administrator at OIRA. Accordingly, 

DOE has not prepared a Statement of 

Energy Effects on the final rule. 

L. Review Under the Information 

Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in 

consultation with the Office of Science 

and Technology Policy (OSTP), issued 

its Final Information Quality Bulletin 

for Peer Review (the Bulletin). 70 FR 

2664 (Jan. 14, 2005). The Bulletin 

establishes that certain scientific 

information shall be peer reviewed by 

qualified specialists before it is 

disseminated by the Federal 

Government, including influential 

scientific information related to agency 

regulatory actions. The purpose of the 

bulletin is to enhance the quality and 

credibility of the Government’s 

scientific information. Under the 

Bulletin, the energy conservation 

standards rulemaking analyses are 

‘‘influential scientific information,’’ 

which the Bulletin defines as ‘‘scientific 

information the agency reasonably can 

determine will have or does have a clear 

and substantial impact on important 

public policies or private sector 

decisions.’’ Id. at 2667. 

In response to OMB’s Bulletin, DOE 

conducted formal in-progress peer 

reviews of the energy conservation 

standards development process and 

analyses and has prepared a Peer 

Review Report pertaining to the energy 

conservation standards rulemaking 

analyses. Generation of this report 

involved a rigorous, formal, and 

documented evaluation using objective 

criteria and qualified and independent 

reviewers to make a judgment as to the 

technical/scientific/business merit, the 

actual or anticipated results, and the 

productivity and management 

effectiveness of programs and/or 

projects. The ‘‘Energy Conservation 

Standards Rulemaking Peer Review 

Report’’ dated February 2007 has been 

disseminated and is available at the 

following Web site: 

www1.eere.energy.gov/buildings/

appliance_standards/peer_review.html. 

M. Congressional Notification 

As required by 5 U.S.C. 801, DOE will 

report to Congress on the promulgation 

of this rule prior to its effective date. 

The report will state that it has been 

determined that the rule is a ‘‘major 

rule’’ as defined by 5 U.S.C. 804(2). 

VII. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of this final rule. 

List of Subjects 

10 CFR Part 429 

Administrative practice and 

procedure, Commercial equipment, 

Confidential business information, 

Energy conservation, Household 

appliances, Imports, Reporting and 

recordkeeping requirements. 

10 CFR Part 430 

Administrative practice and 

procedure, Confidential business 

information, Energy conservation, 

Household appliances, Imports, 

Intergovernmental relations, Small 

businesses. 

Issued in Washington, DC, on June 25, 

2014. 

David T. Danielson, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

For the reasons stated in the 

preamble, DOE amends parts 429 and 

430 of chapter II, subchapter D, of title 

10 of the Code of Federal Regulations, 

as set forth below: 

PART 429—CERTIFICATION, 

COMPLIANCE, AND ENFORCEMENT 

FOR CONSUMER PRODUCTS AND 

COMMERCIAL AND INDUSTRIAL 

EQUIPMENT 

■ 1. The authority citation for part 429 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6317. 

§ 429.12 [Amended] 

■ 2. Section 429.12 is amended by: 

■ a. Removing in paragraph (b)(13) 

‘‘429.54’’ and adding in its place 

‘‘429.58’’; 

■ b. Removing in paragraph (d) table, 

first column, second row (i.e., for 

products with a submission deadline of 

May 1st) the word ‘‘and’’ and adding 

‘‘and Residential furnace fans’’ at the 

end of the listed products. 

■ 3. Section 429.58 is amended by: 

■ a. Adding in paragraph (a)(2) 

introductory text ‘‘within the scope of 

appendix AA of subpart B of part 430’’ 

after ‘‘basic model of furnace fan’’; and 

■ b. Adding paragraph (b). 

The addition reads as follows: 

§ 429.58 Furnace fans. 

* * * * * 

(b) Certification reports. (1) The 

requirements of § 429.12 are applicable 

to residential furnace fans; and 

(2) Pursuant to § 429.12(b)(13), a 

certification report shall include the 

following public product-specific 

information: The fan energy rating (FER) 

in watts per thousand cubic feet per 

minute (W/1000 cfm); the calculated 

maximum airflow at the reference 

system external static pressure (ESP) in 

cubic feet per minute (cfm); the control 

system configuration for achieving the 

heating and constant-circulation 

airflow-control settings required for 

determining FER as specified in the 

furnace fan test procedure (10 CFR part 

430, subpart B, appendix AA); the 

measured steady-state gas, oil, or 

electric heat input rate (QIN) in the 

heating setting required for determining 

FER; and for modular blowers, the 

manufacturer and model number of the 

electric heat resistance kit with which it 

is equipped for certification testing. 

PART 430—ENERGY CONSERVATION 

PROGRAM FOR CONSUMER 

PRODUCTS 

■ 4. The authority citation for part 430 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6309; 28 U.S.C. 

2461 note. 

■ 5. Section 430.2 is amended by adding 

definitions for ‘‘small-duct high-velocity 

(SDHV) electric furnace’’ and ‘‘smallduct high-velocity (SDHV) modular 

blower’’ in alphabetical order to read as 

follows: 

§ 430.2 Definitions. 

* * * * * 

Small-duct high-velocity (SDHV) 

electric furnace means an electric 

furnace that: 

(1) Is designed for, and produces, at 

least 1.2 inches of external static 

pressure when operated at the certified 

air volume rate of 220–350 CFM per 

rated ton of cooling in the highest 

default cooling airflow-control setting; 

and 

(2) When applied in the field, uses 

high velocity room outlets generally 

greater than 1,000 fpm that have less 

than 6.0 square inches of free area. 

Small-duct high-velocity (SDHV) 

modular blower means a modular 

blower that: 

(1) Is designed for, and produces, at 

least 1.2 inches of external static 

pressure when operated at the certified 

air volume rate of 220–350 CFM per 

rated ton of cooling in the highest 

default cooling airflow-controls setting; 

and 

(2) When applied in the field, uses 

high velocity room outlets generally 

greater than 1,000 fpm that have less 

than 6.0 square inches of free area. 

* * * * * 

■ 6. Section 430.32 is amended by 

adding paragraph (y) to read as follows: 

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Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38209 

§ 430.32 Energy and water conservation 

standards and their effective dates. 

* * * * * 

(y) Residential furnace fans. 

Residential furnace fans incorporated in 

the products listed in Table 1 of this 

paragraph and manufactured on and 

after July 3, 2019, shall have a fan 

energy rating (FER) value that meets or 

is less than the following values: 

TABLE 1—ENERGY CONSERVATION STANDARDS FOR COVERED RESIDENTIAL FURNACE FANS* 

Product class FER ** (Watts/cfm) 

Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG–NC) ..................................................................... FER = 0.044 × QMax + 182 

Non-Weatherized, Condensing Gas Furnace Fan (NWG–C) ............................................................................... FER = 0.044 × QMax + 195 

Weatherized Non-Condensing Gas Furnace Fan (WG–NC) ................................................................................ FER = 0.044 × QMax + 199 

Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO–NC) ....................................................................... FER = 0.071 × QMax + 382 

Non-Weatherized Electric Furnace/Modular Blower Fan (NWEF/NWMB) ........................................................... FER = 0.044 × QMax + 165 

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan (MH–NWG–NC) ...................................... FER = 0.071 × QMax + 222 

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan (MH–NWG–C) ................................................. FER = 0.071 × QMax + 240 

Mobile Home Electric Furnace/Modular Blower Fan (MH–EF/MB) ...................................................................... FER = 0.044 × QMax + 101 

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

Mobile Home Weatherized Gas Furnace Fan (MH–WG) ** .................................................................................. Reserved 

* Furnace fans incorporated into hydronic air handlers, SDHV modular blowers, SDHV electric furnaces, and CAC/HP indoor units are not subject to the standards listed in this table. 

** QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the final DOE test procedure at 10 CFR part 430, subpart 

B, appendix AA. 

Note: The following will not appear in the 

Code of Federal Regulations. 

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EricJ. Fygi 

Deputy General Counsel 

Department ofEnergy 

Washington, DC 20585 

Dear Deputy General Counsel Fygi: 

U.S. DEPARTMENT OF JUSTICE 

Antitrust Division 

WILLIAM J. BAER 

Assistant Attorney General 

RFK Main Justice Building 

950 Pe.llllS)'lvania Avenue, N.W. 

Washington. D.C. 20530-0001 

(202)514-2401/ (202)616-2645 (F~) 

December 20, 2013 

I am responding to your October 23, 2013 letter seeking the views ofthe Attontey 

Gener~ about the potential impact on competition of proposed energy conservation 

standards for products that use electricity for purposes of circulating air through duct 

work in residences (also referred to· as "residential furnace fans''). Your request was 

submitted undet Section 325(o )(2)(B)(i)(V) of the Energy Policy and Conservation Act, 

as amended (ECPA), 42 U.S.C. 6295(o )(2)(B)(i)(V), which requires the Attorney General 

to make a detennination of the impact of any lessening of competition that is likely to 

result from the imposition of proposed energy conservation standards. The Attorney 

General's responsibility for responding to requests from other departments about the 

effect of a program on competition has been delegated to the Assistant Attorney General 

for the Antitrust Division in 28 CFR § 0.40(g). 

In conducting its analysis the Antitrust Division examines whether a proposed 

standard may lessen competition, for example, by substantially limiting consumer choice, 

by placing certain manufacturers at an unjustified competitive disadvantage, or by 

inducing avoidable inefficiencies in production or distribution of particular products. A 

lessening of competition could result in higher prices to manufacturers and consumers, 

and perhaps thwart the intent of the revised standards by inducing substitution to less 

efficient products. · 

We have reviewed the proposed standards contained in the Notice of Proposed 

Ru1emaking (78 Fed. Reg. 207, October 25, 2013) (NOPR). We have also reviewed 

supplementary information submitted to the Attorney General by the Department of 

Energy, including the technical support document. Based on this review, our conclusion 
Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Rules and Regulations 38211 

[FR Doc. 2014–15387 Filed 7–2–14; 8:45 am] 

BILLING CODE 6450–01–P 


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2 

is that the proposed energy conservation standards for residential furnace fans are 

unlikely to have a significant adverse impact on competition. 

Enclosure