### March 12, 1999

Office of Hearings and Appeals COMMENTS U.S. Department of Energy 1000 Independence Avenue, SW Washington, DC 20585
Attn: Mr. Fred Brown Department of Consumer and Business Services

Toll Free: 1-800-221-8035 FAX: (503) 373-7806 Web site: www.cbs.state.or.us/ extemal/ooe/



### BY FAX (202-426-1415) AND BY OVERNIGHT DELIVERY
Docket No. VEE-0054: Comments of the OREGON OFFICE of ENERGY on Amana Appliances Application for Exception from Refrigerator Standards
Dear Mr. Brown, On February 18, 1999 Amana Appliances filed with the Department of Energy (DOE) an Application for Exception (Application) to the energy efficiency standards for refrigerators, refrigerator-freezers, and freezers that are established in 10 CFR § 430.32(a) and that go into effect on July 1, 2001 (the 2001 Standard). Amana's Application was filed pursuant to 10 CFR Part 1003, Subparts A and B. The Oregon Office of Energy The Oregon Office of Energy (OOE) is a state agency responsible for establishing state energy policy and, as part of the implementation of that policy, working with DOE to enact and enforce federal energy efficiency standards for appliances, including refrigerators, refrigerator-freezers, and freezers. The State of Oregon and the Pacific Northwest have a long history of pursuing cost-effective energy efficiency to displace more costly and environmentally damaging power generation. Therefore, OOE has a direct interest in the amount of energy that will be saved by the federal appliance efficiency standards; any reduction in savings from federal standards means that additional power generation, with its associated adverse economic and environmental impacts, will be necessary to meet our region's electricity needs. Because of the very limited time available for comment in this docket, there has been no time to research the specific parts of the record supporting DOE's decision on the July 1, 2001 Refrigerator and Refrigerator/Freezer Standard. That record includes the Office of Energy 625 Marion St. NE, Suite I Salem, OR 97301-3742 Phone: (503) 378-4040

IL ia1 

# regan Department ofConsumer and Business Services

. . , . ..: -, Office of Energy

JohnA. Kitzhaber, M.D.,Governor !"-.t. : 625 Marion St. NE, Suite

## 1 Salem, OR97301-3742
March 12, 1999 Phone: (503) 378-4040 Toll Free: 1-800-221-8035 FAX: (503) 373-7806 Web site: wwwcbs.state.or.us/external!ooe/ Office of Hearings and Appeals COMMENTS U.S. Department of Energy 1000 Independence Avenue, SVV VVashington, DC 20585
Attn: Mr. Fred Brown
BY FAX (202-426-1415) AND BY OVERNIGHT DELIVERY
Docket No. VEE-0054: Comments ofthe OREGON OFFICE of ENERGY on Amana Appliances Application for Exception from Refrigerator Standards
Dear Mr. Brown,
On February 18, 1999 Amana Appliances filed with the Department of Energy (DOE) an Application for Exception (Application) to the energy efficiency standards for refrigerators, refrigerator-freezers, and freezers that are established in 10 CFR 

### § 430.32(a) and that go into effect on July 1, 2001 (the 2001 Standard). Amana's Application was filed pursuant to 10 CFR Part 1003, Subparts A and 

### B.
The Oregon Office of Energy
The Oregon Office ofEnergy (OOE) is a state agency responsible for establishing state energy policy and, as part ofthe implementation ofthat policy, working with DOE to enact and enforce federal energy efficiency standards for appliances, including refrigerators, refrigerator-freezers, and freezers. The State ofOregon and the Pacific Northwest have a long history of pursuing cost-effective energy efficiencyto displace more costly and environmentally damaging power generation. Therefore, OOE has a direct interest in the amount ofenergy that will be saved by the federal appliance efficiency standards; any reduction in savings from federal standards means that additional power generation, with its associated adverse economic and environmental impacts, will be necessary to meet our region's electricity needs.
Because ofthe very limited time available for comment in this docket, there has been no time to research the specific parts ofthe record supporting DOE's decision on the July 1, 2001 Refrigerator and Refrigerator/Freezer Standard. That record includes the



### ...o:r: 'C¢

### Pg 2

Office of Hearings and Appeals March 12, 1999 Federal Register Notice (10 CFR Part 430, Energy Conservation Program for Consumer Products: Energy Conservation Standards for Refrigerators, Refrigerator/Freezers and Freezers; Final Rule), the related Technical Support Document (TSD), and a substantial public record of workshops, hearings and technical submissions. Our comments here, while short on specific citations, are based on our first-hand knowledge of that record, and intensive involvement in the rulemaking at issue. While in many areas we take no issue with the situation as Amana describes it, we draw vastly different conclusions than Amana with regard to the appropriateness and cost effectiveness of the'standard, and the timing of its implementation. The Amana Appliances Petition In the "Purpose" section of its narrative, Amana states as its reason for the Application "the potential unavailability of HFC-245fa" and goes on to cite a section of the DOE Federal Register notice of the 2001 Standard (10 CFR Part 430, Energy Conservation Program for Consumer Products: Energy Conservation Standards for Refrigerators, Refrigerator/Freezers and Freezers; Final Rule, page 23108, column 3). As can be taken from a reading of this section, it was written with a prospective view of blowing agentavailability and cost, but with a good deal of information in hand with regard to HFC245fa. A second issue that Amana raises postulates a "competitive disadvantage" situation that really hasn't to do with the availability of HFC-245fa, but rather asserts a potential harm to Amana arising from competitors' continuing to use HCFC-141 b after January 1, 2003. Of course, if Amana's predictions about HFC-245fa availability were to come true, then competitive disadvantage is largely irrelevant. In other words, these two Amana arguments are not additive, but rather are mutually exclusive. The Oregon Office of Energy opposes the granting of the Exception applied for by Amana

. Amana has not demonstrated that it will, in fact, suffer any particular hardship, burden or inequity as a result of complying with the 2001 Standard, much less that such injury would be serious, gross or unfair. Amana fails to meet the criteria for an exception for the following reasons: 1. Amana's arguments concerning the availability and performance of HFC-245fa as a replacement blowing agent for HCFC-141b are founded entirely on speculation. Should Allied Signal follow through with its plans to make adequate quantities of the new blowing agent available at a price near that assumed by DOE in the analyses supporting the new standard, then the entire foundation of the Application for Exception collapses. Pg 2 Office of Hearings and Appeals March 12, 1999 Federal Register Notice (10 CFR Part 430, Energy Conservation Program for Consumer Products: Energy Conservation Standards for Refrigerators, Refrigerator/Freezers and Freezers; Final Rule), the related Technical Support Document (TSD), and a substantial public record ofworkshops, hearings and technical submissions. Our comments here, while short on specific citations, are based on our first-hand knowledge ofthat record, and intensive involvement in the rulemaking at issue. While in many areas we take no issue with the situation as Amana describes it, we draw vastly different conclusions than Amana with regard to the appropriateness and cost effectiveness ofthe'standard, and the timing of its implementation.
The Amana Appliances Petition
In the "Purpose" section of its narrative, Amana states as its reason for the Application "the potential unavailability of HFC-245fa" and goes on to cite a section of the DOE Federal Register notice ofthe 2001 Standard (10 CFR Part430, Energy Conservation Program for Consumer Products: Energy Conservation Standards for Refrigerators, Refrigerator/Freezers and Freezers; Final Rule, page 23108, column 3). 

### As can be taken from a reading ofthis section, it was written with a prospective view of blowing agent availability and cost, but with a good deal of information in hand with regard to HFC245fa.
A second issue thatAmana raises postulates a "competitive disadvantage" situation that really hasn'tto do with the availability of HFC-245fa, but rather asserts a potential harm to Amana arising from competitors' continuing to use HCFC-141 b after January 1, 2003. Ofcourse, ifAmana's predictions about HFC-245fa availability were to come true, then competitive disadvantage is largely irrelevant. In other words, these two Amana arguments are not additive, but rather are mutually exclusive.
The Oregon Office of Energy opposesthe granting ofthe Exception applied for by Amana. Amana has not demonstrated that it will, in fact, suffer any particular hardship, burden or inequity as a resultofcomplying with the 2001 Standard, much less that such injury would be serious, gross or unfair. Amana fails to meetthe criteria foran exception for the following reasons:
1. Amana's arguments concerning the availability and performance of HFC-245fa as a replacement blowing agent for HCFC-141b are founded entirely on speculation. Should Allied Signal follow through with its plans to make adequate quantities ofthe new blowing agent available at a price nearthat assumed by DOE in the analyses supporting the new standard, then the entire foundation ofthe Application for Exception collapses.

### Pg 3

Office of Hearings and Appeals March 12, 1999 a. In a November 5, 1996 letter to Mr. Chuck Samuels of the American Home Appliance Manufacturers Association (AHAM), Mr. David Weidman of Allied Signal discusses the prospects of his company's development of HFC-245fa as an alternative blowing agent to HCFC-141b (copy attached). In the final paragraph, Mr. Weidman describes the estimated time line for all of the activities required to bring HFC-245fa to market. Today, all of the toxicity tests alluded to have been successfully completed, testing for the insulation performance of foam insulation blown with HFC245fa has been substantial and complete, and the company is ready for the initial production and "usability" phase of the program. While Allied Signal appears to be about a year behind the earlier projected time line, there is clearly more than ample time remaining for full production to meet the January 1, 2003 phase-out date for HCFC-141b. b. While Amana correctly notes some of the advantages of HFC-245fa in section 3 of the Application, the "negatives" list actually amounts to a single fault - Amana's dissatisfaction with the prospect of a sole source for this blowing agent (Allied Signal). While we sympathize with any buyer faced with a sole source situation for an important commodity, such circumstances are growing more numerous by the month, and have become common in all sectors and at all levels in our economy. And yet the economy presses on. c. Amana is correct in stating that at this time there is no manufacturing facility for HFC-245fa. But the scaling of a proposed new production facility is, after all, the goal of Allied Signal in its negotiations with AHAM members. Amana has presented no evidence or convincing argument that the manufacturing facility will not be built. Nor has it provided any evidence to justify its assertion that only one such plant will be built. d. While we're not familiar with the status and terms of the negotiations of AHAM members with Allied Signal, we found no compelling argument in Amana's Application that suggests that an agreement will not be reached. Nor has Amana convinced us that the terms of a final agreement will be those dictated by Allied Signal. e. The price for HFC-245fa cited by Amana (page 3 of the Application) was anticipated in the DOE life cycle cost analysis for the new standard, and in no way provides cause for rethinking DOE's decision. The TSD supporting the Final Rule estimates that the added cost to consumers of meeting the new standard will be $80. Approximately one quarter of this added cost is associated with the use of HFC-245fa as the replacement blowing agent for HCFC-141b. So while we have Pg 3 Office of Hearings and Appeals March 12, 1999

a. In a November 5, 1996 letter to Mr. Chuck Samuels of the American Home Appliance Manufacturers Association (AHAM), Mr. David Weidman of Allied Signal discusses the prospects of his company's development of HFC-245fa as an alternative blowing agent to HCFC-141b (copy attached). In the final paragraph, Mr. Weidman describes the estimated time line for all ofthe activities required to bring HFC-245fa to market. Today, all ofthe toxicity tests alluded to have been successfully completed, testing for the insulation performance offoam insulation blown with HFC245fa has been substantial and complete, and the company is ready for the initial production and "usability" phase ofthe program. While Allied Signal appears to be about a year behind the earlier projected time line, there is clearly more than ample time remaining for full production to meet the January 1, 2003 phase-out date for HCFC-141b.

-- b. While Amana correctly notes some ofthe advantages of HFC-245fa in section 3 ofthe Application, the "negatives" list actually amounts to a single fault

- Amana's dissatisfaction with the prospect of a sole source for this blowing agent (Allied Signal). While we sympathize with any buyer faced with a sole source situation for an important commodity, such circumstances are growing more numerous by the month, and have become common in all sectors and at all levels in our economy. And yet the economy presses on.

c. Amana is correct in stating that at this time there is no manufacturing facility for HFC-245fa. Butthe scaling ofa proposed new production facility is, after all, the goal of Allied Signal in its negotiations with AHAM members. Amana has presented no evidence orconvincing argument that the manufacturing facility will not be built. Nor has it provided any evidence tojustify its assertion that only one such plant will be built.
d. While we're not familiar with the status and terms ofthe negotiations ofAHAM members with Allied Signal, we found no compelling argument in Amana's Application that suggests that an agreementwill not be reached. Nor has Amana convinced us that the terms ofa final agreement will be those dictated by Allied Signal.

e. The price for HFC-245fa cited by Amana (page 3 of the Application) was anticipated in the DOE life cycle cost analysis forthe new standard, and in no way provides cause for rethinking DOE's decision. The TSD supporting the Final Rule estimates that the added cost to consumers of meeting the new standard will be $80. Approximately one quarter ofthis added cost is associated with the use of HFC-245fa as the replacement blowing agent for HCFC-141b. So while we havePg 4



### Office of Hearings and Appeals March 12, 1999 no reason to doubt Amana's assertions with regard to added manufacturing costs, we do take issue with Amana's suggestion that these costs can not be passed on to consumers, or that somehow this wasn't accounted for in the justification of the Final Rule. Federal law requires DOE to examine the impact on consumers in justifying its standard decision. The law also requires that DOE account for what fraction of the added costs from the new standard can be passed on by manufacturers, and to analyze the resulting financial impact on the manufacturers. All of this was done. The negotiations leading to the consensus recommendation to DOE, of which Amana was a part, considered these same issues as well. f. While we won't argue Amana's point concerning the lack of HFC-245fa testing in production quantities of product (bottom of page 3 of the Application), we do wish to point out that the performance of production product almost always exceeds the performance of prototype product, once the manufacturing process is fine-tuned. In the spring of 1998, we followed through this process with another manufacturer as their new refrigerator/freezer line was brought from initial to full production volumes. Initial units fell significantly short of expectations in energy use performance, but full production units exceeded expectations. These units perform at or above the level of the 2001 Standard.
2. Since Amana has, in our opinion, failed to make a convincing case for consideration of blowing agents other than HFC-245fa, the company's discussion of other alternatives seems beside the point

. While we recognize that the use of blowing agents such as cyclopentane and HFC-134a result in a lowering of energy efficiency, the DOE analysis was based on the best information available in early 1997 on alternative blowing agents, and it considered these

. The conclusion then was that HFC-245fa represented the most promising and likely choice, and much information was gathered about probable price, testing time lines, and availability

. All of the information assumed then has been validated to a remarkable degree in the interim. Allied Signal could not now be negotiating production volumes with AHAM members if it had not. We also note here that Amana cites a seriously dated passage from DOE's 1995 Proposed Rule in its attempt to justify a 10 percentage point increase in allowable energy use over that required by the 2001 Standard. However, the cited text was simply a proposal made by DOE at that time, and was based on very preliminary information with regard to specific alternative blowing agents, their cost, their performance, or their availability. The Final Rule was based on much better, more recent information in this area, and is much better founded than the passage that Amana cites. We are aware that maximum allowable refrigeratorlfreezer energy consumption is based Pg 4 Office of Hearings and Appeals March 12, 1999

no reason to doubtAmana's assertions with regard to added manufacturing costs, we do take issue with Amana's suggestion that these costs can not be passed on to consumers, orthat somehow this wasn't accounted for in the justification ofthe Final Rule. Federal law requires DOE to examine the impact on consumers in justifying its standard decision. The law also requires that DOE account for what fraction of the added costs from the new standard can be passed on by manufacturers, and to analyze the resulting financial impact on the manufacturers. All ofthis was done. The negotiations leading to the consensus recommendation to DOE, ofwhich Amana was a part, considered these same issues as well.
f. While we won't argue Amana's point concerning the lack of HFC-245fa testing in production quantities ofproduct (bottom ofpage 3 ofthe Application), we do wish to point outthat the performance ofproduction product almost always exceeds the performance of prototype product, once the manufacturing process is fine-tuned. In the spring of 1998, we followed through this process with another manufacturer as their new refrigerator/freezer line was brought from initial to full production volumes. Initial units fell significantly short of expectations in energy use performance, but full production units exceeded expectations. These units perform at or above the level ofthe 2001 Standard.
2. Since Amana has, in our opinion, failed to make a convincing case for consideration ofblowing agents otherthan HFC-245fa, the company's discussion ofother alternatives seems beside the point. While we recognize thatthe use ofblowing agents such as cyc\opentane and HFC-134a result in a lowering ofenergy efficiency, the DOE analysis was based on the best information available in early 1997 on alternative blowing agents, and it considered these. The conclusion then was that HFC-245fa represented the most promising and likery choice, and much information was gathered about probable price, testing time lines, and availability. All ofthe information assumed then has been validated to a remarkable degree in the interim. Allied Signal could not now be negotiating production volumes with AHAM members if it had not.
We also note here that Amana cites a seriously dated passage from DOE's 1995 Proposed Rule in its attempttojustify a 10 percentage point increase in allowable energy use over that required by the 2001 Standard. However, the cited text was simply a proposal made by DOE atthattime, and was based on very preliminary information with regard to specific alternative blowing agents, their cost, their performance, or their availability. The Final Rule was based on much better, more recent information in this area, and is much better founded than the passage that Amana cites.
We are aware that maximum allowable refrigeratorlfreezer energy consumption is based

### Pg 5

Office of Hearings and Appeals March 12, 1999 on volume (as is that of water heaters); it should not be otherwise. However, it would be wrong to assume that product internal volume reduction is the only way to achieve the energy efficiency performance required by the new standard. Amana dismisses a number of the other technology options at its disposal (improved heat exchangers, more efficient motors or compressors, etc.). But We wish to point out that Amana has been manufacturing products for several years now that meet (their S6 line), and nearly meet (their S5/V5 line), this level of performance, using technologies that are now at least five years old. Given this record of accomplishment, we find it hard to believe that Amana will find it impossible or too costly to compensate for the 2-4 percent energy efficiency penalty that might result from the use of HFC-245fa as a blowing agent (2-4% is the worst case testing result so far for insulation blown with HFC-245fa). 3. We acknowledge Amana's concern with regard to some level of competitive disadvantage that might result if some of its competitors continue to use HCFC-141b in products manufactured outside the United States (section 5 of the Application). However, several points not raised by Amana are relevant here. First, only a limited number of products are manufactured in Mexico and Canada, and these products comprise only a fraction of these manufacturers ' product lines

. Second, this advantage is temporary, lasting only until HCFC-141b is phased out everywhere. Third, the cost penalty is small ($9-12), as pointed out by Amana, and should not result in a significant level of cost differentiation of product in the marketplace. And even that small differential may disappear if manufacturers of HCFC-141b take advantage of the higher price of alternatives to raise their prices.
In addition, we not at all persuaded that decisions to locate a manufacturing plant within or outside the U.S. will be made on the basis of a $9

-12 cost advantage conferred by choice of blowing agents. One need only examine the history of factory relocation to Mexico to conclude that more significant advantages stem from labor and infrastructure cost savings

. For instance, blowing agents are not an issue for fluorescent lamp ballast manufacturers, but most production for these devices has been moved overseas. But these larger advantages have thus far failed to move most of the refrigerator/freezer manufacturing out of the U.S. If such decisions are taken , it would be a long stretch of logic to attribute them to blowing agent cost differentials. 3. We strongly dispute the assertion by Amana that, "The DOE 7/1/01 Refrigerator/Freezer Standards were negotiated but not financially justified." First, the standards were not negotiated. What was negotiated was a consensus recommendation for a standard, and Amana was a willing stakeholder in that negotiation. Once DOE received that recommendation, it was still obligated under NAECA to justify its decision as the highest standard that is technologically feasible and economically justified, and Pg S Office of Hearings and Appeals March 12, 1999

on volume (as is that ofwater heaters); it should not be otherwise. However, itwould be wrong to assume that product internal volume reduction is the only way to achieve the energy efficiency performance required by the new standard. Amana dismisses a number ofthe other technology options at its disposal (improved heat exchangers, more efficient motors or compressors, etc.). But we wish to point out that Amana has been manufacturing products for several years now that meet (their S6 line), and nearly meet (their 

### SSNS line), this level of performance, using**technologie~** that are now at least five years old. Given this record of accomplishment, we find it hard to believe that Amana will find it impossible or too costly to compensate for the 2-4 percent energy efficiency penalty that might result from the use of HPC-24Sfa as a blowing agent (2-4% is the worst case testing result so far for insulation blown with HFC-24Sfa).
3. We acknowledge Amana's concern with regard to some level of competitive disadvantage that might result ifsome ofits competitors continue to use HCFC-141b in products manufactured outside the United States (section 5 of the Application). However, several points not raised by Amana are relevant here. First, only a limited number of products are manufactured in Mexico and Canada, and these products comprise only afraction ofthese**manufactun~rs'** product lines. Second, this advantage is temporary, lasting only until HCFC-141b is phased out everywhere. Third, the cost penalty is small ($9-12), as pointed out by Amana, and should not result in a significant level ofcost differentiation of product in the marketplace. And even that small differential may disappear if manufacturers of HCFC-141b take advantage ofthe higher price of alternatives to raise their prices.
In addition, we notat all persuaded that decisions to locate a manufacturing plantwithin .or outside th.e U.S. will be made on the basis ofa $9-12 cost advantage conferred by choice of blowing agents. One need only examine the history offactory relocation to Mexico to conclude that more significant advantages stem from labor and infrastructure cost savings. For instance, blowing agents are not an issue for fluorescent lamp ballast manufacturers, but most production for these devices has been moved overseas. But these larger advantages have thus far failed to move most ofthe refrigerator/freezer manufacturing out ofthe U.S. Ifsuch decisions are taken, itwould be a long stretch of logicto attribute them to blowing agent cost differentials.
3. We strongly dispute the assertion by Amana that, "The DOE 7/1/01 Refrigerator/Freezer Standards were negotiated but not financiallyjustified." First, the standards were not negotiated. What was negotiated was a consensus recommendation for a standard, and Amana was a willing stakeholder in that negotiation. Once DOE received that recommendation, it was still obligated under NAECAto justify its decision as the highest standard that is technologically feasible and economically justified, andPg 6

DOE Office of Hearings and Appeals March 12, 1999 

### to examine the other criteria specified by law. These other criteria included manufacturer and competitive impacts. As pointed out above, the decision was made using the most recent information available with regard to blowing agent cost and availability. And those assumptions have been borne out to a remarkable degree today. Amana states that, "In effect, this states that the DOE could financially justify approximately a 20% reduction in energy consumption in refrigerators and freezers;..." We have no idea what document or phrase "this" is, but our reading of the analysis supporting the Final Rule is that the 30% reduction in energy use, and the cost to achieve it, provided a 4-year payback to consumers (see the TSD, life cycle cost analysis section). Given this, and the results of the analyses for other criteria (manufacturer and competitive impact, for instance), all of which were used and understood by the parties negotiating the consensus recommendation, there is clear justification for the new standard level. We find no reason whatsoever to believe that the same decision would not be reached today.
4. While Amana's discussion of internal volume as a key market driver is interesting, the subtle assumption in its comparisons of HFC- 134a as the alternative blowing agent yields a more drastic impact on internal volume than is warranted

. If one assumes HFC245fa instead, the impact on volume is quite negligible

. As we find no reason believe that HFC-245fa won't be available, we find no merit in Amana's arguments based on HFC-134a.
Likewise, we find little merit in Amana's discussion of other technology options for improving the overall efficiency of their product line. As we pointed out earlier, Amana, using older technologies, has already manufactured product that meets, and nearly meets, the new standard. Other manufacturers are using these technologies

. Maytag now manufactures versions of almost all of its products that exceed the efficiency levels required by the 2001 standard , using some of the same technologies, reliably, that Amana disparages

. Amana notes a $5 premium for a permanent split capacitor motor (PSC motor) that provides a 1-2% improvement in energy efficiency. It is our belief, based on the extensive testing already done, that this 1-2% improvement is virtually all that is needed to overcome the energy penalty that mightbe imposed by the use of HFC245fa as a blowing agent. In the long term, there may be no penalty at all to overcome. Pg 6 DOE Office ofHearings and Appeals March I2, 1999
to examine the other criteria specified by law. These other criteria included manufacturer and competitive impacts. As pointed out above, the decision was made using the most recent information available with regard to blowing agent cost and availability. And those assumptions have been borne out to a remarkable degree today.
Amana states that, "In effect, this states that the DOE could financially justify approximately a 20% reduction in energy consumption in refrigerators and freezers;

..." We have no idea what document or phrase "this" is, but our reading of the analysis supporting the Final Rule is that the 30% reduction in energy use, and the cost to achieve it, provided a 4-year payback to consumers (see the TSD, life cycle cost analysis section). Given this, and the results of the analyses for other criteria (manufacturer and competitive impact, for instance), all ofwhich were used and understood by the parties negotiating the consensus recommendation, there is clear justification for the new standard level. We find no reason whatsoever to believe that the same decision would riot be reached today.
4. While Amana's discussion ofinternal volume as a key market driver is interesting, the subtle assumption in its comparisons of HFC-134a as the alternative blowing agent yields a more drastic impact on**int~rnal** volume than is warranted. Ifone assumes HFC245fa instead, the impact on volume is quite negligible. As we find no reason believe that HFC-245fa won't be available, we find no merit in Amana's arguments based on HFC-134a. Likewise, we find little merit in Amana's discussion of other technology options for improving the overall efficiency oftheir product line. As we pointed out earlier, Amana, using older technologies, has already manufactured product that meets, and nearly meets, the new standard. Other manufacturers are using these technologies. Maytag now manufactures versions ofalmost all ofits products that exceed the efficiency levels required by the 2001 standard, using some of the same technologies, reliably, that Amana disparages. Amana notes a $5 premium for a permanent split capacitor motor (PSC motor) that provides a 1-2% improvement in energy efficiency. It is our belief, based on the extensive testing already done, thatthis 1-2% improvement is virtually all that is needed to overcome the energy penalty that might

### be imposed by the use of HFC245fa as a blowing agent. In the long term, there may be no penalty at all to overcome.Pg 7

DOE Office of Hearings and Appeals

. aren 1.. 1 *Y1J 1 2 999


### In Conclusion: We urge the Office of Hearings and Appeals to reject Amana's Application for Exception. Amana's arguments concerning the availability and price of HFC-245fa are unconvincing. In fact, this Application resembles nothing so much as one part of a negotiating strategy, as Amana's discussions with Allied Signal are ongoing. ® The Exception terms applied for (a ten percentage point increase in allowable energy consumption, for all products, for nearly nine years) amount to a drastic remedy for a potential minor risk. The worst energy penalty implied by Amana's arguments is an 8 percent reduction in energy performance if cyclopentane is used as a blowing agent, assuming that no other cost-effective efficiency-enhancing design options are used to reduce this penalty. In fact, the blowing agent penalty will be substantially less than this. Like other manufacturers have already demonstrated , Amana should have no trouble making up at least some of this shortfall, were it to occur. There is no reason to assume that an exception should be granted for Amana's entire product line. As manufacturers , including Amana, have argued in the past, energy performance improvements are more difficult for some models than others

. Amana has failed to take account of this fact anywhere in its arguments. The 8'/ year Exception term applied for is far too long, and applied for too soon. The recent history of refrigerator technology upgrades demonstrates that significant advances occur in a 3-5 year cycle. There is every reason to believe that whatever barriers to achieving a 30% performance improvement exist today will be overcome well before 2005. In fact, a rulemaking for the next standard could conceivably be underway by then. The year 2010 is significant only as the next mark on the international time line for the phase-out of HCFC-141b. In other words, 2010 should be largely irrelevant to the refrigerator/freezer industry in North America. On an additional note, Amana's application is premature. It is too early to be able to conclusively demonstrate that suitable alternative blowing agents will not be available, or that there will be energy efficiency penalties large enough that they can not be overcome using other component upgrades. Pg 7 DOE Office ofHearings and Appeals

"'\ I' 1 1"

..**Ar~,~** .\lareD j'::. J ';J';J';J In Conclusion:
We urge the Office of Hearings and Appeals to reject Amana's Application for Exception.

• Amana's arguments concerning the availability and price of HFC-245fa are unconvincing. In fact, this Application resembles nothing so much as one part of () negotiating strategy, as Amana's discussions with Allied Signal are ongoing.

.. The Exception terms applied for (a ten percentage point increase in allowable energy consumption, for all products, for nearly nine years) amount to a drastic remedy for a potentialminor risk.

__ The worst energy penalty implied by Amana's arguments is an 8 percent reduction in energy performance if cyclopentane is used as a blowing agent, assuming that no other cost-effective efficiency-enhancing design options are used to reduce this penalty. In fact, the blowing agent penalty will be substantially less than this. Like other manufacturers have already demonstrated, Amana should have no trouble making up at least some of this shortfall, were .it to occur.
There is no reason to assume that an exception should be granted for Amana's entire product line. As manufacturers, including Amana, have argued in the past, energy performance improvements are more difficult for some models than others. Amana has failed to take account ofthis fact anywhere in its arguments.
The 

### 8Y2 year Exception term applied for is far too long, and applied for too soon. The recent history ofrefrigeratortechnology upgrades demonstrates that significant advances occur in a 3-5 year cycle. There is every reason to believe that whatever barriers to achieving a 30% performance improvement exist today will be overcome well before 2005. In fact, a rulemaking for the next standard could conceivably be underway by then. The year 2010 is significant only as the next mark on the international time line for the phase-out of HCFC-141b. In other words, 2010 should be largely irrelevant to the refrigerator/freezer industry in North America. On an additional note, Amana's application is premature. It is too early to be able to conclusively demonstrate that suitable alternative blowing agents will not be available, or that there will be energy efficiency penalties large enough that they can not be overcome using other component upgrades.Pg 8

DOE Office of Hearings and Appeals March 12. 1999 

### Amana's potential exposure to competitive impacts due to blowing agent performance and cost is minimal, and is considerably outweighed by other factors affecting manufacturers' financial and market positions. There is no basis for assuming an impact on U.S. manufacturing jobs caused by such small cost differences.
This concludes our comments at this time. Pursuant to 10 CFR § 1003.9(b), I certify that I am a duly authorized representative of the Oregon Office of Energy.

Sincerely,

Charlie Stephens Policy Analyst Conservation Division 503 378-4298 "



### .

Pg 8 DOE Office ofHearings and Appeals March 12, 1999

• Amana's potential exposure to competitive impacts due to blowing agent performance and cost is minimal, and is considerably outweighed by other factors affecting manufacturers' financial and market positions. There is no basis for assuming an impact on U.S. manufacturing jobs caused by such small cost differences.

This concludes our comments at this time. Pursuant to 10 CFR 

### § 1003.9(b), I certify that I am a duly authorized representative ofthe Oregon Office of Energy.

Sincerely,

# a~' 

# iJrt---

Charlie Stephens Policy Analyst Conservation Division 503 378-4298.W.

H

David N. Weidman YreFidrnc Tlucwinc Products

Mr. Charles A. Samuels Government Relations Counsel Association of Home Appliance Manufacturers 701 Pennsylvania Avenue, N W Suite 900 Washington, DC 20004


### Dear Chuck: MJV 0, lye 1=.59Prt ii1?4 . P.03

Auicdslgnal Inc . 201 455 3611 P.U. Box 1053 Mottistowa, NJ 07962.1053 201 455 2759 Fa

November 5, 1996

AlliedSignal has identified HFC 245fa as the most likely replacement product for HCFC 141b in appliance systems and boardstoek. IIFC 245fa has outstanding energy efficiency characteristics that should lead to significant environmental benefits.
As we discussed at the CFC Conference in Washington, DC, the commercialization process has some critically important steps that have to be taken before HFC 245fa, or any other product, can be said to be commercially available. I want AHAM members to understand how we see the timetable for the commercialization of 1IFC 245fa today

. I want to emphasire "today" because, as we discussed, it's impossible to predict with complete accuracy what the future holds. Our view of the world is that toxicity, manufacturability, and what I call usability are the three critical steps we have to address

. With regard to toxicity testing, we have completed the 28-day test which came out well and expect to see the results of the 90-day test around December l st. We will review those results with AlliedSignal's Risk Assessment Committee, EPA and potential users of the product.. At that point, we have to decide whether more tox testing, such as a two generation study is needed, or whether we arc confident enough in the results to move forward. Subsequently, we expect food migration studies to be conducted by appliance manufacturers. These studies will be completed and reviewed by the GRAS committee, followed by recommendations to the FDA. We expect this process to be completed within about a year from now. '- .1

# 4IliedSignai

David N. Weidman f'rffi(i(-n( FluorineProducts ".J"

Attkd$lgnalInc. P.O. Box 1053**M~tO'illo'1t,** NJ 07962-1**05~**



### November S. 1996



### Mr. Charles A. Samuels Government Relations Counsel Association ofHome Appliance Manufacturers 701 Pennsylvania Avenue, NW Suite 900 Washington, DC 20004
DeuChuck: . 201 455 }(iJ 1 201 -(55 2759 fax

AlJiedSjgnal hac; identified HFC 24Sfa asthemostlikely replacementproductfor HCFC 14tbinappliance systems and boardstock.. IIFC24Sfa bas outstanding**~ergy** efficiency characteristicsthat should l:ad to siJ.,'llificantenvironmental benefits.
As we**diseu.~** atthe CFC Conference inWashington, DC, the commercializationprocess

## h:as sonle criticallyjmportant stepsthathaveto

### be**~en** before

### HFe 24Sfa. orany otherproduct. can besaid to becommercially available. I want AHAM members to understand howwe see the timetable forthecommercializationof 

### lIFe24Sfatoday. Jwantto**emphasi~.e** "today"because, aswe**di~usscd,** it'simpossible to predict with complete accuracy what the ·futureholds. 

### Ow- view ofthe world is that toxicity, manufacturability, and whatI call usability
arc thethree critical stepswehave toaddress. Withregard totoxicitytesting.wehave completedthe 28-day testwhich cameoutwen and expectto see the results ofilie9O-day test aroundDecember JsL Wewill reviewthoseresults with AllicdSignal's Risk Assessment Committee, EPA and potential users oftheproduct.. At**th~**

### point, wehave todecide whethermore tox testing, such a.c; atwo generation study is needed, orwhether
we arc confidentenough in the resultsto move**fo~.** Subsequently. we expect

### food migration studies tobe conducted by appliance

_ manufacturers. These studies wi)) be completedand reviewedby the GRAS committee, fol1owed by recommendations tothe FDA. We expectthis process.tobecompleted within about ayear fromnow.6

_2_ On the manufacturing side, we have significant work ahead of us. Presently we manufacture HI'C 245fa at a pilot plant in our Fluorine Research Center in Buffalo, New York. We will need to build a manufacturing plant to support the needs of the industry, We are still optimizing the manufacmring process and evaluating different locations for customizing. As we go forward with engineering and design, we will put together a capital request to our management for constructing an HFC 245fa plant. Like all capital requests it will be judged on the basis of its return to AlliedSignal's shareholders. We won't know the cost of the facility until we get much deeper into the engineering and design work.
The final point to make is in regard to what I will call usability

. Once we have a manufacturing facility running, we will ship commercial grade quantities of product to customers to allow them to qualify AllicdSignal 's HFC 245fa. We will also be optimizing our process because an important lesson we have learned during the CFC phase out is that the substitutes are more challenging to-manufacturz: Today we believe that the timeline that insults from these events, if all goes well, is AlliedSignal investing in a facility in early 1998, having it begin production in late 1999, early 2000, and delivering products shortly after that time. We see a ramp up in capacity taking some time as customers qualify product and make their necessary investments to use HFC 245fa. For these reasons, we believe that the phase out date for HCPC 141b in 2003 is still appropriate as our capacity ramps up and our customers change out will take some time. Chuck, I would be happy to meet with you to discuss any points in this letter or any other questions you may have about HI?C 245fa
Sincerely, ... -'....0

.... ' 

### .-...ar-... ,HJ., ("'" r-.**~**

-2-
On the manufacturing side, wehave significant work ahead ofus. Presentlywe manufacture**Hl~C** 245fa at 8 pilot plant in ourHuorineResearch Center inBuffalo. New York. Wewill need tobuild amanufacturing planttosupportthe needs ofthcindustry,

. We arestill optimizing the manufacturing process and eva1usting differentlocations for customizing. Aswe go forward withengineering and design, we

### wiJl puttOgether a capital

### requestto ourmanagement for constructingan HFC 24S{aplanl Like 

### all capital requests 

### it

## win bejudgedon the basisofits returnto AlliedSignal's shareholders. We won'tknow the cost ofthe facility untiJ we get much deeper into the engineering and designwork.
The final point

## to make is inregard to whatIwill call usability. Once wehave a manufacturing facility nmning,we

## win ship commercial grade quantities ofproduct to customersto allowthem to qualify AUicdSignaJ's HFC 245fa. We will also be , optimizing our

### process because an importantlesson wehave learned during the CFC' phase out is thatthe substitutes are more chaJJenbrlng to·manufactun:: 

### Today wehcHcve thatthetjmcline thatresults from these events, ifall goes well, isAlliedSignal iqvesting in a facility

# in early 1998,having itbeginproduction inlate 1999,

### early 2000,and deliveringproducts shortly afterthat time. We see arampup 

### in capacitytaking sometime ascustomersqualifyprodU¢and maketheirnecessary
. jnvestmentsto useHFC 24Sfa. Forthese reasons, webelievethat thephase outdatefor HCFC 14lbin2003 is still approprime as ourcapacitynunps up IUld ourcustomers change out

### will take some time.
Chuck. I would behappy to meetwith you todiscuss any points in this letteror any otherquestions you may have aboutHFC 245fa. Sincerely.

# ~1'J+w:-- N.Weidman 

# 1 \ .-"\ '