H

BEFORE THE

U. S. DEPARTMENT OF ENERGY

OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY

- - - - - - - - - - - - - - - x

In the Matter of: :

ENERGY CONSERVATION PROGRAM .

FOR CONSUMER PRODUCTS:

DOCKET NO. EE-RM-93-801.

PROPOSED RULEMAKING REGARDING

ENERGY CONSERVATION STANDARDS :

FOR REFRIGERATORS,

REFRIGERATORS-FREEZERS .

AND FREEZERS

- - - - - - - - - - - - - - - x

U.S. Department of Energy

Forrestal Building, Room 6E-069

1000 Independence Ave., S.W.

Washington, D.C. 20585

Thursday,

October 26, 1995

The above-entitled matter came on for hearing,

pursuant to notice at 8:30 a.m.

APPEARANCES:

PANEL MEMBERS:

MR. ED POLLOCK

DR. BARRY BERLIN

MR. EUGENE MARGOLIS

MR. MARK FRIEDRICHS

CHRISTINE A. ERVIN, Assistant Secretary,

Energy Efficiency and Renewable Energy

SPEAKERS:

CHARLES SAMUELS

MICHAEL THOMPSON

ALLEN WILKINS

HOWARD GELLER

EXECUTIVE COURT REPORTERS, INC.

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EE-RM-93-801 COMMENT 0H

BEFORE THE 

U. S. DEPARTMENT OF ENERGY 

OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY 

- - - - - - x 

In the Matter of: 

ENERGY CONSERVATION PROGRAM 

FOR CONSUMER PRODUCTS: 

DOCKET NO. EE-RM-93-80~. 

PROPOSED RULEMAKING REGARDING 

ENERGY CONSERVATION STANDARDS 

FOR REFRIGERATORS, 

REFRIGERATORS-FREEZERS 

AND FREEZERS 

- - - - - - - - - - - - - - - x 

U.S. Department of Energy 

Forrestal Building, Room 6E-069 

1000 Independence Ave., S.W. 

Washington, D.C. 20585 

Thursday, 

October 26, 1995 

The above-entitled matter came on for hearing, 

pursuant to notice at 8:30 a.m. 

APPEARANCES: 

PANEL MEMBERS: 

MR. ED POLLOCK 

DR. BARRY BERLIN 

MR. EUGENE MARGOLIS 

MR. MARK FRIEDRICHS 

CHRISTINE A. ERVIN, Assistant Secretary, 

Energy Efficiency and Renewable Energy 

SPEAKERS: 

CHARLES SAMUELS 

MICHAEL THOMPSON 

ALLEN WILKINS 

HOWARD GELLER 

EXECUTIVE COURT REPORTERS, INC. 

(301) 565-0064 

I 1 

H 
I N D E X

PAGE

Opening Remarks

Ed Pollock 3

Opening Statement

Christine Ervin 8

Charles A. Samuels (Assoc. of Home

Appliance Manufacturers 11

Michael Thompson (Whirlpool Corporation) 22

Allen Wilkins (Sub-Zero Freezer Company, 31

Inc.)

Howard Geller (Natural Resources Defense 40

Council/American Council for an EnergyEfficient Economy)

EXECUTIVE COURT REPORTERS, INC.

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EE-RM-93-801 COMMENT 0H

I N D E X 

Opening Remarks 

Ed Pollock 

Opening Statement 

Christine Ervin 

Charles A. Samuels (Assoc. of Home 

Appliance Manufacturers 

Michael Thompson (Whirlpool Corporation) 

Allen Wilkins (Sub-Zero Freezer Company, 

Inc. ) 

Howard Geller (Natural Resources Defense 

Council/American Council for an EnergyEfficient Economy) 

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3 

8 

11 

22 

31 

40 
3

1 P R O C E E D I N G S

2 [8:30 a.m.]

3 MR. POLLOCK: Good morning and welcome. I'm

4 Ed Pollock. And on behalf of the Department of

5 Energy, I'd like to thank you for taking the time to

6 participate in this public hearing concerning the

7 Department's energy conservation program for consumer

8 products.

9 The purpose of this hearing is to receive

10 oral testimony from the public on DOE's notice of

11 proposed rulemaking regarding energy conservation

12 standards for refrigerators, refrigerators-freezers and

13 freezers published in the Federal Register on July 20,

14 1995.

15 The comments received here today and those

16 submitted during the written comment period will assist

17 the Department in developing the final rule. The

18 written comment period for this rulemaking ends

19 November 2, 1995. All comments submitted on this

20 notice will be considered before DOE establishes the

21 final rule. Comments received after the comment period

22 closes will be considered to the fullest extent

23 possible.

24 As the presiding official for this hearing, I

25 will set forth the guidelines for conducting the

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3 

1 PRO C E E DIN G S 

2 [8:30 a.m.] 

3 MR. POLLOCK: Good morning and welcome. I'm 

4 Ed Pollock. And on behalf of the Department of 

5 Energy, I'd like to thank you for taking the time to 

6 participate in this public hearing concerning the 

7 Department's energy conservation program for consumer 

8 products. 

9 The purpose of this hearing is to receive 

10 oral testimony from the public on DOE's notice of 

11 proposed rulemaking regarding energy conservation 

12 standards for refrigerators, refrigerators-freezers and 

13 freezers published in the Federal Register on July 20, 

14 1995. 

15 The comments received here today and those 

16 submitted during the written comment period will assist 

17 the Department in developing the final rule. The 

18 written comment period for this rulemaking ends 

19 November 2, 1995. All comments submitted on this 

20 notice will be considered before DOE establishes the 

21 final rule. Comments received after the comment period 

22 closes will be considered to the fullest extent 

23 possible. 

24 As the presiding official for this hearing, I 

25 will set forth the guidelines for conducting the 

EXECUTIVE COURT REPORTERS, INC. 

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4

1 hearing and provide other pertinent information. In

2 approximately one week a complete transcript of this

3 hearing will be available for inspection and copying at

4 the Department of Energy°s Freedom of Information

5 reading room located in Room 1E190. Anyone wishing to

6 purchase a copy of the transcript may make arrangements

7 with the Court Reporter.

8 This will not be an evidentiary or judicial

9 type of hearing. It will be conducted in accordance

10 with Section 553 of the Administrative Procedures Act,

11 5 U.S.C. Section 553, and Section 501 of the DOE

12 Organization act, 42 U.S.C. Section 7191. To provide

13 the Department with as much pertinent information and

14 as many views as can be reasonably obtained, and to

15 enable interested persons to express their views, the

16 hearing will be conducted in accordance with the

17 following procedures.

18 Speakers will be called to testify based on a

19 schedule of those people who responded to the notice of

20 this hearing. The speakers have been allotted 20

21 minutes for their oral statements as stated in the

22 Federal Register notice of July 20, 1995. Speakers are

23 requested to summarize their written statements when

24 possible. I would ask that you especially do that if

25 you are supporting comments already given by another

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4 

1 hearing and provide other pertinent information. In 

2 approximately one week a complete transcript of this 

3 hearing will be available for inspection and copying at 

4 the Department of Energy's Freedom of Information 

5 reading room located in Room lE190. Anyone wishing to 

6 purchase a copy of the transcript may make arrangements 

7 with the Court Reporter. 

8 This will not be an evidentiary or judicial 

9 type of hearing. It will be conducted in accordance 

10 with Section 553 of the Administrative Procedures Act, 

11 5 U.S.C. Section 553, and Section 501 of the DOE 

12 Organization act, 42 U.S.C. Section 7191. To provide 

13 the Department with as much pertinent information and 

14 as many views as can be reasonably obtained, and to 

15 enable interested persons to express their views, the 

16 hearing will be conducted in accordance with the 

17 following procedures. 

18 Speakers will be called to testify based on a 

19 schedule of those people who responded to the notice of 

20 this hearing. The speakers have been allotted 20 

21 minutes for their oral statements as stated in the 

22 Federal Register notice of July 20, 1995. Speakers are 

23 requested to summarize their written statements when 

24 possible. I would ask that you especially do that if 

25 you are supporting comments already given by another 

EXECUTIVE COURT REPORTERS, INC. 

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1 speaker.

2 Since there are only four scheduled speakers,

3 anyone may make an unscheduled oral statement after all

4 scheduled speakers have delivered their statements.

5 Persons interested in making such an unscheduled

6 statement should submit their request to the

7 registration desk before the conclusion of the

8 scheduled speakers.

9 At the conclusion of all presentations,

10 scheduled and unscheduled, speakers will be given the

11 opportunity to make a rebuttal statement subject to

12 time limitations, and will be called in the order in

13 which the initial statements were made. Persons

14 interested in making such a rebuttal statement should

15 submit their request to the registration desk before

16 the conclusion of the speakers.

17 Questions will be asked only by members of

18 the panel conducting the hearing. However, I will

19 allow any interested person an opportunity to present

20 written questions to the speakers who have made oral

21 presentations. These questions will be taken after any

22 rebuttal statements subject to my determination that

23 the question is likely to result in a more timely and

24 effective resolution of the issues.

25 Persons interested in this opportunity must

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5 

1 speaker. 

2 Since there are only four scheduled speakers, 

3 anyone may make an unscheduled oral statement after all 

4 scheduled speakers have delivered their statements. 

5 Persons interested in making such an unscheduled 

6 statement should submit their request to the 

7 registration desk before the conclusion of the 

8 scheduled speakers. 

9 At the conclusion of all presentations, 

10 scheduled and unscheduled, speakers will be given the 

11 opportunity to make a rebuttal statement subject to 

12 time limitations, and will be called in the order in 

13 which the initial statements were made. Persons 

14 interested in making such a rebuttal statement should 

15 submit their request to the registration desk before 

16 the conclusion of the speakers. 

17 Questions will be asked only by members of 

18 the panel conducting the hearing. However, I will 

19 allow any interested person an opportunity to present 

20 written questions to the speakers who have made oral 

21 presentations. These questions will be taken after any 

22 rebuttal statements subject to my determination that 

23 the question is likely to result in a more timely and 

24 effective resolution of the issues. 

25 Persons interested in this opportunity must 

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1 submit their written questions to the registration desk

2 shortly after the completion of any rebuttal

3 statements. There are cards at the registration desk

4 for this purpose. The questions submitted should

5 identify the author and to whom the question is

6 directed. I will determine whether the question is

7 relevant. If the question is allowed, I will ask it.

8 Furthermore, I will allow any interested

9 person an opportunity to present written questions of

10 employees of the United States who have made written or

11 oral presentations with respect to disputed issues of

12 material fact. Questions will be allowed after any

13 rebuttal statements to the extent that I determine that

14 such a question is of a disputed issue of material fact

15 and is likely to result in a more timely and effective

16 resolution of such issues.

17 Persons interested in this opportunity must

18 submit their written questions to the registration desk

19 before the completion of any rebuttal statements. They

20 should state specific justification, including why the

21 issue is one of disputed fact, and how the proposed

22 question would expedite its resolution. The question

23 submitted should identify the author and to whom the

24 question is directed. I will determine whether the

25 question is relevant. If the question is allowed, I

EXECUTIVE COURT REPORTERS, INC.

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6 

1 submit their written questions to the registration desk 

2 shortly after the completion of any rebuttal 

3 statements. There are cards at the registration desk 

4 for this purpose. The questions submitted should 

5 identify the author and to whom the question is 

6 directed. I will determine whether the question is 

7 relevant. If the question is allowed, I will ask it. 

8 Furthermore, I will allow any interested 

9 person an opportunity to present written questions of 

10 employees of the united States who have made written or 

11 oral presentations with respect to disputed issues of 

12 material fact. Questions will be allowed after any 

13 rebuttal statements to the extent that I determine that 

14 such a question is of a disputed issue of material fact 

15 and is likely to result in a more timely and effective 

16 resolution of such issues. 

17 Persons interested in this opportunity must 

18 submit their written questions to the registration desk 

19 before the completion of any rebuttal statements. They 

20 should state specific justification, including why the 

21 issue is one of disputed fact, and how the proposed 

22 question would expedite its resolution. The question 

23 submitted should identify the author and to whom the 

24 question is directed. I will determine whether the 

25 question is relevant. If the question is allowed, I 

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1 will ask it.

2 As mentioned earlier, the close of the

3 comment period is November 2, 1995 . All written

4 comments received will be available for public

5 inspection at the DOE Freedom of Information reading

6 room, phone number ( 202) 586 - 6020 . Written comments

7 should be addressed to the Department of Energy as

8 noted within the Federal Register notice for today's

9 hearing . Ten copies of the comments are requested. In

10 addition, the Department would appreciate an electronic

11 copy of the comments. The Department is currently

12 using WordPerfect 5.1. No faxed comments will be

13 accepted.

14 Any person submitting information which he or

15 she believes to be confidential and exempt by law from

16 public disclosure should submit one complete copy and

17 10 copies from which information claimed to be

18 confidential has been deleted. In accordance with the

19 procedures established at 10 C.F.R. 1004.11, the

20 Department of Energy shall make its own determination

21 as to whether the information shall be exempt from

22 public disclosure.

23 In keeping with the regulations of these

24 facilities, there is no smoking allowed in this room.

25 We appreciate the time and effort you have

EXECUTIVE COURT REPORTERS, INC.

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EE-RM-93-801 COMMENT 0H

1 will ask it. 

2 As mentioned earlier, the close of the 

3 comment period is November 2, 1995. All written 

4 comments received will be available for public 

5 inspection at the DOE Freedom of Information reading 

6 room, phone number (202) 586-6020. Written comments 

7 should be addressed to the Department of Energy as 

8 noted within the Federal Register notice for today's 

7 

9 hearing. Ten copies of the comments are requested. In 

10 addition, the Department would appreciate an electronic 

11 copy of the comments. The Department is currently 

12 using WordPerfect 5.1. No faxed comments will be 

13 accepted. 

14 Any person submitting information which he or 

15 she believes to be confidential and exempt by law from 

16 public disclosure should submit one complete copy and 

17 10 copies from which information claimed to be 

18 confidential has been deleted. In accordance with the 

19 procedures established at 10 C.F.R. 1004.11, the 

20 Department of Energy shall make its own determination 

21 as to whether the information shall be exempt from 

22 public disclosure. 

23 In keeping with the regulations of these 

24 facilities, there is no smoking allowed in this room. 

25 We appreciate the time and effort you have 

EXECUTIVE COURT REPORTERS, INC. 

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8

1 taken in preparing your statements and are pleased to

2 receive your comments and opinions. I would now like

3 to introduce the members of the panel.

4 Today on the panel is Eugene Margolis from

5 the General Counsel; Mark Friedrichs from Policy; and

6 Barry Berlin from the Office of Codes and Standards.

7 Before I call the first speaker, I would like

8 to introduce Christine A. Ervin, Assistant Secretary

9 for Energy Efficiency and Renewable Energy. She has

10 been following the progress of this Notice of Proposed

11 Rulemaking and would like to make an opening statement.

12 MS. ERVIN: Good morning. I'm delighted to

13 be here to make a few very brief remarks.

14 The proposed standards under discussion today

15 are the result of two years of hard work by the

16 Association of Home Appliance Manufacturers and its

17 members, the Natural Resources Defense Council, the

18 American Council for an Energy Efficient Economy, the

19 New York State Energy Office, the California Energy

20 Commission, Pacific Gas and Electric and Southern

21 California Edison.

22 These groups worked to develop a joint

23 recommendation that served as the basis for the

24 Department of Energy's proposed rule. The proposed

25 standard will result in refrigerators which use 22 to

EXECUTIVE COURT REPORTERS, INC.

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1 taken in preparing your statements and are pleased to 

2 receive your comments and opinions. I would now like 

3 to introduce the members of the panel. 

4 Today on the panel is Eugene Margolis from 

5 the General Counsel; Mark Friedrichs from Policy; and 

6 Barry Berlin from the Office of Codes and Standards. 

7 Before I call the first speaker, I would like 

8 to introduce Christine A. Ervin, Assistant Secretary 

9 for Energy Efficiency and Renewable Energy. She has 

10 been following the progress of this Notice of Proposed 

11 Rulemaking and would like to make an opening statement. 

12 MS. ERVIN: Good morning. I'm delighted to 

13 be here to make a few very brief remarks. 

14 The proposed standards under discussion today 

15 are the result of two years of hard work by the 

16 Association of Home Appliance Manufacturers and its 

17 members, the Natural Resources Defense Council, the 

18 American Council for an Energy Efficient Economy, the 

19 New York State Energy Office, the California Energy 

20 Commission, Pacific Gas and Electric and Southern 

21 California Edison. 

22 These groups worked to develop a joint 

23 recommendation that served as the basis for the 

24 Department of Energy's proposed rule. The proposed 

25 standard will result in refrigerators which use 22 to 

EXECUTIVE COURT REPORTERS, INC. 

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1 30 percent less electricity than today's models, saving

2 consumers over $13 billion and reducing carbon

3 emissions by 5 million metric tons by 2010.

4 I applaud this effort. For those of you in

5 the audience who were part of this group, I want to

6 personally thank you for your efforts. Working

7 together to develop consensus based refrigerator

8 standards is a good example of the way manufacturers,

9 energy efficiency advocates, environmental groups and

10 consumers can help the Department create an effective

11 appliance standards setting program.

12 Since the National performance Review

13 recommendations were issued in 1993, the Department of

14 Energy has launched a variety of measures to streamline

15 and enhance our energy efficiency rulemaking

16 responsibilities. Over the last year, we have invited

17 interest group participation in the early stages of

18 development of rulemaking proposals rather than simply

19 reacting to comments after the fact.

20 Moreover, we have strongly encouraged

21 interested parties to work towards agreement based

22 proposals to minimize government prescription.

23 The refrigerator consensus is a good example

24 of how this approach can work. As many of you know,

25 this is a major departure from previous convention and

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1 30 percent less electricity than today's models, saving 

2 consumers over $13 billion and reducing carbon 

3 emissions by 5 million metric tons by 2010. 

4 I applaud this effort. For those of you in 

5 the audience who were part of this group, I want to 

6 personally thank you for your efforts. Working 

7 together to develop consensus based refrigerator 

8 standards is a good example of the way manufacturers, 

9 energy efficiency advocates, environmental groups and 

10 consumers can help the Department create an effective 

11 appliance standards setting program. 

12 Since the National performance Review 

13 recommendations were issued in 1993, the Department of 

14 Energy has launched a variety of measures to streamline 

15 and enhance our energy efficiency rulemaking 

16 responsibilities. Over the last year, we have invited 

17 interest group participation in the early stages of 

18 development of rulemaking proposals rather than simply 

19 reacting to comments after the fact. 

20 Moreover, we have strongly encouraged 

21 interested parties to work towards agreement based 

22 proposals to minimize government prescription. 

23 The refrigerator consensus is a good example 

24 of how this approach can work. As many of you know, 

25 this is a major departure from previous convention and 

EXECUTIVE COURT REPORTERS, INC. 

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1 should significantly reduce the number of concerns that

2 have been expressed in the past. I am proud of these

3 efforts but appreciate that there is more work to be

4 done.

5 Most recently, the Department has initiated a

6 comprehensive study to explore ways to further enhance

7 the process used to develop standards. We are

8 collecting input from a representative group of

9 interested parties on how the standards program has

10 performed in the past and where improvements may be

11 made in the future.

12 Among other issues we want to explore are the

13 relationship between market-pull approaches and

14 standards, how to allow multiple technology paths and

15 how to refine estimates of manufacturer impact given

16 various levels of data made available. We need your

17 help in this effort by agreeing to be interviewed and

18 participating in the public workshops, the first

19 already scheduled for January 17, 1996.

20 Thank you to the people that worked so hard

21 to put this consensus recommendation together. This

22 effort reflects the best in innovative approaches to

23 regulation.

24 Thanks for allowing me a little time to make

25 those comments.

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1 should significantly reduce the number of concerns that 

2 have been expressed in the past. I am proud of these 

3 efforts but appreciate that there is more work to be 

4 done. 

5 Most recently, the Department has initiated a 

6 comprehensive study to explore ways to further enhance 

7 the process used to develop standards. We are 

8 collecting input from a representative group of 

9 interested parties on how the standards program has 

10 performed in the past and where improvements may be 

11 made in the future. 

12 Among other issues we want to explore are the 

13 relationship between market-pull approaches and 

14 standards, how to allow multiple technology paths and 

15 how to refine estimates of manufacturer impact given 

16 various levels of data made available. We need your 

17 help in this effort by agreeing to be interviewed and 

18 participating in the public workshops, the first 

19 already scheduled for January 17, 1996. 

20 Thank you to the people that worked so hard 

21 to put this consensus recommendation together. This 

22 effort reflects the best in innovative approaches to 

23 regulation. 

24 Thanks for allowing me a little time to make 

25 those comments. 

EXECUTIVE COURT REPORTERS, INC. 

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1 MR. POLLOCK: Thank you, Ms. Ervin.

2 At this time, I'd like to call the first

3 speaker. And for the record, please state your name

4 and who you represent. And I call Mr. Charles Samuels

5 of the Association of Home Appliance Manufacturers.

6 MR. SAMUELS: Thank you. I'm Charles Samuels,

7 Government Relations Counsel for the Association of

8 Home Appliance Manufacturers. First, I want to say

9 that we appreciate the comments that Secretary Ervin

10 just made. We will cooperate fully with the very

11 important and necessary internal review of DOE

12 procedures and appliance standards activities that are

13 underway and will participate in all aspects of that

14 review in which we are invited to participate.

15 I also want to make clear, however, publicly,

16 so that there's no confusion, that our participation in

17 those activities in no way prejudices our right or our

18 interest to also defend our interests and to remedy

19 disabilities in the way that DOE has conducted the

20 program and in the law itself before the Congress and

21 in the judiciary, as may be appropriate.

22 As you know, there's presently pending

23 appropriations legislation which has been adopted by

24 both the House and the Senate which prohibits federal

25 funds from being used in this fiscal year to propose or

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1 MR. POLLOCK: Thank you, Ms. Ervin. 

2 At this time, I'd like to call the first 

3 speaker. And for the record, please state your name 

4 and who you represent. And I call Mr. Charles Samuels 

5 of the Association of Home Appliance Manufacturers. 

6 MR. SAMUELS: Thank you. I'm Charles Samuels, 

7 Government Relations Counsel for the Association of 

8 Home Appliance Manufacturers. First, I want to say 

9 that we appreciate the comments that Secretary Ervin 

10 just made. We will cooperate fully with the very 

11 important and necessary internal review of DOE 

12 procedures and appliance standards activities that are 

13 underway and will participate in all aspects of that 

14 review in which we are invited to participate. 

15 I also want to make clear, however, publicly, 

16 so that there's no confusion, that our participation in 

17 those activities in no way prejudices our right or our 

18 interest to also defend our interests and to remedy 

19 disabilities in the way that DOE has conducted the 

20 program and in the law itself before the Congress and 

21 in the judiciary, as may be appropriate. 

22 As you know, there's presently pending 

23 appropriations legislation which has been adopted by 

24 both the House and the Senate which prohibits federal 

25 funds from being used in this fiscal year to propose or 

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1 finalize appliance energy conservation standards.

2 Because of the pendency of this legislation and the

3 intentions clearly expressed by Congress, we do not

4 believe it is appropriate at this time for either AHAM

5 or DOE to determine whether this or any other proposed

6 standard for refrigerator-freezers should be finalized.

7 Therefore, AHAM takes no position on whether

8 the proposed rule or some variation should be

9 finalized. At the time that DOE's legislative

10 situation is clarified and it is in a legal position to

11 consider finalizing this rule, we'll provide

12 appropriate input.

13 We do believe, however, that the analysis

14 found in the Federal Register notice and the technical

15 support document is a good basis for discussion to

16 highlight a number of the serious deficiencies in the

17 DOE program, its analytical process and its use of

18 contractors.

19 We recommend that DOE use this fiscal year as

20 I believe Secretary Ervin has just outlined. And as

21 anticipated, particularly by the Senate during the

22 debate on the interior appropriations bill, to fully

23 and openly reevaluate all aspects of the energy

24 standards program. And I'd like to highlight some of

25 the most important issues that we would recommend that

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1 finalize appliance energy conservation standards. 

2 Because of the pendency of this legislation and the 

3 intentions clearly expressed by Congress, we do not 

4 believe it is appropriate at this time for either AHAM 

5 or DOE to determine whether this or any other proposed 

6 standard for refrigerator-freezers should be finalized. 

7 Therefore, AHAM takes no position on whether 

8 the proposed rule or some variation should be 

9 finalized. At the time that DOE's legislative 

10 situation is clarified and it is in a legal position to 

11 consider finalizing this rule, we'll provide 

12 appropriate input. 

13 We do believe, however, that the analysis 

14 found in the Federal Register notice and the technical 

15 support document is a good basis for discussion to 

16 highlight a number of the serious deficiencies in the 

17 DOE program, its analytical process and its use of 

18 contractors. 

19 We recommend that DOE use this fiscal year as 

20 I believe Secretary Ervin has just outlined. And as 

21 anticipated, particularly by the Senate during the 

22 debate on the interior appropriations bill, to fully 

23 and openly reevaluate all aspects of the energy 

24 standards program. And I'd like to highlight some of 

25 the most important issues that we would recommend that 

EXECUTIVE COURT REPORTERS, INC. 

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1 you thoroughly consider.

2 The joint comments that were filed with DOE

3 focused on technical and engineering issues, leaving to

4 a large extent economic issues in the hands of DOE and

5 LBL. Predictably, but unfortunately, the economic

6 analysis contained in the Federal Register notice is

7 incomplete and wrong. Assumptions and data that have

8 been challenged by us, for which we've provided

9 whatever information we can over the years, continues

10 to be used by DOE and LBL to build a fantasy analysis

11 justifying stringency of standards far beyond what is

12 reasonable, even aside from the particulars of the

13 refrigerator freezer proposal.

14 Basically, you need to commit yourself to a

15 full and fresh examination of these issues. You have

16 not done so, although we've been urging it for years.

17 For example, your energy analysis using data

18 in part derived by LBL and data in part produced by the

19 industry and other parties, indicates that the standard

20 levels that have been proposed will provide

21 approximately a three to four year payback. But this

22 is based entirely on best case scenarios and the most

23 positive data. You and LBL have entirely neglected the

24 range of data and analysis and factors that were

25 provided to you, both quantitative and qualitative

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1 you thoroughly consider. 

2 The joint comments that were filed with DOE 

3 focused on technical and engineering issues, leaving to 

4 a large extent economic issues in the hands of DOE and 

5 LBL. Predictably, but unfortunately, the economic 

6 analysis contained in the Federal Register notice is 

7 incomplete and wrong. Assumptions and data that have 

8 been challenged by us, for which we've provided 

9 whatever information we can over the years, continues 

10 to be used by DOE and LBL to build a fantasy analysis 

11 justifying stringency of standards far beyond what is 

12 reasonable, even aside from the particulars of the 

13 refrigerator freezer proposal. 

14 Basically, you need to commit yourself to a 

15 full and fresh examination of these issues. You have 

16 not done so, although we've been urging it for years. 

17 For example, your energy analysis using data 

18 in part derived by LBL and data in part produced by the 

19 industry and other parties, indicates that the standard 

20 levels that have been proposed will provide 

21 approximately a three to four year payback. But this 

22 is based entirely on best case scenarios and the most 

23 positive data. You and LBL have entirely neglected the 

24 range of data and analysis and factors that were 

25 provided to you, both quantitative and qualitative 

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1 which indicate that in some cases the paybacks could be

2 as long as seven to eight years for refrigerator

3 freezers and 11 to 12 years for freezers.

4 The reason that this occurred is because LBL

5 neglected, as it always does, to take into account in

6 any significant quantitative or qualitative way, cost

7 uncertainty, the range that occurs through likely

8 energy savings of untested options and reliability of

9 new technology, among other factors.

10 You recall at the ANPR hearing, Montgomery

11 Ward testified that paybacks exceeding three years

12 cannot be sold in the marketplace and are unacceptable

13 to consumers. You need to take into account in all

14 your appliance standards rulemakings the possibilities

15 that you're going to exceed three years and what are

16 the factors or the uncertainties of the considerations

17 that may cause that to occur. You don't do that.

18 Therefore, recognizing the fiercely

19 competitive marketplace, it must be understood that

20 even with respect to these particular proposed rules

21 there's a risk that either unacceptable paybacks will

22 be forced on consumers as a result of the proposed rule

23 or that manufacturers will effectively eat these costs

24 to the detriment of the viability of their business and

25 their ability to expand, innovate and increase

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14 

1 which indicate that in some cases the paybacks could be 

2 as long as seven to eight years for refrigerator 

3 freezers and 11 to 12 years for freezers. 

4 The reason that this occurred is because LBL 

5 neglected, as it always does, to take into account in 

6 any significant quantitative or qualitative way, cost 

7 uncertainty, the range that occurs through likely 

8 energy savings of untested options and reliability of 

9 new technology, among other factors. 

10 You recall at the ANPR hearing, Montgomery 

11 Ward testified that paybacks exceeding three years 

12 cannot be sold in the marketplace and are unacceptable 

13 to consumers. You need to take into account in all 

14 your appliance standards rulemakings the possibilities 

15 that you're going to exceed three years and what are 

16 the factors or the uncertainties of the considerations 

17 that may cause that to occur. You don't do that. 

18 Therefore, recognizing the fiercely 

19 competitive marketplace, it must be understood that 

20 even with respect to these particular proposed rules 

21 there's a risk that either unacceptable paybacks will 

22 be forced on consumers as a result of the proposed rule 

23 or that manufacturers will effectively eat these costs 

24 to the detriment of the viability of their business and 

25 their ability to expand, innovate and increase 

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1 employment nationally and internationally.

2 We have been encouraged over the years to

3 develop an alternative to LBL's manufacturers impact

4 model because, for some variety of reasons best known

5 by yourselves, you have felt yourselves incapable of

6 revising or developing alternative models.

7 As a consequence, we spent considerable

8 resources in developing the government regulatory

9 impact model which we felt was well received by you,

10 although clearly grudgingly by LBL. We were told that

11 our government regulatory impact model would be

12 substantially incorporated into your analysis, starting

13 with the refrigerator freezer analysis. And indeed,

14 the rhetoric in the proposed rule indicates that's the

15 case.

16 However, our consultant has evaluated how oui

17 GRIMM is actually used in this new model called the

18 MANN, Manufacturers' Analysis model or whatever it is

19 and it appears to us that although you are using

20 certain characteristics of the GRIMM that you're

21 incorporating it largely by name only while cutting the

22 heart out of its use in value.

23 Fortunately, since you've at least started

24 adopting the data categories in the GRIMM so that we

25 have some sense of what is going on in the black box,

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15 

1 employment nationally and internationally. 

2 We have been encouraged over the years to 

3 develop an alternative to LBL's manufacturers impact 

4 model because, for some variety of reasons best known 

5 by yourselves, you have felt yourselves incapable of 

6 revising or developing alternative models. 

7 As a consequence, we spent considerable 

8 resources in developing the government regulatory 

9 impact model which we felt was well received by you, 

10 although clearly grudgingly by LBL. We were told that 

11 our government regulatory impact model would be 

12 substantially incorporated into your analysis, starting 

13 with the refrigerator freezer analysis. And indeed, 

14 the rhetoric in the proposed rule indicates that's the 

15 case. 

16 However, our consultant has evaluated how OUL 

17 GRIMM is actually used in this new model called the 

18 MANN, Manufacturers' Analysis model or whatever it is 

19 and it appears to us that although you are using 

20 certain characteristics of the GRIMM that you're 

21 incorporating it largely by name only while cutting the 

22 heart out of its use in value. 

23 Fortunately, since you've at least started 

24 adopting the data categories in the GRIMM so that we 

25 have some sense of what is going on in the black box, 

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1 our consultant can tell how it is that LBL is misusing

2 or mis-manipulating the model or not adopting it fully.

3 And I've attached to my statement our consultant's

4 analysis of this issue.

5 I hope that during your internal regulatory

6 review, we'll have an opportunity to explore this more

7 fully. I urge you to hire new independent economists

8 to evaluate this issue. It's certainly in many cases

9 beyond the expertise of ARAM members, which is why

10 we've hired a consultant. It's clearly beyond your

11 expertise. I don't believe you can rely on LBL as a

12 fair and neutral broker on this issue and we urge you

13 to bring in independent expertise to deal with the

14 question of whether or not the GRIMM has in fact been

15 adopted, to what extent it can be adopted, and whether

16 what you have ended up with is a useful device for

17 regulatory decisions.

18 With respect to the issue of industry cost

19 pass-through, which we've discussed for many years,

20 despite the evidence that we've repeatedly presented to

21 the contrary, your analysis continues to accept the

22 theory that all costs are pass-through and marked up,

23 so that stringent costly standards are profitable.

24 We don't know of any empirical justification

25 for what's purely an assumption. We know there are

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16 

1 our consultant can tell how it is that LBL is misusing 

2 or mis-manipulating the model or not adopting it fully. 

3 And I've attached to my statement our consultant's 

4 analysis of this issue. 

5 I hope that during your internal regulatory 

6 review, we'll have an opportunity to explore this more 

7 fully. I urge you to hire new independent economists 

8 to evaluate this issue. It's certainly in many cases 

9 beyond the expertise of AHAM members, which is why 

10 we've hired a consultant. It's clearly beyond your 

11 expertise. I don't believe you can rely on LBL as a 

12 fair and neutral broker on this issue and we urge you 

13 to bring in independent expertise to deal with the 

14 question of whether or not the GRIMM has in fact been 

15 adopted, to what extent it can be adopted, and whether 

16 what you have ended up with is a useful device for 

17 regulatory decisions. 

18 with respect to the issue of industry cost 

19 pass-through, which we've discussed for many years, 

20 despite the evidence that we've repeatedly presented to 

21 the contrary, your analysis continues to accept the 

22 theory that all costs are pass-through and marked up, 

23 so that stringent costly standards are profitable. 

24 We don't know of any empirical justification 

25 for what's purely an assumption. We know there are 

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1 certainly significant problems in getting at real data.

2 But we are still awaiting you to make the effect to do

3 that and we hope that will be done during this year.

4 It's critical that you undertake, independent

5 of LBL, an empirical and theoretical analysis of this

6 issue with the participation of all interested parties.

7 With respect to the question of full

8 cumulative burden, which is an issue that's

9 specifically addressed in President Clinton's Executive

10 Order on regulatory review, but which you have ignored

11 in every rulemaking that's occurred since that

12 Executive Order has been issued, the Senate floor

13 debate on the interior appropriations bill also directs

14 you to undertake a full cumulative burden analysis,

15 particularly for full line companies , which takes into

16 account the problem of multiple DOE and other related

17 standards changing over time and applying to the same

18 companies.

19 This fiscal year is an absolutely appropriate

20 juncture for DOE to undertake that analysis using the

21 GRIMM and/or other analytical measures . Special

22 assessments should certainly be done on the effect of

23 the standards on smaller or niche market companies.

24 You also continue to insist on focusing your

25 analysis on so-called average firms. We understand

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17 

1 certainly significant problems in getting at real data. 

2 But we are still awaiting you to make the effect to do 

3 that and we hope that will be done during this year. 

4 It's critical that you undertake, independent 

5 of LBL, an empirical and theoretical analysis of this 

6 issue with the participation of all interested parties. 

7 with respect to the question of full 

8 cumulative burden, which is an issue that's 

9 specifically addressed in President Clinton's Executive 

10 Order on regulatory review, but which you have ignored 

11 in every rulemaking that's occurred since that 

12 Executive Order has been issued, the Senate floor 

13 debate on the interior appropriations bill also directs 

14 you to undertake a full cumulative burden analysis, 

15 particularly for full line companies, which takes into 

16 account the problem of multiple DOE and other related 

17 standards changing over time and applying to the same 

18 companies. 

19 This fiscal year is an absolutely appropriate 

20 juncture for DOE to undertake that analysis using the 

21 GRIMM and/or other analytical measures. Special 

22 assessments should certainly be done on the effect of 

23 the standards on smaller or niche market companies. 

24 You also continue to insist on focusing your 

25 analysis on so-called average firms. We understand 

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1 what the reasons for that are. But as we have said

2 repeatedly, you also need to take into account the

3 effect on other firms which will, by definition, be the

4 majority of firms who are not literally average.

5 Let me address a problem that I think is both

6 substantive and procedural-and structural, which is the

7 further use of LBL as a principal DOE contractor.

8 Since I've been involved with DOE, certainly since the

9 advent of NACA, LBL has essentially done all your

10 analytical work other than test procedure work that's

11 done by NIST, and I think everyone who's involved with

12 this process recognizes that's about 90 percent of the

13 total effort. So it's critical.

14 We strongly believe that it's time that your

15 principal contractor on appliance energy standards be

16 replaced. LBL's deficiencies, which we've never

17 hesitated to point out at every opportunity. It ranged

18 from rank intellectual dishonesty, -- for example, the

19 outdated inapposite and incorrect sources cited to

20 support the proposed engineering analysis in the

21 microwave oven rule, to a refusal or grudging

22 acceptance of changes in models in which they have

23 proprietary and longstanding interest.

24 We asked you to review how and why those

25 sources were used in the microwave oven rulemaking.

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18 

1 what the reasons for that are. But as we have said 

2 repeatedly, you also need to take into account the 

3 effect on other firms which will, by definition, be the 

4 majority of firms who are not literally average. 

5 Let me address a problem that I think is both 

6 substantive and procedural and structural, which is the 

7 further use of LBL as a principal DOE contractor. 

8 Since I've been involved with DOE, certainly since the 

9 advent of NACA, LBL has essentially done all your 

10 analytical work other than test procedure work that's 

11 done by NIST, and I think everyone who's involved with 

12 this process recognizes that's about 90 percent of the 

13 total effort. So it's critical. 

14 We strongly believe that it's time that your 

15 principal contractor on appliance energy standards be 

16 replaced. LBL's deficiencies, which we've never 

17 hesitated to point out at every opportunity. It ranged 

18 from rank intellectual dishonesty, -- for example, the 

19 outdated inapposite and incorrect sources cited to 

20 support the proposed engineering analysis in the 

21 microwave oven rule, to a refusal or grudging 

22 acceptance of changes in models in which they have 

23 proprietary and longstanding interest. 

24 We asked you to review how and why those 

25 sources were used in the microwave oven rulemaking. 

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1 We've never heard anything from you. I don't know if

2 this is a matter that can be undertaken by the offices

3 present on the panel today or it needs to be done by

4 the Inspector General or others at DOE or people

5 outside of DOE, but these are issues that must be

6 addressed.

7 Even where DOE has directed LBL to make

8 changes in its analysis, such in incorporation of the

9 GRIMM, as I've noted, it appears to us that LBL only

10 acts begrudgingly and makes the minimum necessary

11 changes to assuage DOE.

12 We do not have confidence that LBL acts as a

13 neutral party. We perceive it as an adversary interest

14 and I believe, frankly, they believe that we're an

15 adversary interest. That's not the appropriate role

16 for a contractor to DOE for this purpose.

17 It doesn't appear to us that you have the

18 resources to properly supervise LBL's work to ensure

19 that what policy decisions you do make are not

20 sabotaged in practice.

21 Further, we have evidence which we'll be

22 presenting to appropriate bodies, that LBL has on a

23 number of occasions acted as an advocacy group in favor

24 of appropriations, legislation or international actions

25 to foster appliance standards. This is a conflict of

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19 

1 We've never heard anything from you. I don't know if 

2 this is a matter that can be undertaken by the offices 

3 present on the panel today or it needs to be done by 

4 the Inspector General or others at DOE or people 

5 outside of DOE, but these are issues that must be 

6 addressed. 

7 Even where DOE has directed LBL to make 

8 changes in its analysis, such in incorporation of the 

9 GRIMM, as I've noted, it appears to us that LBL only 

10 acts begrudgingly and makes the minimum necessary 

11 changes to assuage DOE. 

12 We do not have confidence that LBL acts as a 

13 neutral party. We perceive it as an adversary interest 

14 and I believe, frankly, they believe that we're an 

15 adversary interest. That's not the appropriate role 

16 for a contractor to DOE for this purpose. 

17 It doesn't appear to us that you have the 

18 resources to properly supervise LBL's work to ensure 

19 that what policy decisions you do make are not 

20 sabotaged in practice. 

21 Further, we have evidence which we'll be 

22 presenting to appropriate bodies, that LBL has on a 

23 number of occasions acted as an advocacy group in favor 

24 of appropriations, legislation or international actions 

25 to foster appliance standards. This is a conflict of 

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1 interest whether it be a legal one or simply from an

2 ethical point of view in its role as a contractor for

3 DOE and indicates clear prejudgment as to the

4 necessity, viability and value of particular standards

5 and appliance standards in general.

6 As I said, there needs to be a review of LBL

7 lobbying and similar activities, both in the Congress,

8 the Administration and at the international level.

9 More importantly, we urge you to immediately

10 find alternative means through internal and outside

11 resources to do future energy analyses. We don't have

12 any particular view about whether it should be another

13 lab or one contractor or multiple contractors. But it

14 well past the time for LBL's stranglehold on the

15 appliance energy standards to end.

16 Let me mention a few other issues, just to

17 put them on the record.

18 Over the years we've disagreed with what we

19 believe are your incorrect view on the definition of

20 maximum technologically feasible, economic

21 justification, determination of energy savings,

22 discount rates and how utility losses are accounted for

23 under NACA. Although there have been a few occasions

24 in the last year or so where we thought that you'd

25 finally read all of NACA and were accepting the

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20 

1 interest whether it be a legal one or simply from an 

2 ethical point of view in its role as a contractor for 

3 DOE and indicates clear prejudgment as to the 

4 necessity, viability and value of particular standards 

5 and appliance standards in general. 

6 As I said, there needs to be a review of LBL 

7 lobbying and similar activities, both in the Congress, 

8 the Administration and at the international level. 

9 More importantly, we urge you to immediately 

10 find alternative means through internal and outside 

11 resources to do future energy analyses. We don't have 

12 any particular view about whether it should be another 

13 lab or one contractor or multiple contractors. But it 

14 well past the time for LBL's stranglehold on the 

15 appliance energy standards to end. 

16 Let me mention a few other issues, just to 

17 put them on the record. 

18 Over the years we've disagreed with what we 

19 believe are your incorrect view on the definition of 

20 maximum technologically feasible, economic 

21 justification, determination of energy savings, 

22 discount rates and how utility losses are accounted for 

23 under NACA. Although there have been a few occasions 

24 in the last year or so where we thought that you'd 

25 finally read all of NACA and were accepting the 

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1 totality of the implications of all its provisions,

2 nonetheless the proposed rule, once again, totally

3 neglects the specific so-called safe harbor provisions

4 of Section 32504.

5 I'm not going to go into detail on these

6 issues now. Our position in them are quite clear over

7 the years. The bottom line is you are still

8 misapplying the law and you're failing to fully apply

9 the criteria set forth in NACA and various Executive

10 Orders, as I referred to earlier.

11 Finally, what should be one of the most

12 important parts of your analysis is probably the

13 weakest part, which is Section 5 of the Federal

14 Register notice relating to alternative nonregulatory

15 means to achieve energy savings. As you do in every

16 Federal Register notice, you simply put in essentially

17 the same boilerplate and do not seriously contemplate

18 either in this or other rulemakings the role of

19 alternative nonregulatory means, although this is

20 required by the President's Executive Order.

21 I don't know if this is because just from a

22 policy point of view you don't think that this is a

23 serious consideration or you think the law constricts

24 you in some way. But we would hope that in your

25 internal regulatory review you will examine ways in

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1 totality of the implications of all its provisions, 

2 nonetheless the proposed rule, once again, totally 

3 neglects the specific so-called safe harbor provisions 

4 of Section 32504. 

5 I'm not going to go into detail on these 

6 issues now. Our position in them are quite clear over 

7 the years. The bottom line is you are still 

8 misapplying the law and you're failing to fully apply 

9 the criteria set forth in NACA and various Executive 

10 Orders, as I referred to earlier. 

11 Finally, what should be one of the most 

12 important parts of your analysis is probably the 

13 weakest part, which is Section 5 of the Federal 

14 Register notice relating to alternative nonregulatory 

15 means to achieve energy savings. As you do in every 

16 Federal Register notice, you simply put in essentially 

17 the same boilerplate and do not seriously contemplate 

18 either in this or other rulemakings the role of 

19 alternative nonregulatory means, although this is 

20 required by the President's Executive Order. 

21 I don't know if this is because just from a 

22 policy point of view you don't think that this is a 

23 serious consideration or you think the law constricts 

24 you in some way. But we would hope that in your 

25 internal regulatory review you will examine ways in 

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1 which you can more seriously review the way that

2 approaches other than regulations can also achieve

3 significant energy savings, which is a goal that we

4 continue to share with you.

5 If I understood Secretary Ervin's comments,

6 this is one of the particular aspects of the regulatory

7 review that she noted. And if so, we're delighted and

8 are looking forward to working with you.

9 Other parts of your office, the analysis that

10 Mr. Broderick recently did on DSM programs and early

11 replacement/early retirement and golden carrot type

12 programs provides just a basketful of interesting

13 approaches that should be pursued, and we'd like to do

14 that with you.

15 That's the end of my remarks. I'd be happy

16 to answer any questions.

17 MR. POLLOCK: Thank you, Mr. Samuels.

18 Are there questions from the panel?

19 (No response.)

20 MR. POLLOCK: At this time, I would like to

21 call Mr. Michael Thompson from Whirlpool Corporation.

22 MR. THOMPSON: Good morning, gentlemen. I'm

23 Mike Thompson. I'm Director of Government Relations for

24 the Whirlpool Corporation and I'm here this morning to

25 testify on behalf of Whirlpool Corporation regarding

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1 which you can more seriously review the way that 

2 approaches other than regulations can also achieve 

3 significant energy savings, which is a goal that we 

4 continue to share with you. 

5 If I understood Secretary Ervin's comments, 

22 

6 this is one of the particular aspects of the regulatory 

7 review that she noted. And if so, we're delighted and 

8 are looking forward to working with you. 

9 Other parts of your office, the analysis that 

10 Mr. Broderick recently did on DSM programs and early 

11 replacement/early retirement and golden carrot type 

12 programs provides just a basketful of interesting 

13 approaches that should be pursued, and we'd like to do 

14 that with you. 

15 That's the end of my remarks. I'd be happy 

16 to answer any questions. 

17 MR. POLLOCK: Thank you, Mr. Samuels. 

18 Are there questions from the panel? 

19 (No response.) 

20 MR. POLLOCK: At this time, I would like to 

21 call Mr. Michael Thompson from Whirlpool Corporation. 

22 MR. THOMPSON: Good morning, gentlemen. I'm 

23 Mike Thompson. I'm Director of Government Relations for 

24 the Whirlpool Corporation and I'm here this morning to 

25 testify on behalf of Whirlpool Corporation regarding 

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1 the notice of proposed rulemaking on refrigerators and

2 freezers and the minimum efficiency standards that

3 we're going to be supporting.

4 As you know, Whirlpool Corporation is a

5 global manufacturer of home appliances worldwide.

6 We're marketing in approximately 100 countries and our

7 employment is almost 40,000 people. Within North

8 America we have -- we are one of five major

9 participants in the appliance business and we employ

10 over 20,000 people.

11 The July 20th, 1995 notice of proposed

12 rulemaking impacts refrigerators that we manufacture

13 and sell in the United States. In addition, it impacts

14 refrigerators and freezers manufactured by our Mexican

15 joint venture partner, Vitromatic, which are then

16 marketed in the United States.

17 On the front end, I'd like to say that our

18 basic position concerning the DOE's notice of proposed

19 rulemaking is as follows. It's basically two points.

20 Whirlpool continues to support the joint

21 statement with accompanying standards levels which was

22 submitted by seven co-signatories, including the

23 Association of Home Appliance Manufacturers, on

24 November 14th, 1994. And secondly, Whirlpool supports

25 the federal standards levels proposed on July 20th,

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23 

1 the notice of proposed rulemaking on refrigerators and 

2 freezers and the minimum efficiency standards that 

3 we're going to be supporting. 

4 As you know, Whirlpool Corporation is a 

5 global manufacturer of home appliances worldwide. 

6 We're marketing in approximately 100 countries and our 

7 employment is almost 40,000 people. within North 

8 America we have -- we are one of five major 

9 participants in the appliance business and we employ 

10 over 20,000 people. 

11 The July 20th, 1995 notice of proposed 

12 rulemaking impacts refrigerators that we manufacture 

13 and sell in the united States. In addition, it impacts 

14 refrigerators and freezers manufactured by our Mexican 

15 joint venture partner, Vitromatic, which are then 

16 marketed in the united states. 

17 On the front end, I'd like to say that our 

18 basic position concerning the DOE's notice of proposed 

19 rulemaking is as follows. It's basically two points. 

20 Whirlpool continues to support the joint 

21 statement with accompanying standards levels which was 

22 submitted by seven co-signatories, including the 

23 Association of Home Appliance Manufacturers, on 

24 November 14th, 1994. And secondly, Whirlpool supports 

25 the federal standards levels proposed on July 20th, 

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1 1995 by DOE.

2 I'd like to say that our support for the

3 joint statement and the proposed DOE standards is

4 rooted in several basic factors. There's a lot of

5 benefits here. These factors are already well

6 documented in the joint statement and they include the

7 NACA requirements of long-term energy, environmental,

8 consumer and utility benefits to be derived by our

9 entire nation.

10 Our support is also rooted in our ethical

11 commitment to uphold the standards levels which we

12 agreed to in the joint statement and which were

13 subsequently re-proposed in this notice.

14 In supporting this NOPR, we also express

15 disagreement with AHAM's lack of public support for

16 both the original joint statement and for the

17 subsequent proposed DOE standards. AHAM, as you just

18 heard, has adopted a no position on whether the

19 proposed rule or some variation should be finalized

20 because of the pendency of federal legislation which

21 could have an impact on this rulemaking. We question

22 whether the AHAM parties to the joint statement after

23 two years and considerable time and resources spent in

24 drafting this joint statement would withdraw their

25 support for this original statement had the political

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24 

1 1995 by DOE. 

2 I'd like to say that our support for the 

3 joint statement and the proposed DOE standards is 

4 rooted in several basic factors. There's a lot of 

5 benefits here. These factors are already well 

6 documented in the joint statement and they include the 

7 NACA requirements of long-term energy, environmental, 

8 consumer and utility benefits to be derived by our 

9 entire nation. 

10 Our support is also rooted in our ethical 

11 commitment to uphold the standards levels which we 

12 agreed to in the joint statement and which were 

13 subsequently re-proposed in this notice. 

14 In supporting this NOPR, we also express 

15 disagreement with AHAM's lack of public support for 

16 both the original joint statement and for the 

17 subsequent proposed DOE standards. AHAM, as you just 

18 heard, has adopted a no position on whether the 

19 proposed rule or some variation should be finalized 

20 because of the pendency of federal legislation which 

21 could have an impact on this rulemaking. We question 

22 whether the AHAM parties to the joint statement after 

23 two years and considerable time and resources spent in 

24 drafting this joint statement would withdraw their 

25 support for this original statement had the political 

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1 environment on Capitol Hill not changed.

2 In addition, we have concerns that AHAM's,

3 quote, "no position," will encourage conditions that

4 will result in the backsliding of energy efficiency

5 gains already made by this industry. This is

6 especially true with this particular product category,

7 refrigerators.

8 Numerous models are now in the market which

9 are 10 , 20 and even 30 percent plus beyond the federal

10 standards in place right now. As a parenthetical

11 comment, I can add that Whirlpool Corporation has

12 product in the marketplace in virtually every product

13 classification and size that are at least 10 percent

14 above the standard . Some of these efficiency

15 improvements are the results of the impetus of

16 anticipated future appliance standards levels.

17 Now at this point, I'd like to address

18 several specific issues that DOE asked us to comment on

19 in the NOPR.

20 With respect to the first item, any likely

21 adverse effects of the standards on identifiable groups

22 of consumers , one of the assumptions of the agreement

23 was to allow manufacturers to optimize energy savings

24 vis-a-vis investments. Specifically, the largest

25 energy reductions are in larger production quantity

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25 

1 environment on Capitol Hill not changed. 

2 In addition, we have concerns that AHAM's, 

3 quote, "no position," will encourage conditions that 

4 will result in the backsliding of energy efficiency 

5 gains already made by this industry. This is 

6 especially true with this particular product category, 

7 refrigerators. 

8 Numerous models are now in the market which 

9 are 10, 20 and even 30 percent plus beyond the federal 

10 standards in place right now. As a parenthetical 

11 comment, I can add that Whirlpool Corporation has 

12 product in the marketplace in virtually every product 

13 classification and size that are at least 10 percent 

14 above the standard. Some of these efficiency 

15 improvements are the results of the impetus of 

16 anticipated future appliance standards levels. 

17 Now at this point, I'd like to address 

18 several specific issues that DOE asked us to comment on 

19 in the NOPR. 

20 with respect to the first item, any likely 

21 adverse effects of the standards on identifiable groups 

22 of consumers, one of the assumptions of the agreement 

23 was to allow manufacturers to optimize energy savings 

24 vis-a-vis investments. Specifically, the largest 

25 energy reductions are in larger production quantity 

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1 products. Therefore, as the parties to the agreement

2 targeted the largest energy savings at the large

3 production quantity products, this tended to mitigate

4 any adverse effects on identifiable groups of

5 consumers.

6 Through economies of scale and spreading

7 depreciation of investments over larger quantities,

8 this process inherently avoided concentrating the

9 impact of the proposed standards on any particular

10 class of refrigerators.

11 With respect to the issue of market share

12 elasticities, we don't have any comment; We do have

13 comments on usage elasticities. We agree with the DOE

14 that, unlike many other appliances, the energy

15 consumption of refrigerators and freezers is not

16 largely impacted by daily usage patterns and

17 specifically door openings and use of icemakers, et

18 cetera.

19 The next issue : The characterization of

20 prototypical firms for the manufacturer impact

21 analysis. As you also just heard, ARAM has stated that

22 the DOE fails to take into account the adverse effects

23 of standards on, quote, "other firms," other non24 average firms, and that the majority of firms are not

25 average. While we agree that this may be true, we have

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1 products. Therefore, as the parties to the agreement 

2 targeted the largest energy savings at the large 

3 production quantity products, this tended to mitigate 

4 any adverse effects on identifiable groups of 

5 consumers. 

6 Through economies of scale and spreading 

7 depreciation of investments over larger quantities, 

8 this process inherently avoided concentrating the 

9 impact of the proposed standards on any particular 

10 class of refrigerators. 

11 with respect to the issue of market share 

12 elasticities, we don't have any comment~ We do have 

26 

13 comments on usage elasticities. We agree with the DOE 

14 that, unlike many other appliances, the energy 

15 consumption of refrigerators and freezers is not 

16 largely impacted by daily usage patterns and 

17 specifically door openings and use of icemakers, et 

18 cetera. 

19 The next issue: The characterization of 

20 prototypical firms for the manufacturer impact 

21 analysis. As you also just heard, AHAM has stated that 

22 the DOE fails to take into account the adverse effects 

23 of standards on, quote, "other firms," other non24 average firms, and that the majority of firms are not 

25 average. While we agree that this may be true, we have 

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1 to also say that all major manufacturers of

2 refrigerators and freezers voluntarily supported this

3 original agreement dated November 14th, 1994.

4 This support is presumably based on each

5 manufacturer's conducting their own analysis of the

6 impacts of the agreement on their refrigerator

7 business. I would add, again parenthetically, that on

8 page 23 of that agreement there's a statement that says

9 this: None of the parties to this agreement believe

10 that the standards will lead to a likelihood of reduced

11 competition.

12 Therefore, we submit that further exhaustive

13 DOE evaluation of either the atypical or the

14 prototypical refrigerator manufacturer should be either

15 moot or unnecessary for this rulemaking.

16 The next issue: Efficiency forecasts for

17 these products. Considering the reduction in rebate

18 programs resulting in part from the deregulation of the

19 utility industry, we feel that there will be no

20 improvements and probably some backsliding from current

21 efficiency levels if there are no changes from the

22 existing mandatory energy efficiency standards.

23 The next issue deals with any lessening of

24 product utility resulting from incorporation of the

25 design options identified, including but not limited to

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1 to also say that all major manufacturers of 

2 refrigerators and freezers voluntarily supported this 

3 original agreement dated November 14th, 1994. 

4 This support is presumably based on each 

5 manufacturer's conducting their own analysis of the 

6 impacts of the agreement on their refrigerator 

7 business. I would add, again parenthetically, that on 

8 page 23 of that agreement there's a statement that says 

9 this: None of the parties to this agreement believe 

10 that the standards will lead to a likelihood of reduced 

11 competition. 

12 Therefore, we submit that further exhaustive 

13 DOE evaluation of either the atypical or the 

14 prototypical refrigerator manufacturer should be either 

15 moot or unnecessary for this rulemaking. 

16 The next issue: Efficiency forecasts for 

17 these products. Considering the reduction in rebate 

18 programs resulting in part from the deregulation of the 

19 utility industry, we feel that there will be no 

20 improvements and probably some backsliding from current 

21 efficiency levels if there are no changes from the 

22 existing mandatory energy efficiency standards. 

23 The next issue deals with any lessening of 

24 product utility resulting from incorporation of the 

25 design options identified, including but not limited to 

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1 the addition of insulation.

2 Again, we state that manufacturers

3 voluntarily supported the original agreement. As such,

4 we assume each manufacturer has determined their own

5 past to reach the agreed upon standards.

6 In this competitive appliance industry,

7 remaining in business requires no degradation of

8 customer utility. I would come back to the basic

9 agreement. Again, page 23, says this: These standards

10 were chosen at a level that provides for no significant

11 lessening of utility or performance.

12 Therefore, we contend that implementation of

13 energy standards per the original agreement will not

14 result in any lessening of consumer utility.

15 The next issue: The effects of standards on

16 manufacturers' incentives to develop innovative

17 products and product features.

18 Standards are a key driver of innovation for

19 improved energy efficiency. Innovating for improved

20 efficiency does require resources. However, as

21 manufacturers develop and tool energy efficient

22 products, especially what we call the clean sheet

23 designs or the brand new designs, they will routinely

24 include other benefits beyond energy efficiency, such

25 as innovative features, cost reductions and quality

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1 the addition of insulation. 

2 Again, we state that manufacturers 

3 voluntarily supported the original agreement. As such, 

4 we assume each manufacturer has determined their own 

5 past to reach the agreed upon standards. 

6 In this competitive appliance industry, 

7 remaining in business requires no degradation of 

8 customer utility. I would come back to the basic 

9 agreement. Again, page 23, says this: These standards 

10 were chosen at a level that provides for no significant 

11 lessening of utility or performance. 

12 Therefore, we contend that implementation of 

13 energy standards per the original agreement will not 

14 result in any lessening of consumer utility. 

15 The next issue: The effects of standards on 

16 manufacturers' incentives to develop innovative 

17 products and product features. 

18 Standards are a key driver of innovation for 

19 improved energy efficiency. Innovating for improved 

20 efficiency does require resources. However, as 

21 manufacturers develop and tool energy efficient 

22 products, especially what we call the clean sheet 

23 designs or the brand new designs, they will routinely 

24 include other benefits beyond energy efficiency, such 

25 as innovative features, cost reductions and quality 

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1 improvements in order to maximize the return from their

2 investment. Thus, there can be feature cost and

3 quality synergies coincidental with the redesign of

4 appliances for energy efficiency reasons.

5 The next issue : The lifetime of appliances.

You asked us to comment on the 19 year lifetime of

7 these products.

8 We agree with DOE's assumption of a 19 year

9 lifetime. Our only other comment is that we believe

10 there is a greater chance of earlier retirement of old,

11 inefficient refrigerators and freezers as more

12 efficient products are required by these standards.

13 One other issue: Maintenance costs and

14 failure rates.

15 To reiterate, again, all major manufacturers

16 voluntarily supported the original agreement. Thus,

17 once again, we surmise that each manufacturer

18 participants to the joint statement must have

19 determined their own paths to reach the agreed upon

20 standards. In this industry, remaining competitive

21 requires substantial testing of new components and

22 materials to assure that no increase in maintenance

23 costs or failure rates will occur. Because of this, we

24 contend that maintenance costs and failure rates will

25 not be any more likely to occur under this rulemaking

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29 

1 improvements in order to maximize the return from their 

2 investment. Thus, there can be feature cost and 

3 quality synergies coincidental with the redesign of 

4 appliances for energy efficiency reasons. 

5 The next issue: The lifetime of appliances. 

6 You asked us to comment on the 19 year lifetime of 

7 these products. 

8 We agree with DOE's assumption of a 19 year 

9 lifetime. Our only other comment is that we believe 

10 there is a greater chance of earlier retirement of old, 

11 inefficient refrigerators and freezers as more 

12 efficient products are required by these standards. 

13 One other issue: Maintenance costs and 

14 failure rates. 

15 To reiterate, again, all major manufacturers 

16 voluntarily supported the original agreement. Thus, 

17 once again, we surmise that each manufacturer 

18 participants to the joint statement must have 

19 determined their own paths to reach the agreed upon 

20 standards. In this industry, remaining competitive 

21 requires substantial testing of new components and 

22 materials to assure that no increase in maintenance 

23 costs or failure rates will occur. Because of this, we 

24 contend that maintenance costs and failure rates will 

25 not be any more likely to occur under this rulemaking 

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1 than under any other refrigerator freezer redesign.

2 As a last comment, the November 14th, 1994

3 submittal to the Department included cost premiums and

4 energy savings for the design options considered, and

5 that's in Attachment 2 to that submittal. I have a

6 copy of it with me. We find that the Department's

7 contractor, LBL, retained this basic information when

8 performing their analysis of the economic justification

9 for the proposed standard. We also observed that the

10 Department conclusion in favor of those level one

11 standards is absolutely consistent with the recommended

12 standards in the November 14th, 1994 submittal.

13 Therefore, we continue our support for the

14 proposed standards levels, while reserving the option

15 for further comments in the future concerning the

16 relative merits of the LBL MANN versus GRIMM economic

17 analysis.

18 In summary, I'd like to say one last time we

19 support the November 14th, 1994 joint agreement. We

20 support the July 20th, 1995 refrigerator freezer NOPR

21 and we disagree with AHAM's posture of adopting no

22 position on either the refrigerator freezer joint

23 statement or on the DOE proposed standards levels in

24 this notice of proposed rulemaking.

25 Thanks for the opportunity to comment and

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1 than under any other refrigerator freezer redesign. 

2 As a last comment, the November 14th, 1994 

3 submittal to the Department included cost premiums and 

4 energy savings for the design options considered, and 

5 that's in Attachment 2 to that submittal. I have a 

6 copy of it with me. We find that the Department's 

7 contractor, LBL, retained this basic information when 

8 performing their analysis of the economic justification 

9 for the proposed standard. We also observed that the 

10 Department conclusion in favor of those level one 

11 standards is absolutely consistent with the recommended 

12 standards in the November 14th, 1994 submittal. 

13 Therefore, we continue our support for the 

14 proposed standards levels, while reserving the option 

15 for further comments in the future concerning the 

16 relative merits of the LBL MANN versus GRIMM economic 

17 analysis. 

18 In summary, I'd like to say one last time we 

19 support the November 14th, 1994 joint agreement. We 

20 support the July 20th, 1995 refrigerator freezer NOPR 

21 and we disagree with AHAM's posture of adopting no 

22 position on either the refrigerator freezer joint 

23 statement or on the DOE proposed standards levels in 

24 this notice of proposed rulemaking. 

25 Thanks for the opportunity to comment and 

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1 I'll be happy to entertain your questions at this time.

2 MR. POLLOCK: Thank you, Mr. Thompson.

3 Are there questions form the panel for Mr.

4 Thompson ?

5 MR. MARGOLIS: Mike, thank you very much for

6 your statement, but could you just enlighten me on what

7 is a clean sheet design?

8 MR. THOMPSON: Okay. That's a brand new --

9 it's a redesign, a total redesign of the product.

10 MR. MARGOLIS: I see.

11 MR. THOMPSON: To include a lot of --

12 MR. MARGOLIS: So, clean sheet.

13 MR. THOMPSON: Yes.

14 MR. MARGOLIS: Thank you.

15 MR. THOMPSON: -- features.

16 MR. POLLOCK: Thank you, Mr. Thompson.

17 At this time I'd like to call Allen Wilkins

18 from Sub-Zero Freezer Company.

19 MR. WILKINS: Good morning. Allen Wilkins,

20 Sub-Zero Freezer Company.

21 We thank you for the opportunity to comment

22 on the July 20 and September 13th Federal Register

23 notices. Today we are responding in specific to your

24 request for comments from small manufacturers and niche

25 companies. We qualify in both of these categories and

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1 I'll be happy to entertain your questions at this time. 

2 MR. POLLOCK: Thank you, Mr. Thompson. 

3 Are there questions form the panel for Mr. 

4 Thompson? 

5 MR. MARGOLIS: Mike, thank you very much for 

6 your statement, but could you just enlighten me on what 

7 is a clean sheet design? 

8 MR. THOMPSON: Okay. That's a brand new 

9 it's a redesign, a total redesign of the product. 

10 MR. MARGOLIS: I see. 

11 MR. THOMPSON: To include a lot of --

12 MR. MARGOLIS: So, clean sheet. 

13 MR. THOMPSON: Yes. 

14 MR. MARGOLIS: Thank you. 

15 MR. THOMPSON: -- features. 

16 MR. POLLOCK: Thank you, Mr. Thompson. 

17 At this time I'd like to call Allen Wilkins 

18 from Sub-Zero Freezer Company. 

19 MR. WILKINS: Good morning. Allen Wilkins, 

20 Sub-Zero Freezer Company. 

21 We thank you for the opportunity to comment 

22 on the July 20 and September 13th Federal Register 

23 notices. Today we are responding in specific to your 

24 request for comments from small manufacturers and niche 

25 companies. We qualify in both of these categories and 

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1 want to elaborate on how this proposed rule affects us.

2 Sub-Zero is a small family owned company

3 located in Madison, Wisconsin and Phoenix, Arizona,

4 which employs approximately 550 people. In August of

5 this year we celebrated our 50th anniversary of being

6 in business.

7 We build and sell or products for the built8 in refrigerator niche market, and, as you are aware,

9 built-in refrigerators and freezers integrate the

10 storage of food into the overall kitchen design.

11 Not only are our products able to blend into

12 the kitchen visually, some are also designed for

13 specific locations in the kitchen or specific food

14 types. The build-in market is estimated to be about 1

15 percent of the total refrigerators sold, but size does

16 not indicate that the market is without competition.

17 There are several manufacturers in this niche

18 and they range in size from the largest appliance

19 manufacturers to small companies, such as Sub-Zero.

20 I would now like to point out some of the

21 obstacles that small manufacturers like Sub-Zero have

22 had to overcome when complying with standards, such as

23 the one being discussed today.

24 First, the major increases in efficiency

25 realized in the 1980's with refrigerators are no longer

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1 want to elaborate on how this proposed rule affects us. 

2 Sub-Zero is a small family owned company 

3 located in Madison, Wisconsin and Phoenix, Arizona, 

4 which employs approximately 550 people. In August of 

5 this year we celebrated our 50th anniversary of being 

6 in business. 

7 We build and sell or products for the built8 in refrigerator niche market, and, as you are aware, 

9 built-in refrigerators and freezers integrate the 

10 storage of food into the overall kitchen design. 

11 Not only are our products able to blend into 

12 the kitchen visually, some are also designed for 

13 specific locations in the kitchen or specific food 

14 types. The build-in market is estimated to be about 1 

15 percent of the total refrigerators sold, but size does 

16 not indicate that the market is without competition. 

17 There are several manufacturers in this niche 

18 and they range in size from the largest appliance 

19 manufacturers to small companies, such as Sub-Zero. 

20 I would now like to point out some of the 

21 obstacles that small manufacturers like Sub-Zero have 

22 had to overcome when complying with standards, such as 

23 the one being discussed today. 

24 First, the major increases in efficiency 

25 realized in the 1980's with refrigerators are no longer 

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1 possible. Further energy reductions will be much

2 harder to accomplish in future designs due to those

3 significant improvements in efficiency already

4 accomplished through standards of past years.

5 Component improvements will probably provide

6 some future energy reductions, but significantly more

7 engineering and investment will be required to improve

8 efficiency. Also, the risk to manufacturers of not

9 being able to meet new standards with accepted products

10 that appeal to customers at a price that they can

11 afford will continue to increase.

12 We at Sub-Zero are proud of the past

13 accomplishments of our engineering personnel in

14 improving efficiency, but we've had to supplement our

15 staff regularly with outside consultants to assist us

16 with meeting energy standards. We believe future

17 standards will require us to solicit even more

18 assistance.

19 It is important to realize that the amount of

20 effort Sub-Zero must expend in meeting standards does

21 not differ much from the major manufacturers, since the

22 number of models and styles we offer and the level of

23 technology we must utilize are very similar. The

24 process of needing to continually improve the energy

25 efficiency of our products to achieve, in effect,

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1 possible. Further energy reductions will be much 

2 harder to accomplish in future designs due to those 

3 significant improvements in efficiency already 

4 accomplished through standards of past years. 

5 Component improvements will probably provide 

6 some future energy reductions, but significantly more 

7 engineering and investment will be required to improve 

8 efficiency. Also, the risk to manufacturers of not 

9 being able to meet new standards with accepted products 

10 that appeal to customers at a price that they can 

11 afford will continue to increase. 

12 We at Sub-Zero are proud of the past 

13 accomplishments of our engineering personnel in 

14 improving efficiency, but we've had to supplement our 

15 staff regularly with outside consultants to assist us 

16 with meeting energy standards. We believe future 

17 standards will require us to solicit even more 

18 assistance. 

19 It is important to realize that the amount of 

20 effort Sub-Zero must expend in meeting standards does 

21 not differ much from the major manufacturers, since the 

22 number of models and styles we offer and the level of 

23 technology we must utilize are very similar. The 

24 process of needing to continually improve the energy 

25 efficiency of our products to achieve, in effect, 

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1 diminishing gains, is taxing our product engineering

2 and manufacturing staff. It also limited innovation.

3 Customers are no longer offered new features,

4 benefits and utility on a regular basis since the vast

5 majority of redesign effort necessarily focuses on

6 energy alone.

7 Secondly, I'd like to discuss some specific

8 designs that are disadvantaged because they are not

9 necessarily considered in the original NACA rule.

10 We added a product line issue which is

11 composed of smaller modular units which can be located

12 throughout the home. While these are classified by DOE

13 as compacts, they are top-of-the-line, full feature,

14 self-defrost, electronic control icemakers, et cetera,

15 modules which are different from a low price manual

16 defrost compact refrigerator as a Porsche is from a

17 Volkswagen.

18 These do not fit the category that previously

19 was described as compact category. We call your

20 attention to models such as this as examples of new

21 products being demanded by the marketplace that do not

22 fit the original description and utility of small

23 compact units in NACA. And this example specifically

24 goes to the point that the proposed standard levels,

25 when using HCFC, should be less stringent than the

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1 diminishing gains, is taxing our product engineering 

2 and manufacturing staff. It also limited innovation. 

3 Customers are no longer offered new features, 

4 benefits and utility on a regular basis since the vast 

5 majority of redesign effort necessarily focuses on 

6 energy alone. 

7 Secondly, I'd like to discuss some specific 

8 designs that are disadvantaged because they are not 

9 necessarily considered in the original NACA rule. 

10 We added a product line issue which is 

11 composed of smaller modular units which can be located 

12 throughout the home. While these are classified by DOE 

13 as compacts, they are top-of-the-line, full feature, 

14 self-defrost, electronic control icemakers, et cetera, 

15 modules which are different from a low price manual 

16 defrost compact refrigerator as a Porsche is from a 

17 Volkswagen. 

18 These do not fit the category that previously 

19 was described as compact category. We call your 

20 attention to models such as this as examples of new 

21 products being demanded by the marketplace that do not 

22 fit the original description and utility of small 

23 compact units in NACA. And this example specifically 

24 goes to the point that the proposed standard levels, 

25 when using HCFC, should be less stringent than the 

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1 existing '93 standards in certain cases because the

2 product configurations have changed.

3 Certainly, another impact on small

4 manufacturers is that company size dictates production

5 processes which may not be as efficient as those that

6 can be justified by larger companies.

7 We have incorporated a dual compressor system

8 on many of our products over the last 30 years. We

9 believe that the dual systems have food preservation

10 advantages and our market research reveals our

11 customers demand fully independent compartment control.

12 You are also aware of the potential energy

13 advantages made possible by the dual system, but some

14 of the advantage can be offset by lower EER's of

15 available smaller compressors. Since we are a small

16 manufacturer, our small compressors do not receive the

17 design attention by compressor manufacturers that

18 larger capacity units receive because of their larger

19 production volumes. Therefore, there's an energy

20 disadvantage with the small compressors we are forced

21 to use in our dual compressor systems.

22 Another burden on small manufacturers is that

23 the polyurethane foam systems we must use is a froth

24 system. As compared to the large volume producers, we

25 use a very expensive high through-put high pressure

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1 existing '93 standards in certain cases because the 

2 product configurations have changed. 

3 Certainly, another impact on small 

4 manufacturers is that company size dictates production 

5 processes which may not be as efficient as those that 

6 can be justified by larger companies. 

7 We have incorporated a dual compressor system 

8 on many of our products over the last 30 years. We 

9 believe that the dual systems have food preservation 

10 advantages and our market research reveals our 

11 customers demand fully independent compartment control. 

12 You are also aware of the potential energy 

13 advantages made possible by the dual system, but some 

14 of the advantage can be offset by lower EER's of 

15 available smaller compressors. Since we are a small 

16 manufacturer, our small compressors do not receive the 

17 design attention by compressor manufacturers that 

18 larger capacity units receive because of their larger 

19 production volumes. Therefore, there's an energy 

20 disadvantage with the small compressors we are forced 

21 to use in our dual compressor systems. 

22 Another burden on small manufacturers is that 

23 the polyurethane foam systems we must use is a froth 

24 system. As compared to the large volume producers, we 

25 use a very expensive high through-put high pressure 

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1 system. The K factor achieved with froth as opposed --

2 compared to high pressure systems is on the order of 10

3 percent less effective. It is obviously difficult to

4 make up for this substantial loss in properties of the

5 main insulation.

6 Vacuum insulation also poses too much risk

7 and drain our resources for us to seriously consider

8 its introduction in our products until it has been

9 proved by others in the field.

10 In conclusion, we are proud of the

11 contributions Sub-Zero has made to the environment and

12 the country's energy self-sufficiency in complying with

13 or exceeding DOE standards. However, we must now

14 express our opinion that DOE should reassess further

15 standards given the expected returns and the burdens

16 future standards will place on manufacturers and

17 consumers.

18 We particularly ask DOE to more seriously

19 examine the impact of its actions on small

20 manufacturers of refrigerators in the U.S. and our

21 employees. Business is difficult enough not to be

22 further burdened by efficiency improvements which hurt

23 us more than others and make it more difficult to

24 compete the marketplace.

25 I'd be glad to answer any questions.

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1 system. The K factor achieved with froth as opposed 

2 compared to high pressure systems is on the order of 10 

3 percent less effective. It is obviously difficult to 

4 make up for this substantial loss in properties of the 

5 main insulation. 

6 Vacuum insulation also poses too much risk 

7 and drain our resources for us to seriously consider 

8 its introduction in our products until it has been 

9 proved by others in the field. 

10 In conclusion, we are proud of the 

11 contributions Sub-Zero has made to the environment and 

12 the country's energy self-sufficiency in complying with 

13 or exceeding DOE standards. However, we must now 

14 express our opinion that DOE should reassess further 

15 standards given the expected returns and the burdens 

16 future standards will place on manufacturers and 

17 consumers. 

18 We particularly ask DOE to more seriously 

19 examine the impact of its actions on small 

20 manufacturers of refrigerators in the U.S. and our 

21 employees. Business is difficult enough not to be 

22 further burdened by efficiency improvements which hurt 

23 us more than others and make it more difficult to 

24 compete the marketplace. 

25 I'd be glad to answer any questions. 

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1 MR. POLLOCK: Thank you, Mr. Wilkins.

2 MR. MARGOLIS: Mr. Wilkins, thank you very

3 much for your statement.

4 You were saying you are a small manufacturer.

5 Could you tell me what your total sales are?

6 MR. WILKINS: I would like to. It is a

7 family owned business and that's not publicly

8 disclosed.

9 MR. MARGOLIS: Could I ask you this? In our

10 statute, we have a small business exemption and if I'm

11 not mistaken we use a figure of $8 million. Are you

12 above -- can you tell me --

13 MR. WILKINS: We'd be above that.

14 MR. MARGOLIS: Okay.

15 MR. WILKINS: The way we're defining it is

16 any class business, there really are large

17 manufacturers. And 550 people, family owned, is our

18 definition of small. And it is small compared to them.

19 MR. MARGOLIS: And you make a full line,

20 usually compacts and going up to the larger sizes?

21 MR. WILKINS: That's a very good point.

22 Actually, the main categories that we're dealing with

23 as a rule are freezers, refrigerator freezers and

24 compacts. And we do make all three of those.

25 MR. MARGOLIS: Now, you mentioned in your

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1 MR. POLLOCK: Thank you, Mr. Wilkins. 

2 MR. MARGOLIS: Mr. Wilkins, thank you very 

3 much for your statement. 

4 You were saying you are a small manufacturer. 

5 Could you tell me what your total sales are? 

6 MR. WILKINS: I would like to. It is a 

7 family owned business and that's not publicly 

8 disclosed. 

9 MR. MARGOLIS: Could I ask you this? In our 

10 statute, we have a small business exemption and if I'm 

11 not mistaken we use a figure of $8 million. Are you 

12 above -- can you tell me --

13 MR. WILKINS: We'd be above that. 

14 MR. MARGOLIS: Okay. 

15 MR. WILKINS: The way we're defining it is 

16 any class business, there really are large 

17 manufacturers. And 550 people, family owned, is our 

18 definition of small. And it is small compared to them. 

19 MR. MARGOLIS: And you make a full line, 

20 usually compacts and going up to the larger sizes? 

21 MR. WILKINS: That's a very good point. 

22 Actually, the main categories that we're dealing with 

23 as a rule are freezers, refrigerator freezers and 

24 compacts. And we do make all three of those. 

25 MR. MARGOLIS: Now, you mentioned in your 

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1 testimony about modules and you say that they are

2 located throughout the house. Could you just tell me -

3 - I mean, where would they -- I mean, I just look at

4 they're located like in the kitchen or basement.

5 MR. WILKINS: Right.

6 MR. MARGOLIS: Or if you have a -- but where

7 else would they be?

8 MR. WILKINS: Anywhere in the house. It's

9 bedrooms, media rooms, family rooms, kitchens.

10 Kitchens are the main focus, of course, but there are -

11 - in that particular product class there are other

12 places for them.

13 MR. MARGOLIS: But they're not connected one

14 to the other. They're separate units that are self15 standing? I mean, being a modular unit, I mean,

16 doesn't mean that a unit in a bedroom somehow is

17 connected to the unit in the kitchen or in the family

18 room. Am I correct?

19 MR. WILKINS: That's exactly right. They're

20 independent units. And in our mind, they make up a

21 refrigeration system. So in some cases, a small module

22 would be some drawers, a freezer drawer or refrigerator

23 in this section of the kitchen but it makes up the

24 total refrigeration for the household.

25 MR. MARGOLIS: Thank you very much.

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1 testimony about modules and you say that they are 

2 located throughout the house. Could you just tell me -

3 - I mean, where would they -- I mean, I just look at 

4 they're located like in the kitchen or basement. 

5 MR. WILKINS: Right. 

6 MR. MARGOLIS: Or if you have a -- but where 

7 else would they be? 

8 MR. WILKINS: Anywhere in the house. It's 

9 bedrooms, media rooms, family rooms, kitchens. 

10 Kitchens are the main focus, of course, but there are -

11 - in that particular product class there are other 

12 places for them. 

13 MR. MARGOLIS: But they're not connected one 

14 to the other. They're separate units that are self15 standing? I mean, being a modular unit, I mean, 

16 doesn't mean that a unit in a bedroom somehow is 

17 connected to the unit in the kitchen or in the family 

18 room. Am I correct? 

19 MR. WILKINS: That's exactly right. They're 

20 independent units. And in our mind, they make up a 

21 refrigeration system. So in some cases, a small module 

22 would be some drawers, a freezer drawer or refrigerator 

23 in this section of the kitchen but it makes up the 

24 total refrigeration for the household. 

25 MR. MARGOLIS: Thank you very much. 

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1 MR. FRIEDRICHS: I have one question. How

2 many small or niche market refrigerator manufacturers

3 are there? You're representing those manufacturers

4 sort of in a general sense. Approximately how many are

5 there and what percentage of the market do they

6 represent?

7 MR. WILKINS: I'm not representing the other

8 ones but in a general sense, I guess. The number --

9 and I really don't know the answer to any of those

10 questions. I'm aware, I think, of four other

11 manufacturers that are in a niche business, compacts.

12 And I don't know what the percentage is.

13 MR. FRIEDRICHS: Thank you very much.

14 MR. POLLOCK: In your concluding statement,

15 you stated that the Department should reassess its

16 position before further standards. Are you referring

17 to this particular standard that has been proposed or

18 are you referring to any further standards beyond the

19 proposed standards at this date?

20 MR. WILKINS: I guess a little of both. One

21 is -- particularly this standard that is proposed. In

22 the agreement that we worked with, the HCFC in

23 particular was another level. And the way it's

24 proposed now is that the HCFC cannot go below the '93

25 standards. And what I was pointing out was that to

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1 MR. FRIEDRICHS: I have one question. How 

2 many small or niche market refrigerator manufacturers 

3 are there? You're representing those manufacturers 

4 sort of in a general sense. Approximately how many are 

5 there and what percentage of the market do they 

6 represent? 

7 MR. WILKINS: I'm not representing the other 

8 ones but in a general sense, I guess. The number --

9 and I really don't know the answer to any of those 

10 questions. I'm aware, I think, of four other 

11 manufacturers that are in a niche business, compacts. 

12 And I don't know what the percentage is. 

13 MR. FRIEDRICHS: Thank you very much. 

14 MR. POLLOCK: In your concluding statement, 

15 you stated that the Department should reassess its 

16 position before further standards. Are you referring 

17 to this particular standard that has been proposed or 

18 are you referring to any further standards beyond the 

19 proposed standards at this date? 

20 MR. WILKINS: I guess a little of both. One 

21 is particularly this standard that is proposed. In 

22 the agreement that we worked with, the HCFC in 

23 particular was another level. And the way it's 

24 proposed now is that the HCFC cannot go below the '93 

25 standards. And what I was pointing out was that to 

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1 look at those particular categories, because I think a

2 lot of these products have changed. And so to consider

3 that they -- you know, the same units, they're not.

4 MR. POLLOCK: Thank you.

5 At this time I'd like to call Mr. Howard

6 Geller from the American Council for an Energy7 Efficient Economy.

8 MR. GELLER: Good morning. I'm Howard

9 Geller, the Executive Director of the American Council

10 for an Energy-Efficient Economy, testifying on behalf

11 of both ACEEE and the Natural Resources Defense

12 Council.

13 ACEEE and NRDC, along with other interests,

14 including large and small refrigerator manufacturers,

15 state representatives and utilities were co-sponsors of

16 joint comments submitted to the Department of Energy

17 November 194. These comments presented a negotiated

18 compromise position between all identified major

19 stakeholders in refrigerator standards while presenting

20 a recommendation that would meet the requirements of

21 NACA.

22 ACEEE and NRDC support the process of

23 negotiated stakeholder comments on rulemakings when

24 they are feasible. As a consequence, we believe that

25 it is essential to the process of good faith

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1 look at those particular categories, because I think a 

2 lot of these products have changed. And so to consider 

3 that they you know, the same units, they're not. 

4 MR. POLLOCK: Thank you. 

5 At this time I'd like to call Mr. Howard 

6 Geller from the American Council for an Energy7 Efficient Economy. 

8 MR. GELLER: Good morning. I'm Howard 

9 Geller, the Executive Director of the American Council 

10 for an Energy-Efficient Economy, testifying on behalf 

11 of both ACEEE and the Natural Resources Defense 

12 Council. 

13 ACEEE and NRDC, along with other interests, 

14 including large and small refrigerator manufacturers, 

15 state representatives and utilities were co-sponsors of 

16 joint comments submitted to the Department of Energy 

17 November 194. These comments presented a negotiated 

18 compromise position between all identified major 

19 stakeholders in refrigerator standards while presenting 

20 a recommendation that would meet the requirements of 

21 NACA. 

22 ACEEE and NRDC support the process of 

23 negotiated stakeholder comments on rulemakings when 

24 they are feasible. As a consequence, we believe that 

25 it is essential to the process of good faith 

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1 negotiations that participants continue to support

2 their agreements.

3 My principal comment here is to convey

4 ACEEE's and NRDC's support for the agreement we

5 submitted in the joint comments and support for the DOE

6 proposed rule.

7 As in any negotiation process, the results

8 expressed in the joint comments are a compromise.

9 ACEEE and NRDC believe that more stringent standards

10 and more savings could possibly be justified under the

11 criteria of NACA. These comments do not raise this

12 issue in the context of a decision to accept the NOPR

13 as proposed on July 20th. However, if DOE decides to

14 reopen its consideration of standards levels in

15 response to other commenters we'd present additional

16 information that we'd wish DOE to consider.

17 Standards proposed by DOE in this NOPR differ

18 from our joint comments in three respects. First,

19 there are small changes in several of the standards for

20 HCFC free products so as not to propose standards that

21 are less efficient than current standards.

22 Second, there's been a moving up of the

23 effective date for HCFC free products, again, so as not

24 to run afoul of NACA's provision prohibiting standards

25 to be rolled back.

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1 negotiations that participants continue to support 

2 their agreements. 

3 My principal comment here is to convey 

4 ACEEE's and NRDC's support for the agreement we 

5 submitted in the joint comments and support for the DOE 

6 proposed rule. 

7 As in any negotiation process, the results 

8 expressed in the joint comments are a compromise. 

9 ACEEE and NRDC believe that more stringent standards 

10 and more savings could possibly be justified under the 

11 criteria of NACA. These comments do not raise this 

12 issue in the context of a decision to accept the NOPR 

13 as proposed on July 20th. However, if DOE decides to 

14 reopen its consideration of standards levels in 

15 response to other commenters we'd present additional 

16 information that we'd wish DOE to consider. 

17 Standards proposed by DOE in this NOPR differ 

18 from our joint comments in three respects. First, 

19 there are small changes in several of the standards for 

20 HCFC free products so as not to propose standards that 

21 are less efficient than current standards. 

22 Second, there's been a moving up of the 

23 effective date for HCFC free products, again, so as not 

24 to run afoul of NACA's provision prohibiting standards 

25 to be rolled back. 

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1 And third, the NOPR does not restrict the

2 HCFC free standards initially to no more than five

3 percent of manufacturers' production or 10,000 units,

4 as proposed in the joint comments.

5 NRDC and ACEEE do not wish to challenge these

6 changes at the present time. While they will, on net,

7 reduce energy savings compared to exact implementation

8 of the joint comments, we believe that the energy

9 savings lost by delays in standards implementation

10 would outweigh the energy savings, should DOE be

11 convinced to conduct re-analysis and change the final

12 rule.

13 Having said this, there are a number of

14 analytical assumptions on the NOPR, which we question,

15 which we have questioned in the past and which we

16 recommend that DOE consider reviewing in future

17 rulemakings . Given the special process that was used

18 as the basis for the proposed standards, we feel it is

19 reasonable not to press the points in this particular

20 rulemaking but we would like to see DOE address them in

21 future rulemakings, particularly any rulemakings that

22 do not involve consensus proposed standards.

23 The analysis of manufacturers' impacts is one

24 area where we have concerns with the DOE methodology,

25 particularly, the cost of capital to manufacturers,

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1 And third, the NOPR does not restrict the 

2 HCFC free standards initially to no more than five 

3 percent of manufacturers' production or 10,000 units, 

4 as proposed in the joint comments. 

5 NRDC and ACEEE do not wish to challenge these 

6 changes at the present time. While they will, on net, 

7 reduce energy savings compared to exact implementation 

8 of the joint comments, we believe that the energy 

9 savings lost by delays in standards implementation 

10 would outweigh the energy savings, should DOE be 

11 convinced to conduct re-analysis and change the final 

12 rule. 

13 Having said this, there are a number of 

14 analytical assumptions on the NOPR, which we question, 

15 which we have questioned in the past and which we 

16 recommend that DOE consider reviewing in future 

17 rulemakings. Given the special process that was used 

18 as the basis for the proposed standards, we feel it is 

19 reasonable not to press the points in this particular 

20 rulemaking but we would like to see DOE address them in 

21 future rulemakings, particularly any rulemakings that 

22 do not involve consensus proposed standards. 

23 The analysis of manufacturers' impacts is one 

24 area where we have concerns with the DOE methodology, 

25 particularly, the cost of capital to manufacturers, 

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1 assumed in the NOPR to be 12 percent. This is

2 unrealistic in our view.

3 NRDC has pointed out at length in the past

4 that the measure of real cost of capital there is

5 between 2 percent and about 5 or 6 percent. DOE should

6 base its analysis on actual data from the real world,

7 not on arbitrary targets or expectations of

8 manufacturers regarding profitability and cost of

9 capital.

10 The discount rate assumption is another area

11 where we have a concern. We have submitted extensive

12 testimony in other rulemakings concerning the technical

13 justification for real discount rates at or below 6 or

14 7 percent and the inconsistency of DOE's selected

15 discount rates with economic policy and with

16 requirements of NACA. DOE has use the weighted average

17 approach to calculating discount rates that ACEEE has

18 suggested in the past. However, in calculating the

19 discount rate for purchases financed with credit cards,

20 DOE implicitly assumes that a credit card balance will

21 be outstanding for the life of the compliance. Since

22 many consumer pay off their credit card balances

23 periodically, an assumption of a 19 year life for

24 outstanding balances is unrealistic.

25 We urge DOE to collect data on average term

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43 

1 assumed in the NOPR to be 12 percent. This is 

2 unrealistic in our view. 

3 NRDC has pointed out at length in the past 

4 that the measure of real cost of capital there is 

5 between 2 percent and about 5 or 6 percent. DOE should 

6 base its analysis on actual data from the real world, 

7 not on arbitrary targets or expectations of 

8 manufacturers regarding profitability and cost of 

9 capital. 

10 The discount rate assumption is another area 

11 where we have a concern. We have submitted extensive 

12 testimony in other rulemakings concerning the technical 

13 justification for real discount rates at or below 6 or 

14 7 percent and the inconsistency of DOE's selected 

15 discount rates with economic policy and with 

16 requirements of NACA. DOE has use the weighted average 

17 approach to calculating discount rates that ACEEE has 

18 suggested in the past. However, in calculating the 

19 discount rate for purchases financed with credit cards, 

20 DOE implicitly assumes that a credit card balance will 

21 be outstanding for the life of the compliance. Since 

22 many consumer payoff their credit card balances 

23 periodically, an assumption of a 19 year life for 

24 outstanding balances is unrealistic. 

25 We urge DOE to collect data on average term 

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1 of credit card balances and use this information to

2 adjust the discount rate for credit card purchases.

3 Third is the issue of the rejection of

4 standards levels. In this particular NOPR, DOE rejects

5 the standards level because it prevents some consumers

6 from purchasing refrigerators that minimize their own

7 lifecycle costs. This rationale conflicts with the

8 principle of NACA which states that DOE must set

9 standards at the maximum level of efficiency that is

10 technologically feasible and economically justified.

11 Criterion that a standard could be rejected because it

12 prevents some consumers from minimizing their lifecycle

13 costs would at most allow only those energy savings

14 measures that are lifecycle cost effective at the

15 margin to be included as the basis of standards, even

16 of a higher level of energy savings would still be

17 economically justified for consumers as a whole.

18 Such an approach would allow DOE to set a

19 standard below the level that is most economically

20 justified. Some consumers have lower electricity

21 prices or lower usage rates for a product than others.

22 A standard set at the lifecycle cost minimum for these

23 anomalous cases would preclude economically justified

24 energy savings for most consumers and for the public as

25 a whole.

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44 

1 of credit card balances and use this information to 

2 adjust the discount rate for credit card purchases. 

3 Third is the issue of the rejection of 

4 standards levels. In this particular NOPR, DOE rejects 

5 the standards level because it prevents some consumers 

6 from purchasing refrigerators that minimize their own 

7 lifecycle costs. This rationale conflicts with the 

8 principle of NACA which states that DOE must set 

9 standards at the maximum level of efficiency that is 

10 technologically feasible and economically justified. 

11 Criterion that a standard could be rejected because it 

12 prevents some consumers from minimizing their lifecycle 

13 costs would at most allow only those energy savings 

14 measures that are lifecycle cost effective at the 

15 margin to be included as the basis of standards, even 

16 of a higher level of energy savings would still be 

17 economically justified for consumers as a whole. 

18 Such an approach would allow DOE to set a 

19 standard below the level that is most economically 

20 justified. Some consumers have lower electricity 

21 prices or lower usage rates for a product than others. 

22 A standard set at the lifecycle cost minimum for these 

23 anomalous cases would preclude economically justified 

24 energy savings for most consumers and for the public as 

25 a whole. 

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1 Once again, we raise this issue not to

2 challenge the current NOPR proposal, but to suggest

3 corrections to economic analysis methodology in future

4 rulemakings.

5 As I have stated , ACEEE and NRDC support the

6 development of a final rule based on the standards

7 proposed in the NOPR. However, in the event that

8 comments by other parties in this proceeding cause DOE

9 to reexamine the specific standards proposed or in the

10 event that there are substantial delays in issuing the

11 final standard for other reasons , such as a moratorium

12 imposed by the Congress -- I lost my place. Excuse me.

13 We would like to present some recent

14 technological developments that we would like DOE to

15 consider after the moratorium is concluded or in

16 reexamination new standards levels.

17 First and foremost , new information is

18 available on the impacts of HCFC replacement. At the

19 time the separate standard for HCFC free products was

20 proposed, manufacturers believed that the likely

21 substitute for HCFC 141-B would be cyclopentane which

22 typically increases cabinet energy consumption by

23 approximately 10 percent . Recent evidence , however,

24 suggests that a number of HFC blowing agents offer

25 promise as alternatives to HCFC 141-B, both in thermal

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45 

1 Once again, we raise this issue not to 

2 challenge the current NOPR proposal, but to suggest 

3 corrections to economic analysis methodology in future 

4 rulemakings. 

5 As I have stated, ACEEE and NRDC support the 

6 development of a final rule based on the standards 

7 proposed in the NOPR. However, in the event that 

8 comments by other parties in this proceeding cause DOE 

9 to reexamine the specific standards proposed or in the 

10 event that there are substantial delays in issuing the 

11 final standard for other reasons, such as a moratorium 

12 imposed by the Congress I lost my place. Excuse me. 

13 We would like to present some recent 

14 technological developments that we would like DOE to 

15 consider after the moratorium is concluded or in 

16 reexamination new standards levels. 

17 First and foremost, new information is 

18 available on the impacts of HCFC replacement. At the 

19 time the separate standard for HCFC free products was 

20 proposed, manufacturers believed that the likely 

21 substitute for HCFC 141-B would be cyclopentane which 

22 typically increases cabinet energy consumption by 

23 approximately 10 percent. Recent evidence, however, 

24 suggests that a number of HFC blowing agents offer 

25 promise as alternatives to HCFC 141-B, both in thermal 

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1 and energy performance.

2 For example, in tests sponsored by ARAM, the

3 performance of a refrigerator insulated with HFC 245 FA

4 foam was compared to one with a commercial HCFC 141-B

5 appliance foam. The refrigerator cabinets containing

6 the HFC blown foam consumed less than 1 percent more

7 energy on average. Similarly, at least one study on

8 another HFC blowing agent indicates that HFC 345 MFC

9 foam has a lower initial and aged K factors than HCFC

10 141-B blown foams.

11 While testing on these new HFC alternatives

12 is not complete, the results thus far are very

13 encouraging. In addition to new blowing agents, new

14 surfactant additives are being tested that offer

15 enhancements in foam density, K factor and K factor

16 aging for appliance foams.

17 Overall, these studies tend to indicate that

18 the 10 percent energy use penalty for HCFC free

19 refrigerators is very generous . In all likelihood by

20 the 2003 phase-out for HCFC 141-B in the United States,

21 alternative blowing agents will be available with no

22 energy penalty or possibly even offering a small

23 improvement in energy efficiency.

24 Given this new information, the justification

25 for a separate standard for HCFC products becomes

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46 

1 and energy performance. 

2 For example, in tests sponsored by AHAM, the 

3 performance of a refrigerator insulated with HFC 245 FA 

4 foam was compared to one with a commercial HCFC 141-B 

5 appliance foam. The refrigerator cabinets containing 

6 the HFC blown foam consumed less than 1 percent more 

7 energy on average. Similarly, at least one study on 

8 another HFC blowing agent indicates that HFC 345 MFC 

9 foam has a lower initial and aged K factors than HCFC 

10 141-B blown foams. 

11 While testing on these new HFC alternatives 

12 is not complete, the results thus far are very 

13 encouraging. In addition to new blowing agents, new 

14 surfactant additives are being tested that offer 

15 enhancements in foam density, K factor and K factor 

16 aging for appliance foams. 

17 Overall, these studies tend to indicate that 

18 the 10 percent energy use penalty for HCFC free 

19 refrigerators is very generous. In all likelihood by 

20 the 2003 phase-out for HCFC 141-B in the united States, 

21 alternative blowing agents will be available with no 

22 energy penalty or possibly even offering a small 

23 improvement in energy efficiency. 

24 Given this new information, the justification 

25 for a separate standard for HCFC products becomes 

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1 questionable. On the one hand, a slightly weaker

2 standard for a limited number of HCFC products is

3 useful to permit experimentation with non-optimized HFC

4 based foams in the period leading up to 2003. On the

5 other hand, since the NOPR did not include the

6 provision in the joint comments to limit the use of the

7 weaker HCFC free standard to 5 percent of

8 manufacturers' production or 10,000 units, this

9 separate HCFC free standard could allow significantly

10 greater energy use if manufacturers decide to exceed

11 the 5 percent reduction level in the period in which

12 the production ceiling would otherwise be in effect.

13

14 Furthermore, energy use of refrigerators

15 produced in 2003 and possibly several years thereafter,

16 up to nine years after publication of a final rule, can

17 be 10 percent greater than the HCFC free refrigerators

18 if the HCFC refrigerators had to meet the same

19 standards as units with HCFC based foam.

20 These problems become more acute if the final

21 rule in this proceeding is significantly delayed. If

22 DOE had published its final rule on schedule by

23 January 1, 1995, the standard for HCFC products would

24 revert to the primary standard in 2004. There would be

25 only a one-year window following the HCFC ban in which

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1 questionable. On the one hand, a slightly weaker 

2 standard for a limited number of HCFC products is 

47 

3 useful to permit experimentation with non-optimized HFC 

4 based foams in the period leading up to 2003. On the 

5 other hand, since the NOPR did not include the 

6 provision in the joint comments to limit the use of the 

7 weaker HCFC free standard to 5 percent of 

8 manufacturers' production or 10,000 units, this 

9 separate HCFC free standard could allow significantly 

10 greater energy use if manufacturers decide to exceed 

11 the 5 percent reduction level in the period in which 

12 the production ceiling would otherwise be in effect. 

13 

14 Furthermore, energy use of refrigerators 

15 produced in 2003 and possibly several years thereafter, 

16 up to nine years after pUblication of a final rule, can 

17 be 10 percent greater than the HCFC free refrigerators 

18 if the HCFC refrigerators had to meet the same 

19 standards as units with HCFC based foam. 

20 These problems become more acute i'f the final 

21 rule in this proceeding is significantly delayed. If 

22 DOE had published its final rule on schedule by 

23 January 1, 1995, the standard for HCFC products would 

24 revert to the primary standard in 2004. There would be 

25 only a one-year window following the HCFC ban in which 

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1 the use of non-HCFC blowing agents would allow a weaker

2 standard.

3 This is short enough to be unworthy of

4 redesigning a product for higher energy use. Because

5 of DOE's delay until July in issuing the NOPR, the

6 calculus has changed . Manufacturers have a much

7 greater incentive to design to the weaker non-HCFC

8 standard and keep producing that product for enough

9 years to make the retooling worthwhile.

10 How big a difference does this make? The

11 answer depends on when the final standard is issued. If

12 DOE can move promptly to finalize the proposed rule,

13 NRDC and ACEEE believe that on balance DOE should

14 proceed with the rule as published. However, if a

15 final rule were delayed until say January 1st, 1997,

16 then the primary standard would go into effect in the

17 year 2000 and the HCFC exemption would last until 2006.

18 Thus, many manufacturers would be tempted to redesign

19 to the weaker energy standard based on the non-HCFC

20 foams beginning perhaps in 2001 or 2002 . Four to five

21 years worth of production would occur at this lower

22 level of efficiency , presenting a serious setback to

23 the energy savings.

24 Thus, if DOE is significantly delayed in

25 publishing a final rule , we recommend reconsidering the

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1 the use of non-HCFC blowing agents would allow a weaker 

2 standard. 

3 This is short enough to be unworthy of 

4 redesigning a product for higher energy use. Because 

5 of DOE's delay until July in issuing the NOPR, the 

6 calculus has changed. Manufacturers have a much 

7 greater incentive to design to the weaker non-HCFC 

8 standard and keep producing that product for enough 

9 years to make the retooling worthwhile. 

10 How big a difference does this make? The 

11 answer depends on when the final standard is issued. If 

12 DOE can move promptly to finalize the proposed rule, 

13 NRDC and ACEEE believe that on balance DOE should 

14 proceed with the rule as published. However, if a 

15 final rule were delayed until say January 1st, 1997, 

16 then the primary standard would go into effect in the 

17 year 2000 and the HCFC exemption would last until 2006. 

18 Thus, many manufacturers would be tempted to redesign 

19 to the weaker energy standard based on the non-HCFC 

20 foams beginning perhaps in 2001 or 2002. Four to five 

21 years worth of production would occur at this lower 

22 level of efficiency, presenting a serious setback to 

23 the energy savings. 

24 Thus, if DOE is significantly delayed in 

25 publishing a final rule, we recommend reconsidering the 

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1 issue of lower standards for HCFC free products both to

2 examine the usefulness of separate standards entirely

3 and to examine whether the weaker standards for HCFC

4 free products should expire in 2003 or 2004 rather than

5 at a later date.

6 In conclusion, we support the proposed

7 standards, assuming they can be issued in final form in

8 the near future. We stand by the agreement we reached

9 about a year ago with appliance manufacturers, as

10 presented in our joint comments and we are willing to

11 accept the minor deviations from our joint proposal,

12 proposed in the NOPR, even though most of these

13 deviations weaken the standards relative to our

14 consensus proposal.

15 However, if there is a long delay before DOE

16 can issue final standards, we recommend that DOE

17 revisit the justification for a separate standard for

18 HCFC free products.

19 Thank you for the opportunity to present

20 these comments. I'd be happy to take any questions.

21 MR. POLLOCK: Thank you, Mr. Geller.

22 Questions for Mr. Geller?

23 MR. FRIEDRICHS: Yes. I have one question.

24 One of your concerns you raised was DOE's

25 consideration of the potential adverse effects of

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49 

1 issue of lower standards for HCFC free products both to 

2 examine the usefulness of separate standards entirely 

3 and to examine whether the weaker standards for HCFC 

4 free products should expire in 2003 or 2004 rather than 

5 at a later date. 

6 In conclusion, we support the proposed 

7 standards, assuming they can be issued in final form in 

8 the near future. We stand by the agreement we reached 

9 about a year ago with appliance manufacturers, as 

10 presented in our joint comments and we are willing to 

11 accept the minor deviations from our joint proposal, 

12 proposed in the NOPR, even though most of these 

13 deviations weaken the standards relative to our 

14 consensus proposal. 

15 However, if there is a long delay before DOE 

16 can issue final standards, we recommend that DOE 

17 revisit the justification for a separate standard for 

18 HCFC free products. 

19 Thank you for the opportunity to present 

20 these comments. I'd be happy to take any questions. 

21 MR. POLLOCK: Thank you, Mr. Geller. 

22 Questions for Mr. Geller? 

23 MR. FRIEDRICHS: Yes. I have one question. 

24 One of your concerns you raised was DOE's 

25 consideration of the potential adverse effects of 

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1 certain standard levels on some consumers. There's a

2 theme that's been raised in other comments today and

3 elsewhere about the possible consideration -- the

4 consideration of adverse effects of efficiency

5 standards on subgroups of consumers or manufacturers,

6 small manufacturers, consumers that are not

7 representative of the typical consumer but nevertheless

8 may be impacted.

9 When do you feel the Department should

10 consider or how do you think the Department should

11 consider the potential adverse effects of standards on

12 these atypical manufacturers or consumers?

13 MR. GELLER: In the case of consumers, we

14 think the provisions of NACA are very clear. That DOE

15 should set standards that are based on the highest

16 efficiency levels that are economical for consumers as

17 a whole.

18

19

MR. FRIEDRICHS: On average.

MR. GELLER: On average. For consumers on

20 average, taking into account atypical consumers on both

21 sides. Consumers that would have longer paybacks as

22 well as consumers that would have shorter paybacks and

23 look at the average consumer. That's how the world

24 works. There's lots of policies that benefit some

25 parties more than others, but on average, you take

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50 

1 certain standard levels on some consumers. There's a 

2 theme that's been raised in other comments today and 

3 elsewhere about the possible consideration -- the 

4 consideration of adverse effects of efficiency 

5 standards on subgroups of consumers or manufacturers, 

6 small manufacturers, consumers that are not 

7 representative of the typical consumer but nevertheless 

8 may be impacted. 

9 When do you feel the Department should 

10 consider or how do you think the Department should 

11 consider the potential adverse effects of standards on 

12 these atypical manufacturers or consumers? 

13 MR. GELLER: In the case of consumers, we 

14 think the provisions of NACA are very clear. That DOE 

15 should set standards that are based on the highest 

16 efficiency levels that are economical for consumers as 

17 a whole. 

18 MR. FRIEDRICHS: On average. 

19 MR. GELLER: On average. For consumers on 

20 average, taking into account atypical consumers on both 

21 sides. Consumers that would have longer paybacks as 

22 well as consumers that would have shorter paybacks and 

23 look at the average consumer. That's how the world 

24 works. There's lots of policies that benefit some 

25 parties more than others, but on average, you take 

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51

1 actions that lead to benefits to society as a whole,

2 for consumers, for the nation as a whole. And I think

3 NACA is very clear and other history of the program is

4 very clear in directing DOE to set standards that are

5 economical for consumers as a whole.

6 In the case of manufacturers, clearly the

7 consideration of impact on small manufacturers is

8 something that should be taken into account by DOE and

9 in this case there's a necessary weighing of impacts on

10 small manufacturers, medium-sized, large manufacturers,

11 any other criteria in NACA. There must be a balancing

12 of impacts considering a full range of issues that DOE

13 is directed to consider in NACA. It's a judgment. I

14 think it's reasonable to proceed with standards with

15 there can be some additional costs on small

16 manufacturers if the other issues that DOE are

17 considering shows that there's overwhelming positive

18 impacts from the standards, given the other issues that

19 DOE's considering; benefits to the nation, saving

20 energy, benefits to the environment, benefits to

21 consumers, et cetera.

22 MR. FRIEDRICHS: Thank you.

23 MR. GELLER: Sure.

24 MR. POLLOCK: Thank you, Mr. Geller.

25 At this time we'll accept comments from

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51 

1 actions that lead to benefits to society as a whole, 

2 for consumers, for the nation as a whole. And I think 

3 NACA is very clear and other history of the program is 

4 very clear in directing DOE to set standards that are 

5 economical for consumers as a whole. 

6 In the case of manufacturers, clearly the 

7 consideration of impact on small manufacturers is 

8 something that should be taken into account by DOE and 

9 in this case there's a necessary weighing of impacts on 

10 small manufacturers, medium-sized, large manufacturers, 

11 any other criteria in NACA. There must be a balancing 

12 of impacts considering a full range of issues that DOE 

13 is directed to consider in NACA. It's a judgment. I 

14 think it's reasonable to proceed with standards with 

15 there can be some additional costs on small 

16 manufacturers if the other issues that DOE are 

17 considering shows that there's overwhelming positive 

18 impacts from the standards, given the other issues that 

19 DOE's considering; benefits to the nation, saving 

20 energy, benefits to the environment, benefits to 

21 consumers, et cetera. 

22 

23 

24 

25 

MR. FRIEDRICHS: Thank you. 

MR. GELLER: Sure. 

MR. POLLOCK: Thank you, Mr. Geller. 

At this time we'll accept comments from 

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1 unscheduled speakers if there are any.

2 (No response.)

3 There's no one else who would like to make a

4 comment at this time?

5 (No response.)

6 Then we will accept rebuttal statements by

7 any of those who have addressed us previously.

8 (No response.)

9 No rebuttal statements? Then at this time,

10 are there questions to be addressed to any of the

11 speakers or the panel?

12 (No response.)

13 Then I guess this concludes the hearing on

14 this notice.

15 Thank you all.

16 (Whereupon, the proceedings were concluded.)

17

18

19

20

21

22

23

24

25

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1 unscheduled speakers if there are any. 

2 (No response.) 

3 There's no one else who would like to make a 

4 comment at this time? 

5 (No response.) 

6 Then we will accept rebuttal statements by 

7 any of those who have addressed us previously. 

8 (No response.) 

9 No rebuttal statements? Then at this time, 

10 are there questions to be addressed to any of the 

11 speakers or the panel? 

12 (No response.) 

13 Then I guess this concludes the hearing on 

14 this notice. 

15 Thank you all. 

16 (Whereupon, the proceedings were concluded.) 

17 

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25 

EXECUTIVE COURT REPORTERS, INC. 

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REPORTER'S CERTIFICATE

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25

This is to certify that the a tachec

proceedings before DEPT. OF ENERGY

In the Matter oI:

as herein appea

CODES AND STANDERDS MEETING

„H0 r he i

il c0; he 0ric incl %.ran scr ip i:ere0i

Depar menu, Corrission or Agencl,l.

OFFICIAL REPORTER

OCTOBER 26, 1995

EIECUTIYE CO URT REPORTERS

(301) 565-0064

EE-RM-93-801 COMMENT 0H

REPORTER IS [ERTI FI [ATE 

2 

3 

This lS to certify that the attcched 

4: proceedi ngs before DEPT. OF ENERGY 

5 

6 In the rlatter of: CODES AND STANDERDS MEETING 

7 

8 

9 

10 

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! OFF! [IAL REPORTER 

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22 DATE: OCTOBER 26, 1995 

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25 

EXECVTIVE COURT REPORTERS 

(301) 565-0064