THE O F E H G& APPEALS F IC OF EARIN Cl 1999 fi DEPARTMENT OF ENERGY

RESPONSE OF GE APPLIANCES

TO THE PETITION FILED BY AMANA APPLIANCES FOR EXCEPTION

RELIEF TO THE FINAL RULE ON ENERGY CONSERVATION STANDARDS

FOR REFRIGERATORS, REFRIGERATOR-FREEZERS AND FREEZERS

CASE NO. VEE-0054

MARCH 15, 1999

These comments are submitted on behalf of GE Appliances, a leading fullline manufacturer of major household appliances, including, as specifically

relevant to these proceeding, refrigerator-freezers. GE Appliances, a potentially

aggrieved party within the meaning of the Office of Hearings and Appeals

("OHA") regulations, has its headquarters at Appliance Park, Louisville, Kentucky.

I. Introduction and Summary

Amana Appliances ("Amana") has filed an application ("Application")

seeking an exception to the Department of Energy's ("DOE") Final Rule on

Energy Conservation Program for Consumer Products: Energy Conservation

Standards for Refrigerators, Refrigerator-Freezers and Freezers, 10 C.F.R. Part

430 (Final Rule). This Final Rule, promulgated on April 23, 1997, mandates that

refrigerator products manufactured after July 1, 2001, use approximately 30%

less energy than such products manufactured under today's energy conservation

standard.

The specific relief requested by Amana is that covered products

manufactured by it on or after July 1, 2001, not be required to comply with the

Final Rule but be given "10% relief" until January 1, 2010. Thus, rather than

manufacturing refrigerators that use 30% less energy than today's models,

Amana's new products would be permitted to use 10% more energy than

comparable competitive models manufactured in compliance with the more

stringent standard. Moreover, Amana seeks to maintain this cost-avoidance

advantage for a period of eight and one-half years.

Amana offers as the basis for its Application the "uncertain future of

alternative blowing agents (especially HFC-245fa)." (See Application, p.6.) It

argues that the unavailability of HFC-245fa in early 1999 together with the

scheduled 2003 phase-out of HCFC-141 b, the foam-blowing agent used by most

of the industry, poses an insurmountable obstacle to its ability to comply with the

 EE-RM-93-801 COMMENT 341

THE OFFICE OF HEARINGS & APPEALS 

DEPARTMENT OF ENERGY 

': .. f ' •• ~. '._ • ,-." .. ::-'" ' AI { 1999 J - •• ~ [' • , 

~AR Ie; 

"- -4 /(). 23 

RESPONSE OF GE APPLIANCES 

TO THE PETITION FILED BY AMANA APPLIANCES FOR EXCEPTION 

RELIEF TO THE FINAL RULE ON ENERGY CONSERVATION STANDARDS 

FOR REFRIGERATORS, REFRIGERATOR-FREEZERS AND FREEZERS 

CASE NO. VEE-0054 

MARCH 15, 1999 

These comments are submitted on behalf of GE Appliances, a leading fullline manufacturer of major household appliances, including, as specifically 

relevant to these proceeding, refrigerator-freezers. GE Appliances, a potentially 

aggrieved party within the meaning of the Office of Hearings and Appeals 

("OHA") regulations, has its headquarters at Appliance Park, Louisville, Kentucky. 

I. Introduction and Summary 

Amana Appliances ("Amana") has filed an application ("Application") 

seeking an exception to the Department of Energy's ("DOE") Final Rule on 

Energy Conservation Progran:t for Consumer Products: Energy Conservation 

Standards for Refrigerators, Refrigerator-Freezers and Freezers, 10 C.F.R. Part 

430 (Final Rule). This Final Rule, promulgated on April 23, 1997, mandates that 

refrigerator products manufactured after July 1, 2001, use approXimately 30% 

less energy than such products manufactured under today's energy conservation 

standard. 

The specific relief requested by Amana is that covered products 

manufactured by it on or after July 1, 2001, not be required to comply with the 

Final Rule but be given "10% relief' until January 1, 2010. Thus, rather than 

manufacturing refrigerators that use 30% less energy than today's models, 

Amana's new products would be permitted to use 10% more energy than 

comparable competitive models manufactured in compliance with the more 

stringent standard. Moreover, Amana seeks to maintain this cost-avoidance 

advantage for a period of eight and one-half years. 

Amana offers as the basis for its Application the "uncertain future of 

alternative blowing agents (especially HFC-24Sfa)." (See Application, p.6.) It 

argues that the unavailability of HFC-24Sfa in early 1999 together with the 

scheduled 2003 phase-out of HCFC-141 b, the foam-blowing agent used by most 

of the industry, poses an insurmountable obstacle to its ability to comply with the 

- 1 -
Final Rule.' Thus, Amana seeks an exception to the Final Rule to permit a

reduction in the energy efficiency standard as applied to it so that more energy

efficient foams can be developed.

GE Appliances submits that the Application is premature and OHA should,

therefore, deny the relief sought.

II. Amana's Application is Premature

A. The fate of HFC-245fa is not determined

As Amana acknowledges in its Application, the appliance industry, acting

through the Association of Home Appliance Manufacturers ("AHAM"), has begun

discussions with AlliedSignal, the only U.S. company licensed to manufacture

HFC-245fa, regarding production and sale of quantities of HFC-245fa-to meet the

industry's requirements. This all-industry effort was necessary to improve the

chances that sufficient demand volume would be aggregated to justify

construction of a new plant.

The manufacturers retained AD Little to review confidentially AlliedSignal's

estimates of the capital investment and operating costs to produce HFC-245fa.

A report of their findings was given to participating industry members, who,

based on the report's findings, are in the process of reviewing their requirements,

their price sensitivity and their position on other terms and conditions offered by

AlliedSignal.

A new budget has been agreed to for a follow-up project, also led by AD

Little, to start negotiating the terms of a possible deal.

Coming as it does in the middle of the parties' extensive efforts to assure

future availability of HFC-245fa, the Application'sends the wrong signal by

prejudging the outcome.: It is simply too early to predict that HFC-245fa will not

be available. One thing is clear, however: Granting Amana's request for relief

will ensure that HFC-254fa will not be produced in the near future because any

incentive for expeditious handling of the discussions with AlliedSignal will be lost.

Amana concedes, however, that the unavailability of HFC-245fa will not prevent it from

manufacturing products that will meet the 2001 energy requirements . It argues that it is

nevertheless entitled to relief because available foams are less efficient, thereby requiring thicker

application , which, results in less internal volume. One might view the Application as presenting

this issue to OHA: Does the loss of refrigerator internal storage volume constitute a "special

hardship, inequity or unfair distribution of burdens" that justifies an adjustment of the Final Rule

pursuant to Section 504 of the Department of Energy Organization Act? [2 U.S.C. § 7194(a)]. We

think it does not.

2

 EE-RM-93-801 COMMENT 341

Final Rule.' Thus, Amana seeks an exception to the Final Rule to permit a 

reduction in the energy efficiency standard as applied to it so that more energy 

efficient foams can be developed. 

GE Appliances submits that the Application is premature and OHA should, 

therefore, deny the relief sought. 

II. Amana's Application is Premature 

A. The fate of HFC·245fa is not determined 

As Amana acknowledges in its Application, the appliance industry, acting 

through the Association of Home Appliance Manufacturers ("AHAM"), has begun 

discussions with AlliedSignal, the only U.S. company licensed to manufacture 

HFC-245fa, regarding production and sale of quantities of HFC-245fa-to meet the 

industry's requirements. This all-industry effort was necessary to improv~ the 

chances that sufficient demand volume would be aggregated to justify 

construction of a new plant. 

The manufacturers retained AD Little to review confidentially AlliedSignal's 

estimates of the capital investment and operating costs to produce HFC·245fa. 

A report of their findings was given to participating industry members, who, 

based on the report's findings, are in the process of reviewing their requirements, 

their price sensitivity and their position on other terms and conditions offered by 

AlliedSignal. . 

A new budget has been agreed to for a follow-up project, also led by AD 

Little, to start negotiating the terms of a possible deal. 

Coming as it does in the middle of the parties' extensive efforts to assure 

future availability of HFC-245fa, the Application sends the wrong signal by 

prejudging the outcome. ·It is simply too early to predict that HFC-245fa will not 

be available. One thing is clear, however: Granting Amana's request for relief 

will ensure that HFC-254fa will not be produced in the near future because any 

incentive for expeditious handling of the discussions with AlliedSignal will be lost. 

Amana concedes, however, that the unavailability of HFC-245fa will not prevent it from 

manufacturing products that will meet the 2001 energy requirements. It argues that it is 

nevertheless entitled to relief because available foams are less efficient, thereby requiring thicker 

application, which, results in less internal volume. One might view the Application as presenting 

this issue to OHA: Does the loss of refrigerator internal storage volume constitute a "special 

hardship, inequity or unfair distribution of burdens" that justifies an adjustment of the Final Rule 

pursuant to Section 504 of the Department of Energy Organization Act? [2 U.S.c. § 7194(a)]. We 

think it does not. 

2 
B. Amana has failed to show that HFC-245fa unavailability in 1999

is a basis for relief from the Final Rule

The difficult decisions that Amana describes as necessary to achieve

compliance with the Final Rule were thoroughly considered by DOE when it

established the July 1, 2001 effective date.

The Application asserts:

"Retooling an entire refrigeration product line would take significant time,

major capital, and vast human resource requirements. Insulation

thickness must be defined in early 1999 such that the product can be

designed to meet the 7/1/01 DOE Standards2. Amana must select an

insulation of choice at that time such that the product may be optimized for

internal volume." (P.2)

In any event, even if it were to be established that HFC-245fa might not be

available under the schedule that industry hoped would be met, it has not been

demonstrated that it will not be available for use in 2003, which is the key date in

the Final Rule.

The argument that 1999 is critical for foam selection is appealing. Indeed,

GE Appliances made similar arguments about the adverse effects of a lack of

coordination between 2001 compliance and 2003 phase-out of HCFC-141 b. But

DOE rejected those pleas and adopted a Final Rule that explicitly acknowledges

that a double retooling might be required.

DOE has already determined that the potential unavailability of HFC-245fa

before 2001, although unfortunate, is irrelevant.

The Application should be denied as premature.

Ill. Amana has failed to demonstrate that it meets the

requirements for § 504 relief

Amana is owned by Goodman Industries, Inc., a privately held company.

This means that its financial resources-capital, assets, cash, indebtedness and

credit worthiness-are not subject to the scrutiny of outsiders.

How, then, can GE Appliances and other competitors comment on

Amana's claim that it will be disadvantaged by having to invest for 2001 and

2003? We can all sympathize with this statement:

2 in 1997, AlliedSignal advised industry members that it would not have a chemical plant in place

in time to produce HFC-245fa for use in meeting the July 1, 2001 DOE energy standard.

3

 EE-RM-93-801 COMMENT 341

B. Amana has failed to show that HFC-245fa unavailability in 1999 

is a basis for relief from the Final Rule 

The difficult decisions that Amana describes as necessary to achieve 

compliance with the Final Rule were thoroughly considered by DOE when it 

established the July 1, 2001 effective date. 

The Application asserts: 

"Retooling an entire refrigeration product line would take significant time, 

major capital, and vast human resource requiremerits. Insulation 

thickness must be defined in early 1999 such that the product can be 

designed to meet the 7/1/01 DOE Standards2

• Amana must select an 

insulation of choice at that time such that the product may be optimized for 

internal volume." (P.2) 

In any event, even if it were to be established that HFC-245fa might not be 

available under the schedule that industry hoped would be met, it has not been 

demonstrated that it will not be available for use in 2003, which is the key date in 

the Final Rule. 

The argument that 1999 is critical for foam selection is appealing. Indeed, 

G E Appliances made similar ~rguments about the adverse effects of a lack of 

coordination between 2001 compliance and 2003 phase-out of HCFC-141b. But 

DOE rejected those pleas and adopted a Final Rule that explicitly acknowledges 

that a double retooling might be required. 

DOE has already determined that the potential unavailability of HFC-245fa 

before 2001, although unfortunate, is irrelevant. 

The Application should be denied as premature. 

III. Amana has failed to demonstrate that it meets the 

requirements for § 504 relief 

Amana is owned by Goodman Industries, Inc., a privately held company. 

This means that its financial resources-capital, assets, cash, indebtedness and 

credit worthiness-are not subject to the scrutiny of outsiders. 

How, then, can GE Appliances and other competitors comment on 

Amana's claim that it will be disadvantaged by having to invest for 2001 and 

2003? We can all sympathize with this statement: 

21n 1997, AlliedSignal advised industry members that it would not have a chemical plant in place 

in time to produce HFC-24Sfa for use in meeting the July 1, 2001 DOE energy standard. 

3 
"Amana does not want to retool an entire line of refrigerators within an 18-

month period due to the uncertainly of the foam-blowing agent, and

therefore, the uncertainty of the energy consumption of the refrigerator

itself."

Without the ability to scrutinize Amana's financial situation, there is no

basis to conclude that retooling "within an 18-month period" constitutes a "special

hardship, inequity or unfair distribution of burdens" that justifies an adjustment of

the Final Rule pursuant to Section 504 of the Department of Energy Organization

Act.

Nor is there evidence that Amana's situation is different from that of other

manufacturers.

It cites the joint venture operations of GE Appliances and Whirlpool in

Mexico, where HCFC-141 b use will be lawful beyond 2003, as evidencezof

potential competitive disadvantage (see Application, p. 4.) This is a red herring.

Amana has cited no plans by either company to alter import patterns post-2003.

If such factors are relevant to ruling on this Application then other factors

affecting the ability of the manufacturers to achieve compliance, including

financial resources, technical competence and many others, should be examined

by OHA in public hearings so that a full record can be developed. This is the

only way that a decision could withstand attack by adversely affected parties.

IV. Conclusion

For all the above reasons, GE Appliances respectfully requests that OHA

deny the relief sough by Amana's Application.

Please contact the undersigned if you require additional information. By

my signature below I certify that I have complied with the requirements of the

OHA regulation, 10 C.F.R. § 1003.23(d).

cc: Alan F. Kessler, Amana Appliances

4

 EE-RM-93-801 COMMENT 341 .. ,. "1 

"Amana does not want to retool an entire line of refrigerators within an 18-

month period due to the uncertainly of the foam-blowing agent, and 

therefore, the uncertainty of the energy consumption of the refrigerator 

itself." 

Without the ability to scrutinize Amana's financial situation, there is no 

basis to conclude that retooling "within an 18-month period" constitutes a "special 

hardship, inequity or unfair distribution of burdens" that justifies an adjustment of 

the Final Rule pursuant to Section 504 of the Department of Energy Organization 

Act. 

Nor is there evidence that Amana's situation is different from that of other 

manufacturers. 

It cites tfle joint venture operations of GE Appliances and Whirlpool in 

Mexico, where HCFC-141b use will be lawful beyond 2003, as evidence'of 

potential competitive disadvantage (see Application, p. 4.) This is a red herring. 

Amana has cited no plans by either company to alter import patterns post-2003. 

If such factors are relevant to ruling on this Application then other factors 

affecting the ability of the manufacturers to achieve compliance, including 

financial resources, technical competence and many others, should be examined 

by OHA in public hearings so that a full record can be developed. This is the 

only way that a decision could withstand ,?ttack by adversely affected parties. 

IV. Conclusion 

For all the above reasons, GE Appliances respectfully requests that OHA 

deny the relief sough by Amana's Application. 

Please contact the undersigned if you require additional information. By 

my signature below I certify that I have complied with the requirements of ~the 

OHA regulation, 10 C.F.R. § 1003.23(d). 

ully submitted 

cc: Alan F. Kessler, Amana Appliances 

4