GAO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

441 G St. N.W. 

Washington, DC 20548 

B-326096 

August 4, 2014 

The Honorable Mary Landrieu 

Chair 

The Honorable Lisa Murkowski 

Ranking Member 

Committee on Energy and Natural Resources 

United States Senate 

The Honorable Fred Upton 

Chairman 

The Honorable Henry A. Waxman 

Ranking Member 

Committee on Energy and Commerce 

House of Representatives 

Subject: Department of Energy: Energy Conservation Program for Consumer Products: Energy 

Conservation Standards for Residential Furnace Fans · 

Pursuant to section 801 (a)(2)(A) of title 5, United States Code, this is our report on a major rule 

promulgated by the Department of Energy (Energy) entitled "Energy Conservation Program for 

Consumer Products: Energy Conservation Standards for Residential Furnace Fans".(RIN: 1904, 

AC22). We received the rule on July 18, 2014. It was published in the Federal Register as a 

final rule on July 3, 2014. 79 Fed. Reg. 38, 130. 

The final rule prescribes energy conservation standards for residential furnace fans. Pursuant 

to the Energy Policy and Conservation Act of 1975 (EPCA), as amended, Energy must 

prescribe energy conservation standards for various consumer products and certain commercial 

and industrial equipment, including residential furnace fans. EPCA requires Energy to 

determine whether such standards would be technologically feasible and economically justified 

and would save a significant amount of energy. Energy has determined that the prescribed 

energy conservation standards for these products would result in significant conservation of 

energy and are technologically feasible.and economically justified. The effective date for this 

final rule is September 2, .2014. Compli.ance with the prescribed standards established for 

residential furnace fans is required on and after July 3, 2019. 

The Congressional Review Act (CRA) requires a 60-day delay in the effective date of a major 

rule from the date of publication in the Federal Register or receipt of the rule by Congress, 

Whichever is later. 5 U.S.C. § 801 (a)(3)(A). This final rule was published in the Federal 

Register on July 3, 2014, received by the Senate on July 22, 2014, and received by the House 

of Representatives on July 18, 2014. 79 Fed. Reg. 28,130; 160 Cong. Rec. S4702 (July 22, 

2014); 160 Cong. Rec. H6812 (July 24, 2014). This final rule has a stated effective date of 

September 2, 2104. Therefore, this final rule does not have the required 60-day delay in 

effective date under CRA. 

GA0-14-798R 
Enclosed is our assessment of Energy's compliance with the procedural steps required by 

section 801 (a)(1)(B)(i) through (iv) of title 5 with respect to the rule. Other than the 60-day 

delay, our review of the procedural steps taken indicates that Energy complied with the 

applicable requirements. 

· If you have any questions about this report or wish to contact GAO officials responsible for the 

evaluation work relating to the subject matter of the rule, please contact Shirley A. Jones, 

Assistant General Counsel, at (202) 512-8156. 

Robert J. Cramer 

Managing Associate General Counsel 

Enclosure 

cc: Daniel Cohen 

Assistant General Counsel for Legislation, 

Regulation and Energy Efficiency 

Department of Energy 

Page 2 GA0-14-798R 
REPORT UNDER 5 U.S.C. § 801 (a)(2)(A) ON A MAJOR RULE 

ISSUED BY THE 

DEPARTMENT OF ENERGY 

ENTITLED 

ENCLOSURE 

"ENERGY CONSERVATION PROGRAM FOR -

CONSUMER PRODUCTS: ENERGY CONSERVATION STANDARDS 

FOR RESIDENTIAL FURNACE FANS" 

(RIN: 1904-AC22) 

(i) Cost-benefit analysis 

The Department of Energy (Energy) analyzed the costs and benefits of this final rule. Energy 

presented a table of its evaluation of the economic impacts of this final rule on consumers of 

residential furnace fans, as measured by the average life-cycle cost (LCC) savings and the 

median payback period (PBP). The average LCC savings are positive for all product classes. 

Energy also calculated the impact on manufacturers. The industry net present value (INPV) is 

the sum of the discounted cash flows to the industry from the base year through the end of the 

analysis period (2014 to 2048). Using a real discount rate of 7.8 percent, Energy estimated that 

the INPV for manufacturers of residential furnace fans is $349.6 million. Under this final rule, 

Energy expects that manufacturers may lose up to 16.9 percent of their INPV, which is 

approximately $59:0 million. Total conversion costs incurred by industry prior to the compliance 

date are expected to reach $40.6 million. 

Energy also estimated the benefits of this final rule, stating that this final rule would save a 

significant amount of energy. The lifetime energy savings for residential furnace fans purchased 

in the.30-year period that begins in the year of.compliance with.thestandards.(2019~2048) 

amount to 3.99 quadrillion Btu (quads). The estimated annual energy savings in 2030 (0.07 

quads) are equivalent to 0.3 percent of total U.S. residential energy use in 2012. The 

cumulative net present value (NPV) of total consumer costs and savings of the standards for 

residential furnace fans ranges from $10,024 million (at a 7 percent discount rate) to $28,810 

million (at a 3 percent discount rate). This NPV expresses the estimated total value of future 

operating-cost savings minus the estimated increased product costs for residential furnace fans 

purchased in 2019-2048. In addition, this final rule is expected to have significant 

environmental benefits. The energy savings would result in cumulative emission reductions of 

approximately 180.6 million metric tons (Mt) of carbon dioxide (C02), 695.0 thousand tons of 

methane (CH4), 235.7 thousand tons of sulfur dioxide (S02), 84.0 thousand tons of nitrogen 

oxides (NOx). 6.2 thousand tons of nitrous oxide (N20), and 0.4 tons of mercury (Hg). The 

cumulative reduction in C02 emissions through 2030 amounts to 34 million Mt. The value of the 

C02 reductions is calculated using a range of values per metric ton of C02 (otherwise known as 

the Social Cost of Carbon) developed by a recent federal interagency process. 

In a table in the final rule, Energy summarized the national economic costs and benefits 

expected to result from the standards for residential furnace fans. Based on the analyses 

culminating in this final rule, Energy found the benefits to the nation of the standards (energy 

savings, consumer LCC savings, positive NPV of consumer benefit, and emission reductions) 

outweigh the burdens (loss of INPV and LCC increases for some users of these products). 

Energy has concluded that the standards in this final rule represent the maximum improvement 

GA0-14-798R 
in energy efficiency that is technologically feasible and economically justified and would result in 

significant conservation of energy. 

(ii) Agency actions relevant to the Regulatorv Flexibility Act (RFAl. 5 U.S.C. §§ 603-605. 607, 

and 609 

Energy prepared a final regulatory analysis for this final rule. The analysis included (1) a 

description and estimated number of small entities regulated; (2) a description and estimate of 

compliance requirements; (3) any duplication, overlap, or conflict with other rules and 

regulations; and (4) significant alternatives to the rule. 

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act of 1995, 

2 U.S.C. §§ 1532-1535 

Energy has concluded that this final rule would likely require annual expenditures of $100 million 

or more by the private sector. Such expenditures may include investment in research and 

development and in capital expenditures by residential furnace fans manufacturers in the years 

between the final rule and the compliance date for the new standards, and incremental 

additional expenditures by consumers to purchase higher-efficiency residential furnace fans, 

starting at the compliance date for the applicable standard. Energy stated ·that its Regulatory 

Impact Analysis constitutes its actions taken to comply with the Act. In addition, Energy states 

that this final rule adopts the .most cost-effective and least burdensome alternative that achieves 

the objectives of the rule. 

(iv) Other relevant information or requirements under acts and executive orders 

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq. 

On June 1,-2010, Energy published a.framework-document for this rulemaking and then 

published the Notice of Public Meeting and Availability of the Framework Document for furnace 

fans in the Federal Register on June 3, 2010. 75 Fed. Reg. 31,323. Energy originally 

scheduled the comment period on the Framework Document to close on July 6, 2010, but due 

to the large number and broad scope of questions and issues raised, Energy subsequently 

published a notice in the Federal Register reopening the comment period from July 15, 2010, 

until July 27, 2010, to allow additional time for interested parties to submit comments. 75 Fed. 

Reg. 41, 102 (July 15, 2010). Energy also published in the Federal Register a Notice of Public 

Meeting and the Availability of the Preliminary Technical Support Document (TSO) on July 10, 

2012. 77 Fed. Reg. 40,530. Energy published a Notice of Proposed Rulemaking (NOPR) in the 

Federal Register and made available an accompanying NOPR TSO on October 25, 2013. 78 

Fed. Reg. 64,068. Energy invited and received comments on the NOPR, to which it responded 

in this final rule. 

Paperwork Reduction Act (PRA), 44 U.S.C. §§ 3501-3520 

Energy determined that this final rule contains an information collection requirement under the 

Act. This information collection requirement for furnace fan certification has been submitted to 

the Office of Management and Budget (OMB)for approval. Energy estimates trat the public · 

reporting burden for the information collection will average 30 hours per response, including the 

time for reviewing instructions, searching existing data sources, gathering and maintaining the 

data needed, and completing and reviewing the collection of information. Energy notes that the 

Page 2 GA0-14-798R 
certification and recordkeeping requirements for certain consumer products in 1 O C.F.R. part 

430 have previously been approved by OMB and assigned OMB control number 1910-1400; 

the certification requirement for furnace fans will be included in this collection once approved by 

OMB. Energy states that it will notify the public of OMB approval through a Federal Register 

notice. 

Statutory authorization for the rule 

Energy states that it promulgated this final rule under the authority of sections 6291 to 6309 of 

title 42, United States Code. 

Executive Order No. 12,866 (Regulatory Planning and Review) 

· · Energy determined that this final rule is economically significant under the Order, and it has 

been reviewed by OMB. 

Executive Order No. 13, 132 (Federalism) 

On March 14, 2000, Energy published a statement of policy describing the intergovernmental 

consultation process it would follow in the development of these regulations. 65 Fed. Reg. 

13, 735. The Energy and Conservation Act of 1975 (EPCA) governs and prescribes federal 

preemption of state regulations as to energy conservation for the equipment that is the subject 

this final rule. States can petition Energy for exemption from such preemption to the extent, and 

based on criteria, set forth in EPCA. 42 U.S.C. § 6297. Energy determined that no further 

action is required by the Order. 

Page 3 GA0-14-798R