50122 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

1The Energy Policy and Conservation Act, as

amended by the National Energy Conservation

Policy Act, the National Appliance Energy

Conservation Act, the National Appliance Energy

Conservation Amendments of 1988, and the Energy

Policy Act of 1992, is referred to in this notice as

the ‘‘EPCA.’’ Part B of Title III is codified at 42

U.S.C. 6291 et seq.

DEPARTMENT OF ENERGY

Office of Energy Efficiency and

Renewable Energy

10 CFR Part 430

[Docket Numbers EE–RM–90–201 and EE–

RM–93–801–RAC]

RIN 1904–AA38

Energy Conservation Program for

Consumer Products: Final Rule

Regarding Energy Conservation

Standards for Room Air Conditioners

AGENCY: Office of Energy Efficiency and

Renewable Energy, Department of

Energy (DOE).

ACTION: Final Rule.

SUMMARY: The Department of Energy

(DOE or Department) has determined

that revised energy conservation

standards for room air conditioners will

result in a significant conservation of

energy, are technologically feasible, and

are economically justified. On this basis,

the Department is today amending the

existing energy conservation standards

for room air conditioners. The

Department projects the standards to

save 0.64 quad of energy through 2030,

which is likely to result in a cumulative

reduction of emissions of approximately

95,000 tons of nitrogen dioxide and 54

million tons of carbon dioxide.

EFFECTIVE DATE: The effective date of the

standards is October 1, 2000.

ADDRESSES: A copy of the Technical

Support Document (TSD) for this

product may be read at the DOE

Freedom of Information Reading Room,

U.S. Department of Energy, Forrestal

Building, Room 1E–190, 1000

Independence Avenue, SW.,

Washington, DC 20585, (202) 586–3142,

between the hours of 9:00 a.m. and 4:00

p.m., Monday through Friday, except

Federal holidays. Copies of the TSD

may be obtained from: U.S. Department

of Energy, Office of Energy Efficiency

and Renewable Energy, Forrestal

Building, Mail Station EE–43, 1000

Independence Avenue, SW.,

Washington, DC 20585. (202) 586–9127.

FOR FURTHER INFORMATION CONTACT:

Kathi Epping, U.S. Department of

Energy, Office of Energy Efficiency

and Renewable Energy, Forrestal

Building, Mail Station EE–43, 1000

Independence Avenue, SW.,

Washington, DC 20585, (202) 586–

7425

Eugene Margolis, Esq., U.S. Department

of Energy, Office of General Counsel,

Forrestal Building, Mail Station GC–

72, 1000 Independence Avenue, SW.,

Washington, D.C. 20585, (202) 586–

9507.

SUPPLEMENTARY INFORMATION:

I. Introduction

a. Authority

b. Background

II. Summary of Final Rule

III. Discussion of Comments

a. Room Air Conditioner Comments

1. Classes

2. Design Options

3. Engineering Simulation Model

4. Proposed Efficiency Standards

5. Other Comments

6. Other Comments Regarding FR Notice of

January 29, 1997

b. General Analytical Comments

IV. Analysis of Room Air Conditioner

Standards

a. Efficiency Levels Analyzed

b. Significance of Energy Savings

c. Economic Justification

1. Economic Impact on Manufacturers and

Consumers

2. Life-cycle Cost and Net Present Value

3. Energy Savings

4. Lessening of Utility or Performance of

Products

5. Impact of Lessening of Competition

6. Need of the Nation to Save Energy

7. Other Factors

d. Payback Period

e. Conclusion

V. Procedural Issues and Regulatory Review

a. Review Under the National

Environmental Policy Act

b. Review Under Executive Order 12866,

‘‘Regulatory Planning and Review’’

c. Review Under the Regulatory Flexibility

Act

d. Review Under the Paperwork Reduction

Act

e. Review Under Executive Order 12988,

‘‘Civil Justice Reform’’

f. ‘‘Takings’’ Assessment Review

g. Federalism Review

h. Review Under the Unfunded Mandates

Reform Act

i. Review Under Small Business Regulatory

Enforcement Fairness Act of 1996

I. Introduction

a. Authority

Part B of Title III of the Energy Policy

and Conservation Act, Pub. L. 94–163,

as amended by the National Energy

Conservation Policy Act (NECPA), Pub.

L. 95–619, the National Appliance

Energy Conservation Act (NAECA), Pub.

L. 100–12, the National Appliance

Energy Conservation Amendments of

1988 (NAECA 1988), Pub. L. 100–357,

and the Energy Policy Act of 1992

(EPAct), Pub. L. 102–486,1 created the

Energy Conservation Program for

Consumer Products other than

Automobiles. The consumer products

subject to this program are called

‘‘covered products.’’ The covered

products specified by statute include

room air conditioners. EPCA, section

322, 42 U.S.C. 6292.

For room air conditioners, EPCA

prescribes an initial Federal energy

conservation standard effective in 1990

and specifies that the Department shall

publish a final rule no later than January

1, 1992, to determine if the 1990

standards should be amended. A second

review must be completed within five

years after publication of this final rule.

EPCA, section 325(c), 42 U.S.C. 6295(c).

Any new or amended standard is

required to be designed so as to achieve

the maximum improvement in energy

efficiency that is technologically

feasible and economically justified.

EPCA, 325(o)(2)(A), 42 U.S.C.

6295(o)(2)(A). The Secretary may not

prescribe any amended standard which

increases the maximum allowable

energy use or decreases the minimum

required energy efficiency of a covered

product. EPCA, section 325(o)(1), 42

U.S.C. 6295(o)(1).

Section 325(o)(2)(B) provides that

DOE, in determining whether a standard

is economically justified, must

determine whether the benefits of the

standard exceed its burdens, based, to

the greatest extent practicable, on a

weighing of the following seven factors:

(1) The economic impact of the

standard on the manufacturers and on

the consumers of the products subject to

such standard;

(2) The savings in operating costs

throughout the estimated average life of

the covered product in the type (or

class) compared to any increase in the

price of, in the initial charges for, or

maintenance expenses of, the covered

products which are likely to result from

the imposition of the standard;

(3) The total projected amount of

energy savings likely to result directly

from the imposition of the standard;

(4) Any lessening of the utility or the

performance of the covered products

likely to result from the imposition of

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 imposition of the

standard;

(6) The need for national energy

conservation; and

(7) Other factors the Secretary

considers relevant.

In addition, section 325(o)(2)(B)(iii)

establishes a rebuttable presumption of

economic justification in instances

where the Secretary determines that
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50123

2EE–RM–90–201 refers to the docket for the

September 1990 advance notice and the 1994

Proposed Rule. Docket No. EE–RM–93–801–RAC

contains the 1996 Draft Report, comments to the

1996 Draft Report, comments to the 1997 reopening

notice, and the supplemental analysis.

‘‘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.’’

b. Background

The purpose of this rulemaking is to

review the energy conservation

standards for room air conditioners. In

1990, DOE published an advance notice

of proposed rulemaking with regard to

standards for nine covered products,

including room air conditioners. 55 FR

39624 (September 28, 1990) (hereinafter

referred to as the September 1990

advance notice). The September 1990

advance notice presented the product

classes that DOE planned to analyze and

provided a detailed discussion of the

analytical methodology and models that

the Department expected to use.

On March 4, 1994, DOE published a

notice of proposed rulemaking (NOPR)

concerning eight products, including

room air conditioners. 59 FR 10464

(March 4, 1994) (hereinafter referred to

as the Proposed Rule). The standards

the Department proposed for room air

conditioners are shown in the following

table:

TABLE 1–1.—PROPOSED STANDARDS LEVELS FOR ROOM AIR CONDITIONERS

Product class

Energy efficiency ratio

Current standards

(effective January

1, 1990)

Standards proposed in 1994 Proposed Rule

1. Without reverse cycle, with louvered sides, and less than 6,000 Btu/h ............................................. 8.0 11.1

2. Without reverse cycle, with louvered sides, and 6,000 to 7,999 Btu/h ............................................... 8.5 10.3

3. Without reverse cycle, with louvered sides, and 8,000 to 13,999 Btu/h ............................................. 9.0 11.0

4. Without reverse cycle, with louvered sides, and 14,000 to 19,999 Btu/h ........................................... 8.8 11.1

5. Without reverse cycle, with louvered sides, and 20,000 Btu/h or more ............................................. 8.2 9.6

6. Without reverse cycle, without louvered sides, and less than 6,000 Btu/h ........................................ 8.0 10.7

7. Without reverse cycle, without louvered sides, and 6,000 to 7,999 Btu/h .......................................... 8.5 9.9

8. Without reverse cycle, without louvered sides, and 8,000 to 13,999 Btu/h ........................................ 8.5 10.7

9. Without reverse cycle, without louvered sides, and 14,000 to 19,999 Btu/h ...................................... 8.5 10.8

10. Without reverse cycle, without louvered sides, and 20,000 Btu/h or more ...................................... 8.2 9.3

11. With reverse cycle and with louvered sides ...................................................................................... 8.5 10.8

12. With reverse cycle and without louvered sides ................................................................................. 8.0 10.4

DOE received over 8,000 comments

during the comment period on the 1994

Proposed Rule and from participants at

public hearings held in Washington, DC

on April 5–7 and June 7–8, 1994. Most

of the comments related to other

products; twelve of the comments dealt

specifically with room air conditioners.

After reviewing the comments on the

proposed standards for room air

conditioners, the Department concluded

that a number of significant issues were

raised which required additional

analysis. In 1995, the Department

revised the analyses regarding room air

conditioners to account for the

comments and data received during the

public comment period. (This revised

analysis became the basis for the 1996

Draft Report.)

A moratorium was placed on

publication of proposed or final rules

for appliance efficiency standards as

part of the FY 1996 appropriations

legislation. Pub. L. 104–134. That

moratorium expired on September 30,

1996.

In 1995 and 1996, the Department

conducted a review of its process for

developing appliance energy efficiency

standards. This review resulted in the

publication of a final rule, entitled

‘‘Procedures for Consideration of New

or Revised Energy Conservation

Standards for Consumer Products’’

(hereinafter referred to as the Process

Rule). 61 FR 36973 (July 15, 1996).

Although the new procedures in the

Process Rule do not apply to this

rulemaking, 61 FR at 36980, DOE has

employed an approach consistent with

the new procedures in completing work

on this rule. In keeping with the new

process, and based on comments

received in response to the Proposed

Rule, DOE distributed for comment a

Draft Report on the Potential Impact of

Alternative Energy Efficiency Levels for

Room Air Conditioners (hereinafter

referred to as Draft Report). The Draft

Report contained DOE’s revised

analysis, begun in 1995, examining five

alternative efficiency levels. The Draft

Report was distributed to a mailing list

that included all of the commenters on

the proposed rule on room air

conditioners on May 5, 1996. (EE–RM–

93–801–RAC2 No. 1 and No. 2.) The

letter invited comment on the Draft

Report by no later than July 1, 1996.

Between the beginning of June and

the end of November 1996, DOE

received six comments on the Draft

Report and related issues. DOE officials

also held meetings on September 26

with representatives of the Association

of Home Appliance Manufacturers

(AHAM) and interested manufacturers

and on September 27 with the American

Council For an Energy Efficient

Economy (ACEEE), the Alliance to Save

Energy, the Natural Resources Defense

Council (NRDC), and State energy

officials from California, Florida, and

Oregon. (EE–RM–93–801–RAC No. 11

and No. 12.)

On the basis of these comments, DOE

prepared a TSD which comprises the

Draft Report and a supplemental

analysis conducted on a candidate

standard level not included in the Draft

Report. The supplemental analysis

focused on a set of efficiency levels for

the same 9 classes analyzed in the

proposed rule. (EE–RM–93–801–RAC

No. 13.)

In a Federal Register (FR) Notice

dated January 29, 1997, the Department

reopened the comment period for room

air conditioners for 15 days. This notice

announced the availability of the

supplemental analysis and gave

indication of the standard levels the

Department was inclined to promulgate

in the final rule. The Department

received 4 comments in response to this

notice.

II. Summary of Final Rule

The standards set forth in today’s rule

are projected to save approximately 0.64

quad of energy through 2030. Although
50124 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

the standards in the Proposed Rule were

projected to save 2.2 quads, DOE has

concluded, based on public comment

and further analysis, that the proposed

standards are not economically justified.

The standard levels set forth in today’s

rule are significantly less costly than

those standards in the proposed rule.

The following table presents the

standards established in today’s rule:

Product class

Energy efficiency ratio, effective as of

January 1, 1990 October 1, 2000

1. Without reverse cycle, with louvered sides, and less than 6,000 Btu/h ............................................. 8.0 9.7

2. Without reverse cycle, with louvered sides, and 6,000 to 7,999 Btu/h ............................................... 8.5 9.7

3. Without reverse cycle, with louvered sides, and 8,000 to 13,999 Btu/h ............................................. 9.0 9.8

4. Without reverse cycle, with louvered sides, and 14,000 to 19,999 Btu/h ........................................... 8.8 9.7

5. Without reverse cycle, with louvered sides, and 20,000 Btu/h or more ............................................. 8.2 8.5

6. Without reverse cycle, without louvered sides, and less than 6,000 Btu/h ........................................ 8.0 9.0

7. Without reverse cycle, without louvered sides, and 6,000 to 7,999 Btu/h .......................................... 8.5 9.0

8. Without reverse cycle, without louvered sides, and 8,000 to 13,999 Btu/h ........................................ 8.5 8.5

9. Without reverse cycle, without louvered sides, and 14,000 to 19,999 Btu/h ...................................... 8.5 8.5

10. Without reverse cycle, without louvered sides, and 20,000 Btu/h or more ...................................... 8.2 8.5

11. With reverse cycle, with louvered sides, and less than 20,000 Btu/h .............................................. 8.5 9.0

12. With reverse cycle, without louvered sides, and less than 14,000 Btu/h ......................................... 8.0 8.5

13. With reverse cycle, with louvered sides, and 20,000 Btu/h or more ................................................ 8.5 8.5

14. With reverse cycle, without louvered sides, and 14,000 Btu/h or more ........................................... 8.0 8.0

15. Casement-Only .................................................................................................................................. ( 1 ) 8.7

16. Casement-Slider ................................................................................................................................ ( 1 ) 9.5

1 Casement-only and casement-slider room air conditioners are not separate product classes under standards effective January 1, 1990. These

units are subject to the applicable standards in classes 1 through 14 based on unit capacity and the presence or absence of louvered sides and

a reverse cycle.

III. Discussion of Comments

a. Room Air Conditioner Comments.

This section addresses comments to

the 1994 Proposed Rule, the 1996 Draft

Report, and the 1997 reopening notice.

The ‘‘RAC’’ notation signifies that the

following comment is from Docket No.

EE–RM–93–801–RAC which contains

comments to the 1996 Draft Report and

the 1997 reopening notice. All other

comments are from Docket No. EE–RM–

90–201 which contains comments from

the 1994 Proposed Rule. Note that the

Draft Report addressed many of the

comments to the 1994 Proposed Rule.

1. Classes

In the 1994 Proposed Rule, the

Department proposed fourteen classes of

room air conditioners. These product

classes consisted of five categories; units

with side louvers, units without side

louvers, units with reversing valve and

with side louvers, units with reversing

valve and without side louvers, and

casement-type units. There were five

class divisions by capacity within each

of the two categories without reversing

valves. Casement-type units were

divided into the following two classes:

casement only units and casementslider units.

Units with louvered sides and

without reversing valves. The California

Energy Commission (CEC) proposed a

reduction in product classes from

twelve to four, eliminating the class

divisions based on capacity. They stated

that the profusion of classes makes

comparison of models difficult since the

label-reading consumer does not

compare all the models available. In

addition, disincentives could be created

that discourage manufacturers from

making efficiency improvements to

models near capacity breakpoints

because design changes can push the

capacity into the next category which

has a higher or lower standard level.

(CEC, No. 539 at 2–3.) Fedders

Corporation (Fedders) proposed that the

three smallest capacity classes for units

with side louvers and without reversing

valve be consolidated into a single class.

It called for this consolidation due to

the disparity in cost and dehumidifying

capability that would arise from having

significantly different efficiency

standards promulgated for these three

classes. (Fedders, April 7, 1994,

Transcript at 120–122.) AHAM

proposed that the Department retain the

current five capacity class divisions for

units with side louvers and without

reversing valves. (AHAM, No. 1 at 2.)

In the 1994 Proposed Rule, DOE

explained that performance and

installation constraints necessitate class

divisions by capacity. Manufacturers

limit their production of cabinets to

three or four sizes. Units of similar

capacity tend to be designed for the

same cabinet size. The space and

configuration limitations imposed by

the cabinet tend to produce units with

similar efficiencies. Because efficiency

is essentially a function of cabinet size,

and thus capacity, class divisions by

capacity are warranted. In the Final

Rule, the minimum efficiency standards

for each of the four classes with

louvered sides and capacities less than

20,000 Btu/h all have nearly the same

efficiency value (efficiencies range from

9.7 to 9.8 EER), reducing the concern

about inappropriate incentives to

change product capacity to take

advantage of capacity based standards.

The Department agrees with AHAM that

the current 5 capacity-based classes

should be retained.

Units without louvered sides and

without reversing valves. AHAM,

Frigidaire Company (Frigidaire), and

Sanyo Electric Company (Sanyo)

proposed that classes without louvered

sides and without reversing valve be

consolidated into two classes: units

with capacities of less than 8,000 Btu/

h and units with capacities greater than

or equal to 8000 Btu/h. (AHAM, No. 1

at 2; Frigidaire, No. 544 at 5; Sanyo, No.

771 at 3.) AHAM states that the capacity

classes established for units with side

louvers and without reverse cycle are

not particularly applicable to the other

types of classes. (AHAM, RAC No. 4 at

1.) In support of making this

recommendation, AHAM stated that

since the 1990 minimum efficiency

standards became effective, models

without louvered sides have been

produced only in the 6,000 to 7,999 Btu/

h capacity class or the 8,000 to 13,999

Btu/h class. The sizes of existing sleeves

and the efficiency standards have

constrained capacities to these two

classes. (AHAM, No. 1 at 20.) In its

comments to the 1996 Draft report,

AHAM again urged the Department to

reduce the number of classes from five
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50125

to two for these units. (AHAM, RAC No.

4 at Attachment 1 pg. 1.)

As discussed with respect to classes

with louvered sides and without

reversing valves, class divisions by

capacity are warranted for units without

louvered sides because of the effect that

economic and installation constraints

have on capacity and efficiency.

Although manufacturers currently do

not produce units in two of the existing

five capacity classes, the Department

has decided not to consolidate these

classes into those units with capacities

less than and greater than 8,000 Btu/h.

However, the new standards for the two

classes of units less than 8,000 Btu/h are

the same (9.0 EER) and the new

standards for the three classes of units

with capacities of 8,000 Btu/h or more

are the same (8.5 EER.) In the future,

manufacturers might produce units in

classes where none are currently being

produced. For example, models are now

being produced in the less than 6000

Btu/h class where models were not

being manufactured previously.

Therefore, the Department will retain all

five of the existing classes for units

without louvers and without reverse

cycle.

Units with reversing valves. AHAM

and Sanyo proposed that units with

reversing valves be consolidated into a

single class if the efficiency standard

specified for them is a single fixed EER

difference below all other cooling-only

classes (i.e., classes without reversing

valve.) A fixed EER difference of 0.5

EER was proposed. (AHAM, No. 1 at 2;

Sanyo, No. 771 at 3.) This

recommendation essentially creates as

many classes for units with reversing

valves as there are for units without

reversing valves. Both Whirlpool

Corporation (Whirlpool) and Fedders

agreed with this recommendation.

(Whirlpool, April 7, 1994, Transcript at

106; Fedders, April 7, 1994, Transcript

at 136.) In a April 23, 1996 joint letter

to AHAM, ACEEE and NRDC agreed

with the fixed 0.5 EER difference

between reverse-cycle classes and their

corresponding ‘‘cool-only’’ classes.

(ACEEE/NRDC, RAC No. 3 at 4.) In

addition, during a meeting with ACEEE,

Alliance to Save Energy, California

Energy Commission, Florida Energy

Office, Oregon Department of Energy,

and NRDC, a recommendation was

made to refer to reverse cycle products

as ‘‘heat pump air conditioners’’ in the

future. (RAC No. 10 at 2.) AHAM

responded that these systems are not

designed to be sophisticated heat pumps

but rather to modify a room air

conditioner by adding a reverse cycle to

‘‘make it function as a heat pump within

the confines of a relatively small

enclosure.’’ (AHAM, RAC No. 6 at 3.)

The Department has determined its

current class structure for units without

reversing valves (two product classes:

one for units with louvered sides and

another for units without louvered

sides) is not adequate. Therefore, the

Department is adding two classes for

units with reverse cycle to

accommodate the concerns expressed in

public comments. The two additional

classes are class 13—units with reverse

cycle, with louvers, and with a capacity

of 20,000 Btu/h or more—and class 14—

units with reverse cycle, without

louvers, and capacity of 14,000 Btu/h or

more.

Casement-Type Units. In the 1994

Proposed Rule, the Department

proposed additional classes for

casement-slider and casement-only

room air conditioners because of the

unique utility they offer to the

consumer. Casement-type units offer a

performance-related feature (fitting into

casement windows) which other room

air conditioners cannot provide. AHAM

and Frigidaire supported the

Department’s proposal to establish

separate classes for casement only and

casement/slider units. In addition,

AHAM stated that because of the

limited number of models available and

the narrow range of capacities, class

divisions by capacity are not necessary

for these unit types. (AHAM, No. 1 at

21–22; Frigidaire, No. 544 at 6.) In their

comments to the Draft Report, ACEEE

and NRDC recommended that casementonly units be combined in the same

category as casement-slider units due to

the fact that there is only one casementonly unit on the market. ACEEE and

NRDC are also concerned that a

loophole may be created because lowerpriced casement units may be used in

applications that do not require the

special dimensions required by

casement-only units. They commented

that adjustable side panels can be used

to enclose the space created when a

window is wider than the air

conditioner. (ACEEE/NRDC, RAC No. 5

at 4.)

The Department believes that the size

limitations imposed on casement-type

units are more significant than those

faced by typical units which are

designed for double-hung windows.

Since this performance-related feature

justifies a lower efficiency standard,

separate classes will be established for

casement-slider and casement-only

units. The Department agrees with

AHAM that class divisions by capacity

are not necessary because of the narrow

range of capacities in which models are

currently available. According to

AHAM’s Directory of Certified Room

Air Conditioners, casement-slider units

range in capacity from 5,000 to 11,000

Btu/h, while there is currently only one

casement-only unit, which has a

capacity of 6,200 Btu/h. The Department

believes that there is utility added by

having a casement-only as well as a

casement-slider class. In addition, the

Department believes that the

dimensions of casement units are

restrictive enough to prevent a loophole.

Ductless Split Systems. Fedders

proposed that ductless split system air

conditioners be regulated under room

air conditioner efficiency standards as it

believes that they are directly competing

against room air conditioners for market

share. (Fedders, April 7, 1994,

Transcript at 123.) The NRDC agreed

with the Fedders recommendation.

(NRDC, No. 55 at 28)

The Department’s efficiency standards

for split system-type central air

conditioners also apply to ductless split

systems. The Department makes no

distinction between split systems which

deliver conditioned air with or without

ducts. Thus, because split systems are

covered under standards for central air

conditioners, ductless split system air

conditioners will not be established as

an additional class for room air

conditioners.

2. Design Options

Commenters provided detailed

comments on several of the design

options that were analyzed by the

Department for the proposed

rulemaking.

Rotary compressors. Compressor

efficiency was the design option that

drew the greatest amount of comment.

AHAM, Amana Refrigeration, Inc.

(Amana), Frigidaire, Fedders, Sanyo,

Matsushita Electric Corporation

(Matsushita), Whirlpool, and Tecumseh

Corporation (Tecumseh) all provided

comments stating that rotary

compressors cannot attain the 11.5 to

12.0 EER efficiency levels assumed in

the Department’s analysis. They stated

that the maximum efficiency of

currently available rotary compressors

falls in the 10.7 to 10.9 EER range.

Compressor manufacturers stated that

only minor efficiency improvements are

expected within the next three to five

years. The combined effect of these

efficiency improvements would yield

only a 11.1 to 11.3 EER rotary

compressor. And although efficiency

increases of this magnitude may be

theoretically achievable, they would

require the development of highefficiency motors which are currently

not available, use of higher-grade

materials in the rotary compressor
50126 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

mechanism, and new compressor

production methods and equipment.

Both AHAM and Amana additionally

commented that physical samples of

new compressors need to be available to

room air conditioner manufacturers at

least 36 months prior to the effective

date of the standards to provide

adequate time for development,

reliability and field testing. (AHAM, No.

1 at 7; Amana, Inc., No. 347 at 1;

Frigidaire, No. 544 at 2; Fedders, April

7, 1994, Transcript at 121–122; Sanyo,

No. 771 at 7–9; Matsushita, April 7,

1994, Transcript at 88–90; Tecumseh,

April 7,1994, Transcript at 97–99;

Whirlpool, April 7, 1994, Transcript at

102–103.) ACEEE commented that

compressor efficiencies have been

improving in recent years and are still

below the theoretical limit. It stated that

according to trade press articles, rotary

and reciprocating compressors with

efficiencies exceeding 11.0 EER are

already available and further increases

in efficiency are being developed. It

argues that if 11.5 to 12.0 EER

compressors are not realized, other

technologies could be used to attain the

Department’s proposed efficiency levels.

(ACEEE, No. 557 at 21.) ACEEE and

NRDC commented that slightly more

efficient compressors which are likely to

become available soon should be used

in the analyses in future rulemakings.

(ACEEE/NRDC, RAC No. 5 at 1.)

The Department rejects AHAM’s

suggestion that design options must be

available 36 months prior to the

effective date of the standards. However,

the prediction in the 1994 Proposed

Rule that 11.5 to 12.0 EER compressors

would be available by the year new

efficiency standards would become

effective was based on development

plans of a compressor manufacturer to

produce 11.6 to 12.0 EER compressors.

Subsequently, those development plans

were canceled. Because rotary

compressor manufacturers state that

they cannot produce compressors with

efficiency levels approaching the 11.5 to

12.0 EER range, the Department, in the

Draft Report, analyzed only rotary

compressors which are currently on the

market. Depending on their capacity,

the most efficient rotary compressors

range in efficiency from 10.7 to 11.1

EER. In its comments to the 1996 Draft

Report, AHAM stated that the revised

report addressed its concerns. (AHAM,

RAC No. 4 at Attachment 1, pg 2.)

Scroll compressors. Only AHAM

provided comments regarding scroll

compressors. It stated that scroll

compressors are currently not available

in capacities less than 18,000 Btu/h and

that efficiencies are either no more or

slightly more efficient than rotary

compressors. In addition, scroll

compressor application heights are

typically three to five inches greater

than comparable rotary compressors,

therefore requiring a larger chassis.

Copeland Corporation (Copeland), a

scroll compressor manufacturer, was

cited by AHAM as having announced

plans to develop a new, smaller scroll

design optimized in the 14,000 to

24,000 Btu/h capacity range. AHAM

stated this design could be expanded

effectively into room air conditioner

applications with more reasonable cost

premiums and with efficiencies possibly

in the 11.5 to 12.0 EER range, but

because it is not possible to make these

compressors available to manufacturers

36 months prior to the effective date of

new standards, they should not be

considered by the Department for this

rulemaking. (AHAM, No. 1 at 8.) Again,

ACEEE and NRDC in their joint

comments to the Draft Report stated that

slightly more efficient compressors

which are likely to become available

soon should be used in the analyses in

future rulemakings. (ACEEE/NRDC,

RAC No. 5 at 1.)

Again, the Department rejects

AHAM’s suggestion that design options

must be available 36 months prior to the

effective date of the standards. Although

Copeland Corporation is currently

investigating this more efficient

compressor technology in the 14,000 to

24,000 Btu/h capacity range, they could

not commit to produce it. Because there

was not sufficient evidence this

technology would be available by the

effective date of the standards, only

Scroll compressors which are currently

on the market were considered for the

Department’s Final Rule analysis. For

compressors which would be suitable

for room air conditioner applications,

Copeland’s scroll compressors currently

range in efficiency from 10.8 to 11.1

EER. The lowest capacity scroll

compressor offered by Copeland is

16,500 Btu/h. Thus, scroll compressors

were only considered for room air

conditioners with capacities of at least

16,000 Btu/h. The information DOE

received from compressor

manufacturers showed that scroll

compressor heights are only 1–2 inches

greater than comparable rotary

compressors. Moreover, because this

design option was not contained in any

of the standard levels the Department

found to be economically justified, the

Department does not consider this

height differential to be an issue. AHAM

commented that it was satisfied with the

treatment of this issue in the Draft

Report. (AHAM, RAC No. 4 at

Attachment 1 pg. 2.)

Reciprocating compressors. The

Department’s analysis of an advanced

reciprocating compressor design called

the inertia compressor received

comments by AHAM, Frigidaire, and

Bristol Compressors (Bristol.) All three

commented that inertia compressors

with efficiencies in the range of 11.5 to

12.0 EER are expected to be available

within the next couple of years but only

in capacities exceeding 18,000 Btu/h.

Inertia compressors are significantly

heavier, larger, and noisier than the

rotary compressors that are currently

used in room air conditioner

applications. Larger chassis sizes would

be required to accommodate the

increased weight and size of the inertia

compressor. In addition, sound blankets

would be necessary to muffle the

increased noise levels. Thus, cost

premiums and the accompanying

application costs make inertia

compressors difficult to cost justify for

room air conditioners. (AHAM, No. 1 at

8–9; Frigidaire, No. 544 at 2; Bristol,

June 7, 1994, Transcript at 355–362.)

Although the Department recognizes

that advanced reciprocating

compressors are heavier and larger than

existing rotary compressors, no

information was provided as to how

great the application costs for enlarging

and bracing the chassis would be for

incorporating them into room air

conditioner units. Thus, only the cost of

the compressor itself, with its

accompanying sound blanket, was

explicitly included in the Department’s

Final Rule analysis. For those instances

where the advanced reciprocating

compressor exceeded the weight of the

rotary compressor by a significant

amount (over 30 percent), an increase in

chassis size was assumed to be

necessary for incorporating the larger

and heavier compressor. Therefore, a

design option which resulted in a

chassis size increase (i.e., increased

evaporator and condenser face areas)

always preceded the incorporation of an

advanced reciprocating compressor. The

added costs for increasing the chassis

were assumed to cover the expense of

incorporating the reciprocating

compressor. For compressors which

would be suitable for room air

conditioner applications, Bristol’s

inertia compressors currently range in

efficiency from 11.2 to 11.8 EER. The

lowest capacity inertia compressor

offered by Bristol is 18,000 Btu/h. Thus,

inertia compressors were considered

only for room air conditioners with

capacities of at least 18,000 Btu/h. In its

comments to the 1996 Draft Report,

AHAM indicated that this approach
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50127

addressed its concerns. (AHAM, RAC

No. 4 at Attachment 1 pg 2.)

Fan motor efficiency. Only AHAM

provided comments with regard to

improvements in fan motor efficiency. It

stated that permanent split capacitor

(PSC) fan motors are already used in 98

percent of room air conditioners. The

efficiency of PSC fan motors fall in the

range of 50 percent to 70 percent with

larger motors being more efficient.

AHAM admitted that some modest gains

may be achieved with PSC fan motors

in specific applications. With regard to

electronically commutated motors

(ECM), otherwise known as brushless

permanent magnet motors (BPM),

AHAM stated that they cost 2.5 to 3

times more than standard PSC motors.

In addition, they weigh approximately

twice that of a standard PSC motor.

ECM efficiencies range from 68 percent

to 78 percent. ECMs are currently not

available with the double ended shaft

required for room air conditioner

applications because controls block one

end of the motor. AHAM believes that

ECMs with double ended shafts are not

likely to be made available in the

foreseeable future. Even if ECMs were

manufactured with double ended shafts,

AHAM claimed that manufacturers

would need physical samples 24

months before the effective date of

standards. (AHAM, No. 1 at 10 and RAC

No. 4 at 5.)

The Department recognizes that most

room air conditioner designs already

incorporate permanent split capacitor

fan motors. But for two of the product

classes analyzed, the representative

baseline units used inefficient shaded

pole motors. Thus, for these two classes,

significant efficiency gains were

achieved by replacing the shaded pole

motors with more efficient permanent

split capacitor motors. For all other

classes, the representative baseline units

already incorporate permanent split

capacitor motors. Further fan motor

efficiency increases were assumed to be

achieved only through the use of ECMs.

Although current ECM controls are

situated at one end of the motor, the

Department believes that there is no

reason why they cannot be moved to

another location on the motor. Thus, it

is assumed that ECMs can be

manufactured with double ended shafts.

Although the Department recognizes

that ECMs weigh approximately twice

as much as standard permanent split

capacitor motors, no information was

provided about the application costs for

bracing the chassis to incorporate them

into room air conditioner units. Thus,

only the cost of the ECM itself was

explicitly taken into account in the

Department’s Final Rule analysis.

However, because the analysis showed

that ECMs were not an advantageous

design option, any cost increases due to

increased ECM weight need not be

considered further. In its comments to

the 1996 Draft Report, AHAM indicated

that the analysis, which assumes a fan

motor efficiency of 30 percent for

shaded pole and 50 percent for

permanent split capacitor (PSC) when

changing from a shaded pole to a PSC,

addresses its concern. (AHAM, RAC No.

4 at Attachment 1, pg. 2.)

Variable speed compressors. AHAM

stated that variable speed compressors

are not currently used in room air

conditioner applications and should not

be considered a technically viable

design option. AHAM commented that

the cost premium is 30 percent to 50

percent above comparable single-speed

compressors. Although variable speed

compressors are available off-shore in

capacities and sizes suitable for use in

room air conditioners, improvements in

efficiency cannot be measured with the

Department’s current test procedure.

AHAM commented that the

Department’s current single condition

test procedure adequately matches

consumer usage patterns for room air

conditioners. (AHAM, No. 1 at 12.)

AHAM does not believe variable speed

compressors are ‘‘capable of being

assembled into room air conditioners by

the effective date’’ and should not be

considered a viable design option.

(AHAM, RAC No. 4 at 5.)

Although the Department recognizes

that the current test procedure is not

adequate for determining the benefits

due to variable speed compressors, they

are still analyzed as a design option for

room air conditioners. As done for the

Proposed Rule’s analysis, efficiency

gains are established based on estimates

from central air conditioning

applications. The efficiency

improvement, because it is primarily a

result of reduced cycling (i.e., reduced

on and off operation), is reported in

terms of the seasonal energy efficiency

ratio (SEER). A minimum efficiency

standard cannot be based on its

inclusion because the current test

procedure does not recognize a SEER

rating as an appropriate measure of

efficiency. In addition, variable speed

compressors were not included in any

of the efficiency levels DOE determined

to be economically justified.

Heat exchanger design options. A

number of comments were received

regarding design changes to improve

heat exchanger (evaporator and

condenser) performance. These

improvements can be put into two

categories: designs for increasing the

heat exchanger surface area and designs

for increasing the heat transfer

coefficients. The heat transfer surface

area can be increased by any of the

following methods: increasing the

frontal area of the coil by increasing the

height or width; adding a subcooler to

the condenser coil; increasing the depth

of the coil by adding vertical tube rows;

or increasing the fin density. The heat

transfer coefficients can be increased by

using an enhanced fin design or grooved

(rifled) refrigerant tubing.

With regard to heat exchanger

improvements, manufacturers expressed

great concern over design options that

would require an increase in chassis

size, namely, increases in heat

exchanger size. AHAM claimed that

tooling for a new chassis size can range

in cost from $1.5 to $5.0 million per

manufacturer. In addition, it stated that

there are limits to the efficiency that can

be achieved through increases in coil

size without causing problems with

latent cooling capacity (i.e.,

dehumidification.) It also stated that if

standards require larger chassis sizes,

there will be loss of utility in terms of

portability and availability of larger

capacities that can fit into smaller

windows. In addition, availability of

very large capacities would be reduced.

(AHAM, No. 1 at 11–12.) AHAM also

stated that an increase in coil size could

affect compressor reliability. It stated

that if room air conditioner efficiency is

increased by enlarging the coil, the

compressor capacity must be reduced to

maintain the capacity of the system. But

because the unit now has more

refrigerant as a result of enlarging the

coil, it is more likely that the smaller

compressor’s maximum charge

limitation would be reached. The closer

the refrigerant charge comes to the

compressor’s charge limit, the more

likely that compressor failure would

occur. (AHAM, Transcript, April 7,

1994, at 66.) Amana stated that its

current coil designs are already

optimized. (Amana, Inc., No. 347 at 1.)

Sanyo stated that increasing the

condenser surface area is not feasible as

the chassis enclosure is already too

crowded. (Sanyo, No. 771 at 9.)

AHAM and several manufacturers

commented that the Department’s

proposed efficiency standards would

require increases in chassis size for all

room air conditioner product classes

because some design options that the

Department assumed would be

available, primarily 11.5 to 12.0 EER

compressors, would not exist by the

time the proposed standards became

effective. AHAM stated that even a

small increase in the efficiency standard

will cause some models to move to a

larger chassis size. According to AHAM,
50128 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

92 percent of total production would

need to move to a larger chassis size to

meet the standards proposed in the 1994

Proposed Rule. AHAM further

commented that because chassis sizes

vary widely among manufacturers, new

standards will have significant

competitive effects. (AHAM, No. 1 at 1,

14–18.) Amana, Whirlpool and

Frigidaire all provided comments

reinforcing AHAM’s comments. Amana

stated that to meet the Department’s

proposed standards it would need to

redesign nine of thirteen basic models

into a larger chassis. These

manufacturers further commented that

the higher prices resulting from chassis

size increases place an unfair burden on

low income consumers. (Amana, No.

347 at 1; Whirlpool, No. 391A. at 1;

Frigidaire, No. 544. at 3.)

AHAM provided the Department with

a graph which shows the percentage of

production which would be required to

change chassis size at each EER. (AHAM

No. 1 at 14.) In its comments to the Draft

Report, AHAM states that ‘‘more

stringent standards [than the standards

proposed by AHAM] will cause a

significant number of chassis size

changes with step function-like cost

implications to manufacturers and raise

utility, marketing and competitive

issues.’’ (AHAM, RAC No. 6 at 1.)

AHAM stated the baseline model

method of analysis does not realistically

represent the impact on cost of

increasing the chassis size. AHAM

believes the Department should weight

the cost of a larger chassis by the

proportion of models needing a larger

chassis to achieve specific efficiency

levels. (AHAM, RAC No. 4 at 3.) In their

most recent comments, ACEEE and

NRDC state this approach is reasonable,

but they believe the life cycle cost

minimums, resulting when costs of

chassis size increases are prorated,

should be used to select standards.

Referring to the graph provided by

AHAM, ACEEE and NRDC state that the

proportion of models requiring a larger

chassis size at 9.8 EER is ‘‘scarcely

different’’ than the proportion required

by 9.5 EER and that only at EER levels

above 9.8 EER do a significant

proportion of models need a larger

chassis. Furthermore, they state ‘‘to

consider chassis size as an independent

decision-making factor would

overemphasize chassis size in making a

final decision.’’ (ACEEE/NRDC, RAC

No. 5 at 2.)

The impact of increased heat

exchanger size on dehumidification was

assessed with the engineering computer

simulation model. The simulation

model not only estimates the efficiency

increase that results from adding more

coil area but also its effect on latent heat

removal. For all the room air

conditioners which were modeled, the

heat exchanger increases which were

analyzed resulted in latent heat ratios of

at least 25 percent. The latent heat ratio

is the latent heat rate removal of the air

conditioner divided by its total cooling

capacity. AHAM considers 25 percent to

be the minimum acceptable latent heat

ratio. With regard to the issue of

compressor reliability, although the

Department recognizes that an increase

in coil size coupled with a decrease in

compressor capacity could affect the

reliability of the compressor,

manufacturer data were not provided as

to the maximum charge limit of room air

conditioner compressors. The

Department’s analysis of larger coil sizes

assumed that the compressor capacity

would not have to be reduced when

analyzing larger coil sizes. Thus, with

regard to how the Department

conducted its analysis, it is unlikely that

compressor reliability would be

negatively impacted. Moreover,

increasing evaporator/condenser coil

area was not contained in any of the

standard levels DOE found to be

economically justified.

With regard to the issue that some

manufacturers may be competitively

disadvantaged by being required to

increase chassis size, the Department

carefully considered the information

provided by AHAM which indicates

that the proposed standards in the 1994

Proposed Rule would require 92 percent

of manufacturers to increase chassis

size. Both the Department and AHAM

recognize that any change in efficiency

standard will require some

manufacturers to increase chassis size.

The Department has attempted to

reduce the number of chassis size

changes as much as possible while still

achieving the goal of promulgating

standards which maximize energy

efficiency consistent with economic

justification. The standards set forth

would require an increased chassis size

for a substantially smaller subset—

approximately 25 percent—of products.

The Department considered AHAM’s

recalculations of life-cycle cost

minimums which prorated the cost of

chassis size increases. (AHAM, RAC No.

9 at Attachment 3A.) DOE has selected

standard levels corresponding to the

minimum life cycle costs when chassis

size cost is prorated for the classes for

which AHAM provided this information

(i.e., classes 1 through 5).

AHAM commented that

manufacturers will make adjustments to

the number of tube rows and the density

of fins in order to optimize heat

exchanger performance. Because heat

exchangers are, in general, already

optimized, however, adjusting either the

tube rows or the fin density is not a

significant factor in increasing system

efficiency. (AHAM, No. 1 at 9.) Sanyo

stated that adding tube rows or fin

material causes increased air flow

restrictions and requires design changes

to fan and fan motors. If motor speeds

are increased to obtain high airflow,

unacceptable noise levels result. (Sanyo,

No. 771 at 9.)

The Department agrees with AHAM

and Sanyo that the number of tube rows

and the fin density are already

optimized to yield the greatest heat

exchanger performance. In using the

engineering computer simulation

model, increases in either tube row

density or fin density provided

negligible increases in system

performance. In its comments to the

1996 Draft Report, AHAM indicated that

because the simulation model shows

negligible increases in system

performance by increasing the fin

density and number of tube rows,

AHAM is no longer concerned about

this matter. (AHAM, RAC No. 4 at

Attachment 1 pg. 2.)

AHAM stated that enhanced fins are

already used in 64 percent of the

evaporators produced by manufacturers

and 99 percent of the condensers.

AHAM also commented that good

projections for the efficiency

improvement due to enhanced fins are

not available. AHAM further

commented that the increased use of

enhanced fins in evaporators is likely to

be limited because in some cases

condensate drainage is a limiting factor.

AHAM believes that additional

significant improvements in fin design

are not expected in the foreseeable

future. (AHAM, No. 1 at 10.) Sanyo

stated that many models already employ

enhanced fins. (Sanyo, No. 771 at 9.)

The Department recognizes that most

room air conditioner designs

incorporate enhanced fins.

Consequently, most of the

representative baseline units for the

product classes analyzed by the

Department already include enhanced

(i.e., slit-type) fins. For those baseline

units where enhanced fins could be

added, efficiency improvements were

based on information provided by room

air conditioner and heat exchanger

manufacturers. Publicly available

research information was used to check

the reasonableness of the data supplied

by manufacturers. The manufacturer

information also included data on how

densely enhanced fins could be packed

until condensate drainage became a

problem. In accordance with this

manufacturer data, the Department’s
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50129

analysis limited enhanced fin densities

before condensate drainage became a

problem. In its comments to the 1996

Draft Report, AHAM indicated that this

approach addressed its concerns.

(AHAM, RAC No. 4 at Attachment 1 pg.

2.)

AHAM stated that grooved refrigerant

tubes are already used in 97 percent of

the evaporators produced by

manufacturers and 86 percent of the

condensers. AHAM also commented

that good projections for the efficiency

improvement due to grooved tubes are

not available. AHAM does not expect

additional significant improvements in

tube design in the foreseeable future.

(AHAM, No. 1 at 10.) Sanyo stated that

many models already employ grooved

tubes. (Sanyo, No. 771 at 9.)

As with enhanced fins, the

Department recognizes that most room

air conditioner designs already

incorporate grooved refrigerant tubing.

However, for many of the representative

baseline units that were selected (with

consultation from AHAM) for the

Proposed Rule’s analysis, grooved

tubing was not incorporated into the

design. For the Department’s Proposed

Rule analysis, manufacturer test data

was used to determine the efficiency

improvements due to grooved tubing.

However, publicly available research

data indicated the manufacturer test

data overstated the possible

improvement. In addition, the analysis

conducted for the Proposed Rule did not

account for the increase in refrigerantside pressure drop due to the grooved

tubing. Thus, for the Department’s

analysis for the Final Rule, efficiency

and pressure drop estimates were based

on research data published by the

American Society of Heating,

Refrigerating and Air-Conditioning

Engineers (ASHRAE.) In its comments

to the 1996 Draft Report, AHAM

commented that this approach

addressed its concern. (AHAM, RAC No.

4 at Attachment 1 pg. 2.)

In their comments to the Draft Report,

ACEEE and NRDC state that the report

seems to ignore a new heat exchanger

technology by Modine Technology that

can achieve ‘‘at least a 0.75 increase in

EER’’ without changing chassis size.

(ACEEE/NRDC, RAC No. 5 at 1.) The

advocates recommend that new

technologies such as this one be

considered in future rulemakings. The

Oregon Department of Energy also

stated its belief that most manufacturers

were in contact with Modine

Technology. (RAC No. 10 at 2.)

The efficiency improvement made

possible by the new heat exchanger

technology to which the energy

efficiency advocates referred is based on

theoretical calculations. Modine

Technology’s new heat exchanger has

shown improvements in central air

conditioners; however, it has not been

tested in room air conditioners. The

Department does intend to analyze this

technology in future rulemakings.

AHAM, Amana, Frigidaire, Fedders,

and Sanyo all provided comments with

regard to subcoolers. Test data was

provided indicating that the efficiency

improvement due to subcoolers is

significantly lower than that estimated

by the Department in the 1994 Proposed

Rule. AHAM presented data indicating

that, on average, the actual efficiency

and capacity improvements are 44

percent and 67 percent, respectively, of

that projected by the Department’s

simulation model. Also, according to

the AHAM, four out of seven room air

conditioner manufacturers do not

currently use subcoolers and five of the

seven manufacturers would need to

make major tooling changes on all or

some of their chassis. (AHAM, No. 1 at

6–7; Amana, No. 347 at 2; Frigidaire,

No. 544 at 2–3; Fedders, No. 693 at 2–

6; Sanyo, No. 771 at 9.)

Based on comments, the Department

used manufacturer test data to calibrate

the subcooler efficiency increases that

were estimated by the simulation

model. For each room air conditioner

model simulated, the temperature of the

condensate into which the subcooler is

immersed was adjusted until the

simulated efficiency increase matched

that indicated by the manufacturer test

data. Depending on the capacity of the

unit, the manufacturer test data

demonstrates unit efficiency increases

of between 1.4 percent to 3.0 percent, as

compared to approximately 6 percent

increases found in the analysis for the

Proposed Rule. The simulation model

was adjusted based on this test data.

AHAM indicated that this approach

addressed its earlier concern. (AHAM,

RAC No. 4 at Attachment 1 pg. 2.) In

addition, DOE used manufacturer cost

information provided by AHAM to

calculate the economic impact of

incorporating a subcooler as one of the

room air conditioner design options.

Design options already in use. Many

manufacturers claimed that they already

use many of the design options that are

being considered by the Department for

increasing energy efficiency. (AHAM,

April 7, 1994, Transcript at 51–52;

Amana, No. 347 at 1; Frigidaire, No. 544

at 4; Fedders, No. 693 at 1; Sanyo, No.

771 at 8.) Both Amana and Frigidaire

stated that they already use high

efficiency rotary compressors, grooved

tubes, enhanced fins and permanent

capacitor fan motors. Amana stated that

the only design options available for

increasing efficiency are more efficient

compressors, larger coil sizes, larger

chassis sizes, and the addition of a

liquid line subcooler. (Amana, No. 347

at 1; Frigidaire, No. 544 at 4.)

The design options which are

considered in the analysis are based on

the characteristics of the representative

baseline units. The baseline models

used in this analysis were selected

through consultation with AHAM. If a

baseline unit does not include particular

design options, then those options are

analyzed as measures to improve the

efficiency of the unit. Although some of

these design options are already

commonly used, they may not all be

used simultaneously. For example,

some of the baseline units used more

efficient compressors to achieve a

certain efficiency rating, while many of

the units on the market used less

efficient compressors but improved heat

exchanger design options to achieve the

same level of efficiency.

3. Engineering Simulation Model

The Department received several

comments regarding the engineering

computer simulation model that it used

in its analysis of efficiency

improvements for room air conditioners.

Comments were provided primarily by

AHAM and can be categorized into

three areas: (1) the accuracy of the

simulation model; (2) the method in

which the modeling analysis was

conducted; and (3) the selection of

baseline models for room air

conditioners without louvered sides.

In comparing simulation results from

the Department’s computer simulation

model to test data gathered from four

room air conditioner models, AHAM

demonstrated that there is a marked

tendency for the simulation model to

overestimate system efficiency. It

concluded that the simulation model

has the potential for making errors of 5

percent or more, especially when

extended well beyond the point where

actual correlative test data exists.

(AHAM, No. 1 at 3.) Frigidaire and

Sanyo reinforced the AHAM’s

comments when they presented data

demonstrating that the simulation

model estimated higher benefits for

design options than are realized in

practice. (Frigidaire, No. 544 at 4;

Sanyo, No. 771 at 10–12.)

The simulation model was

extensively reviewed by the room air

conditioner industry. For the 1994

Proposed Rule, simulation results were

calibrated to manufacturer test data for

all of the representative baseline units

modeled. The Department recognizes

that when simulation results are

calibrated to a single manufacturer’s test
50130 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

data, it is possible that the model will

yield errors of 5 percent or more when

used to simulate the performance of

other manufacturers’ units. Where test

data is not available, the Department

expects to continue to use the

simulation model to estimate the

efficiency increases resulting from the

incorporation of design options. When

manufacturer test data is provided, as in

the case of subcoolers, the Department

will use it to adjust the simulation

model.

AHAM commented that several errors

were made in the simulation modeling.

The first pertains to compressor

modeling and the fact that actual

compressor performance data was used

only in the modeling of baseline

equipment. The Department derived

performance data for more efficient

compressors by multiplying the motor

input values from the baseline

compressor data by the ratio of the

baseline and high-efficiency compressor

nominal energy efficiency ratios (EER.)

This type of analysis shows overall

room air conditioner efficiency

improvement equal to 89 percent of the

nominal compressor EER improvement.

Limited test data shows that the overall

room air conditioner efficiency increase

is about 75 percent of the nominal

compressor EER improvement. AHAM

advocated using actual compressor

performance data for the analysis of

more efficient compressors but to limit

maximum system efficiency

improvements to 75 percent of the

nominal compressor EER increase. It

also stated that when deriving

compressor coefficients for input to the

simulation model, the Department must

use compressor performance data that

spans the entire range of evaporating

and condensing temperatures under

which the compressor might operate.

Otherwise, incorrect input coefficients

could be generated. (AHAM, No. 1 at 3–

6 and AHAM, RAC No. 4 at Attachment

1 pg 1.)

The Department agrees with AHAM

that actual compressor performance data

should be used to model the

performance of compressors. Nominal

compressor performance is based on

ratings at standardized temperature

conditions, and actual compressor

performance may be significantly

different at actual room air conditioner

operating conditions. Using the nominal

efficiency to compare the performance

between two compressors only provides

the efficiency difference at the

standardized conditions. Using actual

compressor performance data to model

compressor operation captures the effect

that different operating conditions have

on room air conditioner performance.

Thus, actual compressor performance

data, spanning the entire range of

evaporating and condensing

temperatures in which the compressor

might operate, was used to model the

performance of all the compressors

analyzed for the Final Rule. The

Department disagrees with AHAM that

system efficiency improvements should

be limited to 75 percent of the nominal

compressor EER increase. The basis for

using compressor performance data is to

more accurately assess the system

improvement due to more efficient

compressors. Placing a ceiling on the

efficiency improvement eliminates the

possibility of gaining system EER

increases due to more favorable

compressor operating conditions. As it

turned out, most of the compressors

modeled as design options in the Final

Rule analysis yielded system efficiency

increases that were equal to or less than

75 percent of the nominal compressor

EER increase. Only one of the

compressors analyzed yielded a system

efficiency increase significantly above

the AHAM’s suggested 75 percent

ceiling. This compressor was used at

standard level 5, which was found to be

not economically justified.

According to AHAM, another error in

the simulation modeling concerns the

use of superheat. It noted that the

Department incorrectly specified the

input for superheat from manufacturer

test data by using the difference

between the mid-evaporator

temperature and a temperature on the

suction line. It claimed that the

Department should have adjusted the

superheat input to the simulation model

until the difference between the

averages of the simulated evaporator

inlet and outlet temperatures and the

simulated suction line inlet and outlet

temperatures were equal to the test

value. (AHAM, No. 1 at 5.)

The Department’s method for

specifying the superheat was in

accordance with recommendations

made by AHAM in 1990. These

recommendations included making

modifications to the simulation model

in order to account for the presence of

an accumulator. The modifications were

based on treating the inlet to the

accumulator as the inlet to the

compressor shell for rotary compressors.

In order to account for superheating

occurring within the accumulator, the

simulation model was modified to

include provisions to account for the

temperature and pressure increases that

occur within the accumulator. The

location on the suction line where the

temperature was measured was at the

accumulator inlet (i.e., the suction line

outlet). The superheat in the simulation

model is defined as the difference

between the compressor shell inlet’s

refrigerant and saturation temperatures;

therefore, knowing that the suction line

temperature was measured at the

accumulator inlet provided confidence

in using it to specify the superheat.

Because the test data did not provide

the accumulator inlet’s saturation

temperature, the mid-evaporator

temperature was used as a close

approximation of the evaporator

saturation temperature, which is also a

close approximation for the compressor

shell inlet saturation temperature.

Therefore, the Department believes it

appropriate to use the difference

between the mid-evaporator and

accumulator inlet temperatures to

specify the superheat. AHAM indicated

in its comments to the Draft Report that

this method addresses its concerns.

(AHAM, RAC No. 4 at Attachment 1, pg.

1.)

In estimating room air conditioner

efficiency increases resulting from more

efficient fan motors, AHAM commented

that it was inappropriate to use

combined fan and fan motor efficiencies

as input to the simulation model. Rather

than using efficiencies, it advocated

using fan motor power as an input as it

asserts that room air conditioner

efficiencies will be overestimated by

using fan and fan motor efficiencies.

(AHAM, No. 1 at 5.)

The simulation model was originally

developed to model the performance of

central air conditioners. Manufacturers

generally agreed to this approach.

However, some adjustments had to be

made to model a different air delivery

system. For room air conditioners, the

evaporator and condenser fans are both

driven by a single fan motor, as opposed

to central air conditioners, in which

each fan is driven by its own fan motor.

For the room air conditioner model, the

Department decided to describe the air

delivery system with combined fan and

fan motor efficiencies in order to

account for the impact of evaporator and

condenser air-side pressure drop on fan

motor power use. This modeling scheme

also assumed that the evaporator fan

accounted for 40 percent of the total fan

motor power while the condenser fan

accounted for the remaining 60 percent.

AHAM was in agreement with modeling

the room air conditioner’s air delivery

system by using a ‘‘40/60 split’’ on the

fan motor power. But due to this

modeling scheme, only 60 percent of the

fan motor heat loss was added to the

condenser air stream. All of the heat

loss from the fan motor should be added

to the condenser air stream as the motor

resides in the outdoor section of the

room air conditioner. The Department
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50131

decided to change the simulation model

in order to account for the fan motor’s

full heat loss. In the Department’s

analysis for the 1994 Proposed Rule,

simulation results were calibrated to test

data for all the baseline models. Because

accounting for the full heat loss slightly

lowers the system efficiency, minor

adjustments had to be made to the

power and capacity correction factors

contained in the input files in order to

recalibrate the simulation results to the

baseline model test data. In AHAM’s

comments to the 1996 Draft Report,

AHAM indicated that this method

addressed its concerns. (AHAM, RAC

No. 4 at Attachment 1, pg 1.)

AHAM claimed the simulation

modeling analysis used incorrect power

consumption penalties to account for

reversing valves and for no louvers.

With regard to reversing valves, AHAM

noted that the TSD for the 1994

Proposed Rule reports two different

power consumption penalties: 3 percent

and 4 percent. AHAM noted that the

Department’s simulation analysis

actually calculates a power reduction

value of 2.5 percent. AHAM

recommended using a penalty of five

percent when modeling reverse cycle

units with the simulation model. With

regard to the power consumption

penalty used for units without louvered

sides, AHAM claimed that the value of

4 percent used in the Department’s

simulation analysis does not account for

the reduced airflow across the

condenser coil due to the non-louvered

sides. Although it proposed no

alternative power penalty to account for

non-louvered sides, it stated that the

condenser face area being modeled

should be decreased because outdoor air

is drawn through the back of the unit

rather than through louvered sides, and

thus less condenser area is available for

heat exchange. (AHAM, April 7, 1994,

Transcript at 62–65.)

For the 1994 Proposed Rule, power

consumption penalties to account for

reversing valves and to account for no

louvers were applied only to the

compressor’s power consumption.

Because the power penalty is assessed

only to the compressor, the overall

power increase for the entire room air

conditioner is always slightly smaller

than the reported power penalty value.

The TSD for the Proposed Rule did

mistakenly report two different

penalties for reversing valves. The value

that was actually used was 3 percent.

The power penalty used to account for

non-louvered sides was 4 percent. A 5

percent power penalty was used for the

Final Rule to account for products with

a reversing valve. Because an alternative

power penalty value was not proposed

for non-louvered sides, the Department

retained the use of a 4 percent power

penalty. This 4 percent power penalty

was assumed to account for any

degradation in performance due to

drawing outdoor air directly through the

condenser coil. Thus, the modeled

condenser face area was not reduced.

In its comments to the 1996 Draft

Report, AHAM states that although the

Draft Report indicates that power

consumption penalties were used in the

simulation model, it appears

(referencing Table 1.6 of the Draft

Report) that baseline data for actual

models were used, and that these results

are not consistent with actual practice.

(AHAM, RAC No. 4 at 2.) The

Department did use the power

consumption penalties in the simulation

model for the Draft Report. Table 1.6 of

the Draft Report is intended to show

that the results produced by the

simulation model are close to the actual

test data.

Both AHAM and Sanyo asserted that

the Department selected baseline

models for ‘‘through-the-wall’’ units

(units without louvered sides) with

efficiencies that were not representative

of the class. They both stated that

baseline models were derived from

models with louvered sides, and thus,

the analysis conducted for these

products is meaningless. Sanyo stressed

that the largest capacity size within the

smallest enclosure for the particular

product class of interest should be

selected as a representative baseline

model. (AHAM, No. 1 at 19; Sanyo, No.

771 at 6–10.)

In the analysis for the 1994 Proposed

Rule, representative baseline models for

non-louvered and reversing valve

classes were derived from the baseline

models that were selected for louvered

classes. The Department agrees with

AHAM and Sanyo in that actual

baseline units should be used to

represent the non-louvered and

reversing valve classes. Thus, the

Department based its analysis of nonlouvered and reversing valve classes on

modeling of actual baseline units. With

regard to non-louvered classes,

manufacturer data were available only

for two of the existing five capacity

classes; 6,000 to 7,999 Btu/h and 8,000

to 13,999 Btu/h. Thus, analyses were

conducted only for the two classes

where manufacturer data were available.

Manufacturer data were also available

for selecting representative baseline

units for reversing valve classes, with

and without louvered sides, and

engineering analyses were conducted

for both these classes.

Based on its recommended changes

for improving the performance of the

engineering simulation model, AHAM

re-ran the model for the five capacity

classes with louvered sides and without

a reversing valve. For all five classes,

the efficiency levels determined by

AHAM’s simulation analysis were

significantly lower than the

Department’s proposed efficiency

standards. (AHAM, No. 1 at 26.) Using

the version of the simulation model that

the Department used for its Proposed

Rule analysis, Sanyo conducted a

simulation analysis for classes without

louvered sides. With its analysis, it also

concluded that efficiency gains were

significantly below those that the

Department demonstrated were possible

for classes without louvered sides.

(Sanyo, No. 771.) Like AHAM, Fedders

also performed an efficiency analysis for

the five capacity classes with louvered

sides and without a reversing valve. But

instead of using the Department’s

simulation model, it used test data (and

interpolated estimates based on test

data) to project efficiency increases.

Fedders’ results were similar to

AHAM’s in that the efficiency levels

that were calculated were significantly

lower than the Department’s proposed

standards for all five classes. (Fedders,

No. 693 at Sec. 1, 1–6.)

Based on the comments received,

DOE made a number of adjustments to

the simulation model, as described

above, and changed the method in

which certain design options were

analyzed. After these adjustments, the

Department’s simulation results were

close to those reported by AHAM. For

the five capacity classes being

compared, these were the only two

classes for which DOE and AHAM had

efficiency results that differed by greater

than 1 percent—the 6,000 to 7,999 Btu/

h class and the 14,000 to 19,999 Btu/h

class.

In the case of the 6000 to 7999 Btu/

h class, the discrepancy (approximately

3 percent) between AHAM’s simulation

results and the Department’s simulation

results for the Final Rule can be

attributed to an error in the earlier

simulation model. This error, which

was present in the simulation model

that AHAM used and that the

Department used in its analysis for the

Proposed Rule, was corrected for the

Department’s Final Rule analysis. Thus,

correcting this error in the version of the

simulation model used by the AHAM

would yield a predicted efficiency that

would be closer to that estimated by the

Department for the Final Rule. The error

related acceptable difference between

the calculated condenser exiting

temperatures from the two

subroutines—because the acceptable

difference was too low, the model
50132 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

converged at solutions that produced

condenser heat transfer coefficients

which were too small.

In the case of the 14,000 to 19,999

Btu/h class, the discrepancy

(approximately 3.5 percent) was

primarily attributable to AHAM’s

method of estimating efficiency

improvements due to an additional

design option (condenser grooved tubes)

that was analyzed by the Department

but not by AHAM. If the Department

had not considered this design option,

the discrepancy would only be 0.6

percent.

In AHAM’s comments to the 1996

Draft Report, AHAM stated that it was

‘‘satisfied with the efficiency analyses of

models with side louvers and without

reverse cycle up to the application of

the BPM fan motor and the variable

speed compressor’’ and that after

correcting for the errors described in the

preceding paragraphs, ‘‘the correlations

would all be within an acceptable 1%’’.

(AHAM, RAC No. 4 at 2.)

With regard to Fedders’ estimates, the

Department’s revised efficiency

estimates were still significantly

different: discrepancies, on average,

were over 3.5 percent. Unfortunately,

Fedders did not provide detailed

information on how it arrived at its

estimates. Given the close agreement

with the results reported by AHAM, the

Department is comfortable with its

revised simulation results.

In its comments to the Draft Report,

AHAM stated that the ‘‘fine tuning of

the simulation model has led to

reasonably good correlations’’ for

models with side louvers and with a

reverse cycle. However, AHAM stated

that although the simulation model was

calibrated to baseline data for actual

models without louvers and actual

models with a reverse cycle, ‘‘the

simulated effect of the applied design

options is not consistent with actual

practice.’’ AHAM also stated that

considerable time and effort would be

required to ‘‘get the same level of

correlation that was achieved for models

with louvers and without a reverse

cycle.’’ AHAM also states that the wide

variability of results when comparing

simulation model efficiency results to

AHAM’s results shows that there is a

‘‘significant problem’’ in simulating

models with reverse cycle. (AHAM,

RAC No. 4 at 2–4.) In addition, with

regard to units with a reverse cycle,

AHAM stated that ‘‘poor correlation

with these units is most likely due to

the unusual restrictions in the

refrigeration circuit due to the reversing

valve and compromises made to balance

both the heating and the cooling of the

unit.’’ (AHAM, RAC No. 4 at 4.) ACEEE

and NRDC recommended in their joint

comments that ‘‘problems with the

simulation models can be dealt with by

examining the efficiencies of units now

on the market, in order to sanity check

the simulation model results.’’ (ACEEE/

NRDC, RAC No. 5 at 3.)

The Department agrees that its

computer model may not accurately

simulate actual performance for models

without louvers (classes 6–10) or

models with a reverse cycle (classes 11

and 12). Consequently, the Department

has relied more heavily on the

comments in selecting standards levels.

For classes with a reverse cycle, the

Department chose standard levels which

took into consideration the comments

by both the manufacturers and energy

efficiency advocates. With regard to the

recommendation made by ACEEE and

NRDC, the Department consulted the

AHAM directory when making

decisions on the efficiency standards to

set forth in this rule.

4. Proposed Efficiency Standards

Support for proposed standards.

Southern California Edison Company

(SCEC), ACEEE, Central Hudson Gas &

Electric Corporation (CHGEC), and

Alabama Power Company (APC) all

generally supported the Department’s

proposed standards. ACEEE stated that

the standards proposed in the 1994

Proposed Rule are supported due to the

availability of products with high

efficiency levels in the marketplace.

ACEEE stated that according to AHAM’s

1993 and 1994 directories, units with

louvered sides and without a reversing

valve are available with efficiencies

exceeding 11.0 EER in the 6000 to 7999

Btu/h and 8000 to 13,999 Btu/h product

classes. In the 14,000–19,999 Btu/h

product class, models are available with

efficiencies of 10.5 EER. The ACEEE

asserted that even if the Department

underestimated the extra first cost of the

proposed standards by a factor of two,

they would still be cost effective.

(ACEEE, No. 557 at 20–22.) CHGEC

stated that for its service area, the

proposed standards would save

approximately 103 kWh per unit for a

typical 8000 Btu/h size. (CHGEC, No.

601 at 1.) SCEC and APC generally

supported the rulemaking proposals.

(SCEC, No. 14 at 1; APC, No. 696 at 20.)

Although the Department recognizes

the comments supporting the proposed

standards, lower efficiency standards

are being promulgated in this Final

Rule. Revisions made to both the

engineering simulation model and the

method in which certain design options

were analyzed, based on public

comment, resulted in lower efficiency

standards being selected for all product

classes.

Proposed standard level 6. In addition

to receiving comments in support of the

proposed standards, the NRDC

commented that the Department did not

provide justifiable reasons for rejecting

even the higher efficiency standards in

the 1994 Proposed Rule. NRDC’s

argument included: (1) the Department’s

rejection of the higher standards

(described as standard level six in the

1994 Proposed Rule) based on the

standard level’s long payback is legally

unacceptable; (2) though short-term

return on equity is reduced by standard

level six, the long-term return is not

significantly reduced; and (3)

manufacturer cost impacts are premised

on the continuation of current practices

for utility rate design under which

residential peak kilowatt-hours do not

carry a price premium. (NRDC, April 5,

1994, Transcript at 115–116.)

There are significant differences

between the candidate standard levels

selected for the proposed rule and those

levels selected for the final rule. These

differences are a result of revisions

made to the engineering analysis.

In response to NRDC’s specific

comments, the Department recognizes

that in determining whether a standard

is economically justified, the Secretary

cannot consider the failure to meet the

rebuttable presumption criterion. EPCA,

section 325(o)(2)(B)(iii), 42 U.S.C.

6295(o)(2)(B)(iii). However, the

Department does consider energy cost

savings relative to incremental first cost.

EPCA, section 325(o)(2)(B)(I)(II), 42

U.S.C. 6295(o)(2)(B)(I)(II). The

Department also considers both short

run and long run return on equity as

important factors in determining the

rule’s impact on manufacturers. In

addition, the Department strives to

fairly assess consumer cost impacts,

including sensitivity analysis of high

and low State energy prices.

Adverse effects of standards. The

Department received several comments

regarding the adverse affects of

promulgating the proposed standards.

The greatest concern of manufacturers,

that heat exchanger coils and cabinets

would need to be expanded, at

significant expense, in order to meet the

Department’s proposed standards, was

discussed previously under comments

pertaining to design options requiring

increased chassis sizes. Other

manufacturer concerns included: (1)

The disparity in the proposed efficiency

levels for class 1 (less than 6,000 Btu/

h, with louvers and without a reversing

valve) and class 2 (6,000–7,999 Btu/h,

with louvers and without a reversing

valve); (2) the effect of higher efficiency
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50133

standards on the replacement market for

‘‘through-the-wall’’ units (i.e., units

without louvered sides) ; (3) the effect

higher standards would have on sales of

units with reversing valves; (4) the

impact on the dehumidification

capability of low capacity units; and (5)

the impact on low-income consumers.

The proposed standard of 11.1 EER

for class 1 units was significantly greater

than the proposed standard of 10.3 EER

for class 2 units. Both AHAM and

Frigidaire claimed that this disparity in

the efficiency levels will result in

significantly higher consumer costs for

class 1 units. They asserted that this

disparity will eventually eliminate class

1 units from the marketplace because

consumers would purchase less

expensive class 2 units. They stated that

eliminating low cost class 1 units would

adversely effect low income consumers.

With regard to energy consumption, for

applications where class 1 units are

more suitable, they stated that class 2

units might run less to provide the same

amount of cooling, but their overall

power consumption would be higher

because they would operate at a lower

efficiency. For units of equal efficiency

providing cooling to environments with

the same sensible and latent loads,

limited manufacturer test data indicated

that a class 2 unit (6,000 Btu/h capacity)

consumes 6 percent more power than a

class 1 unit (5,000 Btu/h capacity.) In

addition, both AHAM and Frigidaire

claimed that to offset humidity effects,

class 2 units would probably be run

with a lower thermostat setting resulting

in increased run times and increased

energy use. Both commenters urged the

Department to set standard levels for

class 1 units that are no greater than the

standards that are set for class 2 units.

(AHAM, No. 1 at 18–19; Frigidaire, No.

544 at 6–9.)

ACEEE also noted the disparity in the

proposed efficiency levels for class 1

and class 2 units. It noted that class 3

units (8,000 to 13,999 Btu/h) have a

significantly higher efficiency standard

than class 2 units. ACEEE commented

that promulgating a significantly lower

standard for class 2 units would likely

result in manufacturers concentrating a

greater fraction of shipments in this size

range, leading to lower than expected

energy savings from the proposed

standards. The ACEEE urged the

Department to raise the standard for

class 2 units to 11.0 or 11.1 EER. ACEEE

claimed this level is ‘‘technically

feasible according to the Department’s

analysis,’’ citing that the top-rated

model in the market in this capacity

range has an 11.0 EER. ACEEE believed

that because the DOE life-cycle cost

analysis showed only a slight increase

in life-cycle cost going from an EER of

10.25 to 10.74 for this capacity range, a

‘‘small additional step to an EER of

11.0—11.1 should not have much of an

impact on LCC either.’’ It also urged the

Department to raise the standard for the

6000 to 7999 Btu/h product class

without side louvers to the same levels

being proposed for the less than 6000

Btu/h and 8000 to 13,999 Btu/h product

classes. (ACEEE, No. 557 at 22.)

The Department disagrees that

ACEEE’s extrapolation of the life-cycle

cost analysis of the 1994 Proposed rule

indicates that an increase to 11.0—11.1

EER should have little impact on lifecycle cost. Moreover, the reanalysis

provided in the Draft Report resulted in

efficiency levels for classes 1 and 2

being approximately the same. AHAM

indicated in its comments to the Draft

Report that these results addressed its

concerns. (AHAM, RAC No. 4 at

Attachment 1, pg 3.) In addition, for the

final rule, the Department has selected

standards for class 1 and class 2 that are

equal. ACEEE and NRDC also support

these standard levels. (ACEEE/NRDC,

RAC No. 14 at 3.)

AHAM, manufacturers, and real estate

organizations commented that the

proposed efficiency standards would

obsolete the replacement market for

‘‘through-the-wall’’ units (i.e., units

without louvered sides.) Because of the

unavailability of 11.5 to 12.0 EER

compressors, chassis sizes would need

to be increased to meet the proposed

efficiency standards. But because of the

overall size restrictions due to ‘‘throughthe-wall’’ sleeves already in service,

chassis sizes cannot be increased

without obsoleting the existing sleeves.

If existing wall openings are expanded

to accommodate larger units, retrofit

costs are estimated to be between $250

and $500. These commenters argue that

the proposed standards would force the

discontinuation of higher capacity

systems as only smaller capacity units

would be able to fit into existing sleeve

openings. (AHAM, No. 1 at 19; Given &

Spindler Companies (G&S), No. 302 at

1–2; Frigidaire, No. 544. at 5; Institute

of Real Estate Management (IREM), No.

553 at 7; Sanyo, No. 771 at 3–6;

Friedrich Air Conditioning Co.

(Friedrich), April 7, 1994, Transcript at

77–80.) Both IREM and G&S requested

that the Department exempt ‘‘throughthe-wall’’ units because of the undue

burden upon owners who will be forced

to make retrofit changes without any

financial compensation. (G&S, No. 302

at 1–2; IREM, No. 553 at 7.) Sanyo stated

that the efficiency levels proposed in

the 1994 Proposed Rule would force

higher capacity units to be

discontinued. (Sanyo, No. 771 at 3.) The

AHAM presented data demonstrating

that existing models meeting the current

efficiency standards already employ all

available design options. The AHAM

stated that any increase in efficiency can

only be accomplished by increasing

chassis size or by further decreasing

cooling capacity. (AHAM, No. 1 at 20.)

Frigidaire stated that above 8,000 Btu/h,

any increase in the current standard

‘‘will result in a lower BTUH capacity,

thus reducing the utility of this product

category.’’ Frigidaire notes that in order

‘‘to comply with the 1990 Energy

Standards, we were forced to reduce the

capacity in this product class from

13,500 BTU to 10,700 BTU.’’ (Frigidaire,

No. 544 at 5.) In its comments to the

1996 Draft Report, AHAM reiterated the

industry’s struggle to achieve the

current standards in the largest capacity

models which has resulted in the

reduction of the maximum capacity

available. (AHAM, RAC No. 4 at 4.) Both

the National Apartment Association

(NAA) and the National Multi Housing

Council (NMHC) requested that the

Department adopt an efficiency

standard for units without louvered

sides that takes into consideration the

adverse impact upon the multi-family

housing industry. (G&S, No. 302 at 2;

IREM, No. 553 at 7.) Because the multifamily housing industry predominantly

uses air conditioner units without

louvered sides, NAA and NMHC are

concerned about the impact of increased

cabinet size (due to higher efficiency

standards) on these ‘‘through-the-wall’’

units.

The ACEEE opposed exempting

‘‘through-the-wall’’ units from more

stringent standards. It stated that such

an exemption would create a loophole

that could result in a significant

reduction in energy savings. It believed

that manufacturers should be able to

produce these units using the same or

similar components used in louveredtype units. Through gains in economy of

scale, costs with maintaining different

product lines for models with and

without side louvers could be avoided.

(ACEEE, No. 557 at 23.) ACEEE and

NRDC are particularly concerned about

loopholes if standards are not increased

for units below 14,000 Btu/h. (ACEEE/

NRDC, RAC No. 5 at 3.) In February

1997, ACEEE and NRDC urged the

Department to raise the standard for

class 8 (units without louvers, without

a reverse cycle, and 8,000—13,999 Btu/

h) to 8.7 EER in an effort to reduce the

likelihood of a loophole. In addition,

they stated that according to the data

provided by AHAM (AHAM, RAC No. 9

at Attachment 1), the 1994 sales

weighted average for this class is 8.73
50134 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

EER. (ACEEE/NRDC, RAC No. 14 at 3.)

AHAM stated that these concerns are

based ‘‘on the incorrect view that these

products are essentially the same except

for the presence of side louvers.’’

AHAM states that the elimination of

side louvers causes extensive changes

that result in ‘‘a significant loss of

efficiency for the same capacity.’’

(AHAM, RAC No. 6 at 2.) Furthermore,

AHAM stated that increasing the

standard for class 8 would eliminate

higher capacity units, causing harm to

building owners and consumers, and

would ‘‘violate NAECA’s safe harbor

rule in Section 325(n)(4).’’ (AHAM, RAC

No. 16 at 4.)

In its comments to the 1994 Proposed

Rule NRDC was concerned that the

practice of using small sleeves may

amount to a permanent constraint on

how far energy efficiency can be

increased. It suggested that the

Department analyze what fraction of the

market cannot accept design options

that increase sleeve size. Then the

Department should determine the

economic impact of replacing design

options that do require increased size

with other less cost-effective options for

that fraction of the market that cannot

adapt. NRDC also suggested that the

Department consider adopting a second

tier of efficiency standards which would

be available for states to adopt

voluntarily through building codes. This

way, room air conditioners could be

designed to the optimum level for the

new construction market without

imposing unreasonable costs on the

replacement market. (NRDC, No. 55 at

27.)

The Department agrees with

manufacturers and real estate

organizations that added retrofit costs

would be necessary for units which

require larger sleeves and, as a result,

larger wall openings. Thus, for units

without louvered sides, an additional

installation cost of $375 is assumed for

design options which require a larger

chassis (i.e., for increased evaporator

and condenser face areas.) The

Department was not provided with the

necessary information to determine the

percentage of existing sleeves which

could not accept larger chassis sizes.

Thus, the added retrofit cost of $375

was assumed to apply to all units

requiring a chassis size change. In

addition, since the percentage of units

being used in new construction is

believed to be small, all units were

assumed to incur the added retrofit cost,

regardless of application. The

Department examined the 1997 AHAM

Directory. It indicates that for higher

capacity models (9,000 Btu/h or more),

only one manufacturer currently

produces units which could meet the

advocates recommendation of 8.7 EER,

despite the fact that this value is the

1994 shipment weighted average for this

class. The Department agrees that there

is reason to believe that increasing

standards for units without louvers and

without reverse cycle may result in

eliminating higher capacity units from

the market. Thus, the Department will

not increase standards for ‘‘through-thewall’’ units of 8,000 Btu/h capacity or

more in today’s rule. These standard

levels minimize or eliminate the need to

increase chassis size. Consequently, the

Department does not believe the

multifamily housing industry will be

negatively impacted.

As for the advocates concern over

possible loopholes, the Department

intends to monitor market trends for

these classes and will consider these

trends during its next review of room air

conditioner standards. Regarding

NRDC’s suggestion that the Department

adopt a second tier standard for states

to adopt voluntarily through building

codes, in accordance with the

legislation, a recommendation for a

second tier standard for adoption

through voluntary building codes must

be done separately from manufacturing

standards. However, because the

‘‘through-the-wall’’ units account for

only about one-tenth of air conditioner

energy use and because only a fraction

of these units are in new construction,

the Department does not believe this

measure is warranted.

In their comments to the 1994

Proposed Rule, AHAM and Whirlpool

also expressed that, as a result of setting

standards too high for units with a

reversing valve, more electric resistance

heat models will be sold because of

their significantly lower cost. They

stated that this will result in an overall

increase in energy consumption.

(AHAM, No. 1 at 21; Whirlpool, April

7, 1994, Transcript at 103–105.) The

standards for units with a reverse cycle

set forth in today’s rule are significantly

lower than those standards proposed in

the 1994 Proposed Rule, so this concern

should be mitigated.

Fedders claimed that energy

consumption due to reduced

dehumidification is adversely affected

by the standard levels proposed in the

1994 Proposed Rule for class 1 through

class 3. Fedders presented calculations

demonstrating that units meeting the

proposed standard levels will consume

more energy than units meeting existing

efficiency standards. Fedders stated that

units meeting the proposed standard

levels will need to operate longer in

order to dehumidify as effectively as

units meeting the existing standards.

(Fedders, No. 693 at 1–5, Sec. 2.)

Fedders’ claims of longer run times

for more efficient units are based on its

estimates of the dehumidification

capability of existing minimum

efficiency units and those which

comply with the Proposed Rule’s

proposed efficiency standards. Fedders’

dehumidification data for units at the

proposed efficiency levels were based

on historical test data which were

extrapolated to the proposed levels. The

Department’s engineering simulation

model indicated that the proposed

efficiency standards did not

significantly reduce the

dehumidification capability of the units

which were modeled. The Department

has questions about Fedders’

assumptions used to calculate room air

conditioner run times. For example,

although Fedders acknowledges that

sizing recommendations for room air

conditioners are dependent on such

things as building construction, window

types and insulation levels, its cooling

load calculations are based on a single

room size and a single set of initial

indoor room conditions. Most

importantly, because the standards

promulgated in this final rule are

significantly lower than those proposed

in the 1994 Proposed Rule, the

dehumidification capabilities should no

longer be in question.

One of the country’s largest retailers,

the Sears, Roebuck and Company

(Sears), asserted that the standards

proposed in the 1994 Proposed Rule

impose disproportionate hardships on

low income consumers as most room air

conditioner consumers have lower than

average incomes. Whirlpool

substantiates this claim by presenting

data on the income distribution of

typical room air conditioner purchasers.

(Sears, April 7, 1994, Transcript at 115;

Whirlpool, No. 391A at 1–2.)

The standards set forth in the final

rule will have substantially less impact

on purchase price than those standards

proposed in the 1994 Proposed Rule and

will have shorter payback periods. For

example, class 1 has an approximate

first cost increase of $10, and a payback

period of approximately 2 years,

satisfying the rebuttable presumption

criteria for economical justification. The

Department does not believe the

standards set forth today will have a

substantial negative impact on low

income consumers.

Efficiency Standards

Recommendations. Several commenters

concerned about adverse effects of

promulgating the efficiency standards

proposed in the 1994 Proposed Rule

recommended to DOE alternative levels
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50135

at which to set the standards for room

air conditioners. For classes with

louvered sides and without a reversing

valve, Frigidaire recommended the

following efficiency standards: 9.0 EER

for the less than 6000 Btu/h class, 9.5

EER for the 6000 to 7999 Btu/h class, 9.5

EER for the 8000 to 13,999 Btu/h class,

9.5 EER for the 14,000 to 19,999 Btu/h

class, and 8.5 EER for the greater than

20,000 Btu/h class. (Frigidaire, No. 544

at 10.) In its comments to the 1994

Proposed Rule, Fedders called for

consolidating the three smallest

capacity classes into a single class and

setting the efficiency standard at 10.0

EER. For the two largest capacity

classes, Fedders agreed with the

Department’s proposed standards (11.1

and 9.8 EER). (Fedders, April 7, 1994,

Transcript at 120–122.) The CEC

recommended a single efficiency

standard for all classes with louvered

sides and without a reversing valve. It

recommended setting the efficiency

standard based on the level which the

Department proposed (11.0) for the most

popular class (i.e., the 8000 to 13,999

Btu/h class.) (CEC, No. 539 at 2,3.)

For classes without louvered sides

and without a reversing valve, AHAM,

Frigidaire, and Sanyo recommended

that the current five capacity classes be

consolidated into two classes: units less

than 8000 Btu/h and units greater than

or equal to 8000 Btu/h. For the less than

8000 Btu/h class, AHAM, Frigidaire,

and Sanyo all recommended setting the

efficiency standard at 9.0 EER. For the

greater than or equal to 8000 Btu/h

class, they all recommended setting the

standard at 8.5 EER. AHAM presented

data demonstrating that existing models

meeting the current efficiency standards

already employ all available design

options. They stated that any increase in

efficiency can only be accomplished by

increasing chassis size or by further

decreasing cooling capacity. (AHAM,

No. 1 at 20; AHAM RAC No. 4 at 1–2;

Frigidaire, No. 544 at 5; Sanyo, No. 771

at 3.) Friedrich recommended that units

without louvered sides be exempt from

efficiency regulation. (Friedrich, April

7, 1994, Transcript at 84.) The CEC

recommended a single efficiency

standard for all classes without louvered

sides and without a reversing valve. The

Commission recommended setting the

efficiency standard based on the level

which the Department proposed (10.7

EER) for the most popular class (i.e., the

8000 to 13,999 Btu/h class). (CEC, No.

539 at 2,3.)

For classes with a reversing valve,

AHAM stated that the efficiency of a

reverse cycle unit in the cooling mode

is theoretically less than the efficiency

for a cooling-only model due to the

additional pressure drop caused by the

reversing valve and inefficiencies

created by the refrigerant charge being

adjusted for an acceptable balance

between cooling and heating

performance. AHAM presented data

demonstrating that the average

reduction in efficiency due to a

reversing valve is 0.42 EER. In order to

cover the majority of reverse cycle units,

AHAM recommended setting a standard

for reverse cycle units which is 0.5 EER

less than the standard for a comparable

cool-only model with or without

louvered sides. (AHAM, No. 1 at 20, 21.)

Both Sanyo and Whirlpool also

recommended setting the same type of

standard. (Sanyo, No. 771 at 3;

Whirlpool, April 7, 1994, Transcript at

103–105.) The CEC proposed

maintaining the current classification

for units with a reversing valve; one

class for units with louvered sides and

another class for units without louvered

sides. The CEC agreed the efficiency

levels proposed by the Department for

reverse cycle units. (CEC, No. 539 at

2,3.)

On April 23, 1996, ACEEE and NRDC

sent a letter to AHAM with the

following table of proposed standard

levels (ACEEE/NRDC, RAC No. 3 at 3.):

Class Standard level

Units without reverse cycle and with louvered sides:

Capacity less than 20,000 Btu/h ............................................................................................................................................... 10.0 EER.

Capacity 20,000 Btu/h and more ............................................................................................................................................... 9.0 EER.

Units without reverse cycle and without louvered sides .................................................................................................................. 9.0 EER.

Slider/casement and casement-only units ........................................................................................................................................ 9.0 EER.

Units with reverse cycle, all capacities ............................................................................................................................................. 0.5 EER less

than the

standard for

comparable

cool-only

model.

In its comments to the 1996 Draft report, AHAM proposed the following standards (AHAM, RAC No. 6 at 2):

Class Standard level

Units without reverse cycle and with louvered sides:

Capacity less than 20,000 Btu/h ............................................................................................................................................... 9.5 EER.

Capacity 20,000 Btu/h and more ............................................................................................................................................... 8.5 EER.

Units without reverse cycle and without louvered sides:

Capacity less than 8,000 Btu/h ................................................................................................................................................. 9.0 EER.

Capacity 8,000 Btu/h or more ................................................................................................................................................... 8.5 EER.

Units with reverse cycle, with louvers .............................................................................................................................................. 8.5 EER.***

Units with reverse cycle, without louvers ......................................................................................................................................... 8.0 ERR.***

Casement-only .................................................................................................................................................................................. 8.7 EER.

Casement-slider ................................................................................................................................................................................ 9.5 EER.

***AHAM would prefer to set the standard for reverse cycle units 0.5 EER less than the standard for its ‘‘cool-only’’ counterpart. This recommendation results in ten classes for reverse cycle units. Because DOE did not support ten classes for reverse cycle units, AHAM stated that

the standard should be set in reference to the highest capacity class. For example, if the standard for models without reverse cycle, without

louvers, 20,000 Btu/h or more were set at 8.5 EER, then the standard for units with reverse cycle, without louvers, 20,000 Btu/h or more should

be set at 8.0 EER. (AHAM, RAC No. 6 at 2–3.)

Following the meetings in late September 1996, ACEEE modified its recommendation to the following standards

(ACEEE/NRDC, RAC No. 5 at 4–5)
50136 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

Class Standard

Without reverse cycle and with louvered sides less than 6,000 Btu/h ............................................................................................ 9.7 EER.

Without reverse cycle and with louvered sides 6,000 to 7,999 Btu/h .............................................................................................. 9.7 EER.

Without reverse cycle and with louvered sides 8,000 to 13,999 Btu/h ............................................................................................ 9.8 EER.

Without reverse cycle and with louvered sides 14,000 to 19,999 Btu/h .......................................................................................... 9.7 EER.

Without reverse cycle and with louvered sides 20,000 or more Btu/h ............................................................................................ 8.5 EER.

Without reverse cycle and without louvered sides less than 14,000 Btu/h ..................................................................................... 9.0 EER.

Without reverse cycle and without louvered sides 14,000 or more Btu/h ....................................................................................... 8.5 EER.

With reverse cycle and with louvered sides ..................................................................................................................................... 9.0 EER.

With reverse cycle, without louvered sides ...................................................................................................................................... 8.5 EER.

Casement (Casement-only and Casement-slider) ........................................................................................................................... 9.5 EER.

For classes without louvered sides,

ACEEE and NRDC stated in their

November 1996 comments that they

were willing to accept 8.5 EER for

capacities of 14,000 Btu/h or more.

However, ACEEE and NRDC

emphasized their recommendation of

9.0 EER for the 8,000—13,999 Btu/h

capacity class, stating that: this EER is

the minimum life cycle cost point

according to the Draft Report; the 1994

sales weighted average of 8.73 EER

approaches this recommendation; and

20 percent of 1996 models in this class

meet or exceed this level according to

the March 1996 AHAM Directory. They

were concerned that AHAM’s 8.5 EER

recommendation could ‘‘create a

loophole in that units without louvered

sides at 8.5 EER would cost

manufacturers less than units with

louvered sides at 9.5 EER ($240 vs. $263

according to the DOE draft analysis).’’

(ACEEE/NRDC, RAC No. 5 at 3.) In its

comments to the Draft Report, AHAM

states that there is a significant cost and

energy efficiency differential between

models with and without side louvers.

(AHAM, RAC No. 6 at 2.) In February

1997, ACEEE and NRDC urged the

Department to raise the standard for

class 8 to at least 8.7 EER. (ACEEE/

NRDC, RAC No. 14 at 3.)

As discussed earlier, although

manufacturers currently do not produce

units in two of the existing five capacity

classes, the Department has retained the

five capacity-based classes. The

Department conducted analyses only for

the two classes for which manufacturer

data were available (the 6,000 to 7,999

Btu/h and the 8,000 to 13,999 Btu/h

classes.) In this Final Rule, the

Department has applied the same

efficiency standard (9.0 EER) to the

6,000 to 7,999 Btu/h class and the less

than 6,000 Btu/h class. The efficiency

standard for the 8,000 to 13,999 Btu/h

class (8.5 EER) is also applied to the

14,000 to 19,999 Btu/h class and the

20,000 Btu/h or more class. According

to 1997 AHAM Directory, the highest

capacity ‘‘through-the-wall’’ unit

currently manufactured has a capacity

of 12,500 Btu/h, and only one

manufacturer currently makes units at a

capacity of 9,000 Btu/h or higher which

meet the 8.7 EER standard proposed by

ACEEE/NRDC. On this basis, the

Department has determined that raising

this standard is likely to result in higher

capacity models being withdrawn from

the market to the disbenefit of

consumers.

With regard to the comment that units

without louvered sides at 8.5 EER

would cost manufacturers less than

units with louvered sides at 9.5 EER,

ACEEE and NRDC appear to refer to the

values found in tables 1.12 and 1.16 in

the Draft Report. The two units being

compared have different capacities;

therefore a direct cost comparison is not

appropriate. However, the Department

shares the general concern about the

possibility that differences in standard

levels for different classes may cause

shifts in product use and sales, and as

stated previously, the Department

intends to monitor market trends for

these classes. If it appears that products

without louvers are used in lieu of units

with louvers because of differences in

energy efficiency standards, the

Department will consider the need to set

comparable standards during its next

review of room air conditioner

standards.

In their comments to the Draft Report,

ACEEE and NRDC recommend a 9.0

EER for reverse cycle units with louvers

and an 8.5 EER for reverse cycle units

without louvers. They stated that these

levels are well below the minimum lifecycle cost point of the Draft Report.

Furthermore, they state that a third of

the 1996 reverse cycle units with

louvers and 80 percent of the 1996

reverse cycle units without louvers meet

these levels. The advocates also note

that the only reverse cycle unit in the

1996 AHAM directory above 20,000

Btu/h has a 9.0 EER. (ACEEE/NRDC,

RAC No. 5 at 3.) In addition, they are

concerned about ‘‘loopholes’’ which

may result if the standards are not

raised. (RAC, No. 12 at 1.) AHAM

counters that a loophole would not be

created because the cost of building a

unit with a reverse valve is ‘‘quite

significant.’’ (AHAM, RAC No. 6 at 3.)

The energy advocates also state that the

Department’s analysis appears to only

evaluate cooling energy savings and not

heating energy savings. (ACEEE/NRDC,

RAC No. 5 at 2.)

In response to comments, DOE has

split classes 11 and 12. AHAM, NRDC,

and ACEEE all recommended setting the

standards for reverse cycle units at 0.5

EER less than their cool-only

counterparts. (ACEEE/NRDC, RAC No. 3

and AHAM, No. 1 at 21.) For units with

reverse cycle and louvered sides, the

energy efficiency advocates believe an

EER of 9.0 is acceptable. (ACEEE/NRDC,

RAC No. 5 at 5.) AHAM also finds this

level to be acceptable for units with

capacities less than 20,000 Btu/h.

However, for units at 20,000 Btu/h or

more, AHAM argues that the standard

should not be higher than the standard

for its ‘‘cool-only’’ counterpart. (AHAM,

RAC No. 6 at 3.) The Department agrees.

By splitting class 11 at 20,000 Btu/h, the

Department can raise the standard for

most of the units with reverse cycle and

with louvers to 9.0 EER, without raising

the standard for units of capacities of

20,000 Btu/h or more above the 8.5 EER

of its cool-only counterpart.

Similarly, the Department has split

class 12 and set the standard for units

less than 14,000 Btu/h at 8.5 EER while

keeping the standard for units of 14,000

Btu/h or more at 8.0 EER. This split is

largely consistent with the

recommendations of ACEEE, NRDC, and

AHAM for a 0.5 EER differential

between reverse cycle units and their

‘‘cool-only’’ counterparts for units

without louvers, with the exception of

units in the 8,000–13,999 Btu/h capacity

range for which there is no differential.

According to the 1997 AHAM directory,

only one model with reverse cycle and

without louvers in this capacity range

does not meet an 8.5 EER. In response

to the advocates question as to why the

Department’s analysis only evaluates

cooling energy savings and not heating

energy savings, the Department does not

evaluate heating savings because the test

procedure is unable to account for the

heating energy savings.
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50137

In their February 1997 comments to

the notice reopening the comment

period, ACEEE/NRDC stated that

establishing separate classes with

weaker standards for higher capacity

units with a reverse cycle is

unnecessary because all currently

existing models at these capacity levels

meet their recommended standards,

without splitting the classes. (ACEEE/

NRDC. RAC No. 14 at 3.) Although all

currently existing models with louvers

and with a reverse cycle at 20,000 Btu/

h or more meet a 9.0 EER, the

Department does not believe new

models entering the market should be

required to meet a standard higher than

the standard for a unit without a reverse

cycle. In addition, the Department

recognizes that no models currently

exist with a reverse cycle and without

louvers at 14,000 Btu/h or more;

however, the Department believes that it

should allow manufacturers the

opportunity to design units without

louvers and with a reverse cycle at

higher capacities, and the evidence

indicates that manufacturers could not

meet a standard greater than 8.0 EER at

capacities of 14,000 Btu/h or more.

Furthermore, in April 1996, the

advocates supported AHAM’s

recommendation to make the standard

for reverse cycle units 0.5 EER less than

the standard for its cool-only

counterpart. (ACEEE/NRDC, RAC No. 3

at 3.) This recommendation would

create 10 classes for reverse cycle room

air conditioners. Thus, the Department

questions why the advocates suggest

that promoting only four classes for

reverse cycle units is superfluous.

AHAM stated that casement-type

units are already using all available

design options and are limited in size

because of their applications. (AHAM,

No. 1 at 22.) In its comments to the Draft

Report, AHAM recommended efficiency

standards of 9.5 EER for slider/casement

units and 8.7 EER for casement-only

units. (AHAM, RAC No. 6 at 2.) In its

comments to the 1994 Proposed Rule,

Frigidaire recommended a standard of

9.0 EER for slider/casement units.

(Frigidaire, No. 544 at 6.) Because the

1994 Proposed Rule did not propose

standards for casement-type units,

ACEEE, CEC, NRDC, and the New York

State Energy Office (NYSEO) urged the

Department to collect the necessary data

in order to perform an analysis and set

efficiency standards for these units.

ACEEE and NRDC stated that if data is

not available to perform an analysis,

standards should be set for casementtype units that are equivalent to those

for typical room air conditioners. NRDC

added that the Department is prohibited

under NAECA from reducing the

stringency of energy efficiency

standards. The CEC asked the

Department to clarify whether States

may adopt efficiency standards for

casement-type classes without

preemption or whether another standard

level applies to these products until the

Department adopts a separate level.

(ACEEE, No. 557 at 23; CEC, No. 539 at

3; NRDC, April 5, 1994, Transcript at

116–117; NYSEO, June 8, 1994,

Transcript at 18–19.) The Department

considers casement-type units to be air

conditioners. Therefore, these units are

subject to the currently applicable

standards based on unit capacity and

the presence or absence of louvered

sides and a reverse cycle.

In their February 1997 comments,

ACEEE and NRDC stated that a special

class set aside for one casement-only

model in existence is not necessary.

They are concerned that a casementonly unit at an 8.7 EER will be less

expensive to produce than a ‘‘standard’’

unit at 9.7 EER. They believe this cost

disparity would cause manufacturers to

capitalize on this niche class. (ACEEE/

NRDC, RAC No. 14 at 2.) AHAM

counters that casement units are

expensive relative to their capacity and

that there would be no economic

incentive to exploit this class.

Furthermore, casement-only units add a

unique utility not provided by

casement-slider units. (AHAM, RAC No.

16 at 3.) In addition, in February 1997,

Friedrich provided information

regarding the relative costs of casement

room air conditioners as compared to

‘‘standard’’ models with side louvers

and without a reverse valve. This

information shows that casement-only

and casement-slider room air

conditioners are significantly more

expensive than units that do not meet

the size constraints of casement room

air conditioners. (RAC No. 18.)

Therefore, the Department has found no

economical advantage to using

casement-type units at lower energy

efficiency ratings for standard room air

conditioner applications. Thus, the

Department has selected separate

classes for casement room air

conditioners. DOE has selected the

efficiency standard recommended by

AHAM, ACEEE, and NRDC for

casement-slider units (9.5 EER) (AHAM,

RAC No. 6 at 2 and ACEEE/NRDC, RAC

No. 5 at 5) and the standard

recommended by AHAM for casementonly units (8.7 EER). (AHAM, RAC No.

6 at 2.) However, due to the energy

efficiency advocates’ concern about the

possibility of ‘‘loopholes,’’ the

Department will monitor market trends

for these classes. If it appears that

casement units are used in lieu of

‘‘standard’’ units because of differences

in energy efficiency standards, the

Department will consider the need to set

comparable standards during its next

review of room air conditioner

standards.

AHAM stated that its recommended

standards would result in meaningful

energy savings but would alleviate the

economic burden on manufacturers.

AHAM states that in light of the

economic burden of chassis size

increases, the cumulative burden of

other rulemakings, and the relatively

modest energy use of room air

conditioners that ‘‘more stringent

standards than that proposed by

industry would be unreasonable and

unjustified.’’ (AHAM, RAC No. 6 at 1.)

The standards established in today’s

rule are similar to the standards

recommended by AHAM. The

Department selected slightly higher

standards for the first four classes.

AHAM’s primary concern was the cost

of increasing chassis size. Because the

standard levels the Department has

selected for the first five classes are

based on the life cycle cost minimums

when the cost of increasing chassis size

is prorated, the Department believes the

cost impact is reduced.

5. Other Comments

Effective date of standards.

Commenting on the 1994 Proposed

Rule, Fedders proposed accelerating the

effective date from January 1st to August

1st. It claimed this would prevent

manufacturers from producing large

quantities of less efficient units during

the months of August through

December. (Fedders, April 7, 1994,

Transcript at 123–124.)

AHAM urged the Department to set an

effective date of October 1, 2000, in

order to coordinate with manufacturing

cycles. AHAM stated that production

begins in August or September and runs

through June or July. AHAM stated that

an arbitrary effective date of 3 years

from the date of the rule, and likely in

the middle of a manufacturing season,

would cause severe economic hardships

on manufacturers which are not

accounted for in the manufacturing

impact analysis. (AHAM, RAC No. 16 at

3.)

The Department agrees, due to the

unique seasonal nature of room air

conditioners, the effective date should

be coordinated with manufacturing

cycles. Thus, this rule will take effect on

October 1,2000.

Units consuming less than 500 watts.

Commenting on the 1994 Proposed

Rule, Fedders recommended that room
50138 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

4The EPA’s final rule accelerating the phaseout

of ozone-depleting substances bans the production

and consumption of virgin HCFC–22 unless it is

used as feedstock or in equipment manufactured

before January 1, 2010. The final rule also bans the

production and consumption of HCFC–22 on

January 1, 2020, except for limited exemptions

specified by statute. 60 FR 24970 (Wednesday May

10, 1995).

air conditioners consuming less than

500 watts be exempted from regulation.

In support of this recommendation, it

stated that a 3000 Btu/h capacity unit at

an efficiency of 8.0 EER consumes 375

watts compared to a 5000 Btu/h

capacity unit at 11.1 EER that consumes

450 watts. Fedders argued that this

exemption would encourage

development of units that are smaller

and consume less energy and resources.

(Fedders, April 7, 1994, Transcript at

122–123.) AHAM, Frigidaire, NRDC,

and the ACEEE all opposed the Fedders’

recommendation. AHAM disagreed with

Fedders’ claim that as many as twothirds of the rooms in which 5000 Btu/

h capacity units are installed could be

adequately cooled with units as small as

3000 Btu/h. AHAM saw no reason that

smaller units should be given an

advantage by being exempted from a

standard and ‘‘strenuously disagreed

with Fedders’ proposed exemption for

models of less than 500 watts.’’ (AHAM,

No. 1 at 23 and AHAM, RAC No. 4 at

Attachment 1, pg 4.) Frigidaire stated

that the recommendation by Fedders is

counterproductive to saving energy as,

under it, low capacity units of low

efficiency will be introduced into the

marketplace. (Frigidaire, No. 544 at 11.)

The NRDC agreed with the motivation

behind Fedders’ suggestion but did not

agree with the specifics of the

recommendation as it would allow the

creation of a new market driven entirely

by low first cost. NRDC suggested that

the Department consider a lower

standard for a product class below 4000

Btu/h in capacity based on comparable

criteria to the standard set for the below

6000 Btu/h class. (NRDC, No. 55 at 28.)

The ACEEE opposed the Fedders’

recommendation as it believes it could

lead to widespread use of inefficient

smaller capacity units. (ACEEE, No. 557

at 22.)

The Department agrees with both

AHAM and ACEEE that room air

conditioners which consume less than

500 watts should not be exempt from

efficiency regulation. The Department

recognizes that small capacity units may

draw less power than larger capacity

systems. But the Department does not

agree with Fedders’ claims that, for

units in the less than 6000 Btu/h class,

small capacity units will consume less

energy than more efficient, larger

capacity systems. In creating a separate

product class for units with capacities

below 6000 Btu/h, the Department has

recognized that small capacity units are

used differently than units in larger

capacity classes. Applications for small

capacity units tend to be for small

rooms where the cooling load is

relatively low. To further differentiate

the less than 6000 Btu/h class by

capacity would require field tests

demonstrating that there are

applications which are suitable

specifically for units with extremely

small capacities. Such field data has not

been presented.

Phase out of HCFC–22. With concern

that the phase out 4 of HCFC–22 (the

refrigerant used by all room air

conditioners) might be accelerated,

AHAM recommended, in its comments

to the 1994 Proposed Rule, that the

Department promulgate a second tier of

standard levels for HCFC-free room air

conditioners. AHAM stated that some

replacement refrigerants show a drop in

efficiency of 10 percent. AHAM

proposed that the second tier be set

initially at 10 percent less than the

efficiency standards for room air

conditioners using HCFC–22. AHAM

proposed that second tier of standards

would be effective upon the phase-out

date of HCFC–22 and would not be

available if the HCFC–22 phase out date

is not accelerated. (AHAM, No. 1 at

22,23.) Because compressor testing

indicates that alternative refrigerant

blends will decrease efficiency,

Matsushita commented that any

efficiency standards promulgated for

room air conditioners should apply only

to units charged with HCFC–22.

(Matsushita, April 7, 1994, Transcript at

91–92.) Frigidaire urged the Department

to consider possible energy penalties for

HCFC–22 alternative refrigerants.

(Frigidaire, No. 544 at 11.) NRDC did

not support creating less stringent

standards for room air conditioners

using alternative refrigerants. NRDC

believed that units with new refrigerant

alternatives can attain the same

efficiency level as units using HCFC–22.

NRDC suggested that the Department

collaborate with the Environmental

Protection Agency on decisions

regarding the phase out of HCFCs.

Because the Department must

promulgate another rulemaking before a

phaseout would occur, NRDC stated that

the phase out date of HCFC–22 is not

within the period of applicability for

room air conditioner efficiency

standards. It urged that the Department

should not plan around a phase out

requirement that does not exist. (NRDC,

No. 55 at 27,28.) ACEEE stated that

alternative refrigerants, such as AZ–20,

have been demonstrated to increase

room air conditioner efficiency as

compared to HCFC–22. (ACEEE, No. 557

at 21.)

In 1996, Fedders stated it has concern

over replacement refrigerants. Fedders

commented that the Montreal Protocol

may require phase-out sooner than the

current phaseout date of 2010. Fedders

stated that the industry will be required

to do extensive retooling if the new

standards cannot be met with

replacement refrigerants. Furthermore,

Fedders stated that the U.S. is

‘‘dangerously close to the legal caps of

HCFC chemicals.’’ Fedders was

concerned ‘‘the EPA will impose

restrictions on production, thereby

necessitating implementation of

replacement refrigerants quickly.’’

Therefore, Fedders recommended

maintaining the current energy

efficiency regulations until the issues

related to refrigerant charges are

‘‘resolved and implemented into

commerce.’’ (Fedders, RAC No. 7 and

RAC No. 8.)

In its comments to the 1996 Draft

Report, AHAM stated that the issue of

replacement refrigerants is a far more

serious problem than the Department

acknowledges. It states that because of

the size restrictions of room air

conditioners and because the

compressor and condenser are located

in a window, the potential adverse

effects of high pressure refrigerants are

higher, and low pressure alternates

demonstrate efficiency penalties.

(AHAM, RAC No. 4 at 5.) In February

1997, AHAM requested that the

Department make a provision for

compliance problems which may result

from the transition to HCFC-free

refrigerants.

In their comments to the Draft Report,

ACEEE and NRDC stated that because

the standard set forth in today’s rule

will cover the 2000–2005 time period,

alternative refrigerants will likely be an

issue for the next statutorily required

standard review but not this review. In

addition, the advocates state that it is

unlikely for replacement refrigerants to

result in an energy penalty and may

result in a slight energy efficiency

increase. (ACEEE/NRDC, RAC No. At 3.)

The Department agrees that the phase

out date of 2010 for HCFC–22 is far

enough in the future that no adjustment

to these standards is necessary.

Replacements for HCFC–22 are being

developed. Concerned over the impact

that the phase out of HCFC–22 would

have on the unitary air conditioner and

heat pump industry, the Air

Conditioning and Refrigeration Institute

initiated the Alternative Refrigerant
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50139

Evaluation Program (AREP). AREP has

identified several HCFC–22 alternatives.

Two of the more promising

replacements include a low-glide

ternary blend consisting of HFC–32,

HFC–125 and HFC–134a refrigerants,

and an azeotrope consisting of H.C.-32

and H.C.-125 refrigerants. A detailed

discussion of replacement refrigerants

can be found on page 1.18 of the TSD.

Although two of the more promising

alternatives demonstrate slight

disadvantages compared to R–22, the

Department expects that the

performance characteristics of the

available alternative refrigerant blends

will improve as more experience is

gained with their use in different

formulations. The Department does not

anticipate a problem with degradation

of performance of refrigerants related to

the HCFC–22 phaseout. The EPA states

that it does not intend to accelerate the

HCFC–22 phaseout. (RAC No. 19.) The

Department recognizes the possibility

that the phaseout date could be

accelerated or the availability of HCFC–

22 could diminish. DOE will continue

to monitor the situation and take

appropriate actions.

Based on this information, the

Department declines to establish a two

tier system that takes into account a

possible degradation in system

performance using replacement

refrigerants.

Exemption of refrigerant-gas free

units. Fedders stated that in order to

promote the research and development

of alternative air conditioning systems,

the Department should exempt

refrigerant-gas free room air

conditioners from efficiency regulation.

(Fedders, April 7, 1994, Transcript at

123.)

The Department will not exempt

refrigerant-gas free room air

conditioners from efficiency regulation

because the energy conservation

policies underlying the EPCA do not

support such an exemption.

Installation Costs. A few commenters

opposed the proposed standard because

of increased installation costs. (G&S No.

302 at 2; Amana, No. 347 at 2;

Southwestern Public Service Co No. 495

at 5; Whirlpool, No. 391A at 4; CHGEC,

No. 601 at 1; and AHAM No. 1 for some

classes.)

The Department analyzed the net

consumer benefit from the imposition of

the standards, estimating costs,

including installation costs, and benefits

to the utility customer, and concluded

that the benefits outweighed the

increased costs.

6. Other comments regarding FR Notice

of January 29, 1997

Southern Company Services, Inc.

stated that these standards appear

reasonable and economically justified.

(Southern Gas, RAC No. 15 at 1.) ACEEE

and NRDC stated that the standards the

Department indicated it was inclined to

select for the final rule were generally

reasonable, and they strongly supported

those standards for the first five classes.

For the remaining classes, they

suggested a few changes which were

addressed under ‘‘Efficiency Standards

Recommendations.’’ (ACEEE/NRDC,

RAC No. 14 at 3.) AHAM stated that

under two critical conditions, the

majority of their members accepted the

standard levels the Department

indicated it was inclined to select in the

January 29 notice. These conditions

concerned non-HCFC refrigerants and

the effective date of the standards,

discussed in the previous section.

(AHAM, RAC No. 16 at 1) Glenn

Schleede of Energy Market & Policy

Analysis, Inc. (EM&PA) stated that the

economic analysis is based on outdated

and invalid assumptions about potential

energy costs. Mr. Schleede’s comments

dealt specifically with: overestimating

national energy cost savings; using total

residential electricity cost per kilowatthour to calculate national and consumer

energy savings; the utility impact

model; and the variables and

assumptions used in the model. Mr.

Schleede believes all calculations of life

cycle costs, payback periods, and

consumer energy cost savings in the

TSD are based on unrealistically high

estimates of future energy (particularly

electricity) prices. He also believes the

Department has not ‘‘taken into account

the interests of real consumers.’’

(EM&PA, RAC No. 17.)

In the analyses for the Draft Report,

the Department utilized EIA forecasts

that have not yet addressed the possible

price effects of the electric utility

regulatory reforms and industry

restructuring that are anticipated. Due to

this and other uncertainties in

electricity price forecasts, the

Department conducts sensitivity

analyses to bound the possible ranges of

impacts. The Department intends to

increase the use of sensitivity analyses

and scenario analyses in future

rulemakings. 61 FR at 36987 (to be

codified at 10 CFR Part 430, Subpart C,

Appendix A, section 11(e)(1)). The

Department will continue to examine

how to better account for these changes

in the future.

Various cases of Net Present Value

(NPV) and life-cycle cost sensitivity to

changes in energy price and equipment

price were analyzed. These sensitivity

analyses are discussed in section IV.c.2.,

‘‘Life-cycle Cost and Net Present Value,’’

of today’s rule. These sensitivity

analyses included the effect of using the

lowest state energy prices on life-cycle

cost and the use of energy price

projections provided by the Gas

Research Institute to calculate NPV and

energy savings.

As a complement to energy price

sensitivities, the Department calculated

the cost of conserved energy (CCE) for

its appliance energy-efficiency

standards under consideration. The CCE

is the increase in purchase price

amortized over the lifetime of the

appliance. The advantage of the CCE

approach is that it does not require

assumptions about future energy prices,

because it uses only the purchase

expense of the efficiency measure and

the expected energy savings. The

consumer will benefit whenever the cost

of conserved energy is less than the

energy price paid by the consumer for

that end use. The CCE’s calculated for

the standards set forth in today’s rule

are all less than the energy prices

projected by either the EIA or GRI. See

Supplemental tables 4.10–4.18 in the

TSD.

For consumer impacts such as

payback and changes in life cycle cost,

which are measured at the effective date

of the standard, the Department believes

both fixed and variable costs should be

included because these costs are

currently reflected in consumer utility

bills based on cost-of-service rates. It is

not anticipated that the reductions in

energy demand resulting from energy

efficiency standards for room air

conditioners are likely to have any

significant effect on consumer

electricity rates (or prices).

In estimating the national net present

value of the cost savings resulting from

more stringent efficiency standards, it

may be appropriate to distinguish

between the expected cost impacts on

individual consumers and the cost

impacts on the nation as a whole. To

determine whether there is a significant

difference between consumer and

national cost impacts, it would be

necessary to distinguish between the

long run fixed and variable costs of

serving residential electricity demand.

For example, if electricity demand is

reduced, utilities will be able to cut

back immediately on the fuel used to

generate electricity and, over the long

run, should also be able to reduce their

power generating, transmission and

possibly even their distribution

capacity. However, reduced demand is

unlikely to affect the cost to a utility of

billing and servicing individual
50140 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

customers. Furthermore, because

virtually all consumer electricity rates

are still based on average costs and do

not reflect the variations in these costs

that occur hourly, it is also possible that

improving the efficiency of particular

appliances will result in significant

reductions in the high costs of meeting

peak demand or, in other cases, may

simply reduce utility base loads

(resulting in much lower cost savings).

Unfortunately, the Department does not

have adequate information upon which

to distinguish accurately between

consumer cost savings and the cost

reductions likely to be experienced by

utilities or the nation as a whole. In the

absence of such information, the

Department believes that its use of retail

prices as the basis for calculating the net

present value of projected cost savings

to the nation (national benefits) is a

reasonable approach.

In addition to the impact of energy

savings in today’s world, there is much

speculation as to the impact of electric

utility restructuring on future electric

rates. However, with federal and state

regulations being very undefined, the

Department believes it would be

pointless to attempt to reflect unknown

future electric rate structures in today’s

analyses. In future rulemakings, the

Department will consider such impacts

as they become evident. The

Department concludes from the

information set forth above that it is

properly calculating consumer energy

cost savings and national net present

value.

With regard to the variables and

assumptions used in the models, the

assumptions regarding discount rates

have been discussed extensively, and

DOE used the discount rates it

determined to be most appropriate. For

future rulemakings, the Department

always seeks and welcomes the most

current information regarding its models

and will continue to improve them.

b. General Analytical Comments

This section discusses the general

analytical issues raised by the

comments to the 1994 Proposed Rule.

The Engineering Analysis identified

design options for improvements in

efficiency along with the associated

costs to manufacturers for each class of

product. For each design option, these

costs constitute the increased per-unit

cost to manufacturers to achieve the

indicated energy efficiency levels.

Manufacturer, wholesaler, and retailer

markups will result in a consumer

purchase price higher than the

manufacturer cost.

In the analysis which supported the

Draft Report, the Department used a

computer model that simulates a

hypothetical company to assess the

likely impacts of standards on

manufacturers and to determine the

effects of standards on the industry at

large. This model, the Manufacturer

Analysis Model (MAM), is described in

the TSD. (See TSD, Appendix C.) It

provides a broad array of outputs,

including shipments, price, revenue, net

income, and short- and long-run returns

on equity. An ‘‘Output Table’’ lists

values for all these outputs for the base

case and for each of the five standard

levels analyzed. It also gives a range for

each of these estimates. The base case

represents the forecasts of outputs with

a range of energy efficiencies which are

expected if there are no new or

amended standards. A ‘‘Sensitivity

Chart’’ (TSD, Appendix C) shows how

returns on equity would be affected by

a change in any one of the nine control

variables of the model. The

Manufacturer Analysis Model consists

of 13 modules. The module which

estimates the impact of standards on

total industry net present value is

version 1.2 of the Government

Regulatory Impact Model (GRIM), dated

March 1, 1993, which was developed by

the Arthur D. Little Consulting

Company (ADL) under contract to

AHAM, the Gas Appliance

Manufacturers Association (GAMA),

and the Air-Conditioning and

Refrigeration Institute (ARI). (See TSD,

Appendix C for more details.)

Arthur D. Little, Inc. (ADL) submitted

comments on the 1994 Proposed Rule

on behalf of AHAM, the AirConditioning and Refrigeration Institute

(ARI), and the Gas Appliance

Manufacturers Association (GAMA.)

ADL and others criticized the

methodology and analytical models

used to assess standards. These

comments raised concerns about the

determination of the impact of

standards on manufacturers,

particularly the way the Department

used the GRIM developed by industry,

and the failure to consider the impact of

multiple DOE and other agency

regulations. Other analytical issues

raised included the determination of

consumer paybacks from energy

savings, expected life of the product,

economic assumptions, the use of

prototypical firms, and other

assumptions and variables used in the

simulation model. (ADL, No. 665 at 1,

8–10, 14-19; AHAM, Transcript April 7,

1994, at 173.) Amana commented that

historical models are difficult to

construct and that prices fluctuate, and

therefore, the Department should not

‘‘place too much stock in computer

models.’’ Basing its statement on the

consumer price index (CPI), producer

price index (PPI), and average energy

use trends, Amana also stated that there

is no evidence to suggest that capital

cost increases due to efficiency

improvements are passed on to the

consumer. (Amana, No. 347 at 2–3.)

In implementing the Process Rule, the

Department is now undertaking a

review of the manufacturing impact

analysis model and methodologies. In

developing its new methodology, the

Department will take into account the

comments received concerning its

methodology. However, while DOE is

committed to working with the

interested public to improve these

analytical tools, DOE believes the

analytical approach used in conjunction

with the Draft Report is a reasonable

basis for assessing manufacturer impact.

The Department recognizes that the

manufacturers disagreed with the

analytical method used in the 1994

Proposed Rule and the Draft Report

regarding impacts on manufacturers.

However, the Department assumes that

the standards recommended by AHAM

would not have adverse impacts on the

industry or the individual

manufacturers. The standards the

Department sets forth in today’s rule are

quite similar to those recommended by

AHAM. The Department has selected

slightly higher (0.2–0.3 EER) standards

than those standards proposed by

AHAM for the classes 1 through 4.

AHAM’s primary concern was the

impact of the cost of chassis size

increases on manufacturers. The

Department took into consideration a

graph provided by AHAM which shows

the percent of production requiring a

chassis size change at each EER level. In

selecting the standard levels for classes

1 through 4, the Department, in an effort

to mitigate the identified cost impact on

manufacturers, was careful to avoid any

significant increase in the percentage of

production requiring a chassis size

change.

ACEEE recommended that DOE

compile the best available data on two

key variables: markup from

manufacturer to the consumer and

changes in purchase patterns in

response to efficiency-induced price

increases. This data should be used for

the current analysis in both the

Government Regulatory Impact Model

(GRIM) and the Manufacturer Impact

Model (MIM.) Over the long term,

ACEEE suggested that DOE work with

industry to co-fund a study on

consumer purchase behavior in

response to efficiency-induced price

increases that would help improve the
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50141

usefulness of both GRIM and MIM.

(ACEEE, No. 557 at 5.)

DOE has decided to integrate the

GRIM with the MIM which has resulted

in the development of a new model

entitled the Lawrence Berkeley

Laboratory Manufacturer Analysis

Model (LBL–MAM.) The Department

will continue in its efforts to collect the

best available data on markups to use in

its analytical tools. With regard to

consumer response to efficiencyinduced price increases, the

Department’s consumer analysis

contains, for each covered product,

values that represent the likely

response. These values were originally

estimated by analyses of data

concerning product purchases during

the 1970’s and have been updated. The

Department continues attempting to

update its assumptions where updates

are warranted and welcomes ACEEE’s

suggestions. DOE will explore the

feasibility of a cooperative study on

empirically-verifiable updates on price

elasticity.

IV. Analysis of Room Air Conditioner

Standards

Revised standards for room air

conditioners shall be designed to

achieve the maximum improvement in

energy efficiency that is technologically

feasible and economically justified.

These and related statutory criteria are

addressed below.

a. Efficiency Levels Analyzed

The Department examined a range of

standard levels for room air

conditioners. Table 4–1 presents the five

efficiency levels selected for analysis in

the Draft Report, as well as the

supplemental efficiency level. Level 5

corresponds to the highest efficiency

level, max tech, considered in the

engineering analysis. The Final TSD

contains the information analyzed in the

Draft Report and the supplemental

analysis.

After analyzing the comments

received concerning the Draft Report,

the Department decided to analyze an

additional standard level, defined as the

supplemental level. The Department

calculated the energy savings, net

present value, life-cycle cost, life-cycle

cost sensitivity to energy prices,

payback period, and environmental

emissions reduction for this

supplemental standard level. These

tables can be found in the Supplemental

section of the TSD.

TABLE 4–1.—STANDARD LEVELS ANALYZED FOR ROOM AIR CONDITIONERS

Product class Level 1 Level 2 Suppl.

level Level 3 Level 4 Level 5

Without reverse cycle, with louvered sides, and less than

6,000 Btu/h .................................................................... 9.32 9.71 9.7 10.00 10.38 11.74

Without reverse cycle, with louvered sides, and 6,000 to

7,999 Btu/h .................................................................... 9.38 9.66 9.7 9.91 10.33 11.67

Without reverse cycle, with louvered sides, and 8,000 to

13,999 Btu/h .................................................................. 9.71 9.85 9.8 10.11 10.97 12.39

Without louvered sides, with reverse cycle, and 14,000

to 19,999 Btu/h .............................................................. 9.70 9.98 9.7 10.15 10.15 12.77

Without reverse cycle, with louvered sides, and 20,000

Btu/h or more ................................................................ 8.39 8.39 8.5 8.51 8.88 11.14

Without reverse cycle, without louvered sides, and less

than 6,000 Btu/h ............................................................ 9.10 9.10 9.0 9.23 9.23 11.52

Without reverse cycle, without louvered sides, and 6,000

to 7,999 Btu/h ................................................................ 9.10 9.10 9.0 9.23 9.23 11.52

Without reverse cycle, without louvered sides, and 8,000

to 13,999 Btu/h .............................................................. 8.80 9.05 8.5 9.12 9.12 11.08

Without reverse cycle, without louvered sides, and

14,000 to 19,999 Btu/h .................................................. 8.80 9.05 8.5 9.12 9.12 11.08

Without reverse cycle, without louvered sides, and

20,000 Btu/h or more .................................................... 8.80 9.05 8.5 9.12 9.12 11.08

With reverse cycle and with louvered sides ..................... 9.05 9.05 9.0 9.27 9.27 11.16

With reverse cycle and without louvered sides ................ 8.72 8.72 8.5 8.86 8.86 10.87

Rather than presenting the results for

all classes of room air conditioners in

today’s rule, the Department selected a

class of room air conditioners as being

representative, or typical, of the product

and is presenting the results only for

that class. The results for the other

classes can be found in the TSD in the

same sections as those referenced for the

representative class. The representative

class for room air conditioners is units

with side louvers, without a reverse

cycle, and with a capacity of 8,000–

13,999 Btu per hour. This class of room

air conditioners has the largest sales

volume. For this representative class,

trial standard level 1 accomplishes

efficiency improvements from the

baseline by increasing the compressor

EER to 10.8; level 2 adds a subcooler;

level 3 adds evaporator and condenser

grooved tubing; level 4 increases the

evaporator and condenser coil area; and

level 5 adds a variable-speed

compressor and brushless permanent

magnet fan motor. Similar design

options are used to achieve the above

efficiencies for the other classes and are

found tabulated in Section 1.5 of the

TSD. The supplemental level was not

based on any specific configuration of

design options, but rather it resulted

from consideration of the comments

DOE received regarding the Draft

Report. The analysis used in the Draft

Report became the basis for the TSD.

Consequently, calculations in the TSD

and today’s rule are based on those

energy price forecasts from the 1995

Annual Energy Outlook (AEO) of the

Energy Information Administration

(EIA) , the current forecast at the time

of the analysis, unless otherwise noted.

(DOE/EIA–0383(95)). Supplemental

calculations were performed where the

Department determined it would be

appropriate to reflect the most current

prices.

The Department believes that all the

standard levels it examined are

technologically feasible. The only

questions which were raised by

commenters about technological

feasibility pertained to Brushless

Permanent Magnetic (BPM) fan motors

and variable speed compressors. These
50142 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

5AEO 1995 projected higher energy prices in the

future as compared to AEO 1997. Consequently,

using AEO 1995 projections, a larger percentage of

consumers are projected to purchase higher

efficiency room air conditioners in the absence of

standards (in the base case), as compared to the

base case using AEO 1997 projections. This relative

difference results in a larger projected energy

savings between the base case and the standards

case using AEO 1997 projections as compared to

AEO 1995 projections.

6 The engineering analysis is conducted on the

basis of selecting a representative ‘‘baseline’’ unit

for each room air conditioner product class. The

selected ‘‘baseline’’ unit is an actual room air

conditioner model that has an EER close to the

existing minimum efficiency standard and a cooling

capacity that is representative of most units in the

product class. The physical characteristics of the

design options were only considered at

the most stringent standard levels.

b. Significance of Savings

Under section 325(o)(3)(B) of EPCA,

the Department is prohibited from

adopting a standard for a product if that

standard would not result in

‘‘significant’’ energy savings. The

Department forecasted energy

consumption by the use of the LBL–

REM. (See Appendix B of the TSD.) To

estimate the energy savings by the year

2030 due to revised standards, the

energy consumption of new room air

conditioners under the base case is

compared to the energy consumption of

those sold under the candidate standard

levels. For the candidate energy

conservation standards, the Lawrence

Berkeley Laboratory-Residential Energy

Model projects that over the period

1999–2030, the following energy savings

would result for all classes of the

product:

Level 1—0.36 Quad

Level 2—0.52 Quad

Supplemental Level—0.49 Quad

Level 3—0.69 Quad

Level 4—0.96 Quad

Level 5—0.72 Quad

The preceding values of energy

savings use AEO 1995 energy price

forecasts; however, calculating the

energy savings for the supplemental

level using AEO 1997 produces an

energy savings of 0.64 Quad.5

While the term ‘‘significant’’ is not

defined in EPCA, the U.S. Court of

Appeals for the District of Columbia

Circuit concluded that Congress

intended the word ‘‘significant’’ to mean

‘‘non-trivial.’’ Natural Resources

Defense Council v. Herrington. 768 F.2d

1355, 1373 (D.C.Cir. 1985). Thus, for

this rulemaking, DOE concludes that

each standard level considered results

in significant energy savings.

c. Economic Justification

Section 325(o)(2)(B) of EPCA provides

seven factors to be evaluated, to the

greatest extent practicable, in

determining whether a conservation

standard is economically justified.

1. Economic Impact on Manufacturers

and Consumers

The engineering analysis identified

improvements in efficiency along with

the associated costs to manufacturers for

each efficiency level for each class of

product. For each design option, these

associated costs constitute the increased

per-unit cost to manufacturers to

achieve the indicated energy efficiency

levels. Manufacturer, wholesaler, and

retailer markups will result in a

consumer purchase price higher than

the manufacturer cost.

To assess the likely impacts of

standards on manufacturers and to

determine the effects of standards on

different-sized firms, the Department

used a computer model that simulates

hypothetical firms in the industry under

consideration. This model, the

Manufacturer Analysis Model (MAM), is

explained in the TSD. (See TSD,

Appendix C.)

For consumers, measures of economic

impact are the changes in purchase

price, annual energy expense, and

installation costs. The purchase price,

installation cost, and cumulative annual

energy expense, i.e., life-cycle cost, of

each standard level are presented in

Chapter 3 of the TSD. Under section 325

of the EPCA, the life-cycle cost analysis

is a separate factor to be considered in

determining economic justification.

The per unit increased costs to

manufacturers to meet the efficiency of

levels 1–5 for the representative class

are $6.11, $8.37, $13.17, $47.09, and

$242.52, respectively. The increased per

unit cost for the supplemental level falls

within the range of $6–$9 for the

representative class. See Tables 1.10–

1.18 in the TSD.

The consumer price increases for the

representative class are estimated to be

$11, $15, $23, $82, and $434 for

standard levels 1–5, respectively. The

consumer price increase for the

supplemental level is estimated to be

$13. See Tables 4.1–4.9 and

Supplemental Tables 4.1–4.9 in the

TSD.

The per-unit reduction in annual

costs of operation (i.e., energy expense)

for the representative class are $2, $3,

$4, $8, and $13 for standard levels 1–

5, respectively, and $2.5 for the

supplemental level. See Tables 4.1–4.9

and Supplemental Tables 4.1–4.9 in the

TSD.

The Lawrence Berkeley LaboratoryManufacturer Impact Model results for

all classes of room air conditioners

show that revised standards could cause

a prototypical manufacturer to have

some reductions in short-run return on

equity from the 10.9 percent return in

the base case. Standard levels 1 through

5 are projected to produce short-run

returns on equity of 10.7 percent, 10.6

percent, 10.5 percent, 8.8 percent, and

0.13 percent, respectively. The short-run

return on equity for the supplemental

level is projected to be in the range of

10.5–10.7 percent. Revised standards

have little or no effect on the

prototypical manufacturer’s long-run

return on equity. Standard levels 1

through 5 are projected to produce longrun returns on equity of 10.8 percent,

10.8 percent, 10.8 percent, 10.3 percent,

and 7.2 percent, respectively. For the

supplemental level the long-run return

on equity would also be approximately

10.8 percent. See Tables 5.1 and 5.3 in

the TSD.

2. Life-cycle Cost and Net Present

Value

One measure of the effect of proposed

standards on consumers is the change in

life-cycle costs, including recurring

operating expenses, the purchase price,

and the installation costs resulting from

the new standards. The change in lifecycle cost is quantified by the difference

in the life-cycle costs between the base

case and candidate standard case for

each of the product classes analyzed.

The life-cycle cost is the sum of the

purchase price and the cumulative

operating expense, including

installation and maintenance

expenditures, discounted over the

lifetime of the appliance. The life-cycle

cost was calculated for the range of

efficiencies analyzed in the

‘‘Engineering Analysis’’ section of the

TSD, for each class, in the year

standards are imposed, using real

consumer discount rates of six percent.

For the representative class, life-cycle

costs at standard levels 1–3 as well as

the supplemental level are less than the

baseline unit. Standard level 1 would

reduce life-cycle costs for the average

affected consumer of $6.76 for the

representative class of room air

conditioner; standard level 2 would

reduce average life-cycle costs by $6.67,

standard level 3 by $8.48, and the

supplemental level by $6.59; for

standard levels 4 and 5, the life-cycle

costs are projected to increase $19.4 and

$328, respectively, compared to the base

case. Of the five candidate standard

levels, a unit meeting standard level 3

would have the lowest consumer lifecycle cost for the representative class.

See Figures 4.4, Tables 4.1–4.18, and

Supplemental Tables 4.1–4.18 in the

TSD.

The Department’s baseline method of

analysis 6 calculated costs of increasing
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50143

‘‘baseline’’ unit (e.g., compressor efficiency and

heat exchanger design) dictate which design

options can be considered to improve its efficiency

and at what rate the manufacturer cost will be

increased. The selected ‘‘baseline’’ unit’s physical

make-up is known not to be representative of all

minimum efficiency equipment in its product

classes. But because its EER and capacity are

representative, it is assumed that the design options

that are added to improve its efficiency will yield

a manufacturer cost vs. efficiency relationship that

is representative of all ‘‘baseline’’ units in the

product class, irrespective of physical design.

chassis size at the standard level at

which the baseline required a chassis

size change. This analysis produced the

preceding values for life-cycle cost. In

addition, AHAM provided analysis in

which the cost of increasing chassis size

was prorated at each standard level.

Using this method and the data

provided by AHAM (AHAM, RAC No. 9

at Attachment 3A), for classes 1–5,

which make up 85 percent of the

shipments, the supplemental standard

level has the lowest life-cycle cost when

prorating chassis size cost.

The Department examined the effect

of different discount rates (2, 6, and 15

percent) on the life-cycle cost curves

and generally found little impact. See

Figures 4.1–4.9 in the TSD. Life-cycle

cost sensitivity to changes in energy

price and equipment price were

analyzed. See Figure 4.10, Table 4.19,

and Supplemental Table 4.19 in the

TSD. This analysis shows that the lifecycle cost minimums remain unchanged

at high energy prices. For low State

energy prices, any increase in standard

above the baseline, shows a life-cycle

cost increase; however, through

standard level 3, this increase is less

than $3 (and approximately $1 for the

standards in today’s rule).

As previously addressed under

Discussion of Comments, the

Department also calculated life cycle

costs and paybacks using energy prices

calculated by the Gas Research Institute

(GRI). (See the Supplemental Sensitivity

Analysis subsection of the TSD.) The

life-cycle minimums resulting from the

GRI projections remain unchanged from

the analysis using the AEO price

forecasts. The payback periods increase

slightly, using the GRI forecasts, but

remain well within the expected

lifetime of the product.

The Net Present Value analysis, a

measure of the net savings to society,

indicates that for all classes of room air

conditioners, standard level 1 would

produce an NPV of $0.40 billion to

consumers. The corresponding net

present values for standard levels 2–5

are $0.54 billion, $0.59 billion, $¥0.26

billion, and $¥10.9 billion, respectively

(based on AEO 1995 energy price

projections). See Table 3.6 in the TSD.

The NPV for the supplemental level is

$0.51 billion using AEO 1995, for basis

of comparison. Using AEO 1997 data,

the NPV of the supplemental level is

calculated to be $0.45 billion. See the

Supplemental Sensitivity Analysis

subsection of the TSD.

A sensitivity analysis was also

conducted for energy savings and Net

Present Value (NPV), using GRI

forecasts for the following cases: the GRI

fuel price projection, low equipment

price, high equipment price, and high

efficiency trend. (See the Supplemental

Sensitivity Analysis subsection of the

TSD.) The results of this analysis show

that although the NPV and energy

savings change in each scenario, both

the NPV and the energy savings remain

positive, indicating an overall benefit to

the consumer and the nation.

3. Energy Savings

EPCA requires DOE to consider the

total projected energy savings that result

from revised standards. The Department

forecasted energy consumption through

the use of the LBL–REM. (See Appendix

B of the TSD for a detailed discussion

of the LBL–REM.) The projected savings

using AEO 1997 is 0.64 Quad for the

supplemental level. See Supplemental

Table 3.97 in the TSD. Also, see section

IV.c. in today’s rule for the energy

savings of the other efficiency levels.

4. Lessening of Utility or Performance of

Products

In establishing classes of products and

design options, the Department tried to

eliminate consideration of any design

option that would result in degradation

of utility or performance. Thus, a

separate class with a different efficiency

standard was created for a product

where the record indicated that the

product included a utility or

performance-related feature that affected

energy efficiency. For example, the

Department added classes for casementonly and casement-slider room air

conditioners. These room air

conditioners offer the unique utility of

fitting into slider and casement

windows. In this way, the Department

attempted to minimize the impact of

amended standards on the utility and

performance of room air conditioners.

5. Impact of Lessening of Competition

The Energy Policy and Conservation

Act directs the Department to consider

the impact of any lessening of

competition that is likely to result from

the standards, as determined by the

Attorney General.

In a letter dated September 16, 1994,

the Department of Justice (DOJ)

expressed concern about the effects the

standards proposed in the 1994

Proposed Rule might have on industry.

DOJ stated that there was evidence that

some of the design options suggested in

the 1994 Proposed Rule were less

effective and more costly than the TSD

indicated and that manufacturers may,

among other things, need to redesign the

chassis of some classes to comply with

the standard. DOJ concluded that such

redesigns could add to unit installation

costs, make units larger and more

cumbersome to install, and otherwise

depress demand. Furthermore, DOJ

noted evidence that at least one product,

the five thousand Btu/h unit, may cease

to be manufactured if the standard

proposed in 1994 were adopted. DOJ

was also concerned about the

availability and efficacy of some design

options suggested in the TSD for the

Proposed Rule. DOJ concluded that the

proposed standard could have a

substantial negative impact on demand

and rates of return, and could cause one

or more firms to cease the manufacture

and sale of some of these products, thus

lessening competition. (DOJ, No. 840 at

5.) The September 16, 1994, letter is

printed at the end of today’s rule.

The Department of Justice comments

were based on the standards proposed

in the 1994 Proposed Rule. The revised

analysis contained in the 1996 Draft

Report and the supplemental analysis,

and commented upon by the public,

addressed many of the concerns raised

by DOJ. The standards promulgated in

today’s final rule have been adjusted

from the proposed standards in order to

mitigate the types of concerns raised by

DOJ. For example, the Final Rule sets

the same standard level for class 1 as for

class 2, addressing the concern that

class 1 units would be eliminated from

the marketplace as a result of the

revised standards. The Department’s

revised analysis addressed concerns

about the installation costs and chassis

size increases, and the standards in the

Final Rule reflect this revised analysis.

The manufacturing impact analysis

shows no significant shifts in

manufacturer rates of return under the

supplemental standards level. Thus, the

Department of Energy concludes that

the concerns raised by the DOJ have

been addressed, and DOE does not

expect competition to be negatively

impacted by this final rule.

6. Need of the Nation to Save Energy

Enhanced energy efficiency improves

the Nation’s energy security, strengthens

the economy, and reduces the

environmental impacts of energy

production. In 1997, 3.4 percent of

residential sector electricity

consumption (corresponding to 0.38
50144 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

10This value was calculated using AEO 1997 and

factoring in the offset from the increased use of

central air conditioners and heat pumps.

10This value was calculated using AEO 1997 and

factoring in the offset from the increased use of

central air conditioners and heat pumps.

10This value was calculated using AEO 1997 and

factoring in the offset from the increased use of

central air conditioners and heat pumps.

10This value was calculated using AEO 1997 and

factoring in the offset from the increased use of

central air conditioners and heat pumps.

10This value was calculated using AEO 1997 and

factoring in the offset from the increased use of

central air conditioners and heat pumps.

10This value was calculated using AEO 1997 and

factoring in the offset from the increased use of

central air conditioners and heat pumps.

quad source energy) was accounted for

on a national basis by room air

conditioners. The Department estimates

that over 30 years the revised standards

will save approximately 0.64 quads of

primary energy.

7. Other Factors

Decreasing future electricity demand

by means of standards will decrease air

pollution. Standards will result in a

decrease in nitrogen dioxide (NOx)

emissions. For standard levels 1–5, over

the years 2000 to 2030, the total

estimated NOx emission reduction

would be 55,000 tons; 80,000 tons;

104,000 tons; 141,000 tons; and 60,000

tons, respectively. For the supplemental

level the reduction is estimated at

74,000 tons using the AEO 1995 energy

prices and 95,000 tons using AEO 1997

energy prices. See Tables 7.1–7.5 and

Supplemental Tables 7.6 and 7.7 in the

TSD.

d. Payback Period

Another consequence of the standards

will be the reduction of carbon dioxide

(CO2) emissions. For standard level 1,

over the years 2000 to 2030, the total

estimated CO2 emission reduction

would be 30 million tons. For standard

levels 2–5, the reductions would be 44

million tons; 57 million tons; 79 million

tons; and 55 million tons, respectively.

For the supplemental level the

reduction is estimated at 41 million tons

using AEO 1995 energy prices and 54

million tons using AEO 1997. See

Tables 7.1—7.5 and Supplemental

Tables 7.6 and 7.7 in the TSD.

Energy associated with these

standards would also reduce the costs

associated with SO2 compliance.7 See

Tables 7.1—7.5 and Supplemental

Tables 7.6 and 7.7 in the TSD.

7 Decreases in SO2 emissions will not occur

because the Clean Air Act places a ceiling on SO2

emissions that will be met under any regulatory

regime. In the case of SO2 therefore, the emissions

reductions should be interpreted as reduced costs

to electricity generators for controlling SO2. For all

classes of room air conditioners, over the years 2000

to 2030, the estimated need to control SO2 is

estimated to be reduced by 59,000 tons; 86,000 tons;

111,000 tons; 149,000 tons; and 43,000 tons, for

levels 1–5, respectively. For the supplemental level

the reduction is estimated at 79,000 tons. However,

using AEO 1997, the reduction is estimated at

100,000 tons. This reduced need to control

emissions will be reflected in lower costs of

pollution control at utilities or lower price

allowances.

If the increase in initial price of an

appliance due to a conservation

standard would repay itself to the

consumer in energy savings in less than

three years, then it is presumed that

such standard is economically justified.8

EPCA, Section 325(o)(2)(B)(iii), 42

U.S.C. 6295(o)(2)(B)(iii). This

presumption of economic justification

can be rebutted upon a proper showing.

Failure to qualify for this presumption

shall not be taken into consideration in

determining whether a standard is

economically justified. Id.

8For this calculation, the Department calculated

cost-of-operation based on the DOE test procedures.

Therefore, the consumer is assumed to be an

‘‘average’’ consumer as defined by the DOE test

procedures. Consumers who use the products less

than the test procedure assumes will experience a

longer payback while those who use them more

than the test procedure assumes will have a shorter

payback.

Table 4.2 presents the payback

periods 9 for the efficiency levels

analyzed for the representative class of

the product. For this representative

class, none of the standard levels satisfy

the rebuttable presumption test.

Standard level 4 meets the rebuttable

presumption criteria for classes 4 and

12. Standard level 3 meets the

rebuttable presumption criteria for

classes 1, 4 and 12. The standards set

forth in today’s rule meet the rebuttable

presumption criteria for classes 1, 2, 4,

8–10, and 12. Payback periods for all

classes of room air conditioners may be

found in Tables 4.10—4.18 and

Supplemental Tables 4.10—4.18 in the

TSD.

9These payback periods are weighted averages.

They compare the portion of the projected

distributions of designs in the base case that are less

efficient than the standard level to the design at the

standard level. Designs with energy consumption at

or below the standard level are not affected by the

standard and are excluded from the calculation of

impacts.

TABLE 4–2.—PAYBACK PERIODS OF

DESIGN OPTIONS (YEARS) FOR THE

REPRESENTATIVE CLASS OF ROOM

AIR CONDITIONERS

Standard level Payback

period

1 .................................................... 3.8

2 .................................................... 3.9

Supplemental ................................ 3.8

TABLE 4–2.—PAYBACK PERIODS OF

DESIGN OPTIONS (YEARS) FOR THE

REPRESENTATIVE CLASS OF ROOM

AIR CONDITIONERS—Continued

Standard level Payback

period

3 .................................................... 4.2

4 .................................................... 8.3

5 .................................................... 27.2

e. Conclusion

1. Additional Product Classes. The

Department has added four new product

classes. First, the Department is adding

two classes for casement-type units

because of the unique utility they offer

the consumer. The size limitations

imposed on casement-type units are

more significant than the limitations of

typical units designed for double-hung

windows, and the performance-related

feature (fitting into casement windows)

justifies a lower efficiency standard. The

two additional product classes for

casement units are casement-only units

and casement-slider units. In today’s

rule, definitions for these terms are

being added to Section 430.2 Subpart A

of 42 U.S.C. 6291–6309. For today’s

rule, the Department has selected the

efficiency standard recommended by

AHAM, ACEEE, and NRDC for

casement-slider units (9.5 EER) (AHAM,

RAC No. 6 at 2 and ACEEE/NRDC, RAC

No. 5 at 5) and the standard

recommended by AHAM for casementonly units (8.7 EER). (AHAM, RAC No.

6 at 2.)

Second, the Department is splitting

each of two classes for reverse cycle

units into two classes. Splitting of these

two classes accommodates the concerns

expressed in public comments. The

class of units with a reverse cycle and

louvered sides is split between

capacities of less than 20,000 Btu/h

(class 11) and 20,000 Btu/h or more

(new class 13). The class of units with

reverse cycle and without louvered

sides is split between capacities of less

than 14,000 Btu/h (class 12) and

capacities of 14,000 Btu/h or more (new

class 14).

2. Standards. Section 325(o)(2)(A) of

the Act specifies that the Department

must establish standards that ‘‘achieve

the maximum improvement in energy

efficiency which the Secretary

determines is technologically feasible

and economically justified.’’ EPCA,

section 325(o)(2)(A). Technologically

feasible design options are

‘‘technologies which can be

incorporated in commercial products or

in working prototypes.’’ 10 CFR part

430, Appendix A to Subpart C, 4(a)(4)(I).
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50145

A standard level is economically

justified if the benefits exceed the

burdens. EPCA, section 325(o)(2)(B)(I).

A maximum technologically feasible

(max tech) design option was identified

for each class of room air conditioners.

The max tech levels were derived by

adding energy-conserving engineering

design options to the baseline units for

each of the respective classes in order of

decreasing consumer payback. The max

tech level includes higher efficiency fan

motors, which were added as one of the

first design options, and variable speed

compressors, which were added as one

of the last design options because of

their slower payback. A complete

discussion of each max tech level, and

the design options included in each, is

found in the Engineering Analysis in the

TSD, Chapter 3.

Table 5–1 presents the max tech

performance levels for all classes of the

subject product:

TABLE 5–1.—MAXIMUM TECHNOLOGICALLY FEASIBLE STANDARD LEVELS FOR ROOM AIR CONDITIONERS EXPRESSED IN

ENERGY EFFICIENCY RATIO

Product class Energy efficiency ratio

Without reverse cycle, with louvered sides, and less than 6,000 Btu/h ............................................................................................. 11.7

Without reverse cycle, with louvered sides, and 6,000 to 7,999 Btu/h ............................................................................................... 11.7

Without reverse cycle, with louvered sides, and 8,000 to 13,999 Btu/h ............................................................................................. 12.4

Without reverse cycle, with louvered sides, and 14,000 to 19,999 Btu/h ........................................................................................... 12.8

Without reverse cycle, with louvered sides, and 20,000 Btu/h or more ............................................................................................. 11.1

Without reverse cycle, without louvered sides, and less than 6,000 Btu/h ........................................................................................ 11.5

Without reverse cycle, without louvered sides, and 6,000 to 7,999 Btu/h .......................................................................................... 11.5

Without reverse cycle, without louvered sides, and 8,000 to 13,999 Btu/h ........................................................................................ 11.1

Without reverse cycle, without louvered sides, and 14,000 to 19,000 Btu/h ...................................................................................... 11.1

Without reverse cycle, without louvered sides, and 20,000 Btu/h or more ........................................................................................ 11.1

With reverse cycle and with louvered sides ........................................................................................................................................ 11.2

With reverse cycle and without louvered sides ................................................................................................................................... 10.9

Accordingly, the Department first

considered the max tech level of

efficiency, i.e., standard level 5. Of the

standard levels analyzed, level 5 would

save the most energy (4.1 quads between

1999 and 2030.) However, because

many consumers would not purchase

room air conditioners due to the high

first cost associated with this standard

level, purchases of central air

conditioners and heat pumps will

increase, resulting in a reduction of

savings for room air conditioners. After

accounting for this offset, the net

savings is 0.72 quad. Also, in order to

meet this standard, the Department

assumes that all room air conditioners

would incorporate larger and improved

heat transfer devices in addition to high

efficiency, variable-speed fan motors

and compressors. However, at this

standard level, the payback period of 27

years for the representative class, and

up to 107 years for other classes,

exceeds the 12.5-year life of the product.

The life-cycle cost increases are $328 for

the representative class and up to $911

for other classes. This level also drives

the short-run manufacturer return on

equity from 10.9 percent to 0.13 percent.

The Department therefore concludes

that the burdens of standard level 5 for

room air conditioners outweigh the

benefits and that this standard level is

not economically justified, and thus the

Department rejects the standard level.

The next most stringent standard level

is standard level 4. This standard level

is projected to save 1.34 quads of

energy. However, many consumers

would not purchase room air

conditioners due to the high first cost

associated with this standard level,

resulting in increased purchases of

central air conditioners and heat pumps

and a reduction of savings for room air

conditioners. After accounting for this

offset, the savings are 0.96 quad. For the

representative class this level produces

a life-cycle cost increase of $19

compared to the base case. Classes 4 and

12 meet the rebuttable presumption

criteria. However, the payback period

for the representative class is 8.3 years,

with payback periods of up to 10.6 years

for the other classes (80 percent of the

average product lifetime of 12.5 years).

This level also reduces manufacturer

short-run return on equity from 10.9

percent to 8.8 percent, a reduction of

nearly 20 percent. The Department

therefore, concludes that the burdens of

standard level 4 for room air

conditioners outweigh the benefits and

that this standard level is not

economically justified, and thus the

Department rejects the standard level.

The next most stringent standard level

is standard level 3. Standard level 3 is

projected to save 0.79 quad of energy.

After accounting for the increased use of

central air conditioners and heat pumps,

the savings become 0.69 quad. For the

representative class, the analysis shows

this level produces a life-cycle cost

decrease of $8.5 compared to the base

case and a payback of 4.2 years. This

standard level meets the rebuttable

presumption criteria for classes 1, 4 and

12. The manufacturer impact analysis

for this level shows a manufacturer

short-run return on equity reduction

from 10.9 percent to 10.5 percent.

Although the feedback generated from

the LBL-MAM indicated acceptable

manufacturer impact, the comments

received from manufacturers on the

1996 Draft Report indicated burdens to

manufacturers which were not

identified by the model. The

Department believes these impacts must

be considered. A class-specific approach

was taken to consider these impacts.

For classes 1 through 5, the

manufacturers disagreed with the

Department’s baseline method of

analysis wherein, for each class, a

specific model was simulated for

improvement up to and including a

chassis size change, when necessary for

that model. AHAM commented that this

method does not adequately account for

the cost of increasing chassis size.

AHAM believes the cost of increasing

chassis size should be prorated for each

efficiency level analyzed, because at

each efficiency improvement, some

models within each class would need to

undergo a chassis size change, even

though the specific model being

analyzed did not necessarily need a

chassis size change. AHAM provided

the Department with a graph depicting

the percent of production required to

change chassis size at each standard

level for each of the first five classes.

(AHAM, No, 1 at 14.) AHAM calculates

that efficiency level 3 would require 39

percent of production to move to a

larger chassis size. However, because

the baseline method of analysis does not

prorate the cost at each level, the impact

of 39 percent of production requiring a
50146 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

10This value was calculated using AEO 1997 and

factoring in the offset from the increased use of

central air conditioners and heat pumps.

larger chassis is not considered by the

model. (AHAM, No. 4 at 3.)

For classes 6 through 12, AHAM

argues that because the engineering

simulation model was designed using

units with louvered sides and without a

reversing valve, the simulation does not

provide a good simulation for units

without louvers or units with a

reversing valve. AHAM commented that

this inaccuracy understates the extreme

differences between the air flow

patterns on the condenser side of units

with and without louvers, as well as the

refrigeration circuit restrictions caused

by the reversing valve and concessions

made to balance both cooling and

heating in one unit. As addressed in

section III, ‘‘Discussion of Comments,’’

manufacturers emphasize that

increasing the standards could eliminate

higher capacity models from the market

due to the impracticality of increasing

the chassis size for these units. (AHAM,

RAC No. 4 at 3–4.)

For these reasons, the Department

concludes the burdens of standard level

3 outweigh the benefits and that the

standard level is not economically

justified, and thus, the Department

rejects this standard level.

Based on the comments received

regarding the 1996 Draft Report, the

Department next considered a

supplemental efficiency level. The

comments the Department received in

response to its 1996 Draft Report

contained recommended standards from

AHAM and from ACEEE and NRDC.

These recommended standards fell in

the range between efficiency levels 1, 2

and 3, depending on the product class.

For classes with louvered sides and

without a reversing valve, ACEEE and

NRDC recommended 10.0 EER for the

first four classes, while AHAM

recommended 9.5 EER for the first four

classes. For class 5, all three

organizations supported an 8.5 EER.

AHAM calculated the life cycle costs

when prorating the cost of increasing

the chassis size for each of the efficiency

levels. The life cycle cost minimums fell

in the 9.7–9.8 range for the first four

classes and 8.5 EER for class 5. The

Department concluded that these lifecycle cost minimums should be

considered in the supplemental

efficiency level.

For classes without louvered sides

and without a reverse cycle, the

Department also received comments and

recommendations for efficiency

standards. For most of these classes,

both AHAM and the efficiency

advocates agreed upon standard levels.

Consequently, these levels were selected

for the Department’s supplemental

efficiency level. For class 8, upon which

AHAM and the efficiency advocates had

differing recommendations, the

Department concluded, after analyzing

the AHAM Directory, that there is

evidence that increasing standards for

units without louvers and without

reverse cycle may result in eliminating

higher capacity units from the market.

Thus, the Department chose 8.5 EER for

this class.

For classes with a reverse cycle, the

Department again took the comments

and recommendations it received into

consideration in adding and

establishing efficiency levels to examine

as part of the supplemental efficiency

level. In response to public comment,

the Department split the two classes for

reverse cycle units in order to address

the concerns of AHAM, ACEEE, and

NRDC.

After carefully considering the

analysis, the Department is amending

the existing statutory standard for room

air conditioners with the supplemental

standard level for room air conditioners.

The Department concludes that the

supplemental standard level for room

air conditioners saves a significant

amount of energy and is designed to be

technologically feasible and

economically justified.

This level of efficiency will result in

significant energy savings. During the

period 2000—2030, these savings are

calculated to be 0.64 quad 10 of primary

energy. In addition, the standard is

expected to have a positive effect on the

environment by reducing the emissions

of NOX and CO2 by 95,000 tons and 54

million tons, respectively.

The technologies that are necessary to

meet this standard are presently

available. The Department finds this

level to be economically justified. The

consumer payback of this standard level

is 3.8 years for the representative class

and no more than 5 years for any class.

This standard is at or close to the lowest

life-cycle cost for all classes and is

expected to result in a reduction in lifecycle cost of approximately $6.6 for the

representative class and up to $23 for

the other classes. Additionally, the

standard is expected to have a small

impact on the prototypical

manufacturer’s short run return on

equity and no impact on their long run

return on equity, as calculated by the

Department. Furthermore, the efficiency

levels are reasonably close to the

standards recommended by AHAM,

which presumably reflect acceptable

manufacturer impacts. Although

stakeholder consensus was not reached,

the public comments converged

following the reanalysis, meetings with

stakeholders, and the notice reopening

the comment period. The efficiency

levels selected for today’s rule fall

within the small range of difference

between the stakeholder

recommendations. These efficiency

levels address the concerns raised by

the Department of Justice with regard to

the standards in the 1994 Proposed

Rule. In addition, since this standard

does not involve substantial redesign or

retooling, the Department expects that it

will not have negative impacts on

smaller competitors. Moreover, for

classes 1, 2, 4, 8–10, and 12 there is a

payback period of less than 3 years and

thus a presumption of economic

justification. For these reasons, DOE

concludes that these standard levels are

economically justified and thus

promulgates them as revisions to the

existing standards.

V. Procedural Issues and Regulatory

Review

a. Review Under the National

Environmental Policy Act

In issuing the proposed rule, the

Department prepared an Environmental

Assessment (EA) (DOE/EA–0819) that

was published within the Technical

Support Document for the Proposed

Rule. (DOE/EE–0009, November 1993.)

The environmental effects associated

with various standard levels were not

found to be significant, and a Finding of

No Significant Impact (FONSI) was

published. 59 FR 15868 (April 5, 1994).

In conducting the analysis for the

final rule, the Department evaluated

several design options suggested in

comments on the proposed rule. As a

result, the energy savings estimates and

resulting environmental effects in the

final rule differ somewhat from those

presented in the proposed rule. For

example, by the year 2030, the

reductions in nitrogen dioxide (NO2)

and carbon dioxide (CO2) emissions

from the standard on room air

conditioners are expected to be 95,000

tons and 54,000,000 tons respectively.

The environmental effects expected

from the final rule fall within ranges of

environmental impacts that DOE found

in the FONSI not to be significant.

b. Review Under Executive Order 12866,

‘‘Regulatory Planning and Review’’

Today’s regulatory action has been

determined to be an ‘‘economically

significant regulatory action’’ under

Executive Order 12866, ‘‘Regulatory

Planning and Review.’’ 58 FR 51735

(October 4, 1993.) Accordingly, today’s

action was subject to review under the
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50147

Executive Order by the Office of

Information and Regulatory Affairs

(OIRA).

Pursuant to E.O. 12866, DOE prepared

a draft regulatory analysis. Six major

alternatives were identified by DOE as

representing feasible policy alternatives

for achieving consumer product energy

efficiency. Each alternative was

evaluated in terms of its ability to

achieve significant energy savings at

reasonable costs and has been compared

to the effectiveness of the rule. 59 FR

10464, 10525–6 (March 4, 1994.) No

new data has been received concerning

this review, and no substantive changes

have been made to this action since the

review of the draft by OIRA. The nonregulatory alternatives analyzed in the

draft Regulatory Analysis were

evaluated for the eight products in

aggregate. None of the alternatives

analyzed saved as much energy as the

standards in the Proposed Rule. The

Department believes that the nonregulatory alternatives for each product

would have energy savings proportional

to the savings for all eight products.

Therefore, the Department concludes

that non-regulatory alternatives are not

likely to meet or exceed the energy

savings expected from the standards set

forth in today’s rule.

c. Review Under the Regulatory

Flexibility Act

The Regulatory Flexibility Act, 5

U.S.C. 601 et seq., requires an

assessment of the impact of regulations

on small businesses unless an agency

certifies that the rule will not have a

significant economic impact on a

substantial number of small businesses

and other small entities. To be

considered a small business, a

manufacturer of room air-conditioners

and its affiliates may employ a

maximum of 750 employees. (Small

Business Administration size standards,

61 FR 3280.) In the notice of proposed

rulemaking, DOE certified pursuant to

section 605(b) of the Regulatory

Flexibility Act that the proposed action

would not have a ‘‘significant economic

impact on a substantial number of small

entities,’’ and, thus, a regulatory

flexibility analysis was not prepared.

The Department has not identified

any firms that both manufacture room

air conditioners covered by EPCA, and

have, together with their affiliates, 750

or fewer employees. The Department

estimates there are approximately nine

domestic firms and six foreign firms that

manufacture room air conditioners

covered under EPCA, with three

domestic companies holding

approximately 70 percent of U.S. room

air conditioner sales. Many room air

conditioner manufacturers are affiliated

with larger U.S. or foreign firms which

manufacture full product lines of home

appliances.

DOE’s notice of proposed rulemaking

elicited no public comments on the

economic impact of the proposed rule

on small businesses. One commenter

did criticize the Manufacturer Impact

Model (MIM) and claimed that the

model is inadequate for estimating the

impact of standards on small firms. The

comment was not supported by any data

to cause the Department to conclude

that this final rule would have a

significant impact on small businesses

subject to the regulation.

Today’s final rule contains less

stringent room air conditioner energy

efficiency standards than the proposed

rule. The final rule establishes standards

in a range from 8.0 to 9.8 EER, and it

would add four new product classes to

accommodate room air conditioners

with and without side louvers and

reverse cycle as well as casement room

air conditioners. These changes in the

final rule will significantly reduce any

potential economic impact of the rule

on small businesses. Therefore, DOE

certifies that this final rule will not have

a significant economic impact on a

substantial number of small entities.

d. Review Under the Paperwork

Reduction Act

No new information or record keeping

requirements are imposed by this

rulemaking. Accordingly, no Office of

Management and Budget clearance is

required under the Paperwork

Reduction Act. 44 U.S.C. 3501 et seq.

e. Review Under Executive Order 12988,

‘‘Civil Justice Reform’’

With respect to the review of existing

regulations and the promulgation of

new regulations, section 3(a) of

Executive Order 12988, ‘‘Civil Justice

Reform,’’ 61 FR 4729 (February 7, 1996),

imposes on Executive agencies the

general duty to adhere to the following

requirements: (1) Eliminate drafting

errors and ambiguity; (2) write

regulations to minimize litigation; and

(3) provide a clear legal standard for

affected conduct rather than a general

standard and promote simplification

and burden reduction. With regard to

the review required by section 3(a),

section 3(b) of Executive Order 12988

specifically requires that Executive

agencies make every reasonable effort to

ensure that the regulation: (1) Clearly

specifies the preemptive effect, if any;

(2) clearly specifies any effect on

existing Federal law or regulation; (3)

provides a clear legal standard for

affected conduct while promoting

simplification and burden reduction; (4)

specifies the retroactive effect, if any; (5)

adequately defines key terms; and (6)

addresses other important issues

affecting clarity and general

draftsmanship under any guidelines

issued by the Attorney General. Section

3(c) of Executive Order 12988 requires

Executive agencies to review regulations

in light of applicable standards in

section 3(a) and section 3(b) to

determine whether they are met or it is

unreasonable to meet one or more of

them. DOE reviewed today’s final rule

under the standards of section 3 of the

Executive Order and determined that, to

the extent permitted by law, the final

regulations meet the relevant standards.

f. ‘‘Takings’’ Assessment Review

It has been determined pursuant to

Executive Order 12630, ‘‘Governmental

Actions and Interference with

Constitutionally Protected Property

Rights,’’ 52 FR 8859 (March 18, 1988)

that this regulation would not result in

any takings which might require

compensation under the Fifth

Amendment to the United States

Constitution.

g. Federalism Review

Executive Order 12612, ‘‘Federalism,’’

52 FR 41685 (October 30, 1987) requires

that regulations, rules, legislation, and

any other policy actions be reviewed for

any substantial direct effect on States,

on the relationship between the Federal

Government and the States, or on the

distribution of power and

responsibilities among various levels of

government. If there are substantial

direct effects, then Executive Order

12612 requires preparation of a

federalism assessment to be used in all

decisions involved in promulgating and

implementing a regulation or a rule.

The Department finds that this final

rule will not have a substantial direct

effect on State governments. State

regulations that may have existed on the

products that are the subject of today’s

rule were preempted by the Federal

standards established in EPCA. States

can petition the Department for

exemption from such preemption based

on criteria set forth in EPCA. None has

done so. Accordingly, the Department

finds that the preparation of a

federalism assessment for this

rulemaking is not warranted.

h. Review Under the Unfunded

Mandates Reform Act

With respect to a proposed regulatory

action that may result in the

expenditure by the private sector of

$100 million or more (adjusted annually

for inflation), section 202 of the
50148 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

Unfunded Mandates Reform Act of 1995

(UMRA) requires a Federal agency to

publish estimates of the resulting costs,

benefits and other effects on the

national economy. 2 U.S.C. 1532(a), (b).

Section 202 of UMRA authorizes an

agency to respond to the content

requirements of UMRA in any other

statement or analysis that accompanies

the proposed rule. 2 U.S.C. 1532(c).

The content requirements of section

202(b) of UMRA relevant to a private

sector mandate substantially overlap the

economic analysis requirements that

apply under section 325(o) of EPCA and

Executive Order 12866. The

Supplementary Information section of

the notice of proposed rulemaking and

‘‘Regulatory Impact Analysis’’ section of

the TSD for the 1994 Proposed Rule

responded 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.

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 section 325(o) of the

Energy Policy and Conservation Act (42

U.S.C. 6295(o)), this final rule

establishes energy conservation

standards for room air conditioners that

are designed to achieve the maximum

improvement in energy efficiency which

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 the

1994 Proposed Rule.

i. Review Under the Small Business

Regulatory Enforcement Fairness Act of

1996

Consistent with Subtitle E of the

Small Business Regulatory Enforcement

Fairness Act of 1996, 5 U.S.C. 801–808,

DOE will submit to Congress a report

regarding the issuance of today’s final

rule before the effective date set forth at

the outset of this notice.

List of Subjects in 10 CFR Part 430

Administrative practice and

procedure, Energy conservation,

Household appliances.

Issued in Washington, D.C., on September

12, 1997.

Joseph J. Romm,

Acting Assistant Secretary, Energy Efficiency

and Renewable Energy.

For the reasons set forth in the

preamble Part 430 of Chapter II of Title

10, Code of Federal Regulations, is

amended as set forth below.

Part 430—ENERGY CONSERVATION

PROGRAM FOR CONSUMER

PRODUCTS

1. The authority citation for Part 430

continues to read as follows:

Authority: 42 U.S.C. 6291–6309.

2. Section 430.2 of Subpart A is

amended by adding new definitions for

‘‘Casement-only room air conditioner’’

and ‘‘Casement-slider room air

conditioner’’ in alphabetical order, to

read as follows:

Subpart A—General Provisions

§ 430.2 Definitions.

* * * * *

Casement-only means a room air

conditioner designed for mounting in a

casement window with an encased

assembly with a width of 14.8 inches or

less and a height of 11.2 inches or less.

Casement-slider means a room air

conditioner with an encased assembly

designed for mounting in a sliding or

casement window with a width of 15.5

inches or less.

* * * * *

3. Section 430.32 is amended by

revising paragraph (b) to read as follows:

§ 430.32 Energy conservation standards

and effective dates.

* * * * *

(b) Room air conditioners.

Product class

Energy efficiency ratio, effective as of

Jan. 1, 1990 Oct. 1, 2000

1. Without reverse cycle, with louvered sides, and less than 6,000 Btu/h ............................................................. 8.0 9.7

2. Without reverse cycle, with louvered sides, and 6,000 to 7,999 Btu/h ............................................................... 8.5 9.7

3. Without reverse cycle, with louvered sides, and 8,000 to 13,999 Btu/h ............................................................. 9.0 9.8

4. Without reverse cycle, with louvered sides, and 14,000 to 19,999 Btu/h ........................................................... 8.8 9.7

5. Without reverse cycle, with louvered sides, and 20,000 Btu/h or more ............................................................. 8.2 8.5

6. Without reverse cycle, without louvered sides, and less than 6,000 Btu/h ........................................................ 8.0 9.0

7. Without reverse cycle, without louvered sides, and 6,000 to 7,999 Btu/h .......................................................... 8.5 9.0

8. Without reverse cycle, without louvered sides, and 8,000 to 13,999 Btu/h ........................................................ 8.5 8.5

9. Without reverse cycle, without louvered sides, and 14,000 to 19,999 Btu/h ...................................................... 8.5 8.5

10. Without reverse cycle, without louvered sides, and 20,000 Btu/h or more ...................................................... 8.2 8.5

11. With reverse cycle, with louvered sides, and less than 20,000 Btu/h .............................................................. 8.5 9.0

12. With reverse cycle, without louvered sides, and less than 14,000 Btu/h ......................................................... 8.0 8.5

13. With reverse cycle, with louvered sides, and 20,000 Btu/h or more ................................................................ 8.5 8.5

14. With reverse cycle, without louvered sides, and 14,000 Btu/h or more ........................................................... 8.0 8.0

15. Casement-Only .................................................................................................................................................. * 8.7

16. Casement-Slider ................................................................................................................................................ * 9.5

* Casement-only and casement-slider room air conditioners are not separate product classes under standards effective January 1, 1990. These

units are subject to the applicable standards in classes 1 through 14 based on unit capacity and the presence or absence of louvered sides and

a reverse cycle.

* * * * *

Note: The following letter will not appear

in the Code of Federal Regulations.

September 16, 1994

Honorable Christine A. Ervin

Assistant Secretary for Energy Efficiency and

Renewable Energy

United States Department of Energy,

Forrestal Building, 1000 Independence

Ave., S. W., Washington, D.C. 20585

Dear Ms. Ervin:

By letter dated March 14, 1994, the

Department of Energy (‘‘DOE’’) transmitted to

the Attorney General a Notice of Proposed

Rulemaking (59 FR 10464) addressing energy
Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations 50149

standards for eight classes of household

appliances. Those classes are: room air

conditioners, water heaters, direct heating

equipment, mobile home furnaces, kitchen

ranges and ovens, pool heaters, fluorescent

lamp ballasts and television sets. Section 325

of the Energy Policy and Conservation Act,

as amended in 1992 (42 U.S.C. 6295) (‘‘the

Act’’), requires the Attorney General to

determine the impact, if any, of any lessening

of competition likely to result from the

proposed standards. This letter contains the

competitive impact determination of the

Department of Justice (‘‘Department’’).

Summary

The evidence available to the Department

does not indicate that any significant

lessening of competition is likely to result

from the imposition of the proposed

standards for mobile home furnaces and pool

heaters contained in the Notice. For

television sets, fluorescent lamp ballasts and

professional-style or high-end kitchen ranges

it is the Department’s judgement based on the

available evidence that significant

anticompetitive effects are likely to occur.

For electric water heaters the evidence

indicates that a significant anticompetitive

effect could take place if sufficient time is not

permitted firms to develop, produce and

market products complying with the new

standard. For microwave ovens, oil-fired

water heaters, room air conditioners, and

direct heating equipment the evidence

indicates that anticompetitive effects could

result; the Department is unable on the basis

of the available evidence to determine

whether such effects are likely. Finally, the

evidence indicates that the cumulative effects

of these and other regulatory standards could

be to lessen competition in certain markets

for household appliances.

In preparing these comments the

Department has considered the Notice, the

Technical Support Document (TSD) prepared

by Lawrence Berkeley Laboratory, written

comments and oral comments collected by

the department in the time allowed and

without the benefit of compulsory process.

Discussion

Adoption of standards requiring greater

energy efficiency in household appliances

could affect competition in a number of

ways. First, by raising the cost of appliances

and reducing design and feature choices,

standards may lower demand. If standards

impose costs on manufacturers that can not

be passed to consumers they can lower

manufacturers’ rates of return. Either one or

both of these effects could cause

manufacturers to exit the market with the

effect of lessening competition and raising

prices. Second, imposition of standards may

lessen or discourage competition in the

design and development of new product

features or technologies; such competition

benefits consumers and the economy.

The record in this proceeding raises many

factual issues relating, among other things, to

the technical feasibility of certain standards,

their economic impact on manufacturers and

consumers and consumer reaction to the

changes in products that they might require.

In numerous instances, industry

representatives and technical consultants

retained by them have challenged

assumptions and conclusions in the Notice

and TSD. The Department is not in a position

to resolve many of these contested issues on

the basis of the available record. Accordingly,

in some instances, the Department is unable

to reach a conclusion about the impact of the

proposed standards on competition.

Fluorescent Lamp Ballasts

One technical issue that has been raised is

whether the proposed standards for

fluorescent lamp ballasts are attainable with

currently available technology. Numerous

ballast manufacturers assert that in many

instances they are not. The Department

concludes that the doubts raised about the

technical feasibility of the standards are

serious and affect a substantial number of

ballast classes. Thus, if the proposed

standards were adopted some or all

manufacturers would likely have to cease the

production of many products and

competition in the sale of those products

would cease or diminish.

Television Sets and Related Technologies

1. The weight of available evidence is that

adoption of the proposed standard for

television sets could force all or many

manufacturers to revise their products to

lessen the number and quality of their

features. Many in the industry contend that

the only way to produce products that will

comply with the standard would be to reduce

or eliminate features that consume electricity

such as brighter pictures, remote control,

picture-in-picture, improved sound and inset program guides and other features

presently being developed. Development and

marketing of product improvements and new

features has been an important factor driving

competition in the market for television sets.

Reducing or retarding the development of

such features could substantially reduce

demand for sets, retard development and

refinement of technology, and reduce utility

of the product.

Manufacturers might attempt to

circumvent the proposed standard by letting

features ‘‘migrate’’—incorporating them in

units to be sold separately or packaged with

television sets. It is claimed that

disaggregating features in this manner will

decrease overall television energy efficiency.

There is evidence that it could also lessen

competition because the development and

marketing of features in such attached units

could be costly and cumbersome, among

other things encountering receivers that

receive cable signals.

There is evidence that the proposed

standard for television sets could affect

competition in other markets.

Representatives of the television industry

assert that as the ‘‘Information Highway’’

develops television manufacturers intend to

expand the capabilities of their products to

include new features to enable them to serve

as in-home devices for data transmission and

communication. They argue that the TV

receiver, already located in virtually every

American home, could be a uniquely

efficient vehicle for the introduction of new

data-processing and communication devices.

The Department does not make final

judgement on this contention but does

conclude that, given the apparent difficulties

in the marketing of new features as part of

attached units, the standard is likely to retard

the development of technology and inhibit

the ability of television manufacturers to

compete with computer manufacturers and

others in the development of new

technologies and features for the Information

Highway.

Professional-Style and Standard Ranges

The Notice proposes a single set of

standards for gas ovens and cooking tops in

household ranges. There is substantial

evidence that one category of home range

cannot be manufactured to meet these

proposed standards without losing so much

of its distinct characteristics that it is no

longer marketable. Professional-style or highend ranges are products designed to provide

some of the performance characteristics of

professional or restaurant ranges for home

kitchens. Some of these characteristics which

differentiate them from standard kitchen

ranges, such as high performance burners

and ovens, involve considerably more energy

consumption than do standard ranges; the

special uses and appeal of these products,

and their premium in price, depends in good

measure on these features. Representatives of

the range industry assert that high-end ranges

cannot be modified to comply with the

proposed standards without giving up so

much of the special features of the product

that they are no longer marketable. The

Department concludes that it is likely that

competition in the manufacture and sale of

these products will be eliminated if the

proposed standards are adopted.

While not as strong as the evidence relating

to professional style ranges there is evidence

challenging the conclusions in the TSD that

the proposed standards for standard gas and

electric range ovens and cooking tops will

not require significant retooling or redesign

and will have not more than minimal impact

on manufacturers’ long run rates of return on

equity. The Association of Home Appliance

Manufacturers contends that the standard

could have a destructive impact on the range

industry. It and various range manufacturers

claim that design options suggested in the

TSD are not effective and that compliance

would require substantial investment in

redesign and retooling. The Association also

insists that suppliers of equipment and

technology necessary to comply may not be

able to respond simultaneously and evenly to

range manufacturers, a problem that could

impose a competitive handicap on some

range manufacturers.

A range manufacturer has commented that

compliance with the standard could

seriously weaken it and its ability to

compete. There is also evidence that the

cumulative costs of compliance with this

standard and with other and future appliance

standards could induce or force ‘‘full line’’

appliance manufacturers to exit one or more

of the markets that they serve. The range

market is concentrated and, while there is

conflicting evidence, the Department

concludes that there is a possibility that this

proposed standard could force one or more
50150 Federal Register / Vol. 62, No. 185 /Wednesday, September 24, 1997 /Rules and Regulations

firms out of the manufacture of standard

ranges thus lessening competition.

Microwave Ovens

The Notice and the TSD conclude that the

proposed standard for microwave ovens will

not involve any substantial redesign or

retooling by manufacturers and will have

little impact on their long run returns on

equity. Representatives of the industry

strongly challenge these conclusions. For

example, a representative of MCD

Corporation has testified that compliance

with the standard would require that her

company, a manufacturer of microwaves,

make large investments in retooling, and

would threaten its viability. The Association

of Home Appliance Manufacturers contends

that the standard will in all likelihood

eliminate all U.S. Production of microwaves

and concentrate U.S. sales in the hands of

one or two companies. The Department is not

in a position to resolve all of the contested

technical and financial issues but concludes

that this proposed standard could force some

significant producers from this concentrated

market and substantially lessen competition

in it.

Room Air Conditioners

The Notice and TSD conclude that this

proposed standard will not involve

substantial redesign or retooling and, while

it may produce some reductions in the short

run, will have little or no effect on

manufacturers’ long run returns on equity.

This conclusion has been challenged by firms

in the industry. There is evidence that some

of the design options suggested in the Notice

are less effective and more costly than the

TSD assumes and that manufacturers may,

among other things, need to redesign the

chassis of some classes to comply with the

standard. Such redesigns could add to unit

installation costs, make units larger and more

cumbersome to install, and otherwise depress

demand. There is evidence that at least one

product, the five thousand BTU unit, may

cease to be manufactured if the standard is

adopted. There are also unresolved issues

about such matters as the availability and

efficacy of some design options suggested in

the TSD. The Department is not able to

resolve these issues but concludes that the

standard could have a substantial negative

impact on demand and rates of return, and

cause one or more firms to cease the

manufacture and sale of some of these

products, thus lessening competition.

Direct Heating Equipment

Manufacturers of direct heating equipment

contend that this standard will seriously

depress demand for their product and likely

force some, perhaps all, manufacturers out of

this business. Among other things, they

contend that the TSD substantially

underestimates the added costs of

manufacture, and also the added installation

costs for venting and wiring, that will be

required. They insist that consumer cost

increases will seriously depress demand for

their product and that their profit margins

will suffer because it will be impossible to

pass on much of the increased manufacturing

costs to consumers. The Department cannot

resolve many of these issues but concludes

that there is a possibility that several of the

five companies that account for most of the

production of these products might exit the

market if the standard is adopted thus

substantially lessening competition.

Water Heaters

Manufacturers of oil-fired heaters contend

that the proposed standard for their product

class would threaten the survival of the

product, likely forcing all or most producers

out of this business. Some claim that it may

not be possible with presently available

technology to design and manufacture a

product that would comply. Manufacturers

assert that the added costs of producing a

product in compliance with the standard

would, in any event, be considerably higher

than the TSD indicates and that increases in

price would very seriously depress consumer

demand for this product. Five firms, two of

them Canadian producers, account for most

of the sales of this product in the U.S. The

Department is not able to resolve all the

questions raised regarding this standard; it

concludes that there is at least a possibility

that the standard might force one or more of

these competitors to exitthe U.S. market.

Another firm has been taking steps to enter

the oil-fired water heater market; adoption of

the standard may deter it from doing so. The

loss of one such firm could result in a

substantial lessening of competition.

DOE’s proposed standard for electric water

heaters would, in effect, require that such

products have an integral heat pump. DOE

concedes that this would involve major

changes and might cause one or more

existing firms to cease the marketing of

electric water heaters but believes that other

firms such as air conditioner manufacturers

may begin producing electric water heaters as

a result of the standard. There are complex

and unresolved issues as to what would

happen to demand for electric water heaters

if consumers were required to purchase heat

pumps with them. It seems clear that the

price of such units will be considerably

higher than that of the electric resistance

heaters that the standard would remove from

the market, but the range of future prices,

costs of installation and maintenance and

degree of consumer acceptance of a product

that has not been widely accepted until now

are very difficult to predict. Heat pump water

heaters may be useful and economically

attractive to many consumers but serious

issues have been raised in this proceeding as

to whether certain kinds of consumers, such

as households with relatively little demand

for hot water, will derive a benefit from the

product.

Even if the heat pump water heater is

eventually widely accepted in the market the

Department has concluded that it is likely

that competition will be adversely affected

for some period of time if adequate time is

not permitted for the phasing in of the

standard. Three million units or more of

electric resistance units are now sold

annually in the U.S. Only a few thousand

heat pump units are now produced annually

in this country, by two firms. It could take

a considerable time for other firms to design

new product lines and being substantial ne

production capacity on line. There is also

evidence from those with experience with

the product that heat pump water heaters

require special maintenance and servicing.

Considerable time may be required for firms

to develop and train adequate distribution

and service networks if they are to compete

effectively. If adequate time for phasing in

the standard is not allowed, for a

considerable period of time there could be

fewer companies competing effectively in the

electric water heater business than there are

now, and competition in this concentrated

market could be substantially lessened.

Cumulative Effects of Regulation

Many of the manufacturers of appliances

subject to the proposed standards

manufacture several different types of

appliance, each subject to those standards or

to others authorized by the Act. As indicated

above, there is evidence that compliance

with some of these standards may require

manufacturers to make considerable

investments. It is anticipated that future

standards for other appliances could require

manufacturers to make similar investments.

Full-line manufacturers such as General

Electric, Whirlpool, Frigidaire, Amana and

Maytag could thus be required to make

changes in several product lines.

As the TSD recognizes, it is difficult for

manufacturers to pass redesign and retooling

costs on to consumers. And the impact of a

single product redesign may fall more

heavily on firms with small shares of the

market since they must write off their costs

against less sales volume. There is some

evidence that firms, particularly the smaller

ones, facing the prospect of repeated

redesigns involving several different

products, may be induced to cease

manufacturing one or more of such product

lines. Thus to a degree that we cannot fully

assess there is a possibility that the

cumulative effect of these and future energy

efficiency standards could be to lessen

competition in one or more home appliance

markets.

Sincerely yours,

Anne K. Bingaman,

Assistant Attorney General.

[FR Doc. 97–24978 Filed 9–23–97; 8:45 am]

BILLING CODE 6450–01–P