[Federal Register Volume 79, Number 128 (Thursday, July 3, 2014)]
[Rules and Regulations]
[Pages 38130-38211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15387]



[[Page 38129]]

Vol. 79

Thursday,

No. 128

July 3, 2014

Part II





Department of Energy





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10 CFR Parts 429 and 430





Energy Conservation Program for Consumer Products: Energy Conservation 
Standards for Residential Furnace Fans; Final Rule

  Federal Register / Vol. 79 , No. 128 / Thursday, July 3, 2014 / Rules 
and Regulations  

[[Page 38130]]


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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[Docket Number EERE-2010-BT-STD-0011]
RIN 1904-AC22


Energy Conservation Program for Consumer Products: Energy 
Conservation Standards for Residential Furnace Fans

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy.

ACTION: Final rule.

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SUMMARY: Pursuant to the Energy Policy and Conservation Act of 1975 
(EPCA), as amended, the U.S. Department of Energy (DOE) must prescribe 
energy conservation standards for various consumer products and certain 
commercial and industrial equipment, including residential furnace 
fans. EPCA requires DOE to determine whether such standards would be 
technologically feasible and economically justified, and would save a 
significant amount of energy. In this final rule, DOE is adopting new 
energy conservation standards for residential furnace fans. DOE has 
determined that the prescribed energy conservation standards for these 
products would result in significant conservation of energy, and are 
technologically feasible and economically justified.

DATES: The effective date of this rule is September 2, 2014. Compliance 
with the prescribed standards established for residential furnace fans 
in this final rule is required on and after July 3, 2019.

ADDRESSES: The docket for this rulemaking, which includes Federal 
Register notices, public meeting attendee lists and transcripts, 
comments, and other supporting documents/materials, is available for 
review at www.regulations.gov. All documents in the docket are listed 
in the www.regulations.gov index. However, not all documents listed in 
the index may be publicly available, such as information that is exempt 
from public disclosure.
    A link to the docket Web page can be found at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/41. The www.regulations.gov Web page contains simple 
instructions on how to access all documents, including public comments, 
in the docket.
    For further information on how to review the docket, contact Ms. 
Brenda Edwards at (202) 586-2945 or by email: 
[email protected].

FOR FURTHER INFORMATION CONTACT:
Mr. Ron Majette, U.S. Department of Energy, Office of Energy Efficiency 
and Renewable Energy, Building Technologies Office, EE-5B, 1000 
Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 
586-7935. Email: [email protected].
Mr. Eric Stas, U.S. Department of Energy, Office of the General 
Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-9507. Email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Summary of the Final Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Residential Furnace Fans
III. General Discussion
    A. Test Procedures
    B. Product Classes and Scope of Coverage
    C. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    D. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    E. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Commercial Customers
    b. Savings in Operating Costs Compared To Increase in Price 
(Life-Cycle Costs)
    c. Energy Savings
    d. Lessening of Utility or Performance of Equipment
    e. Impact of Any Lessening of Competition
    f. Need of the Nation To Conserve Energy
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion
    A. Market and Technology Assessment
    1. Definition and Scope of Coverage
    2. Product Classes
    3. Technology Options
    a. Fan Housing and Airflow Path Design Improvements
    b. Inverter Controls for PSC Motors
    c. High-Efficiency Motors
    d. Multi-Stage or Modulating Heating Controls
    e. Backward-Inclined Impellers
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    a. High-Efficiency Motors
    b. Backward-Inclined Impellers
    C. Engineering Analysis
    1. Efficiency Levels
    a. Baseline
    b. Percent Reduction in FER
    2. Manufacturer Production Cost (MPC)
    a. Production Volume Impacts on MPC
    b. Inverter-Driven PSC Costs
    c. Furnace Fan Motor MPC
    d. Motor Control Costs
    e. Backward-Inclined Impeller MPC
    f. Other Components
    D. Markups Analysis
    E. Energy Use Analysis
    F. Life-Cycle Cost and Payback Period Analysis
    1. Installed Cost
    2. Operating Costs
    3. Furnace Fan Lifetime
    4. Discount Rates
    5. Compliance Date
    6. Base-Case Efficiency Distribution
    7. Payback Period
    G. Shipments Analysis
    H. National Impact Analysis
    1. National Energy Savings Analysis
    2. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model
    a. Government Regulatory Impact Model Key Inputs
    b. Government Regulatory Impact Model Scenarios
    3. Discussion of Comments
    a. Conversion Costs
    b. Cumulative Regulatory Burden
    c. Scope of MIA Coverage
    d. Markups Analysis
    e. Employment Impacts
    f. Consumer Utility
    g. Small Businesses
    K. Emissions Analysis
    L. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    b. Development of Social Cost of Carbon Values
    c. Current Approach and Key Assumptions
    M. Utility Impact Analysis
    N. Employment Impact Analysis
    O. Comments on Proposed Standards
V. Analytical Results and Conclusions
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Consumers
    a. Life-Cycle Cost and Payback Period
    b. Consumer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impact on Manufacturers
    a. Industry Cash-Flow Analysis Results
    b. Impacts on Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on Product Utility or Performance
    5. Impact of Any Lessening of Competition
    6. Need of the Nation To Conserve Energy
    7. Other Factors
    C. Conclusions
    1. Benefits and Burdens of Trial Standard Levels Considered for 
Residential Furnace Fans

[[Page 38131]]

    2. Summary of Benefits and Costs (Annualized) of Today's 
Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Congressional Notification
VII. Approval of the Office of the Secretary

I. Summary of the Final Rule

    Title III, Part B of the Energy Policy and Conservation Act of 1975 
(EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as 
codified), established the Energy Conservation Program for Consumer 
Products Other Than Automobiles. Pursuant to EPCA, any new or amended 
energy conservation standard that DOE prescribes for certain products, 
such as furnace fans, must be designed to achieve the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)). Furthermore, the new 
or amended standard must result in a significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B)). In accordance with these and other 
statutory provisions discussed in this notice, DOE proposes amended 
energy conservation standards for furnace fans. The proposed standards 
shall have a fan energy rating (FER) value that meets or is less than 
the values shown in Table I.1. These standards would apply to all 
products listed in Table I.1 and manufactured in, or imported into, the 
United States on or after manufactured on and after July 3, 2019.

                 Table I.1.--Energy Conservation Standards for Covered Residential Furnace Fans
----------------------------------------------------------------------------------------------------------------
                                                                                                      Percent
                                                                                                   increase over
                Product class                                  FER\*\ (watts/cfm)                    baseline
                                                                                                     (percent)
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace    FER = 0.044 x QMax + 182.........................              46
 Fan (NWG-NC).
Non-Weatherized, Condensing Gas Furnace Fan    FER = 0.044 x QMax + 195.........................              46
 (NWG-C).
Weatherized Non-Condensing Gas Furnace Fan     FER = 0.044 x QMax + 199.........................              46
 (WG-NC).
Non-Weatherized, Non-Condensing Oil Furnace    FER = 0.071 x QMax + 382.........................              12
 Fan (NWO-NC).
Non-Weatherized Electric Furnace/Modular       FER = 0.044 x QMax + 165.........................              46
 Blower Fan (NWEF/NWMB).
Mobile Home Non-Weatherized, Non-Condensing    FER = 0.071 x QMax + 222.........................              12
 Gas Furnace Fan (MH-NWG-NC).
Mobile Home Non-Weatherized, Condensing Gas    FER = 0.071 x QMax + 240.........................              12
 Furnace Fan (MH-NWG-C).
Mobile Home Electric Furnace/Modular Blower    FER = 0.044 x QMax + 101.........................              46
 Fan (MH-EF/MB).
Mobile Home Non-Weatherized Oil Furnace Fan    Reserved.........................................  ..............
 (MH-NWO).
Mobile Home Weatherized Gas Furnace Fan (MH-   Reserved.........................................  ..............
 WG).
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* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the final DOE test
  procedure at 10 CFR part 430, subpart B, appendix AA.

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of 
today's standards on consumers of residential furnace fans, as measured 
by the average life-cycle cost (LCC) savings and the median payback 
period (PBP). The average LCC savings are positive for all product 
classes.

   Table I.2--Impacts of Energy Conservation Standards on Consumers of
                        Residential Furnace Fans
------------------------------------------------------------------------
                                            Average LCC   Median payback
              Product class                   savings         period
                                              (2013$)         (years)
------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas                 $506             5.4
 Furnace Fan............................
Non-weatherized, Condensing Gas Furnace             $341             5.8
 Fan....................................
Weatherized Non-Condensing Gas Furnace              $447             4.4
 Fan....................................
Non-Weatherized, Non-Condensing Oil                  $46             1.7
 Furnace Fan............................
Non-weatherized Electric Furnace/Modular            $204             3.2
 Blower Fan.............................
Mobile Home Non-Weatherized, Non-                    $36             2.7
 Condensing Gas Furnace Fan.............
Mobile Home Non-Weatherized, Condensing              $35             2.3
 Gas Furnace Fan........................
Mobile Home Electric Furnace/Modular                 $85             4.1
 Blower Fan.............................
------------------------------------------------------------------------

B. Impact on Manufacturers

    The industry net present value (INPV) is the sum of the discounted 
cash flows to the industry from the base year through the end of the 
analysis period (2014 to 2048). Using a real discount rate of 7.8 
percent, DOE estimates that the INPV for manufacturers of residential 
furnace fans is $349.6 million.\1\ Under today's standards, DOE expects 
that manufacturers may lose up to 16.9 percent of their INPV, which is 
approximately $59.0 million. Total conversion costs incurred by 
industry prior to the compliance date are expected to reach $40.6 
million.
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    \1\ DOE calculated a present value in 2014; all monetary values 
in this document are expressed in 2013 dollars unless explicitly 
stated otherwise.
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C. National Benefits and Costs \2\
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    \2\ All monetary values in this section are expressed in 2013$ 
and are discounted to 2014.
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    DOE's analyses indicate that today's standards would save a 
significant amount of energy. The lifetime energy savings for 
residential furnace fans purchased in the 30-year period that begins in 
the year of compliance with the standards (2019-2048) amount to

[[Page 38132]]

3.99 quadrillion Btu (quads \3\). The estimated annual energy savings 
in 2030 (0.07 quads) are equivalent to 0.3 percent of total U.S. 
residential energy use in 2012.
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    \3\ A quad is equal to 10\15\ British thermal units (Btu).
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    The cumulative net present value (NPV) of total consumer costs and 
savings of today's standards for residential furnace fans ranges from 
$10,024 million (at a 7-percent discount rate) to $28,810 million (at a 
3-percent discount rate). This NPV expresses the estimated total value 
of future operating-cost savings minus the estimated increased product 
costs for residential furnace fans purchased in 2019-2048.
    In addition, today's standards are expected to have significant 
environmental benefits. The energy savings would result in cumulative 
emission reductions of approximately 180.6 million metric tons (Mt) \4\ 
of carbon dioxide (CO2), 695.0 thousand tons of methane 
(CH4), 235.7 thousand tons of sulfur dioxide 
(SO2), 84.0 thousand tons of nitrogen oxides 
(NOX), 6.2 thousand tons of nitrous oxide (N2O), 
and 0.4 tons of mercury (Hg).\5\ The cumulative reduction in 
CO2 emissions through 2030 amounts to 34 million Mt.
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    \4\ A metric ton is equivalent to 1.1 short tons. Results for 
NOX and Hg are presented in short tons.
    \5\ DOE calculated emissions reductions relative to the Annual 
Energy Outlook 2013 (AEO 2013) Reference case, which generally 
represents current legislation and environmental regulations for 
which implementing regulations were available as of December 31, 
2012.
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    The value of the CO2 reductions is calculated using a 
range of values per metric ton of CO2 (otherwise known as 
the Social Cost of Carbon, or SCC) developed by a recent Federal 
interagency process.\6\ The derivation of the SCC values is discussed 
in section IV.L. Using discount rates appropriate for each set of SCC 
values, DOE estimates that the net present monetary value of the 
CO2 emissions reductions is between 1,134 million to 16,799 
million. DOE also estimates that the net present monetary value of the 
NOX emissions reductions is $53.1 million at a 7-percent 
discount rate, and $110.8 million at a 3-percent discount rate.\7\
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    \6\ Technical Update of the Social Cost of Carbon for Regulatory 
Impact Analysis Under Executive Order 12866, Interagency Working 
Group on Social Cost of Carbon, United States Government (May 2013; 
revised November 2013) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).
    \7\ DOE is investigating valuation of avoided Hg and 
SO2 emissions.
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    Table I.3 summarizes the national economic costs and benefits 
expected to result from today's standards for residential furnace fans.

      Table I.3--Summary of National Economic Benefits and Costs of
         Residential Furnace Fans Energy Conservation Standards*
------------------------------------------------------------------------
                                          Present value   Discount rate
                Category                 million 2013 $     (percent)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings........          13,409              7
                                                 34,999              3
CO2 Reduction Monetized Value ($12.0/t            1,134              5
 case)**...............................
CO2 Reduction Monetized Value ($40.5/t            5,432              3
 case)**...............................
CO2 Reduction Monetized Value ($62.4/t            8,694              2.5
 case)**...............................
CO2 Reduction Monetized Value ($119/t            16,799              3
 case)**...............................
NOX Reduction Monetized Value (at                    53              7
 $2,684/ton)**.........................
                                                    111              3
Total Benefits[dagger].................          18,894              7
                                                 40,542              3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs...           3,385              7
                                                  6,189              3
------------------------------------------------------------------------
                              Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX[dagger] Reduction          15,509              7
 Monetized Value.......................
                                                 34,353              3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with residential
  furnace fans shipped in 2019-2048. These results include benefits to
  consumers which accrue after 2048 from the products purchased in 2019-
  2048. The results account for the incremental variable and fixed costs
  incurred by manufacturers due to the standard, some of which may be
  incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
  2013$, in 2015 under several scenarios of the updated SCC values. The
  first three cases use the averages of SCC distributions calculated
  using 5%, 3%, and 2.5% discount rates, respectively. The fourth case
  represents the 95th percentile of the SCC distribution calculated
  using a 3% discount rate. The SCC time series used by DOE incorporate
  an escalation factor. The value for NOX is the average of the low and
  high values used in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using
  the series corresponding to average SCC with 3-percent discount rate.

    The benefits and costs of today's standards, for products sold in 
2019-2048, can also be expressed in terms of annualized values. The 
annualized monetary values are the sum of: (1) The annualized national 
economic value of the benefits from operating the product that meets 
the new or amended standard (consisting primarily of operating cost 
savings from using less energy, minus increases in equipment purchase 
and installation costs, which is another way of representing consumer 
NPV), and (2) the annualized monetary value of the benefits of emission 
reductions, including CO2 emission reductions.\8\
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    \8\ DOE used a two-step calculation process to convert the time-
series of costs and benefits into annualized values. First, DOE 
calculated a present value in 2014, the year used for discounting 
the NPV of total consumer costs and savings, for the time-series of 
costs and benefits using discount rates of three and seven percent 
for all costs and benefits except for the value of CO2 
reductions. For the latter, DOE used a range of discount rates, as 
shown in Table I.4. From the present value, DOE then calculated the 
fixed annual payment over a 30-year period (2019 through 2048) that 
yields the same present value. The fixed annual payment is the 
annualized value. Although DOE calculated annualized values, this 
does not imply that the time-series of cost and benefits from which 
the annualized values were determined is a steady stream of 
payments.

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[[Page 38133]]

    Although adding the value of consumer savings to the values of 
emission reductions provides a valuable perspective, two issues should 
be considered. First, the national operating cost savings are domestic 
U.S. consumer monetary savings that occur as a result of market 
transactions, whereas the value of CO2 reductions is based 
on a global value. Second, the assessments of operating cost savings 
and CO2 savings are performed with different methods that 
use different time frames for analysis. The national operating cost 
savings is measured for the lifetime of residential furnace fans 
shipped in 2019-2048. The SCC values, on the other hand, reflect the 
present value of all future climate-related impacts resulting from the 
emission of one metric ton of carbon dioxide in each year. These 
impacts continue well beyond 2100.
    Estimates of annualized benefits and costs of today's standards are 
shown in Table I.4. The results under the primary estimate are as 
follows. Using a 7-percent discount rate for benefits and costs other 
than CO2 reduction (for which DOE used a 3-percent discount 
rate along with the SCC series that has a value of $40.5/t in 2015), 
the cost of the residential furnace fans standards in today's final 
rule is $358 million per year in increased equipment costs, while the 
benefits are $1416 million per year in reduced equipment operating 
costs, $312 million in CO2 reductions, and $5.61 million in 
reduced NOX emissions. In this case, the net benefit amounts 
to $1,376 million per year. Using a 3-percent discount rate for all 
benefits and costs and the SCC series that has a value of $40.5/t in 
2015, the cost of the residential furnace fans standards in today's 
rule is $355 million per year in increased equipment costs, while the 
benefits are $2010 million per year in reduced operating costs, $312 
million in CO2 reductions, and $6.36 million in reduced 
NOX emissions. In this case, the net benefit amounts to 
$1,973 million per year.

               Table I.4--Annualized Benefits and Costs of Standards for Residential Furnace Fans
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                                                       Primary  estimate   Low net benefits    High net benefits
                                     Discount rate             *              estimate *          estimate *
----------------------------------------------------------------------------------------------------------------
                                                                          million 2013$/year
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.  7%................  1416..............  1167..............  1718
                                  3%................  2010..............  1626..............  2467
CO2 Reduction (at $12.0/t case)   5%................  90................  77................  108
 **.
CO2 Reduction (at $40.5/t case)   3%................  312...............  268...............  377
 **.
CO2 Reduction (at $62.4/t case)   2.5%..............  459...............  393...............  555
 **.
CO2 Reduction (at $119/t case)    3%................  965...............  828...............  1166
 **.
NOX Reduction (at $2,684/ton) **  7%................  5.61..............  4.80..............  6.82
                                  3%................  6.36..............  5.35..............  7.86
Total Benefits [dagger].........  7% plus CO2 range.  1,512 to 2,387....  1,249 to 2,000....  1,833 to 2,891
                                  7%................  1,734.............  1,439.............  2,102
                                  3% plus CO2 range.  2,106 to 2,981....  1,708 to 2,459....  2,583 to 3,641
                                  3%................  2,328.............  1,899.............  2,852
----------------------------------------------------------------------------------------------------------------
                                                      Costs
----------------------------------------------------------------------------------------------------------------
Consumer Incremental Product      7%................  358...............  314...............  410
 Costs.                           3%................  355...............  304...............  419
----------------------------------------------------------------------------------------------------------------
                                                  Net Benefits
----------------------------------------------------------------------------------------------------------------
    Total [dagger]..............  7% plus CO2 range.  1,154 to 2,029....  935 to 1,685......  1,423 to 2,481
                                  7%................  1,376.............  1,125.............  1,692
                                  3% plus CO2 range.  1,750 to 2,625....  1,404 to 2,155....  2,164 to 3,222
                                  3%................  1,973.............  1,595.............  2,433
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with residential furnace fans shipped in 2019-
  2048. These results include benefits to consumers which accrue after 2048 from the products purchased from
  2019-2048. The results account for the incremental, variable, and fixed costs incurred by manufacturers due to
  the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High
  Benefits Estimates utilize projections of energy prices and housing starts from the AEO 2013 Reference case,
  Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a flat rate for
  projected product price trends in the Primary Estimate, a slightly increasing rate for projected product price
  trends in the Low Benefits Estimate, and a slightly declining rate for projected product price trends in the
  High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.
** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the
  updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and
  2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution
  calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The
  value for NOX is the average of the low and high values used in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average
  SCC with a 3% discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the
  operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to
  the full range of CO2 values.


[[Page 38134]]

D. Conclusion

    Based on the analyses culminating in this final rule, DOE found the 
benefits to the nation of the standards (energy savings, consumer LCC 
savings, positive NPV of consumer benefit, and emission reductions) 
outweigh the burdens (loss of INPV and LCC increases for some users of 
these products). DOE has concluded that the standards in today's final 
rule represent the maximum improvement in energy efficiency that is 
technologically feasible and economically justified, and would result 
in significant conservation of energy.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying today's final rule, as well as some of the relevant 
historical background related to the establishment of standards for 
residential furnace fans.

A. Authority

    Title III, Part B \9\ of the Energy Policy and Conservation Act of 
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as 
codified) established the Energy Conservation Program for Consumer 
Products Other Than Automobiles, a program covering most major 
household appliances (collectively referred to as ``covered 
products''),\10\ which includes the types of residential furnace fans 
that are the subject of this rulemaking. (42 U.S.C. 6295(f)(4)(D))
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    \9\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \10\ All references to EPCA in this document refer to the 
statute as amended through the American Energy Manufacturing 
Technical Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 
2012).
---------------------------------------------------------------------------

    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists of essentially of four parts: (1) Testing; (2) 
labeling; (3) the establishment of Federal energy conservation 
standards; and (4) certification and enforcement procedures. The 
Federal Trade Commission (FTC) is primarily responsible for labeling, 
and DOE implements the remainder of the program. Subject to certain 
criteria and conditions, DOE is required by EPCA to consider and 
establish energy conservation standards for ``electricity used for 
purposes of circulating air through duct work'' (which DOE has referred 
to in shorthand as residential ``furnace fans''). (42 U.S.C. 
6295(f)(4)(D)) DOE is also required by EPCA to develop test procedures 
to measure the energy efficiency, energy use, or estimated annual 
operating cost of each covered product prior to the adoption of an 
energy conservation standard. (42 U.S.C. 6295(o)(A)(3) and (r)) 
Manufacturers of covered products must use the prescribed DOE test 
procedure as the basis for certifying to DOE that their products comply 
with the applicable energy conservation standards adopted under EPCA 
and when making representations to the public regarding the energy use 
or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) 
Similarly, DOE must use these test procedures to determine whether the 
products comply with standards adopted pursuant to EPCA. (42 U.S.C. 
6295(s)) The DOE test procedures for residential furnace fans currently 
appear at title 10 of the Code of Federal Regulations (CFR) part 430, 
subpart B, appendix AA.
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products, including furnace fans. As 
indicated above, any standard for a covered product must be designed to 
achieve the maximum improvement in energy efficiency that is 
technologically feasible and economically justified. (42 U.S.C. 
6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard 
that would not result in the significant conservation of energy. (42 
U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For 
certain products, including residential furnace fans, if no test 
procedure has been established for the product, or (2) if DOE 
determines by rule that the standard is not technologically feasible or 
economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In deciding 
whether a standard is economically justified, DOE must determine 
whether the benefits of the standard exceed its burdens. (42 U.S.C. 
6295(o)(2)(B)(i)) DOE must make this determination after receiving 
comments on the proposed standard, and by considering, to the greatest 
extent practicable, the following seven factors:

    (1) The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    (2) The savings in operating costs throughout the estimated 
average life of the covered products in the type (or class) compared 
to any increase in the price, initial charges, or maintenance 
expenses for the covered products that are likely to result from the 
standard;
    (3) The total projected amount of energy (or as applicable, 
water) savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the 
covered products likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary of Energy (Secretary) considers 
relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

    EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing 
any standard that either increases the maximum allowable energy use or 
decreases the minimum required energy efficiency of a covered product. 
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended 
or new standard if interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States of any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States. (42 U.S.C. 
6295(o)(4))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the consumer of purchasing a product complying 
with an energy conservation standard level will be less than three 
times the value of the energy savings during the first year that the 
consumer will receive as a result of the standard, as calculated under 
the applicable test procedure. (See 42 U.S.C. 6295(o)(2)(B)(iii))
    Additionally, under 42 U.S.C. 6295(q)(1), the statute specifies 
requirements when promulgating an energy conservation standard for a 
covered product that has two or more subcategories. DOE must specify a 
different standard level for a type of class of covered product that 
has the same function or intended use, if DOE determines that products 
within such group: (A) Consume a different kind of energy from that 
consumed by other covered products within such type (or class); or (B) 
have a capacity or other performance-related feature which other 
products within such type (or class) do not have and such feature 
justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In 
determining whether a performance-related feature justifies a different 
standard for a group of products, DOE must consider such factors as the 
utility to the consumer of such a feature and other factors DOE deems 
appropriate. Id. Any rule prescribing such a standard must include an 
explanation of the basis on which such higher or lower level was 
established. (42 U.S.C. 6295(q)(2))

[[Page 38135]]

    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers 
of Federal preemption for particular State laws or regulations, in 
accordance with the procedures and other provisions set forth under 42 
U.S.C. 6297(d)).
    Finally, pursuant to the amendments contained in the Energy 
Independence and Security Act of 2007 (EISA 2007), Public Law 110-140, 
any final rule for new or amended energy conservation standards 
promulgated after July 1, 2010, is required to address standby mode and 
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE 
adopts a standard for a covered product after that date, it must, if 
justified by the criteria for adoption of standards under EPCA (42 
U.S.C. 6295(o)), incorporate standby mode and off mode energy use into 
a single standard, or, if that is not feasible, adopt a separate 
standard for such energy use for that product. (42 U.S.C. 
6295(gg)(3)(A)-(B)) The furnace fan energy rating metric does not 
account for the electrical energy consumption in standby mode and off 
mode, because energy consumption in those modes is being fully 
accounted for in the DOE energy conservation standards for residential 
furnaces and residential central air conditioners (CAC) and heat pumps 
(HP). Manufacturers will be required to use the new metrics and methods 
adopted in those rulemakings for the purposes of certifying to DOE that 
their products comply with the applicable energy conservation standards 
adopted pursuant to EPCA and for making representations about the 
efficiency of those products. (42 U.S.C. 6293(c); 42 U.S.C. 6295(s))

B. Background

1. Current Standards
    Currently, no Federal energy conservation standards apply to 
residential furnace fans.
2. History of Standards Rulemaking for Residential Furnace Fans
    Pursuant to 42 U.S.C. 6295(f)(4)(D), DOE must consider and 
prescribe new energy conservation standards or energy use standards for 
electricity used for purposes of circulating air through duct work. DOE 
has interpreted this statutory language to allow regulation of the 
electricity use of any electrically-powered device applied to 
residential central heating, ventilation, and air-conditioning (HVAC) 
systems for the purpose of circulating air through duct work.
    DOE initiated the current rulemaking by issuing an analytical 
Framework Document, ``Rulemaking Framework for Furnace Fans'' (June 1, 
2010). DOE then published the Notice of Public Meeting and Availability 
of the Framework Document for furnace fans in the Federal Register on 
June 3, 2010. 75 FR 31323. See http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/41. The Framework Document 
explained the issues, analyses, and process that DOE anticipated using 
to develop energy conservation standards for residential furnace fans. 
DOE held a public meeting on June 18, 2010 to solicit comments from 
interested parties regarding DOE's analytical approach. DOE originally 
scheduled the comment period on the Framework Document to close on July 
6, 2010, but due to the large number and broad scope of questions and 
issues raised, DOE subsequently published a notice in the Federal 
Register reopening the comment period from July 15, 2010 until July 27, 
2010, to allow additional time for interested parties to submit 
comments. 75 FR 41102 (July 15, 2010).
    As a concurrent effort to the residential furnace fan energy 
conservation standard rulemaking, DOE also initiated a test procedure 
rulemaking for residential furnace fans. On May 15, 2012, DOE published 
a notice of proposed rulemaking (NOPR) for the test procedure in the 
Federal Register. 77 FR 28674. In that NOPR, DOE proposed to establish 
methods to measure the performance of covered furnace fans and to 
obtain a value for the proposed metric, referred to as the ``fan 
efficiency rating'' (FER).\11\ DOE held the test procedure NOPR public 
meeting on June 15, 2012, and the comment period closed on July 30, 
2012. After receiving comments on the NOPR alleging significant 
manufacturer burden associated with the proposed test procedure, DOE 
determined that an alternative test method should be developed. DOE 
published in the Federal Register an SNOPR on April 2, 2013, which 
contained its revised test procedure proposal and an explanation of the 
changes intended to reduce burden. 78 FR 19606. DOE proposed to adopt a 
modified version of the alternative test method recommended by the Air-
Conditioning, Heating, and Refrigeration Institute (AHRI) and other 
furnace fan manufacturers to rate the electrical energy consumption of 
furnace fans. DOE concluded that the AHRI-proposed method provides a 
framework for accurate and repeatable determinations of FER that is 
comparable to the test method previously proposed by DOE, but at a 
significantly reduced test burden. DOE published in the Federal 
Register a final rule on January 3, 2014, which contained the final 
test procedure for residential furnace fans. 79 FR 500.
---------------------------------------------------------------------------

    \11\ In the May 15, 2012 NOPR for the test procedure, DOE 
referred to FER as ``fan efficiency rating.'' However, in the April 
2, 2013 test procedure SNOPR, DOE proposed to rename the metric as 
``fan energy rating,'' thereby keeping the same abbreviation (FER).
---------------------------------------------------------------------------

    To further develop the energy conservation standards for 
residential furnace fans, DOE gathered additional information and 
performed a preliminary technical analysis. This process culminated in 
publication in the Federal Register of a Notice of Public Meeting and 
the Availability of the Preliminary Technical Support Document (TSD) on 
July 10, 2012. 77 FR 40530. DOE published a NOPR in the Federal 
Register and made available an accompanying NOPR TSD on October 25, 
2013. 78 FR 64068. In that document, DOE requested comment on the 
following matters discussed in the TSD: (1) Additional FER values; (2) 
the methodology for accounting for the relationship between FER and 
airflow capacity; (3) the reasonableness of the values that DOE used to 
characterize the rebound effect with high-efficiency residential 
furnace fans; (4) DOE's estimate of the base-case efficiency 
distribution of residential furnace fans in 2018; (5) the long-term 
market penetration of higher-efficiency residential furnace fans; (6) 
data regarding manufacturer product costs for furnace fan equipment and 
components; (7) the effect of standards on future furnace fan equipment 
shipments; (8) whether there are features or attributes of the more 
energy-efficient furnace fans that manufacturers would produce to meet 
the standards in the proposed rule that might affect how they would be 
used by consumers; (9) data that would refine the analytical timeline; 
(10) input on average equipment lifetimes; (11) the new SCC values used 
to determine the social benefits of CO2 emissions reductions 
over the rulemaking analysis period; and (12) input on the cumulative 
regulatory burden. Id. DOE also invited written comments on these 
subjects, as well as any other relevant issues. A PDF copy of the NOPR 
TSD is available at http://www.regulations.gov/#!documentDetail;D=EERE-
2010-BT-STD-0011-0068.
    The NOPR TSD provided an overview of the activities DOE undertook 
in developing proposed energy

[[Page 38136]]

conservation standards for residential furnace fans, and discussed the 
comments DOE received in response to the Preliminary Analysis. It also 
described the analytical methodology that DOE used and each analysis 
DOE had performed up to that point. These analyses were as follows:
     A market and technology assessment addressed the scope of 
this rulemaking, identified the potential product classes of 
residential furnace fans, characterized the markets for these products, 
and reviewed techniques and approaches for improving their efficiency;
     A screening analysis reviewed technology options to 
improve the efficiency of furnace fans, and weighed these options 
against DOE's four prescribed screening criteria;
     An engineering analysis developed relationships that show 
the manufacturer's cost of achieving increased efficiency;
     A markups analysis developed distribution channel markups 
that relate the manufacturer production cost (MPC) to the cost to the 
consumer;
     An energy use analysis estimated the annual energy use of 
furnace fans at various potential standard levels;
     A life-cycle cost (LCC) analysis calculated, at the 
consumer level, the discounted savings in operating costs throughout 
the estimated average life of the product, compared to any increase in 
installed costs likely to result directly from the adoption of a given 
standard;
     A payback period (PBP) analysis estimated the amount of 
time it would take consumers to recover the higher expense of 
purchasing more-energy-efficient products through lower operating 
costs;
     A shipments analysis estimated shipments of residential 
furnace fans over the time period examined in the analysis (30 years), 
which were used in performing the national impact analysis;
     A national impact analysis assessed the aggregate impacts 
at the national level of potential energy conservation standards for 
residential furnace fans, as measured by the net present value of total 
consumer economic impacts and national energy savings;
     A manufacturer impact analysis estimated the financial 
impact of new energy conservation standards on manufacturers and 
calculated impacts on competition, employment, and manufacturing 
capacity;
     A consumer subgroup analysis evaluated variations in 
customer characteristics that might cause a standard to affect 
particular consumer sub-populations (such as low-income households) 
differently than the overall population;
     An emissions analysis assessed the effects of the 
considered standards on emissions of carbon dioxide (CO2), 
sulfur dioxide (SO2) nitrogen oxides (NOX), 
mercury (Hg), nitrous oxide (N20), and methane 
(CH4);
     An emissions monetization estimated the economic value of 
reductions in CO2 and NOX emissions from the 
considered standards;
     A utility impact analysis estimated selected effects of 
the considered standards on electric utilities;
     An employment impact analysis assessed the impacts of the 
considered standards on national employment; and
     A regulatory impact analysis (RIA) evaluated alternatives 
to amended energy conservation standards in order to assess whether 
such alternatives could achieve substantially the same regulatory goal 
at a lower cost.
    The NOPR public meeting took place on December 3, 2013. At this 
meeting, DOE presented the methodologies and results of the analyses 
set forth in the NOPR TSD. The numerous comments received since 
publication of the October 2013 NOPR, including those received at the 
NOPR public meeting, have contributed to DOE's resolution of the issues 
raised by interested parties.
    The submitted comments include a comment from the American Council 
for an Energy-Efficiency Economy (ACEEE); a joint comment from the 
American Fuel and Petrochemical Manufacturers (AFPM), the U.S. Chamber 
of Commerce (the Chamber), the Council of Industrial Boiler Owners 
(CIBO), the American Forest and Paper Association (AF&PA), and the 
American Petroleum Institute (API); a comment from the American Gas 
Association (AGA); a comment from the Air-Conditioning, Heating, and 
Refrigeration Institute (AHRI); a comment from the American Public Gas 
Association (APGA); a joint comment from the Appliance Standards 
Awareness Project (ASAP), Alliance to Save Energy (ASE), National 
Consumer Law Center (NCLC) and the Natural Resources Defense Council 
(NRDC); a second joint comment from California Investor-Owned Utilities 
(CA IOUs) including Pacific Gas and Electric Company (PG&E), Southern 
California Edison (SCE), Southern California Gas Company (SCGC), and 
San Diego Gas and Electric (SDGE); a comment from the Cato Institute; a 
comment from China WTO (WTO); a comment from Earthjustice; a comment 
from Edison Electric Institute (EEI); a comment from the George 
Washington University Regulatory Studies Center; a comment from Goodman 
Global, Inc. (Goodman); a comment from Heating, Air-Conditioning and 
Refrigeration Distributers International (HARDI); a comment from 
Johnson Controls; a comment from Laclede Gas Company (Laclede); a 
comment from a comment from Lennox International, Inc. (Lennox); a 
comment from the Mercatus Center at George Mason University; a comment 
from Morrison Products, Inc. (Morrison); a comment from Mortex Product, 
Inc. (Mortex); a comment from the National Association of Manufacturers 
(NAM); a joint comment from the Northwest Energy Efficiency Alliance 
(NEEA) and the Northwest Power and Conservation Council (NPCC); a 
comment from the Northeast Energy Efficiency Partnerships (NEEP); a 
comment from Rheem Manufacturing Company (Rheem); a comment from 
Southern Company; a comment from Ingersoll Rand; and a comment from 
Unico, Incorporated. Comments made during the public meeting by those 
not already listed include Nidec Motor Corporation (Nidec) and the 
motor manufacturer Regal Beloit. This final rule summarizes and 
responds to the issues raised in these comments. A parenthetical 
reference at the end of a quotation or paraphrase provides the location 
of the item in the public record.

III. General Discussion

A. Test Procedures

    DOE published the furnace fan test procedure final rule in the 
Federal Register on January 3, 2014. 79 FR 499. DOE's test procedure 
for furnace fans (hereinafter referred to as ``the test procedure'') is 
codified in appendix AA of subpart B of part 430 of the code of federal 
regulations (CFR).The test procedure is applicable to circulation fans 
used in weatherized and non-weatherized gas furnaces, oil furnaces, 
electric furnaces, and modular blowers. The test procedure is not 
applicable to any non-ducted products, such as whole-house ventilation 
systems without ductwork, central air-conditioning (CAC) condensing 
unit fans, room fans, and furnace draft inducer fans.
    DOE aligned the test procedure with the DOE test procedure for 
furnaces by incorporating by reference specific provisions from an 
industry standard that is also incorporated by reference in the DOE 
test procedure for furnaces. DOE's test procedure for furnaces is 
codified in appendix N of subpart B of part 430 of the CFR. The DOE 
furnace test procedure incorporates by reference American National 
Standards Institute (ANSI)/American Society of Heating, Refrigerating 
and Air Conditioning

[[Page 38137]]

Engineers (ASHRAE) 103-1993, Method of Testing for Annual Fuel 
Utilization Efficiency of Residential Central Furnaces and Boilers 
(ASHRAE 103-1993). The DOE furnace fan test procedure incorporates by 
reference the definitions, test setup and equipment, and procedures for 
measuring steady-state combustion efficiency provisions of the 2007 
version of ASHRAE 103 (ASHRAE 103-2007). In addition to these 
provisions, the test procedure includes provisions for apparatuses and 
procedures for measuring temperature rise, external static pressure, 
and furnace fan electrical input power. The test procedure also 
incorporates by reference provisions for measuring temperature and 
external static pressure from ANSI/ASHRAE 37-2009, Methods of Testing 
for Rating Electrically Driven Unitary Air-Conditioning and Heat Pump 
Equipment (ASHRAE 37-2009). There are no differences between the 2005 
version (which is already incorporated by reference in the CFR) and the 
2009 version of the ASHRAE 37 provisions incorporated by reference for 
the furnace fan test procedure. The test procedure also establishes 
calculations to derive the rating metric, fan energy rating (FER), for 
each furnace fan basic model based on the results of testing per the 
test method for furnace fans codified in appendix AA of subpart B of 
part 430 of the CFR.
    FER is the estimated annual electrical energy consumption of a 
furnace fan normalized by: (a) The estimated total number of annual fan 
operating hours (1,870); and (b) the airflow in the maximum airflow-
control setting. For the purposes of the furnace fan test procedure, 
the estimated annual electrical energy consumption is the sum of the 
furnace fan electrical input power (in Watts), measured separately for 
multiple airflow-control settings at different external static 
pressures (ESPs), multiplied by national average operating hours 
associated with each setting. These ESPs are determined by a reference 
system, based on operation at maximum airflow that represents national 
average ductwork system characteristics. Table III.1 includes the 
reference system ESP values by installation type that are specified by 
the test procedure. In previous rulemaking documents for the furnace 
fan test procedure and energy conservation standard rulemaking, DOE 
used the term ``manufactured home furnace'' to be synonymous with 
``mobile home furnace,'' as defined in the Code of Federal Regulation 
(CFR). 10 CFR 430.2. DOE will use the term ``mobile home'' hereinafter 
to be consistent with the CFR definition for ``mobile home furnace.'' 
All provisions and statements regarding mobile homes and mobile home 
furnaces are applicable to manufactured homes and manufactured home 
furnaces.

  Table III.1--Required Reference System Criteria (i.e., ESP at Maximum
                Airflow) by Furnace Fan Installation Type
------------------------------------------------------------------------
                                                          ESP at maximum
                    Installation type                       airflow (in.
                                                                wc)
------------------------------------------------------------------------
Units with an internal evaporator coil..................            0.50
Units designed to be paired with an evaporator coil.....            0.65
Units designed to be installed in a mobile home \12\....            0.30
------------------------------------------------------------------------

    The test procedure requires measurements for the airflow-control 
settings that correspond to fan operation while performing the cooling 
function (which DOE finds is predominantly associated with the maximum 
airflow-control setting), heating function, and constant-circulation 
function. Table III.2 describes the required airflow-control settings 
by product type.
---------------------------------------------------------------------------

    \12\ Mobile home external static pressure is much lower because 
there is no return air ductwork in mobile homes. Also, the United 
States Department of Housing and Urban Development (HUD) 
requirements for mobile homes stipulate that the ductwork for 
cooling should be designed for 0.3 in. water column (wc). 24 CFR 
3280.715.

         Table III.2--Airflow-Control Settings at Which Measurements Are Required for Each Product Type
----------------------------------------------------------------------------------------------------------------
                                       Airflow-control        Airflow-control
           Product type                   setting 1              setting 2           Airflow-control setting 3
----------------------------------------------------------------------------------------------------------------
Single-stage Heating..............  Default constant-      Default heat.........  Absolute maximum.*
                                     circulation.
Multi-stage or Modulating Heating.  Default constant-      Default low heat.....  Absolute maximum.
                                     circulation.
----------------------------------------------------------------------------------------------------------------
* For the purposes of the test procedure, ``absolute maximum'' airflow-control setting refers to the airflow-
  control setting that achieves the maximum attainable airflow at the operating conditions specified by the test
  procedure.

As shown in Table III.2, for products with single-stage heating, the 
three airflow-control settings to be tested are: The default constant-
circulation setting; the default heating setting; and the absolute 
maximum setting. For products with multi-stage heating or modulating 
heating, the airflow-control settings to be tested are: The default 
constant-circulation setting; the default low heating setting; and the 
absolute maximum setting. The absolute lowest airflow-control setting 
is used to represent constant circulation if a default constant-
circulation setting is not specified. DOE defines ``default airflow-
control settings'' as the airflow-control settings for installed use 
specified by the manufacturer in the product literature shipped with 
the product in which the furnace fan is integrated. See Section 2.2 of 
Appendix AA to Subpart B of 10 CFR part 430. Manufacturers typically 
provide detailed instructions for setting the default heating airflow-
control setting to ensure that the product in which the furnace fan is 
integrated operates safely. In instances where a manufacturer specifies 
multiple airflow-control settings for a given function to account for 
varying installation scenarios, the highest airflow-control setting 
specified for the given function shall be used for the DOE test 
procedure. High heat and reduced heat shall be considered different 
functions for multi-stage heating units. Manufacturer installation 
guides also provide detailed instructions regarding compatible 
thermostats and how to wire them to achieve the specified default 
settings.
    The Watt measurements for calculating FER are weighted using 
designated annual operating hours for each function (i.e., cooling, 
heating, and constant circulation) that represent national average 
operation. Table III.3 shows the estimated national average operating 
hours for each function.

[[Page 38138]]



                Table III.3--Estimated National Average Operating Hour Values for Calculating FER
----------------------------------------------------------------------------------------------------------------
                                                                                                  Multi-stage or
                         Operating mode                              Variable      Single-stage     modulating
                                                                                      (hours)         (hours)
----------------------------------------------------------------------------------------------------------------
Heating.........................................................              HH             830         830/HCR
Cooling.........................................................              CH             640             640
Constant Circulation............................................             CCH             400             400
----------------------------------------------------------------------------------------------------------------

    For multi-stage heating or modulating heating products, the 
specified operating hours for the heating mode are divided by the 
heating capacity ratio (HCR) to account for variation in time spent in 
this mode associated with turndown of heating output. The HCR is the 
ratio of the measured reduced heat input rate to the measured maximum 
heat input rate.
    The FER equation is:
    [GRAPHIC] [TIFF OMITTED] TR03JY14.000
    
Where:

CH = annual furnace fan cooling operating hours;
EMax = furnace fan electrical consumption at maximum 
airflow-control setting operating point;
HH = annual furnace fan heating operating hours;
EHeat = furnace fan electrical consumption at the default 
heating airflow-control setting operating point for units with 
single-stage heating or the default low-heating airflow control 
setting operating point for units with multi-stage heating;
CHH = annual furnace fan constant circulation hours;
ECirc = furnace fan electrical consumption at the default 
constant-circulation airflow-control setting operating point (or 
minimum airflow-control setting operating point if a default 
constant-circulation airflow-control setting is not specified);
QMax = airflow at maximum airflow-control setting 
operating point; and
1000 = constant to put metric in terms of watts/1000cfm, which is 
consistent with industry practice.

    DOE received comments from interested parties regarding the furnace 
fan test procedure in response to the furnace fan energy conservation 
standard (ECS) NOPR. Interested parties' comments on the test procedure 
are summarized below. DOE addressed many of these issues in the test 
procedure final rule, published in the Federal Register on January 3, 
2014. (79 FR 514). The publication of the test procedure final rule 
occurred after the standards NOPR public meeting, held on December 3, 
2013, but before the close of the standards NOPR comment period on 
January 23, 2014. For comments that were addressed in the test 
procedure final rule, a reference to the applicable discussion 
contained in the test procedure final rule document is provided. DOE's 
detailed response is provided in this document for comments that were 
not addressed in the test procedure final rule document.
    AHRI, Goodman, Morrison, Rheem, Southern Company, Johnson Controls, 
and Ingersoll Rand commented that DOE's schedule for finalizing the 
test procedure did not provide interested parties with sufficient time 
to evaluate product performance in accordance with the final test 
procedure in order to develop and submit substantive comments on the 
standards proposed in the NOPR. (AHRI, No. 98 at p. 2, 3; Goodman, No. 
102 at pp. 7, 8; Morrison, No. 108 at p. 3; Rheem, No. 83 at p. 1; 
Southern Company, No. 85 at p. 2; Johnson Controls, No. 95 at p. 3; 
Ingersoll Rand, No. 43 at p. 33) Ingersoll Rand added that the comments 
they have submitted to date are based on the proposed test procedure, 
not the final test procedure. (Ingersoll Rand, No. 107 at pp. 2, 10) 
AGA and Allied Air agree and recommend that DOE delay promulgation of 
standards to give interested parties and DOE more time to conduct 
analyses using the final test procedure. (AGA, No. 110 at pp. 3, 4; 
Allied Air, Public Meeting Transcript, No. 43 at p. 48) Goodman 
recommended a delay of three months for this type of product and 
testing. (Goodman, No. 102 at p. 3) Prior to publication of the test 
procedure final rule, EEI expressed support for DOE issuing a 
supplemental notice of proposed rulemaking (SNOPR) for the standard if 
changes were made to the test procedure final rule that had significant 
impacts on DOE's analyses results. (EEI, No. 87 at p. 3) APGA and 
Southern Company also recommended that DOE publish a standards SNOPR. 
(APGA, No. 90 at p. 2; Southern Company, No. 43 at p. 37)
    DOE recognizes that interested parties need sufficient time to 
collect and evaluate relevant fan performance data in order to submit 
meaningful comments on the proposed energy conservation standard for 
furnace fans. Thus, on December 24, 2013, DOE posted a pre-publication 
test procedure final rule notice to regulations.gov and issued a 30-day 
extension of the standards NOPR comment period to provide interested 
parties with time to evaluate DOE's proposed standards using the final 
test procedure.
    AHRI, Johnson Controls, and Morrison stated that, even with the 
comment period extension, the 20 days between the publication of the 
test procedure final rule on January 3, 2014 and the close of the 
standards NOPR comment period on January 23, 2014 did not provide 
interested parties with sufficient time to assess the energy 
conservation standards NOPR based on the provisions within the final 
test procedure. AHRI added that DOE was obligated to issue the NOPR on 
the proposed energy conservation standards after the issuance of the 
final rule on the furnace fan test procedures per Section 7(c) of 
Appendix A to Subpart C of 10 CFR part 430. (AHRI, No. 98 at pp. 2, 3; 
Johnson Controls, No. 95 at p. 3; Morrison, No. 108 at p. 3) Mortex 
stated that they were not able to test any of their products according 
to the final test procedure by the time the energy conservation 
standard NOPR comment period closed. (Mortex, No. 104 at p. 2) 
Ingersoll Rand commented that DOE's standards NOPR analyses are invalid 
because they were not based on the test procedure final rule. 
(Ingersoll Rand, No. 107 at p. 2, 10). NEEA and NPCC provided there is 
a need for product testing using the final test procedure, and a re-
assessment of the derivation of the proposed FER equations and standard 
levels. NEEA and NPCC added that they do not support a decision on

[[Page 38139]]

standards before there is sufficient data with which to verify that the 
proposed FER values will not disqualify from compliance the majority of 
the very products upon which they are founded, and for which DOE's 
economic analyses are valid. (NEEA and NPCC, No. 96 at p. 2)
    DOE disagrees with AHRI and Morrison that the extended comment 
period was insufficient. DOE issued a test procedure SNOPR for furnace 
fans on April 2, 2013. 78 FR 19606. DOE did not make changes to the 
test procedure between the SNOPR and final rule that would 
significantly alter FER values for most products. Interested parties 
that conducted testing in accordance with the test procedure SNOPR 
proposal should not have to retest most furnace models to derive an FER 
value that is consistent with the final test procedure. For most 
furnaces, the FER value should not change or the FER value can be 
recalculated per the final test procedure requirements using the raw 
data measured according to the SNOPR test method. Therefore, 
notwithstanding the 20 days between the test procedure final rule and 
the close of the standards NOPR comment period, interested parties 
still had over nine months between the publication of the test 
procedure SNOPR and the close of the standards NOPR comment period to 
collect and evaluate fan performance data that is relevant to DOE's 
proposed standards. DOE received data that could be used to derive FER 
values that meet the final test procedure requirements from multiple 
manufacturers during this period.
    DOE agrees with NEEA and NPCC that its proposed standards should be 
assessed based on FER values that are reflective of performance as 
measured by the final test procedure. For the reasons stated above, DOE 
was able to use much of the FER data it has collected in previous 
phases of this rulemaking to generate FER values that meet the 
requirements of the final test procedure. DOE also conducted testing 
prior to and during the development of the test procedure final rule 
that generated a broad set of results to enable DOE to derive FER 
values that are consistent with the requirements of the final test 
procedure. In addition, DOE continued to collect and use data from 
publicly-available product literature. DOE relied on the mathematical 
methods outlined in the test procedure NOPR for using this data to 
model fan performance and estimate FER values that meet the final test 
procedure requirements. 77 FR 28690 (May 15, 2012). DOE recognizes that 
this method is not identical to the final test procedure method. 
However, DOE believes the FER values generated in this manner are still 
relevant because the final test method is similar to the test method 
proposed by AHRI (with support from Goodman, Ingersoll Rand, Lennox, 
and Morrison) in response to the test procedure NOPR, which they argued 
would result in accurate and repeatable FER values that are comparable 
to the FER values resulting from the methods proposed in the NOPR. 
(AHRI, No. 16 at p. 3; Goodman, No. 17 at p. 4; Ingersoll Rand, No. 14 
at p. 1; Morrison, No. 21 at p. 3.) For these reasons, Ingersoll Rand's 
comment stating that DOE's standards NOPR analyses are invalid because 
they are not based on the test procedure final rule is inaccurate. The 
standards proposed in the NOPR and those established by this final rule 
are based on relevant FER data.
    Goodman stated that DOE's modifications to the test procedure since 
the April 2013 test procedure SNOPR will have a significant impact on 
FER. Goodman referred specifically to the modification in the test 
procedure that specifies that airflow be calculated based on firing the 
product in the absolute maximum airflow-control setting if that setting 
is a default heating setting. According to Goodman, most furnaces allow 
heating operation at the highest airflow setting. Thus, instead of 
heating airflow setting being a mid-range temperature rise as typically 
set by factory default, it will now be a low-range temperature rise at 
a much higher and less efficient setting for FER calculation (and a 
setting that will not be typical of a field installation). (Goodman, 
No. 102 at p. 7) Ingersoll Rand echoed Goodman's statement, adding that 
the modification would also result in higher watts in heating mode and 
a higher FER value than would have resulted using the procedure in the 
SNOPR for a majority of furnaces. (Ingersoll Rand, No. 107 at pp. 2, 
10).
    DOE disagrees with Goodman's and Ingersoll Rand's comments. DOE 
expects that both interested parties have misinterpreted the test 
procedure requirement. DOE recognizes that product controls can be 
altered from factory settings to allow heating in the absolute maximum 
airflow-control setting. The test procedure does not allow for this 
practice. The test procedure only requires testing in factory-set 
configurations. Specific to the modification in question, the test 
procedure requires heating in the absolute maximum airflow-control 
setting only if that setting is a default heat setting. See Section 
8.6.1.2 of Appendix AA to Subpart B of 10 CFR part 430. By definition, 
as outlined in the test procedure, a default heating airflow-control 
setting is factory-set and specified for installed-use as a heat 
setting by the manufacturer. See Section 2.2 of Appendix AA to Subpart 
B of 10 CFR part 430. Consequently, the resulting temperature rise is 
also factory-set by the manufacturer, and the measured performance will 
be representative of field use. In addition, the test procedure SNOPR 
and final rule requirements for EHeat (the watts in heating 
mode input for FER) are consistent and the measured values for this 
input should not change. The impacts of the modification in question 
are explained in more detail in the test procedure final rule. 79 FR 
514 (January 3, 2014).
    AHRI commented that in the final test procedure that was published 
on January 3, 2014, DOE introduced a change within the test procedure 
that increases the measured FER. AHRI stated that DOE decided not to 
implement AHRI's recommendation that a furnace be fired at the maximum 
airflow rate to calculate the maximum airflow. Instead, according to 
AHRI, the final rule specifies that the maximum airflow is determined 
by applying the airflow equation for a heating setting and adjusting to 
the maximum setting based on pressure measurements. AHRI claims that 
this approach results in an increase of the measured FER and was not 
accounted within the analyses associated with the energy conservation 
standards NOPR TSD that was issued on October 25, 2013. AHRI recommends 
that DOE reevaluate the analyses within the entire TSD due to this 
single change. (AHRI, No. 98 at p. 3, 4)
    DOE introduced the change referred to by AHRI in the April 2, 2013 
test procedure SNOPR. A detailed discussion of DOE's reasoning for that 
change are provided in that notice. 78 FR 19616. DOE made additional 
changes to this provision in the test procedure final rule by requiring 
that the product under test be fired at the maximum airflow rate to 
calculate the maximum airflow for furnaces for which the maximum 
airflow-control setting is a default heat setting (consistent with 
AHRI's recommendation). See Section 8.6.1.2 of Appendix AA to Subpart B 
of 10 CFR part 430. DOE disagrees with AHRI that the change in question 
will result in higher FER values. DOE fan performance tests, including 
tests following the final test procedure, show that the maximum airflow 
calculated when firing the product under test in the maximum airflow 
control setting is typically lower than when applying the airflow 
equation for a heating setting

[[Page 38140]]

and adjusting to the maximum setting based on pressure measurements. 
Consequently, FER values would be lower if they were derived using 
airflow values calculated when firing in the maximum airflow-control 
setting. AHRI did not provide data to the contrary. As stated above, 
DOE's proposed standards and the standards established by this document 
are valid because they are based on FER values that are consistent with 
the final test procedure (to include FER values employing the airflow 
adjustment method in question).
    AHRI, Morrison, and Ingersoll Rand commented that they are opposed 
to DOE eliminating the HCR from the denominator of the FER equation. 
According to AHRI, DOE did not provide a sound technical justification 
for such a modification and unnecessarily penalized the FER values 
associated with multi-stage and modulating units. (AHRI, No. 98 at p. 
2, 3; Morrison, No. 108 at p. 3, 4; Ingersoll Rand, No. 107 at p. 2, 
10)
    As discussed in the test procedure final rule, DOE found that 
including HCR in the denominator of the FER equation resulted in 
percent reductions in estimated annual energy consumption, as 
calculated for FER, of 15 percent. 79 FR 515 (January 3, 2014). 
Further, DOE found percent reductions in FER of approximately 30 
percent when comparing single-stage products using constant-torque 
brushless permanent magnet (BPM) motors to multi-stage products using 
constant-torque BPM motors. DOE eliminated HCR from the FER equation 
because, as a result, percent reductions in FER dropped to 15 percent 
on average, which is consistent with percent reduction in estimated 
annual energy consumption. 79 FR 515 (January 3, 2014). DOE did not 
receive any new FER values for products that use a constant-torque BPM 
motor and multi-stage heating. DOE was also unable to find data in the 
public domain with which to calculate new FER values to represent such 
products. In the absence of new data, DOE used the raw airflow, ESP, 
and fan electrical energy consumption data for single-stage furnaces 
with constant-torque BPM motors to generate FER values reflecting the 
addition of theoretical multi-stage heating capabilities. Single-stage 
furnaces using constant-torque BPM motors typically have additional 
airflow-control settings that provide less airflow than the factory-set 
heating airflow-control setting. Theoretically, these airflow-control 
settings could be used for a low heat setting in a multi-stage heating 
configuration. DOE identified as many models as possible that meet this 
criterion and for which DOE has sufficient data to calculate 
theoretical FER values for a multi-stage configuration. For each model, 
DOE first calculated the temperature rise in the default heating 
setting based on the airflow, thermal efficiency and input heat rating 
in that setting. Next, DOE used a variation of the same relationship 
between these parameters to calculate the theoretical low input 
capacity that would achieve the same temperature rise for each 
available airflow-control setting below the heat setting. DOE then 
evaluated the HCR for each of the lower airflow-control settings based 
on the theoretical input capacity of the lower setting and the rated 
input capacity of the default heat setting. DOE selected the low 
airflow-control setting that produced an HCR between 0.4 and 0.9 that 
was closest to 0.7 to represent the theoretical low heating setting. 
DOE chose these criteria based on investigation of typical HCR values 
observed in currently available products. Finally, DOE calculated 
estimated annual energy consumption and an FER value using the single-
stage model's data for the absolute maximum and constant circulation 
airflow-control settings and the data for the theoretical low heating 
setting for the heating airflow-control setting. DOE's new data shows 
that multi-staging reduces estimated annual energy consumption by an 
average of 14 percent and FER by an average of 12 percent. These 
findings are consistent with DOE's previous findings and support its 
decision to eliminate HCR from the denominator of the FER calculation.
    Ingersoll Rand stated that the final test procedure reduces the 
estimated savings associated with BPM motors. Ingersoll Rand commented 
that BPM motors consume more power as static pressure increases than 
permanent-split capacitor (PSC) motors. (Ingersoll Rand, No. 107 at p. 
2, 10)
    DOE addressed this issue in the energy conservation standards NOPR. 
78 FR 64084 (October 25, 2013). While BPM motors consume more power as 
static pressure increases, they also provide more airflow. FER is 
normalized by airflow to account for this difference in behavior 
between BPM and PSC motors. In addition, the standards established in 
this document are a function of airflow. BPM motor-driven fan 
performance is evaluated relative to PSC motor-driven fans that provide 
the same amount of airflow at the same reference system static pressure 
as a result. Interested parties did not provide any evidence that these 
methods are inappropriate for evaluating relative fan performance.
    China WTO commented that FER includes factors, such as HCR, to 
account for multi-stage heating but does not include analogous factors 
for multi-stage cooling. (China WTO, No. 92 at p. 1)
    DOE considered accounting for fan performance during multi-stage 
cooling operation for the test procedure NOPR. 77 FR 28680. DOE did not 
include factors for multi-stage cooling in the final test procedure 
because the presence and capacity of low-stage cooling is dependent on 
the cooling system with which a product containing a furnace fan is 
paired. DOE found in its review of publicly-available product 
literature that detailed characteristics of the cooling system are not 
typically provided. Consequently, entities performing the DOE furnace 
fan test procedure cannot identify the airflow-control setting that 
would be designated for low-stage cooling operation. In addition, 
multi-stage heating is not necessarily associated with multi-stage 
cooling capability (e.g., multi-stage cooling equipment is much less 
common than multi-stage heating equipment).
    China WTO stated that the final test procedure does not provide a 
method for calculating the maximum airflow when the maximum airflow-
control setting is only designated for cooling. (China WTO, No. 92 at 
p. 1)
    The method for calculating the maximum airflow when the maximum 
airflow-control setting is only designated for cooling is provided in 
the final rule and in Section 9 of appendix AA of subpart B of part 430 
of the CFR. 79 FR 524 (January 3, 2014).
    The California Investor Owned Utilities (CA IOU) commented that 
they observed a potential error in the calculation of airflow in the 
final test procedure. Specifically, CA IOU recommended that DOE include 
the humidity ratio in pounds water vapor per pounds dry air. CA IOU 
submits that this addition will increase the accuracy of the 
calculation of specific volume of test room air in cubic feet per pound 
of dry air to calculate airflow. (CA IOU, No. 106 at p. 4)
    The equation for calculating airflow in the final test procedure 
already includes the humidity ratio in pounds water vapor per pounds 
dry air as codified in Section 9 of appendix AA of subpart B of part 
430 of the CFR.
    CA IOU recommended that in addition to reporting FER, which is the 
basis for the performance standard, DOE require manufacturers to report 
individual mode electrical energy consumption values (e.g., 
EHeat, EMax, and ECirc). According to 
CA IOU,

[[Page 38141]]

reporting these values would greatly facilitate the development of more 
targeted energy efficiency incentive programs, and manufacturers 
already have to measure and perform these calculations for the 
composite FER. CA IOU recognizes that EMax could represent 
fan electrical energy consumption in either heating or cooling mode 
depending on the product. Nonetheless, CA IOU also recommends that DOE 
require manufacturers to report fan electrical energy consumption in 
cooling mode even if not included in FER because having it as an 
additional data point could be useful for the development of utility 
programs across the country. CA IOU stated that energy efficiency 
incentive programs typically require a rigorous level of review and 
justification for implementation. Gaps in performance data of 
commercially available equipment is one of the main limiting factors in 
program development, contributing to the lengthy and resource-intensive 
data collection and verification processes. In the case of this 
rulemaking, manufacturers will already be required to test their 
products in heating, cooling, and constant circulation modes. CA IOU 
believes that the minimal extra effort required by manufacturers to 
report these values would be outweighed by the opportunity for 
utilities and other public agencies to develop incentive programs using 
these performance metrics, which in turn would positively impact 
manufacturers of high performing products. For these reasons, CA IOU 
strongly urge DOE to require manufacturers to report tested and 
calculated metrics that feed into a composite metric for the standard. 
ASAP, ASE, NCLC, and NRDC, hereinafter referred to as ASAP, et al., 
agree. (ASAP, et al., No. 105 at p. 3)
    At this time, DOE is declining to adopt reporting requirements for 
individual mode electrical consumption values as the CA IOU suggests. 
While DOE is open to considering additional reporting metrics in the 
future, DOE believes that establishing a Federal test procedure and 
metric (i.e., FER) will provide utility programs with a basis for 
establishing meaningful incentive programs as the CA IOUs desire. 
Further, DOE believes that reporting the aggregated electrical 
consumption (i.e., the FER metric) will provide market differentiation 
amongst currently- available models, thereby allowing the utility 
programs to set voluntary levels for incentive programs at meaningful 
levels to obtain energy savings. If data and analyses are provided, 
which show the disaggregated levels are necessary for the proper 
execution of utility incentive programs, DOE will consider modifying 
the certification requirements for furnace fans.
    Unico pointed out that DOE presents the required minimum reference 
system ESP values inconsistently across rulemaking documents. Unico 
noticed that in some documents DOE presents these values as a range for 
each installation type, and in other rulemaking documents DOE presents 
only the lower value within each range with an asterisk. (Unico, No. 93 
at p. 6)
    As explained in the test procedure final rule, DOE's test 
experience confirms manufacturer concerns that specific ESP values are 
difficult to achieve and maintain when measuring airflow. The final 
test procedure specifies that products maintain an ESP level between 
the minimum reference system value and 0.05 in. wc. above that minimum 
value to allow for slight variations. 79 FR 508 (January 3, 2014). 
Consequently, DOE presents the minimum required ESP values as a range 
in Section 8.6.1.2 in appendix AA of subpart B of part 430 in the CFR 
or as the minimum value with an asterisk accompanied by the explanation 
above in other DOE documents.
    AHRI commented that DOE should provide the option of employing an 
alternative efficiency determination method (AEDM) to determine FER. 
AHRI insists that an AEDM is critical for manufacturers to implement 
new requirements on a timely basis while minimizing burden. AHRI 
believes that the number of furnace fan basic models will be greater 
than the number of furnace basic models. According to AHRI, the 
pressure drop due to the gas heat exchanger will require that each 
furnace basic model also be considered as a furnace fan basic model. 
AHRI added that additional furnace fan basic models would be created in 
order to account for the type of installation. AHRI also pointed out 
that many furnace fan manufacturers also produce several other DOE 
regulated products. AHRI submits that rather than requiring 
manufacturers to spend valuable resources on conducting several tests, 
DOE should recognize that those resources could be better spent on 
innovating more efficient products. (AHRI, No. 98 at p. 13)
    DOE provided a detailed discussion of this issue in the test 
procedure final rule. 79 FR 513 (January 3, 2014). DOE currently does 
not allow the use of AEDMs for residential products, with the exception 
of central air conditioners and heat pumps due to the uniquely large 
number of combinations of split-system air conditioners and heat pumps 
that are rated. DOE recognizes that the number of furnace fan basic 
models may outnumber furnace basic models for the reasons AHRI lists. 
Even so, DOE expects the number of basic models of furnace fans to be 
significantly less than the number of basic models of residential 
central air conditioners and heat pumps (CAC and HP) for which 
alternative rating methods are currently allowed. DOE has not found the 
residential furnace fan market to be highly customized (i.e., 
containing many unique built-to-order designs) and expects that 
manufacturers will be able to group similar individual furnace fan 
types into basic models to reduce testing burden. DOE notes that it 
currently has over 1 million CAC combinations certified in the 
Compliance Certification Management System (CCMS) compared to 
approximately 12,500 certified furnace basic models. Consequently, DOE 
does not agree with AHRI's assertion that an alternative rating method 
needs to be considered at this time. Should AHRI or the industry 
provide additional data or substantiation for its requests 
demonstrating why testing furnace fans are unique, as compared to the 
majority of other residential products for which AEDMs are not allowed, 
then DOE may consider such requests in a separate rulemaking.

B. Product Classes and Scope of Coverage

    Although the title of 42 U.S.C. 6295(f) refers to ``furnaces and 
boilers,'' DOE notes that 42 U.S.C. 6295(f)(4)(D) was written using 
notably broader language than the other provisions within the same 
section. Specifically, that statutory provision directs DOE to 
``consider and prescribe energy conservation standards or energy use 
standards for electricity used for purposes of circulating air through 
duct work.'' Such language could be interpreted as encompassing 
electrically-powered devices used in any residential HVAC product to 
circulate air through duct work, not just furnaces, and DOE has 
received numerous comments on both sides of this issue. However, in 
this rulemaking, DOE is only covering those circulation fans that are 
used in furnaces and modular blowers. DOE is using the term ``modular 
blower'' to refer to HVAC products powered by single-phase electricity 
that comprise an encased circulation blower that is intended to be the 
principal air-circulation source for the living space of a residence. A 
modular blower is not contained within the same cabinet as a 
residential furnace, CAC, or heat pump. Instead,

[[Page 38142]]

modular blowers are designed to be paired with separate residential 
HVAC products that provide heating and cooling, typically a separate 
CAC/HP coil-only unit. DOE finds that modular blowers and electric 
furnaces are very similar in design. In many cases, the only difference 
between a modular blower and electric furnace is the presence of an 
electric resistance heating kit. DOE is aware that some modular blower 
manufacturers offer electric resistance heating kits to be installed in 
their modular blower models so that the modular blowers can be 
converted to stand-alone electric furnaces. In addition, FER values for 
modular blowers can be easily calculated using the final test 
procedure. DOE addresses the furnace fans used in modular blowers in 
this rulemaking for these reasons. As a result of the extent of the 
current rulemaking, DOE is not addressing public comments that pertain 
to fans in other types of HVAC products.
    When evaluating and establishing energy conservation standards, DOE 
divides covered products into product classes by the type of energy 
used or by capacity or other performance-related features that justify 
a different standard. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such 
factors as the utility to the consumer of the feature and other factors 
DOE determines are appropriate. (42 U.S.C. 6295(q)) For this 
rulemaking, DOE differentiates between product classes based on 
internal structure and application-specific design differences that 
impact furnace fan energy consumption. Details regarding how internal 
structure and application-specific design differences that impact 
furnace fan energy consumption are included in chapter 3 of the final 
rule technical support document (TSD). DOE includes the following 
product classes for this rulemaking.

 Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG-NC)
 Non-Weatherized, Condensing Gas Furnace Fan (NWG-C)
 Weatherized Non-Condensing Gas Furnace Fan (WG-NC)
 Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO-NC)
 Non-Weatherized Electric Furnace/Modular Blower Fan (NWEF/
NWMB)
 Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan 
(MH-NWG-NC)
 Mobile Home Non-Weatherized, Condensing Gas Furnace Fan (MH-
NWG-C)
 Mobile Home Electric Furnace/Modular Blower Fan (MH-EF/MB)
 Mobile Home Weatherized Gas Furnace Fan (MH-WG)
 Mobile Home Non-Weatherized Oil Furnace Fan (MH-NWO)

    Each product class title includes descriptors that indicate the 
application-specific design and internal structure of its included 
products. ``Weatherized'' and ``non-weatherized'' are descriptors that 
indicate whether the HVAC product is installed outdoors or indoors, 
respectively. Weatherized products also include an internal evaporator 
coil, while non-weatherized products are not shipped with an evaporator 
coil but may be designed to be paired with one. ``Condensing'' refers 
to the presence of a secondary, condensing heat exchanger in addition 
to the primary combustion heat exchanger in certain furnaces. The 
presence of an evaporator coil or secondary heat exchanger 
significantly impacts the internal structure of an HVAC product, and in 
turn, the energy performance of the furnace fan integrated in that HVAC 
product. ``Mobile home'' products meet certain design requirements that 
allow them to be installed in mobile homes (e.g., a more compact 
cabinet size). Descriptors for ``gas,'' ``oil,'' or ``electric'' 
indicate the type of fuel that the HVAC product uses to produce heat, 
which determines the type and geometry of the primary heat exchanger 
used in the HVAC product.

C. Technological Feasibility

1. General
    In each energy conservation standards rulemaking, DOE conducts a 
screening analysis based on information gathered on all current 
technology options and prototype designs that could improve the 
efficiency of the products or equipment that are the subject of the 
rulemaking. As the first step in such an analysis, DOE develops a list 
of technology options for consideration in consultation with 
manufacturers, design engineers, and other interested parties. DOE then 
determines which of those means for improving efficiency are 
technologically feasible. DOE considers technologies incorporated in 
commercially-available products or in working prototypes to be 
technologically feasible. 10 CFR part 430, subpart C, appendix A, 
Section 4(a)(4)(i).
    After DOE has determined that particular technology options are 
technologically feasible, it further evaluates each technology option 
in light of the following additional screening criteria: (1) 
Practicability to manufacture, install, and service; (2) adverse 
impacts on product utility or availability; and (3) adverse impacts on 
health or safety. 10 CFR part 430, subpart C, appendix A, Section 
4(a)(4)(ii)-(iv). Additionally, it is DOE policy not to include in its 
analysis any proprietary technology that is a unique pathway to 
achieving a certain efficiency level. Section IV.B of this document 
discusses the results of the screening analysis for residential furnace 
fans, particularly the designs DOE considered, those it screened out, 
and those that are the basis for the tcrial standard levels (TSLs) in 
this rulemaking. For further details on the screening analysis for this 
rulemaking, see chapter 4 of the final rule TSD.
2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt a new standard for a type or class of 
covered product, it must determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the 
engineering analysis, DOE determined the maximum technologically 
feasible (``max-tech'') improvements in energy efficiency for 
residential furnace fans, using the design parameters for the most-
efficient products available on the market or in working prototypes. 
The max-tech levels that DOE determined for this rulemaking are 
described in section IV.C of this final rule and in chapter 5 of the 
final rule TSD.

D. Energy Savings

1. Determination of Savings
    For each TSL, DOE projected energy savings from the products that 
are the subjects of this rulemaking purchased during a 30-year period 
that begins in the year of compliance with amended standards (2019-
2048).\13\ The savings are measured over the entire lifetime of 
products purchased in the 30-year period.\14\ DOE used the NIA model to 
estimate the NES for products purchased over the above period. The 
model forecasts total energy use over the analysis period for each 
representative product class at efficiency levels set by each of the 
considered TSLs. DOE then

[[Page 38143]]

compares the aggregated energy use at each TSL to the base-case energy 
use to obtain the NES. The NIA model is described in section IV. H of 
this document and in chapter 10 of the final rule TSD.
---------------------------------------------------------------------------

    \13\ DOE also presents a sensitivity analysis that considers 
impacts for products shipped in a 9-year period.
    \14\ In the past, DOE presented energy savings results for only 
the 30-year period that begins in the year of compliance. In the 
calculation of economic impacts, however, DOE considered operating 
cost savings measured over the entire lifetime of products purchased 
during the 30-year period. DOE has chosen to modify its presentation 
of national energy savings to be consistent with the approach used 
for its national economic analysis.
---------------------------------------------------------------------------

    DOE used its NIA spreadsheet model to estimate energy savings from 
amended standards for the products that are the subject of this 
rulemaking. The NIA spreadsheet model (described in section IV. H of 
this notice) calculates energy savings in site energy, which is the 
energy directly consumed by products at the locations where they are 
used. For electricity, DOE reports national energy savings in terms of 
the primary (source) energy savings, which are the savings in the 
energy that is used to generate and transmit the site electricity. To 
convert site energy to primary energy, DOE derives annual conversion 
factors from the model used to prepare the Energy Information 
Administration's (EIA) Annual Energy Outlook 2013 (AEO 2013).
    DOE also has begun to estimate full-fuel-cycle energy savings. 76 
FR 51282 (August 18, 2011), as amended at 77 FR 49701 (August 17, 
2012). The full-fuel-cycle (FFC) metric includes the energy consumed in 
extracting, processing, and transporting primary fuels (i.e., coal, 
natural gas, petroleum fuels), and thus presents a more complete 
picture of the impacts of energy efficiency standards. DOE's evaluation 
of FFC savings is driven in part by the National Academy of Science's 
(NAS) report on FFC measurement approaches for DOE's Appliance 
Standards Program.\15\ The NAS report discusses that FFC was primarily 
intended for energy efficiency standards rulemakings where multiple 
fuels may be used by a particular product. In the case of this 
rulemaking pertaining to residential furnace fans, only a single fuel--
electricity--is consumed by the product. DOE's approach is based on the 
calculation of an FFC multiplier for each of the energy types used by 
covered products. Although the addition of FFC energy savings in the 
rulemakings is consistent with the recommendations, the methodology for 
estimating FFC does not project how fuel markets would respond to this 
particular standards rulemaking. The FFC methodology simply estimates 
how much additional energy, and in turn how many tons of emissions, may 
be displaced if the estimated fuel were not consumed by the products 
covered in this rulemaking. It should be noted that inclusion of FFC 
savings has not affected DOE's choice of the energy conservation 
standards adopted in today's final rule. For more information on FFC 
energy savings, see section IV. H.2.
---------------------------------------------------------------------------

    \15\ ``Review of Site (Point-of-Use) and Full-Fuel-Cycle 
Measurement Approaches to DOE/EERE Building Appliance Energy-
Efficiency Standards,'' (Academy report) was completed in May 2009 
and included five recommendations. A copy of the study can be 
downloaded at: http://www.nap.edu/catalog.php?record_id=12670.
---------------------------------------------------------------------------

2. Significance of Savings
    EPCA prohibits DOE from adopting a standard for a covered product 
that would not result in significant energy savings. (42 U.S.C. 
6295(o)(3)(B)) Although the term ``significant'' is not defined in 
EPCA, the U.S. Court of Appeals for the District of Columbia, in 
Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 
(D.C. Cir. 1985), opined that Congress intended ``significant'' energy 
savings in this context to be savings that were not ``genuinely 
trivial.'' The energy savings for today's standards (presented in 
section V of this notice) are nontrivial, and, therefore, DOE considers 
them ``significant'' within the meaning of section 325 of EPCA.

E. Economic Justification

1. Specific Criteria
    As discussed in section II.A, EPCA provides seven factors to be 
evaluated in determining whether a potential energy conservation 
standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-
(VII)) The following sections generally discuss how DOE is addressing 
each of those seven factors in this rulemaking. For further details and 
the results of DOE's analyses pertaining to economic justification, see 
sections IV and V of today's document.
Economic Impact on Manufacturers and Commercial Customers
    In determining the impacts of a potential new or amended energy 
conservation standard on manufacturers, DOE conducts a manufacturer 
impact analysis (MIA), as discussed in section IV.J. DOE first 
determines a potential standard's quantitative impacts using an annual 
cash flow approach. This step includes both a short-term assessment 
(based on the cost and capital requirements associated with new or 
amended standards during the period between the announcement of a 
regulation and the compliance date of the regulation) and a long-term 
assessment (based on the costs and marginal impacts over the 30-year 
analysis period). The impacts analyzed include: (1) Industry net 
present value (INPV) (which values the industry based on expected 
future cash flows); (2) cash flows by year; (3) changes in revenue and 
income; and (4) other measures of impact, as appropriate. Second, DOE 
analyzes and reports the potential impacts on different types of 
manufacturers, paying particular attention to impacts on small 
manufacturers. Third, DOE considers the impact of new or amended 
standards on domestic manufacturer employment and manufacturing 
capacity, as well as the potential for new or amended standards to 
result in plant closures and loss of capital investment, as discussed 
in section IV.N. Finally, DOE takes into account cumulative impacts of 
other DOE regulations and non-DOE regulatory requirements on 
manufacturers.
    For individual customers, measures of economic impact include the 
changes in LCC and the PBP associated with new or amended standards. 
These measures are discussed further in the following section. For 
consumers in the aggregate, DOE also calculates the national net 
present value of the economic impacts applicable to a particular 
rulemaking. DOE also evaluates the LCC impacts of potential standards 
on identifiable subgroups of consumers that may be affected 
disproportionately by a national standard.
Savings in Operating Costs Compared to Increase in Price (Life-Cycle 
Costs)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product compared 
to any increase in the price of the covered product that are likely to 
result from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts 
this comparison in its LCC and PBP analysis.
    The LCC is the sum of the purchase price of a product (including 
the cost of its installation) and the operating costs (including 
energy, maintenance, and repair costs) discounted over the lifetime of 
the equipment. To account for uncertainty and variability in specific 
inputs, such as product lifetime and discount rate, DOE uses a 
distribution of values, with probabilities attached to each value. For 
its analysis, DOE assumes that consumers will purchase the covered 
product in the first year of compliance with new standards.
    The LCC savings and the PBP for the considered efficiency levels 
are calculated relative to a base-case scenario, which reflects likely 
market trends in the absence of new or amended standards. DOE 
identifies the percentage of consumers estimated to receive LCC savings 
or experience an LCC increase, in addition to the average LCC savings 
associated with a particular

[[Page 38144]]

standard level. DOE's LCC analysis is discussed in further detail in 
section IV.F.
Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA also 
requires DOE, in determining the economic justification of a standard, 
to consider the total projected energy savings that are expected to 
result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) 
DOE uses NIA spreadsheet results in its consideration of total 
projected savings. For the results of DOE's analyses related to the 
potential energy savings, see section V.B of this notice and chapter 10 
of the final rule TSD.
Lessening of Utility or Performance of Equipment
    In establishing product classes, and in evaluating design options 
and the impact of potential standard levels, DOE follows EPCA's 
requirement to develop standards that would not lessen the utility or 
performance of the products under consideration. (42 U.S.C. 
6295(o)(2)(B)(i)(IV)) DOE has determined that none of the TSLs 
presented in today's final rule would reduce the utility or performance 
of the products under consideration in this rulemaking. During the 
screening analysis, DOE eliminated from consideration any technology 
that would adversely impact customer utility. See section IV.B of this 
notice and chapter 4 of the final rule TSD for further details.
Impact of Any Lessening of Competition
    EPCA requires DOE to consider any lessening of competition that is 
likely to result from setting new or amended standards. It also directs 
the Attorney General of the United States (Attorney General) to 
determine the impact, if any, of any lessening of competition likely to 
result from a proposed standard and to transmit such determination to 
the Secretary within 60 days of the publication of a proposed rule, 
together with an analysis of the nature and extent of the impact. (42 
U.S.C. 6295(o)(2)(B)(i)(V) and (ii))
    To assist the Department of Justice (DOJ) in making such a 
determination, DOE provided DOJ with copies of both the NOPR and NOPR 
TSD for review. In its assessment letter responding to DOE, DOJ 
concluded that the proposed energy conservation standards for 
residential furnace fans are unlikely to have a significant adverse 
impact on competition. DOE is publishing the Attorney General's 
assessment at the end of this final rule.
Need of the Nation To Conserve Energy
    Another factor that DOE must consider in determining whether a new 
or amended standard is economically justified is the need for national 
energy and water conservation. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The 
energy savings from new or amended standards are likely to provide 
improvements to the security and reliability of the Nation's energy 
system. Reductions in the demand for electricity may also result in 
reduced costs for maintaining the reliability of the Nation's 
electricity system. DOE conducts a utility impact analysis to estimate 
how new or amended standards may affect the Nation's needed power 
generation capacity, as discussed in section IV.M.
    Energy savings from energy conservation standards are also likely 
to result in environmental benefits in the form of reduced emissions of 
air pollutants and greenhouse gases associated with energy production 
(i.e., from power plants). For a discussion of the results of the 
analyses relating to the potential environmental benefits of today's 
standards, see sections IV.K, IV.L and V.B.6 of this notice. DOE 
reports the expected environmental effects from today's standards, as 
well as from each TSL it considered, in chapter 13 of the final rule 
TSD. DOE also reports estimates of the economic value of emissions 
reductions resulting from the considered TSLs in chapter 14 of the 
final rule TSD.
Other Factors
    EPCA allows the Secretary, in determining whether a new or amended 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) 
There were no other factors considered for today's final rule.
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA provides for a 
rebuttable presumption that an energy conservation standard is 
economically justified if the additional cost to the consumer of a 
product that meets the new or amended standard is less than three times 
the value of the first-year energy (and, as applicable, water) savings 
resulting from the standard, as calculated under the applicable DOE 
test procedure. DOE's LCC and PBP analyses generate values that 
calculate the PBP for consumers of products subject to potential new 
and amended energy conservation standards. These analyses include, but 
are not limited to, the 3-year PBP contemplated under the rebuttable 
presumption test. However, DOE routinely conducts an economic analysis 
that considers the full range of impacts to consumers, manufacturers, 
the Nation, and the environment, as required under 42 U.S.C. 
6295(o)(2)(B)(i). The results of these analyses serve as the basis for 
DOE's evaluation of the economic justification for a potential standard 
level (thereby supporting or rebutting the results of any preliminary 
determination of economic justification). The rebuttable presumption 
payback calculation is discussed in section IV.F of this rulemaking and 
chapter 8 of the final rule TSD.

IV. Methodology and Discussion

A. Market and Technology Assessment

    DOE develops information that provides an overall picture of the 
market for the products concerned, including the purpose of the 
products, the industry structure, manufacturers, market 
characteristics, and technologies used in the products. This activity 
includes both quantitative and qualitative assessments, based primarily 
on publicly-available information. The subjects addressed in the market 
and technology assessment for this residential furnace fans rulemaking 
include: (1) A determination of the scope of this rulemaking; (2) 
product classes; (3) manufacturers; (4) quantities and types of 
products sold and offered for sale; (5) retail market trends; (6) 
regulatory and non-regulatory programs; and (7) technologies or design 
options that could improve the energy efficiency of the product(s) 
under examination. The key findings of DOE's market assessment are 
summarized below. See chapter 3 of the final rule TSD for further 
discussion of the market and technology assessment.
1. Definition and Scope of Coverage
    EPCA provides DOE with the authority to consider and prescribe new 
energy conservation standards for electricity used to circulate air 
through duct work. (42 U.S.C. 6295(f)(4)(D)) DOE adopted the term 
``furnace fan'' as shorthand to describe the range of products 
encompassed by this statutory mandate. In the preliminary analysis, DOE 
interpreted its statutory mandate by defining ``furnace fan'' to 
include ``any electrically-powered device used in residential central 
heating, ventilation, and air-conditioning (HVAC) systems for the 
purpose of circulating air through duct work.'' 77 FR 40530, 40532 
(July 10, 2012). DOE

[[Page 38145]]

considered a typical furnace fan as consisting of a fan motor and its 
controls, an impeller, and a housing, all of which are components of an 
HVAC product that includes additional components, including the 
cabinet.
    In response to the preliminary analysis, many interested parties 
disagreed with DOE's definition of ``furnace fan'' and corresponding 
approach to set component-level regulations, which they warned would 
ignore system effects that could impact both fan and HVAC system energy 
consumption. California investor-owned utilities CA IOUs suggested that 
``furnace fan'' should be defined as a unit consisting of a fan motor, 
its controls, an impeller, shroud, and cabinet that houses all of the 
heat exchange material for the furnace. According to CA IOUs, their 
suggested definition would reduce ambiguity and ensure that the 
components in HVAC products that affect furnace fan energy consumption 
are considered in this rulemaking. (CA IOUs, No. 56 at p. 1) Ingersoll 
Rand went further and suggested a system-level regulatory approach, 
where the entire duct and furnace system would be regulated, 
maintaining that such approach would produce a more useful metric to 
consumers when evaluating performance. (Ingersoll Rand, PA Public 
Meeting Transcript, No. 43 at p. 42) Conversely, NEEP observed that by 
regulating fan energy use separately, the individual efficiency of the 
component is considered when it would otherwise be ignored by 
manufacturers. (NEEP, No. 51 at p. 3) Rheem commented that some designs 
require higher air velocity to improve heat transfer but also require 
more electrical consumption to drive the blower at the higher velocity. 
(Rheem, PA Public Meeting Transcript, No. 43 at p. 63) Rheem commented 
that turbulent flow is considerably more efficient for heat transfer 
than laminar flow,\16\ but more energy is required to move turbulent 
air. (Rheem, No. 54 at p. 10) Similarly, Lennox and Morrison commented 
that in order to improve heating and cooling efficiency, often a second 
heating coil is added, but this also leads to higher electrical 
consumption by the furnace fan. (Lennox, No. 43 at p. 64; Morrison, No. 
43 at p. 64) Ingersoll Rand argued that as the efficiency of the 
furnace fan motor increases, it dissipates less heat, and consequently, 
the furnace will consume more gas to compensate and meet the desired 
house heat load. (Ingersoll Rand, No. 43 at p. 66)
---------------------------------------------------------------------------

    \16\ ``Laminar flow'' is as term to describe when all fluid 
particles move in paths parallel to the overall flow direction 
(i.e., in layers). Laminar flow may occur when the flow channel is 
small and the speed is low. ``Turbulent flow'' is characterized by a 
three-dimensional movement of the fluid particles superimposed on 
the overall direction of motion. Turbulent flow may occur when the 
flow speed is higher and when there are obstacles in the channel 
that disrupt the flow profile. The turbulent flow intensifies the 
heat transfer, thus resulting in more efficient heat exchange.
---------------------------------------------------------------------------

    In the NOPR, DOE responded by explaining that DOE is required by 
EPCA to consider and prescribe new energy conservation standards or 
energy use standards for electricity used for purposes of circulating 
air through duct work. (42 U.S.C. 6295(f)(4)(D)) Consequently, in the 
context of furnace fans, DOE does not have latitude to apply only a 
single standard for the larger HVAC product (which is already 
regulated). Pursuant to this statutory mandate, DOE issued a NOPR which 
proposed energy conservation standards for circulation fans used in 
residential central HVAC systems (78 FR 64068 (Oct. 25, 2013)). DOE 
added that it did not interpret its authority as including regulating 
the duct work itself. DOE recognized that component-level regulations 
could have system-level impacts. Accordingly, DOE conducted its NOPR 
analyses and selected the standard levels proposed in the NOPR in such 
a way that meets the statutory requirements set forth by EPCA without 
ignoring system effects, which otherwise might compromise the thermal 
performance of the HVAC products that incorporate furnace fans. For 
example, the final test procedure codified in DOE's regulations at 10 
CFR part 430, subpart B, appendix AA specifies that the furnace fan be 
tested as factory-installed in the HVAC product, thereby enabling the 
rating metric, FER, to account for system effects on airflow delivery 
and, ultimately, energy performance. In addition, the product class 
structure proposed in the NOPR allowed for differentiation of products 
with designs that achieve higher thermal efficiency but may have lower 
fan performance, such as condensing furnaces. 78 FR 64068, 64082 (Oct. 
25, 2013).
    In the January 3, 2014 test procedure final rule, DOE broadened its 
definition of ``furnace fan'' to mean ``an electrically-powered device 
used in a consumer product for the purpose of circulating air through 
ductwork.'' 79 FR 500, 521.
    In response to the NOPR, DOE did not receive comments from 
interested parties regarding the definition of ``furnace fan'' 
established by the test procedure final rule. Consequently, in this 
standards final rule, DOE is maintaining the definition for ``furnace 
fan,'' codified at 10 CFR 430.2. However, DOE did receive comments on 
its definitions for certain product types that include furnace fans. 
DOE summarizes and responds to these comments later in this section of 
the notice.
    The scope of the preliminary analysis included furnace fans used in 
furnaces, modular blowers, and hydronic air handlers. Even though DOE 
has interpreted its authority as encompassing any electrically-powered 
device used in residential HVAC products to circulate air through duct 
work, the preliminary analysis scope excluded single-package central 
air conditioners (CAC) and heat pumps (HP) and split-system CAC/HP 
blower-coil units. At the time of the preliminary analysis, DOE 
determined that it may consider these and other such products in a 
future rulemaking as data and information to develop credible analyses 
becomes available.
    In response to the preliminary analysis, efficiency advocates 
expressed concern at DOE's exclusion of packaged and split-system CAC 
products because advocates believe current standards for these products 
do not maximize the technologically feasible and economically justified 
energy savings for the circulation fans integrated in these products. 
ASAP and Adjuvant stated that the metric used for CAC products does not 
accurately represent field conditions and requested that they be added 
to the scope. 78 FR 64068, 64080 (Oct. 25, 2013).
    In contrast, many manufacturers submitted comments in response to 
the preliminary analysis that they believe that the scope of coverage 
presented in the preliminary analysis exceeds the statutory authority 
granted to DOE because the statutory language for this rulemaking is 
found in 42 U.S.C 6295(f) under the title ``Standards for furnaces and 
boilers.'' Consequently, manufacturers stated that DOE should not 
include any non-furnace products such as central air conditioners, heat 
pumps, or condensing unit-blower-coil combinations. Manufacturers also 
claimed that the electricity used to circulate air through duct work is 
already adequately accounted for in existing energy efficiency metrics 
for CAC and HP products that use circulation fans. 78 FR 64068, 64080-
81 (Oct. 25, 2013).
    In the October 25, 2013 furnace fan energy conservation standard 
NOPR, DOE noted that, although the title of this statutory section 
refers to ``furnaces and boilers,'' the applicable provision at 42 
U.S.C. 6295(f)(4)(D) was written using notably broader language than 
the other provisions within the same section. 78

[[Page 38146]]

FR 64068, 64081. Specifically, that statutory provision directs DOE to 
``consider and prescribe energy conservation standards or energy use 
standards for electricity used for purposes of circulating air through 
duct work.'' Id. Such language could be interpreted as encompassing 
electrically-powered devices used in any residential HVAC product to 
circulate air through duct work, not just furnaces, and DOE has 
received numerous comments on both sides of this issue. In the 
standards NOPR, however, DOE only proposed energy conservation 
standards for those circulation fans that are used in residential 
furnaces and modular blowers (see discussion below). As a result, DOE 
did not address public comments that pertain to fans in other types of 
HVAC products (other than to clarify instances where there was 
uncertainty as to whether a given product fits within the scope of the 
current rulemaking). The following list describes the furnace fans 
which DOE proposed to address in the standards NOPR.
     Products addressed in this rulemaking: Furnace fans used 
in weatherized and non-weatherized gas furnaces, oil furnaces, electric 
furnaces, and modular blowers.
     Products not addressed in this rulemaking: Furnace fans 
used in other products, such as split-system CAC and heat pump indoor 
units, through-the-wall indoor units, small-duct, high-velocity (SDHV) 
indoor units, energy recovery ventilators (ERVs), heat recovery 
ventilators (HRVs), draft inducer fans, exhaust fans, or hydronic air 
handlers.

Id.

    In the October 25, 2013 NOPR, DOE also maintained its proposal to 
account for the electrical consumption of furnace fans while performing 
all active mode functions (i.e., heating, cooling, and constant 
circulation) because furnace fans are used not just for circulating air 
through duct work during heating operation, but also for circulating 
air during cooling and constant-circulation operation. In DOE's view, 
in order to obtain a complete assessment of overall performance and a 
metric that reflects the product's electrical energy consumption during 
a representative average use cycle, the metric must account for 
electrical consumption in a set of airflow-control settings that spans 
all active mode functions. This would ensure a more accurate accounting 
of the benefits of improved furnace fans. Id.
    China WTO commented that DOE's definition for ``furnace fan'' and 
the proposed scope show that residential furnace fans primarily perform 
the heating function. For this reason, China WTO recommended that DOE 
exclude fan performance for cooling operation to avoid unnecessary test 
procedure burden. (China WTO, No. 92 at pp. 1-2).
    For the reasons stated above, the energy conservation standards 
established by this notice account for the electrical consumption of 
furnace fans while performing all active mode functions (i.e., heating, 
cooling, and constant circulation). The commenter did not dispute the 
fact that fans will operate in cooling or constant-circulation mode, 
often for non-trivial periods of time. Because the electrical energy 
consumption of the fan may vary substantially depending on its mode of 
operation, DOE has concluded that testing fan operation in all these 
modes is necessary to reflect the product's energy consumption during a 
representative use cycle and that such testing would not be unduly 
burdensome to conduct.
    Unico submitted comments regarding concerns with DOE's test 
procedure and proposed standard levels as they apply to SDHV systems. 
Unico explains that DOE proposed to exclude SDHV products from the 
rulemaking but included modular blowers and electric furnaces, 
resulting in a potential conflict. Unico added that most of their SDHV 
air handlers are modular in construction. Unico also offers an add-on 
electric furnace to provide secondary or backup heat, but very few 
systems are installed as an electric furnace. As a result, Unico 
expressed uncertainty whether this rule applies to SDHV modular blowers 
and SDHV electric furnaces. Unico provided data showing that SDHV 
blowers operate at different conditions compared to the products 
proposed to be covered and cannot meet the proposed FER levels. 
Ultimately, Unico expressed concerns that this rule could potentially 
eliminate many SDHV products from the market if they are subject to 
DOE's proposed standards. (Unico, No. 93 at pp.1-4)
    In response to the comment, DOE clarifies that the furnace fan test 
procedure and the energy conservation standards established by this 
final rule do not apply to SDHV products, including SDHV modular 
blowers and electric furnaces. DOE recognizes that these products 
operate at different conditions which significantly impact their fan 
performance, as compared to the products addressed in this rulemaking. 
While DOE's regulations at 10 CFR 430.2 include a definition for 
``small duct high velocity systems,'' it does not include a definition 
for small duct high velocity modular blowers or SDHV electric furnaces. 
Absent clarification, DOE realizes that confusion may result regarding 
which products are and are not covered by today's standards. 
Accordingly, DOE is adopting the following definition of ``small-duct 
high-velocity (SDHV) modular blower,'' which has been drafted to be 
consistent with the existing definition of ``SDHV system'' at 10 CFR 
430.2:
    Small-duct high-velocity (SDHV) modular blower means a product 
that:
     Meets the definition of ``modular blower,'' as set forth 
in 10 CFR part 430, subpart B, appendix AA;
     Is designed for, and produces, at least 1.2 inches of 
external static pressure when operated at the certified air volume rate 
of 220-350 CFM per rated ton of cooling in the highest default cooling 
airflow-controls setting; and
     When applied in the field, uses high velocity room outlets 
generally greater than 1,000 fpm that have less than 6.0 square inches 
of free area.
    Similarly, DOE is adopting a definition for ``small-duct high-
velocity (SDHV) electric furnace'' to read as follows:
    Small-duct high-velocity (SDHV) electric furnace means a product 
that:
     Meets the definition of ``electric furnace,'' as set forth 
in 10 CFR 430.2;
     Is designed for, and produces, at least 1.2 inches of 
external static pressure when operated at the certified air volume rate 
of 220-350 CFM per rated ton of cooling in the highest default cooling 
airflow-control setting; and
     When applied in the field, uses high velocity room outlets 
generally greater than 1,000 fpm that have less than 6.0 square inches 
of free area.
    DOE has concluded that these amendments should eliminate any 
confusion associated with DOE not addressing SDHV modular blowers and 
SDHV electric furnaces in the present rulemaking. Unico also submitted 
other SDHV-related concerns, but DOE need not discuss those issues 
further because SDHV products are not addressed in this rulemaking.
    AHRI, Morrison, Goodman, Johnson Controls, and Mortex stated that 
modular blowers should be excluded from the scope of this rulemaking. 
(AHRI, No. 98 at pp. 1, 2; Morrison, No. 108 at p. 1; Goodman, No. 102 
at p. 5; Johnson Controls, No. 95 at p. 2; and Mortex, NOPR Public 
Meeting Transcript, No. 91 at pp. 78-79). AHRI,

[[Page 38147]]

Morrison, and Johnson Controls continue to advance an interpretation of 
42 USC 6295(f)(4)(D) as being only applicable to furnaces, and these 
commenters argued that absent a legislative change, DOE has exceeded 
its statutory authority in terms of the NOPR's proposed coverage of 
modular blowers. (AHRI, No. 98 at pp. 1-2; Morrison, No. 108 at p. 1; 
and Johnson Controls, No, 95 at p. 2). AHRI and Johnson Controls added 
that some modular blowers in today's marketplace are not designed to 
operate with electric resistance heat kits, rendering the final test 
procedure insufficient for these products. (AHRI, No. 98 at pp. 1, 2; 
and Johnson Controls, No. 95 at p. 3).
    ASAP, et al., on the other hand, expressed support for the 
inclusion of modular blowers in the scope of coverage. ASAP, et al. 
stated that they understand that the strip heat used with electric 
furnaces is often installed in the field, which means that an 
``electric furnace'' is often sold by the manufacturer as a ``modular 
blower.'' ASAP, et al. cite DOE's finding that non-weatherized and 
mobile home electric furnace/modular blower furnace fans represent 10 
percent of all furnace fan sales. According to ASAP, et al., excluding 
modular blowers from the scope of coverage would not only reduce energy 
savings from this rulemaking, but would also create a loophole--i.e., 
manufacturers would have an incentive to sell electric furnaces as 
modular blowers (without strip heat installed) in order to avoid 
compliance with the furnace fan energy conservation standards. (ASAP, 
et al., No. 105 at pp. 1, 2)
    As stated above, DOE maintains its interpretation that the relevant 
statutory language at 42 U.S.C. 6295(f)(4)(D) is broader in its 
applicability than just furnaces, and consequently, it provides DOE 
authority to cover modular blowers in this rulemaking. These same 
arguments were already addressed in some detail in the NOPR (see 78 FR 
64068, 64081 (Oct. 25, 2013)). DOE also disagrees with the contention 
of AHRI and Johnson Controls that the final test procedure is not 
sufficient to address all modular blowers. All modular blower models of 
which DOE is aware can be operated in conjunction with an electric 
resistance heat kit, and commenters did not identify any models of 
modular blowers that cannot. Even assuming arguendo that modular 
blowers do exist that are not designed to operate with an electric 
resistance heat kit, DOE expects that number of such models would be de 
minimis and that manufacturers producing modular blowers that cannot be 
operated in conjunction with an electric resistance heat kit would 
apply for a waiver from the test procedure. DOE provides more details 
regarding this issue in the January 3, 2014 test procedure final rule. 
79 FR 504.
    In its comments, Johnson Controls stated that DOE's use of the 
phrase ``primary heat source'' is too ambiguous, especially when 
certain products might be modified in the field. According to Johnson 
Controls, DOE's characterizations of air handlers and modular blowers 
when an air handler or modular blower is the primary heating source is 
still confusing and brings uncertainty to the NOPR market assessment. 
Johnson Controls commented that none of the residential air handlers, 
modular blowers, or residential single-package finished good models 
built by Johnson Controls includes factory-installed electric heat 
kits. Therefore, according to the commenter, electric heat kits 
installed in these products cannot be considered to be the primary 
source for heat in their applications, and so none of these products 
should be included in this rulemaking. Johnson Controls added that 
while field-installed electric heat kits are available and used 
frequently, the use of field kits is outside of the air handler or 
modular blower manufacturer's control, unlike gas furnaces where the 
application is known to usually be the primary heating source in the 
vast number of situations. (Johnson Controls, No. 95 at p. 2) NEEA, 
Mortex, and Daikin agreed that the contractor determines whether a CAC/
HP blower-coil unit with electric resistance heat is the principal 
source of heating for a residence, rendering any such determination 
speculative for other entities. (NEEA, NOPR Public Meeting Transcript, 
No. 91 at pp. 64-65; Mortex, NOPR Public Meeting Transcript, No. 91 at 
pp. 78-79; and Daikin, NOPR Public Meeting Transcript, No. 91 at pp. 
75-76)
    Modular blowers are not a source of heat per DOE's definition of 
``modular blower'' as provided in 10 CFR part 430, subpart B, appendix 
AA. Consequently, the ``principal heating source'' qualifier (per the 
definition of ``furnace'' at 10 CFR 430.2) does not apply to modular 
blowers, so this part of the ``furnace'' definition has the effect of 
excluding modular blowers from that definition. However, the 
``furnace'' definition is not the only factor in deciding whether 
modular blowers are covered in this rulemaking, contrary to what 
Johnson Controls suggests. If electric resistance heat is added to a 
modular blower product, that product no longer meets DOE's definition 
of a ``modular blower.'' Instead, DOE considers the modified product an 
electric furnace, absent other design changes. Regardless of whether 
the electric resistance heat is factory-installed, both product 
variations are covered in the final test procedure and this energy 
conservation standard.
    DOE recognizes that interested parties may have trouble determining 
whether a CAC/HP blower-coil unit with electric resistance heating is 
considered an electric furnace and thereby covered by the energy 
conservation standards established by this final rule. Strictly 
following the DOE definition for ``electric furnace'' (which references 
the DOE definition of ``furnace'') as set forth at 10 CFR 430.2, 
coverage in this final rule of a CAC/HP blower-coil with electrical 
resistance heating depends on whether the electric resistance heating 
is the ``principal heating source for the residence.'' As Johnson 
Controls points out, this is not as easily determined as for gas and 
oil furnaces. DOE expects that in the significant majority of CAC/HP 
blower-coil models that have electric resistance heat, the electric 
resistance heat is supplemental in nature and not the principal heating 
source for the residence. For this reason, DOE has decided that the 
energy conservation standards established by this rule will not cover 
CAC/HP blower-coil units, regardless of whether they include electric 
resistance heat.
    Lennox argued that including weatherized commercial products in 
this rulemaking is unrealistic and improper. Specifically, Lennox 
expressed concerns that DOE mischaracterizes single-package weatherized 
products as ``residential'' when these products are offered with a 
single-phase power source. The commenter stated that these products are 
often used in commercial applications, explaining that single-phase 
weatherized products are often designed to have higher duct static 
pressure capability than a traditional residential furnace. Lennox 
commented that they have single-phase belt-drive products that are 
capable of operating up to 2 inches water column external static 
pressure to meet commercial duct static requirements. According to 
Lennox, BPM motors (including both constant-torque and constant-airflow 
BPM motors) typically used in residential products cannot achieve the 
high static pressures required in these commercial installations. 
Therefore, Lennox recommended that DOE should exclude all products 
marked not for residential use from standards coverage. (Lennox, No. 
100 at p. 4).
    DOE recognizes that industry may differentiate between residential 
products and commercial equipment differently than DOE. The standards

[[Page 38148]]

established by this final rule do not cover all single-phase, single-
package HVAC products, only single-phase weatherized furnaces (i.e., 
single-phase, single-package HVAC products that include a ``furnace'' 
as defined at 10 CFR 430.2). Lennox did not identify, and after 
additional research, DOE is not aware of any weatherized gas furnace 
models that operate at the static pressures mentioned by the commenter. 
DOE expects that the operating conditions mentioned by Lennox are 
typical of single-package heat pump equipment, which is not covered by 
this rule. DOE expects the number of models covered by this rule that 
DOE defines as residential but are designed and operated in commercial 
applications to be de minimis. Any manufacturer which can substantiate 
its case that it would suffer serious hardship, gross inequity, and an 
unfair distribution of burdens if required to comply with the furnace 
fan standards may seek exception relief from DOE's Office of Hearings 
and Appeals (OHA).\17\
---------------------------------------------------------------------------

    \17\ For information about obtaining exception relief, see 10 
CFR part 1003 (available at http://www.ecfr.gov/cgi-bin/text-idx?SID=d95bf6ed9cd849253fab734656f80c2e&node=10:4.0.3.5.3&rgn=div5).

---------------------------------------------------------------------------

    ACEEE commented that if manufacturers offered air handlers as a 
separate product, without the coil, the modified product would not be 
inherently different than a modular blower. ACEEE stated that DOE 
should cover CAC/HP blower-coil units following the same logic that DOE 
used to justify covering modular blowers (i.e., because of their 
similarities to electric furnaces). ACEEE also commented that the DOE 
definition for ``modular blower'' is confusing because, in their 
experience, all (or almost all) conventional indoor blower units--
whether furnaces, HP, or CAC--use a separate assembly (or field-
fabricated `plenum') to house the coil used as the evaporator (CAC) or 
evaporator and condenser (HP). (ACEEE, No. 94 at pp. 1-2, 4).
    DOE disagrees with ACEEE's assessment that a CAC/HP blower-coil 
unit with the coil removed and an electric furnace are equally 
comparable to a modular blower. For example, modular blowers are 
typically designed to accommodate the addition of electric resistance 
heating kits (after which DOE would consider them as electric furnaces) 
without modifying the product envelope. Modular blower envelope 
dimensions are similar, and in many cases identical, to electric 
furnace dimensions as a result. In addition, the final test procedure 
requires an electric resistance heat kit to be installed in modular 
blowers to produce a temperature rise allowing for calculation of 
airflow for the rating metric, FER. The test configurations for 
electric furnaces and modular blowers are almost identical as a result. 
In turn, the FER values for an electric furnace and modular blower with 
no other design difference other than the presence of an electric 
resistance heat kit are expected to be approximately equivalent. On the 
other hand, the coils typically included in CAC/HP blower-coil units 
are larger than heat resistance kits. Consequently, blower-coil unit 
envelope dimensions are different than modular blower dimensions, which 
impacts fan performance. CAC/HP blower-coil unit design, as it relates 
to fan performance, cannot be compared to modular blower design for 
this reason. The final test procedure does not include methods for 
deriving an FER value for CAC/HP blower-coil units. Furthermore, the 
coil and envelope dimension differences mentioned would preclude the 
circulation fan performance of a CAC/HP blower-coil unit from being 
deemed equivalent to an otherwise similarly-designed modular blower. In 
addition, modular blowers and electric furnaces are product 
configurations installed in the field. DOE doubts that a CAC/HP blower-
coil unit with the coil removed would be offered by manufacturers or 
purchased and installed in the field. Regarding the criticism of its 
definition of ``modular blower,'' DOE recognizes that the definition 
for ``modular blower'' as set forth at 10 CFR part 430, subpart B, 
appendix AA may be confusing because it does not explicitly state that 
a modular blower does not include an indoor refrigerant coil, only that 
it does not provide heating or cooling. An ``indoor unit,'' on the 
other hand, is defined at 10 CFR 430.2 as containing a ``coil.'' This 
notice modifies the definition of ``modular blower'' to explicitly 
exclude products that contain an indoor refrigerant coil in order to 
eliminate ambiguity between the two definitions.
    ACEEE, Earthjustice, and CA IOU stated that DOE's decision to 
exclude products such as CAC/HP and hydronic air handlers is 
inappropriate and in conflict with DOE's interpretation of the 
statutory language. These interested parties also commented that DOE 
does not provide a justification for its decision to exclude products 
for which DOE claims to have authority to set energy conservation 
standards. (ACEEE, No. 94 at pp. 1-2, 4; and CA IOU, No. 106 at pp. 1, 
2) According to Earthjustice, DOE's decision to exclude products for 
which it claims authority to cover represents a failure to carry out 
EPCA's command to adopt ``standards for electricity used for purposes 
of circulating air through ductwork'' and does not comply with the 
statute's requirement that standards ``shall be designed to achieve the 
maximum improvement in energy efficiency'' that is ``technologically 
feasible and economically justified.'' (42 U.S.C. 6295(o)(2)(A). 
Earthjustice adds that EPCA authorizes DOE not to prescribe an amended 
or new standard for a type or class of covered product in three 
situations: (1) The standard will eliminate certain product features 
from the market; (2) the standard will not result in significant 
conservation of energy or is not technologically feasible or 
economically justified; or (3) for certain products, test procedures 
have not been established. (42 U.S.C. 6295(o)(3) and (4)). Earthjustice 
states that DOE has failed to show that the products it is not 
addressing in this rule meet those criteria. (Earthjustice, No. 101 at 
p. 1).
    ASAP, et al. encouraged DOE to adopt standards and/or test 
procedure changes to drive improved efficiency of furnace fans that are 
part of single-package and blower-coil central air conditioners and 
heat pumps in the future. According to ASAP, et al., CA IOU and ACEEE, 
the operating conditions and metrics used in the DOE test procedures 
for CAC/HP (i.e., SEER and HSPF) are insufficient for representing 
furnace fan performance in the field for those products. (ASAP, et al., 
No. 105 at pp. 2, 3; CA IOU, No. 106 at pp. 1, 2; and ACEEE, No. 94 at 
pp. 1-2, 4). Further, ASAP, et al. are concerned that heat pump indoor 
units will increasingly be installed and operated as electric furnaces 
(without an outdoor unit) to avoid both the DOE standard for CAC/HP and 
the standards established by this rule. ASAP, et al. added that 
consumers will have greater incentive to install heat pump indoor units 
to operate as electric furnaces if a heat pump indoor unit with a PSC 
motor is less expensive than an electric furnace/modular blower with a 
constant-torque BPM motor. (ASAP, et al., No. 105 at pp. 2, 3) 
Earthjustice also identified CAC/HP blower-coil units installed without 
an outdoor unit and operated as an electric furnace as a potential 
loophole. (Earthjustice, No. 101 at p. 1) While ASAP, et al., stated 
that they recognize that it may be too late to include furnace fans 
that are part of single-package and blower-coil central air 
conditioners and heat pumps in the scope of coverage in the current 
rulemaking, they encourage

[[Page 38149]]

DOE to address furnace fan efficiency in these products in the future 
through one of two options: (1) Amend the test procedures for central 
air conditioners and heat pumps to incorporate more realistic external 
static pressure values; or (2) include furnace fans that are part of 
single-package and blower-coil central air conditioners and heat pumps 
in a future rulemaking for furnace fans. ASAP, et al., submitted that 
if DOE pursued the second option, changing the external static pressure 
values in the central air conditioner and heat pump test procedures 
would be less critical, because fan efficiency would be addressed 
through standards for furnace fans. (ASAP, et al., No. 105 at pp. 2, 3) 
CA IOU also expressed support for a separate, expedited rulemaking to 
set energy conservation standards for products not addressed in this 
rule. CA IOU claims that such a rule would ensure that the entire 
market for furnace fans is regulated, thereby avoiding the negative 
market impacts due to the prevalence of unregulated products. (CA IOU, 
No. 106 at pp. 1, 2). NEEA and NPCC also expressed disappointment that 
DOE is choosing to cover only two-thirds of furnace fan products by 
excluding indoor blower/cool units used with split system heat pump and 
air conditioning systems and hydronic air handlers, which leaves 
substantial energy savings on the table. (NEEA and NPCC, No. 96 at p. 
3). ACEEE estimated that approximately two quads of potential 
cumulative energy savings are left uncaptured by DOE's decision to 
exclude CAC/HP blower-coil units, which ACEEE claims could jeopardize 
achievement of the Administration's goal of 3 billion tons of 
CO2 avoided. (ACEEE, No. 94 at p. 1-2, 4). CA IOU cited 
these potential energy savings as another reason that a separate, 
expedited rulemaking is warranted. (CA IOU, No. 106 at pp. 1, 2). 
Laclede, APGA, and AGA also recommended that DOE expand the scope of 
this rule to include products such as split-system central air 
conditioners, heat pump air handlers, through-the-wall air handlers, 
and small-duct high-velocity air handlers that compete with the types 
of natural gas furnaces covered by this rules. Each cited concerns that 
DOE's decision to exclude fans used in these products could lead to 
fuel switching. (Laclede, No. 89 at p. 2; APGA, No. 90 at p. 2; and 
AGA, No. 110 at p. 2). Laclede believes the Department failed to 
adequately explain why fans in heat pumps are excluded and to clearly 
demonstrate how this exclusion serves the best interests of the 
American public.
    EEI, on the other hand, supports DOE's exclusion of CAC/HP blower-
coils and hydronic air handlers from this rulemaking. EEI commented 
that the energy used by the fans operating in the cooling mode is part 
of the calculation of SEER, EER, and HSPF. EEI explains that 
manufacturers have already made design decisions that reduce the energy 
usage of such fans for these systems to meet the higher air conditioner 
and heat pump energy conservation standards (based on SEER and HSPF) 
that took effect in 1992 and 2006, and will take effect in 2015. EEI 
stated that including these fans in this rule would be a form of 
``double regulation'' of the same product. (EEI, No. 87 at p. 3) 
Southern Company agreed that CAC/HP fan energy is already covered by 
the SEER and HSPF rating. (Southern Company, NOPR Public Meeting, No. 
43 at p. 70).
    As explained previously, DOE has noted the relatively broad scope 
of the language of 42 U.S.C. 6295(f)(4)(D), which provides DOE 
authority to regulate ``electricity used for purposes of circulating 
air through duct work.'' At the present time, however, DOE is only 
adopting energy conservation standards for those circulation fans that 
are used in residential furnaces and modular blowers. The DOE test 
procedure for furnace fans is not currently equipped to address fans 
contained in central air conditioners, heat pumps, or other products, 
as would be required for the adoption of standards under 42 U.S.C. 
6295(o)(3). Consequently, DOE is not considering standard setting for 
other products beyond the current scope of the rulemaking at this time.
2. Product Classes
    DOE identified nine key product classes in the preliminary 
analysis, each of which was assigned its own candidate energy 
conservation standard and baseline FER. DOE identified twelve 
additional product classes that represent significantly fewer shipments 
and significantly less overall energy use. DOE grouped each non-key 
product class with a key product class to which it is closely related 
in application-specific design and internal structure (i.e., the 
primary criteria used to differentiate between product classes). DOE 
assigned the analytical results of each key product class to the non-
key product classes with which it is grouped because DOE expected the 
energy use and incremental manufacturer production costs (MPCs) of 
improving efficiency to be similar within each grouping. Table IV.1 
lists the 21 preliminary analysis product classes.

            Table IV.1--Preliminary Analysis Product Classes
------------------------------------------------------------------------
           Key product class                Additional product classes
------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas
 Furnace Fan (NWG-NC).
Non-weatherized, Condensing Gas Furnace
 Fan (NWG-C).
Weatherized Non-Condensing Gas Furnace   Weatherized, Non-Condensing Oil
 Fan (WG-NC).                             Furnace Fan (WO-NC).
                                         Weatherized Electric Furnace/
                                          Modular Blower Fan (WEF/WMB).
                                         Mobile Home Weatherized Gas
                                          Furnace Fan (MH-WG).
                                         Mobile Home Weatherized Oil
                                          Furnace Fan (MH-WO).
                                         Mobile Home Weatherized
                                          Electric Furnace/Modular
                                          Blower Fan (MH-WEF/WMB).
Non-weatherized, Non-Condensing Oil      Non-Weatherized, Condensing Oil
 Furnace Fan (NWO-NC).                    Furnace Fan (NWO-C).
                                         Mobile Home Non-Weatherized Oil
                                          Furnace Fan (MH-NWO).
Non-weatherized Electric Furnace/
 Modular Blower Fan (NWEF/NWMB).
Heat/Cool Hydronic Air Handler Fan (HAH- Heat-Only Hydronic Air Handler
 HC).                                     Fan (HAH-H).
                                         Hydronic Air Handler Fan with
                                          Coil (HAH-C).
                                         Mobile Home Heat/Cool Hydronic
                                          Air Handler Fan (MH-HAH-HC).
                                         Mobile Home Heat-Only Hydronic
                                          Air Handler Fan (MH-HAH-H).
                                         Mobile Home Hydronic Air
                                          Handler Fan with Coil (MH-HAH-
                                          C).
Mobile Home Non-Weatherized, Non-
 Condensing Gas Furnace Fan (MH-NWG-NC).

[[Page 38150]]

 
Mobile Home Non-Weatherized, Condensing
 Gas Furnace Fan (MH-NWG-C).
Mobile Home Electric Furnace/Modular
 Blower Fan (MH-EF/MB).
------------------------------------------------------------------------

    Manufacturers agreed that the selected key product classes are an 
accurate representation of the market. Some manufacturers disagreed 
with DOE's approach to specify additional product classes within a key 
product class, stating that shipment data indicates that the additional 
product classes are too small to be covered.
    In the NOPR, DOE agreed with manufacturers' assertion that the 
additional non-key product classes represent products with few and in 
many cases, no shipments. 78 FR 64082. Individual discussions with 
manufacturers for the MIA confirmed this assertion. Additionally, 
review of the AHRI appliance directory revealed that only two of the 
additional non-key product classes have active models listed: (1) 
Mobile home weatherized gas furnace fans (MH-WG) and (2) mobile home 
non-weatherized oil furnace fans (MH-NWO). The number of active basic 
models for MH-WG and MH-NWO are 4 and 16, respectively. For this 
reason, DOE proposed in the NOPR to eliminate the additional non-key 
product classes except for MH-WG and MH-NWO. Due to the limited number 
of basic models for MH-WG and MH-NWO, DOE did not have data to directly 
analyze and establish standards for these additional product classes. 
As a result, DOE proposed to reserve space to establish standards for 
MH-WG and MH-NWO furnace fans in the future as sufficient data become 
available. DOE also proposed to exclude hydronic air handlers from 
consideration in this rulemaking, thereby further reducing the number 
of product classes addressed in the NOPR to 10. 78 FR 64082. Table IV.2 
includes a list of the revised set of product classes for residential 
furnace fans used in the NOPR.
    DOE did not receive comment or additional information on the 
proposed product classes, thus, DOE is not making changes to the 
product classes in this Final Rule. Table IV.2 includes a list of the 
product classes for residential furnace fans used in the Final Rule.

        Table IV.2--Product Classes for Residential Furnace Fans
------------------------------------------------------------------------
                              Product class
-------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG-NC)
Non-Weatherized, Condensing Gas Furnace Fan (NWG-C)
Weatherized Non-Condensing Gas Furnace Fan (WG-NC)
Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO-NC)
Non-Weatherized Electric Furnace/Modular Blower Fan (NWEF/NWMB)
Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan (MH-NWG-NC)
Mobile Home Non-Weatherized, Condensing Gas Furnace Fan (MH-NWG-C)
Mobile Home Electric Furnace/Modular Blower Fan (MH-EF/MB)
Mobile Home Weatherized Gas Furnace Fan (MH-WG)
Mobile Home Non-Weatherized Oil Furnace Fan (MH-NWO)
------------------------------------------------------------------------

3. Technology Options
    In the preliminary analysis, DOE considered seven technology 
options that would be expected to improve the energy efficiency of 
furnace fans: (1) Fan housing and airflow path design modifications; 
(2) high-efficiency fan motors (in some cases paired with multi-stage 
or modulating heating controls); (3) inverter-driven permanent-split 
capacitor (PSC) fan motors; (4) backward-inclined impellers; (5) 
constant-airflow brushless permanent magnet (BPM) motor control relays; 
(6) toroidal transformers; and (7) switching mode power supplies. In 
the NOPR, DOE revised its proposed scope of coverage to no longer 
address hydronic air handlers, the only furnace fan product class for 
which standby mode and off mode energy consumption is not already fully 
accounted for in the DOE energy conservation standards rulemakings for 
residential furnaces and residential CAC and HPs. 76 FR 37408 (June 27, 
2011); 76 FR 67037 (Oct. 31, 2011). Consequently, the standby mode and 
off mode technology options (options 5 through 7 in the list above) are 
no longer applicable. In addition, DOE found that multi-staging and 
modulating heating controls can also improve FER, so DOE evaluated 
multi-staging and modulating heating controls as a separate technology 
option for the NOPR. 78 FR 64083.
    DOE did not receive comment or additional information regarding the 
evaluated technology options, so DOE did not make any changes to the 
list of technology options identified in the NOPR. The resultant list 
of technology options identified to be evaluated in the screening 
analysis before consideration in the engineering analysis for the Final 
Rule include: (1) Fan housing and airflow path design modifications; 
(2) inverter-driven PSC fan motors; (3) high-efficiency fan motors; (4) 
multi-staging and modulating heating controls; and (5) backward-
inclined impellers. Each identified technology option is discussed 
below and in more detail in chapter 3 of the Final Rule TSD.
Fan Housing and Airflow Path Design Improvements
    The preliminary analysis identified fan housing and airflow path 
design modifications as potential technology options for improving the 
energy efficiency of furnace fans. Optimizing the shape of the inlet 
cone \18\ of the fan housing, minimizing gaps between the impeller and 
fan housing inlet, and optimizing cut-off location and manufacturing 
tolerances were identified as enhancements to a fan

[[Page 38151]]

housing that could improve efficiency. Separately, modification of 
elements in the airflow path, such as the heat exchanger, could reduce 
internal static pressure and as a result, reduce energy consumption. 
Manufacturer input was requested to determine the use and 
practicability of these potential technology options.
---------------------------------------------------------------------------

    \18\ The inlet cone is the opening of the furnace fan housing 
through which return air enters the housing. The inlet cone is 
typically curved inward, forming a cone-like shape around the 
perimeter of the opening, to provide a smooth surface to direct air 
from outside the housing to inside the housing and into the 
impeller.
---------------------------------------------------------------------------

    Interested parties expressed support for DOE's consideration of the 
aerodynamics of furnace fan cabinets in its initial analysis of 
technology options. In particular, ASAP cited a 2003 GE study \19\ that 
quantified energy savings produced by modifying fan housing as 
justification for its inclusion as an option. ACEEE, et al. also cited 
a Lawrence Berkeley National Laboratory (LBNL) study \20\ that linked 
changes in efficiency to modifying the clearance between fan housing 
and an air handler cabinet wall. Ingersoll Rand stated that there are 
proprietary fan housing designs on the market that already improve 
mechanical efficiency by 10-20 percent at a cost much lower than the 
cost to implement high-efficiency motors or make changes to the 
impeller and its tolerances. 78 FR 64083.
---------------------------------------------------------------------------

    \19\ Wiegman, Herman, Final Report for the Variable Speed 
Integrated Intelligent HVAC Blower (2003) (Available at: http://www.osti.gov/bridge/servlets/purl/835010-GyvYDi/native/835010.pdf).
    \20\ Walker, I.S, State-of-the-art in Residential and Small 
Commercial Air Handler Performance (2005) LBNL 57330 (Available at: 
http://epb.lbl.gov/publications/pdf/lbnl-57330plus.pdf).
---------------------------------------------------------------------------

    DOE is aware of the studies cited by ASAP and ACEEE, as well as the 
proprietary housing design mentioned by Ingersoll Rand. For the NOPR, 
DOE decided to include fan housing design modifications as a technology 
to be evaluated further in the screening analysis because of these 
indications that each could improve fan efficiency. 78 FR 64083.
    Many interested parties requested that DOE keep airflow path design 
as a technology option. Manufacturers stated that improving airflow 
path design, like modifying fan housing, is highly cost-effective when 
compared to other enhancements. Similar to the fan housing design 
modifications, DOE decided to include airflow path design as a 
technology option to be evaluated further in the screening analysis as 
a result of these claims of potential fan efficiency improvement. 78 FR 
64083. DOE believes including airflow path design is appropriate 
because of its potential to impact fan efficiency. Airflow path design 
will impact the rating metric, FER, because the DOE test procedure 
requires the furnace fan to be tested as it is factory-installed in the 
HVAC product.
    DOE did not receive comment or additional information on fan 
housing about including airflow path design improvements as a 
technology option, thus, DOE is including these as technologies to be 
evaluated further in the screening analysis. Chapter 3 of the Final 
Rule TSD provides more technical detail regarding fan housing and 
airflow path design modifications and how these measures could reduce 
furnace fan energy consumption.
Inverter Controls for PSC Motors
    In the preliminary analysis, DOE identified inverter-driven PSC 
motors as a technology option. DOE is aware of a series of non-
weatherized gas furnaces with inverter-driven PSC furnace fan motors 
that was once commercially available. DOE has determined that inverter 
controls provide efficiency improvement by offering additional 
intermediate airflow-control settings and a wider range of airflow-
control settings (i.e., lower turndown ratio) than conventional PSC 
controls. The additional airflow-control settings and range enable the 
furnace fan to better match demand. Publically-available performance 
data for the series of furnaces using inverter-driven PSCs demonstrate 
that the use of this technology results in reduced FER values compared 
to baseline PSC furnace fans. Consequently, DOE considered inverter-
driven PSCs as a technologically feasible option for reducing furnace 
fan energy consumption.
    Manufacturers were opposed to listing inverter-driven PSCs as a 
viable technology option. Manufacturers commented that there are 
alternate, more cost-effective solutions to reduce energy consumption 
for air-moving systems, such as airflow path design or ECM (referred to 
herein by DOE as a ``constant-airflow BPM motor'') technology. 78 FR 
64084.
    For the NOPR analysis, DOE recognized manufacturers' concerns with 
the cost-effectiveness of inverter-driven PSC fan motors. However, DOE 
decided to include inverter-driven PSC motors as a technology option to 
be evaluated further in the screening analysis due to their potential 
to reduce furnace fan energy consumption. 78 FR 64084.
    DOE did not receive comment or additional information on including 
inverter controls for PSC motors as a technology option, thus, DOE is 
including this technology option in the Final Rule. DOE evaluates in 
the engineering analysis the cost-effectiveness of all energy-saving 
technology options that are not screened out. Chapter 3 of the Final 
Rule TSD provides a more detailed discussion of inverter-driven PSC 
furnace fan motors.
High-Efficiency Motors
    In the preliminary analysis, DOE identified four motor types that 
are typically used in furnace fan assemblies: (1) PSC motors; (2) PSC 
motors that have more than 3 airflow-control settings and sometimes 
improved materials (hereinafter referred to as ``improved PSC'' 
motors); (3) constant-torque BPM motors (often referred to as ``X13 
motors''); and (4) constant-airflow BPM motors (often referred to as 
``ECMs'').\21\ DOE finds that furnace fans using high-efficiency motor 
technology options operate more efficiently than furnace fans using 
baseline PSC motors by:
---------------------------------------------------------------------------

    \21\ ``ECM'' and ``X13'' refer to the constant-airflow and 
constant torque (respectively) BPM offerings of a specific motor 
manufacturer. Throughout this notice, DOE will refer to these 
technologies using generic terms, which are introduced in the list 
above. However, DOE's summaries of interested-party submitted 
comments include the terminology used by the interested party when 
referring to motor technologies.
---------------------------------------------------------------------------

     Functioning more efficiently at a given operating 
condition;
     Maintaining efficiency throughout the expected operating 
range; and
     Achieving a lower turndown ratio \22\ (i.e., ratio of 
airflow in lowest setting to airflow in highest setting).
---------------------------------------------------------------------------

    \22\ A lower turndown ratio can significantly improve furnace 
fan efficiency because fan input power has a cubic relationship with 
airflow.
---------------------------------------------------------------------------

    Ingersoll Rand commented that a PSC motor will use less energy at 
higher static pressures, while an ECM increases energy use as static 
pressure rises. Ingersoll Rand stated that as a result, understanding 
the impact of switching to an ECM at higher static pressures may 
confuse the consumer. (Ingersoll Rand, PA Public Meeting Transcript, 
No. 43 at p. 67)
    For the NOPR analysis, DOE stated that it is aware that consumers 
may be confused when BPM motors (referred to as ECMs by Ingersoll Rand 
above) consume more energy than PSC motors at higher static pressures, 
because consumers expect BPM motors to consume less energy than PSC 
motors under the same operating conditions. In general, input power to 
the fan motor increases as static pressure increases to provide a given 
airflow (i.e., the fan motor has to work harder in the face of 
increased resistance to provide a desired amount of air).\23\ DOE 
agreed with Ingersoll Rand that as static pressure increases, input 
power to a PSC-driven furnace fan will decrease, which is

[[Page 38152]]

seemingly contradictory to the principle described above. DOE found 
that input power to a PSC-driven furnace fan decreases because the 
airflow provided by the fan decreases as static pressure rises (i.e., 
the fan does not have to work as hard in the face of increased 
resistance because the fan is not providing as much air). 78 FR 64084. 
Input power to a constant-airflow BPM motor-driven furnace fan, on the 
other hand, will increase as static pressure rises because the BPM 
motor-driven fan is designed to maintain the desired level of airflow. 
Recognizing that this behavior could complicate comparing the relative 
performance of these motor technologies, DOE's rating metric, FER, is 
normalized by airflow to result in ratings that are in units of watts/
cfm. DOE believed that a comparison using a watts/cfm metric will 
mitigate confusion by accurately reflecting that even though a 
constant-airflow BPM motor is consuming more power at higher statics, 
it is also providing more airflow, which is useful to the consumer.
---------------------------------------------------------------------------

    \23\ See chapter 3 of the TSD for more details regarding fan 
operation.
---------------------------------------------------------------------------

    As detailed in the NOPR, interested parties recognized the benefits 
provided by constant-torque and constant-airflow BPM motors. Interested 
parties also agreed that the BPM motor variations (i.e., constant-
torque and constant-airflow) and inverter-driven PSC motors generally 
have lower turndown ratios than a three-speed PSC motor. 78 FR 64084. 
Table IV.3 contains the turndown ratio estimates supplied publicly by 
interested parties. Manufacturers generally provided similar feedback 
during interviews.

                        Table IV.3--Interested Party Estimated Fan Motor Turndown Ratios
----------------------------------------------------------------------------------------------------------------
                                                                   Wave chopper      Constant-       Constant-
                Interested party                        PSC       controller PSC    torque ECM      airflow ECM
----------------------------------------------------------------------------------------------------------------
NMC (NMC, No. 60 at p. 1).......................            0.45            0.36            0.45            0.20
Goodman (Goodman, No. 50 at p. 2)...............       0.70-0.75  ..............       0.40-0.50       0.25-0.35
Rheem (Rheem, No. 54 at p. 6)...................            0.60  ..............            0.30            0.20
----------------------------------------------------------------------------------------------------------------

    Overall, comments regarding high-efficiency motor turndown ratio 
validated DOE's expectation that lower turndowns are associated with 
improved PSCs, inverter-driven PSCs, and BPM motor variations. These 
motors consume significantly less energy over a typical residential 
furnace fan operating range. DOE disagreed with Lennox that including 
constant circulation as part of FER would ``artificially'' inflate the 
performance of BPM motors compared to PSC motors, because DOE concluded 
that there is non-trivial use of this mode by consumers. 78 FR 64085. 
As part of the test procedure rulemaking, DOE estimated that on 
average, consumers operate furnace fans in constant-circulation mode 
400 hours annually. This estimate is used to weight fan constant-
circulation electrical energy consumption in FER. Excluding this mode 
from the rating metric would underestimate the potential efficiency 
improvements of technology options, such as BPM motors, that could 
reduce fan electrical consumption while performing this function. A 
detailed discussion of DOE's estimate for national average constant-
circulation furnace fan operating hours can be found in the test 
procedure NOPR. 77 FR 28674, 28682 (May 15, 2012). DOE did not revise 
these estimates in the test procedure Final Rule published on January 
3, 2014. 79 FR 499.
    DOE did not receive comment or additional information on including 
high-efficiency motors as a technology option, thus, DOE is including 
this technology option in the Final Rule. DOE evaluates in the 
engineering analysis the cost-effectiveness of all energy-saving 
technology options that are not screened out. Chapter 3 of the Final 
Rule TSD provides a more detailed discussion of high-efficiency furnace 
fan motors.
Multi-Stage or Modulating Heating Controls
    In the preliminary analysis (77 FR 40530 (July 10, 2012)), DOE 
identified two-stage and modulating heating controls (hereinafter 
collectively referred to as ``multi-stage'' controls) as a method of 
reducing residential furnace fan energy consumption. Multi-stage 
furnaces typically operate at lower heat input rates and, in turn, a 
lower airflow-control setting for extended periods of time compared to 
single-stage furnaces to heat a residence.\24\ Due to the cubic 
relationship between fan input power and airflow, operating at the 
reduced airflow-control setting reduces overall fan electrical energy 
consumption for heating despite the extended hours. In the preliminary 
analysis, DOE analyzed multi-staging controls paired with use of a 
constant-airflow BPM fan motor as one technology option, because DOE 
found the two to be almost exclusively used together in commercially-
available products.
---------------------------------------------------------------------------

    \24\ A further discussion of multi-stage heating controls is 
found in chapter 3 of the preliminary analysis TSD, which can be 
found at the following web address: http://www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-0011-0037.
---------------------------------------------------------------------------

    Interested parties encouraged DOE to consider X13-level motors 
applied with multi-stage furnace controls as a technology option. 78 FR 
64085. During interviews, manufacturers commented that multi-stage 
heating controls can be and are used regardless of motor type.
    Based on comments from manufacturers, DOE recognized that multi-
stage controls can be paired with other motor types, not just constant-
airflow BPM motors. DOE agreed with interested parties that 
implementing multi-stage heating controls independent of motor type 
could result in residential furnace fan efficiency improvements. 
Consequently, DOE decided to de-couple multi-staging controls from the 
constant-airflow BPM motor technology option. Accordingly, DOE 
evaluated multi-staging controls as a separate technology option for 
the NOPR. 78 FR 64085.
    DOE did not receive comment or additional information on multi-
staging controls as a technology option, thus, DOE is including this 
technology option in the Final Rule.
Backward-Inclined Impellers
    DOE determined in the preliminary analysis that using backward-
inclined impellers could lead to possible residential furnace fan 
energy savings. Although limited commercial data regarding backward-
inclined impeller performance were available, DOE cited research by 
General Electric (GE) that showed large improvements in efficiency were 
achievable under certain operating conditions.\25\
---------------------------------------------------------------------------

    \25\ Wiegman, Herman, Final Report for the Variable Speed 
Integrated Intelligent HVAC Blower (2003) (Available at: http://www.osti.gov/bridge/servlets/purl/835010-GyvYDi/native/835010.pdf).
---------------------------------------------------------------------------

    Interested parties disagreed with the DOE's findings, stating that 
literature indicates there are varying degrees of performance 
improvement when

[[Page 38153]]

backward-inclined impellers are used in place of forward-curved 
impellers. 78 FR 64085. Ebm-papst, a company that provides custom air-
movement products, offered a diverging opinion from most manufacturers 
regarding the energy-saving potential of backward-inclined impellers. 
That company retrofitted several HVAC products with furnace fan 
assemblies that incorporated backward-inclined impellers without 
increasing cabinet size and tested them. Depending on the application 
and the external static pressure load (typically 0.5 in. w.c. to 1 in. 
w.c.), ebm-papst found that the backward-inclined impeller achieved 
input power reductions from 15-30 percent. (ebm-papst Inc., No. 52 at 
p. 1).
    DOE recognized that backward-inclined impellers may not be more 
efficient than forward-curved impellers under all operating conditions 
and that there may be considerable constraints to implementation. 
However, the GE prototype and ebm-papst prototype both demonstrate that 
significant energy consumption reduction is achievable at some points 
within the range of residential furnace fan operation. For this reason, 
DOE included backward-inclined impellers as a technology option in the 
NOPR. 78 FR 64086.
    DOE did not receive additional comment or information on including 
backward-inclined impellers as a technology option. Thus, DOE included 
backward-inclined impellers as a technology to be evaluated further in 
the screening analysis for the Final Rule.

B. Screening Analysis

    DOE uses the following four screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    1. Technological feasibility. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    2. Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial products could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
compliance date of the standard, then that technology will not be 
considered further.
    3. Impacts on product utility or product availability. If it is 
determined that a technology would have significant adverse impact on 
the utility of the product to significant subgroups of consumers or 
would result in the unavailability of any covered product type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the United States at the time, it will not be 
considered further.
    4. Adverse impacts on health or safety. If it is determined that a 
technology would have significant adverse impacts on health or safety, 
it will not be considered further.

(10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b))

    In sum, if DOE determines that a technology, or a combination of 
technologies, fails to meet one or more of the above four criteria, it 
will be screened out from further consideration in the engineering 
analysis. The reasons for eliminating any technology are discussed 
below.
    The subsequent sections include comments from interested parties 
pertinent to the screening criteria, DOE's evaluation of each 
technology option against the screening analysis criteria, and whether 
DOE determined that a technology option should be excluded (``screened 
out'') based on the screening criteria.
1. Screened-Out Technologies
    DOE screened out fan housing and airflow path design improvements 
in the preliminary analysis. DOE had little quantitative data to 
correlate specific fan housing alterations with efficiency 
improvements. Additionally, DOE anticipated that any improvements to 
airflow path design that would result in fan efficiency improvement 
would require an increase in furnace fan cabinet size or negatively 
impact heat exchanger performance, thereby compromising the 
practicability to manufacture or reducing utility to consumers.
    In response to the preliminary analysis, interested parties stated 
many concerns associated with modifying airflow path designs to reduce 
residential furnace fan electrical energy consumption, namely, that 
airflow path design modifications would likely require increasing HVAC 
product size. Manufacturers explained that increasing HVAC products 
size would have adverse impacts on practicability to install and 
consumer utility, because the furnace fan market is predominantly a 
replacement market. 78 FR 64086.
    For the NOPR, DOE did not receive or find additional quantitative 
data that shows a measurable increase in fan efficiency as a result of 
a specific fan housing or airflow path design modification. Even after 
individual discussion with manufacturers, DOE was not able to identify 
a case in which fan housing or airflow path design modifications could 
lead to potential fan energy savings without increasing the size of the 
HVAC product or compromising thermal performance or safety. DOE is 
aware of the impacts on thermal efficiency and furnace fan performance 
of the additional heat exchanger in condensing furnaces. As discussed 
in section III.B, DOE accounted for these impacts in its criteria for 
differentiating product classes. In addition, DOE concurs with 
manufacturers' observations that an increase in envelope size would 
adversely impact practicability to manufacture and install, as well as 
product utility. Accordingly, DOE decided to screen out fan housing and 
airflow path design modifications in the NOPR. 78 FR 64086.
    DOE did not receive additional comment or information regarding fan 
housing and airflow path design modifications in response to the NOPR. 
Thus, DOE determined to screen out fan housing and airflow path design 
modifications in the Final Rule.
2. Remaining Technologies
    Through a review of each technology, DOE found that all of the 
other identified technologies met all four screening criteria to be 
examined further in DOE's analysis. 78 FR 64087. In summary, DOE did 
not screen out the following technology options: (1) Inverter-driven 
PSC fan motors; (2) high-efficiency fan motors; (3) multi-stage heating 
controls; and (4) backward-inclined impellers. DOE understands that all 
of these technology options are technologically feasible, given that 
the evaluated technologies are being used (or have been used) in 
commercially-available products or working prototypes. These 
technologies all incorporate materials and components that are 
commercially available in today's supply markets for the residential 
furnace fans that are the subject of this Final Rule. Therefore, DOE 
believes all of the efficiency levels evaluated in this notice are 
technologically feasible. For additional details, please see chapter 4 
of the Final Rule TSD.
    Interested parties, however, voiced concerns regarding these 
screening criteria as they apply to BPM fan motors and backward-
inclined impellers in previous phases of this rulemaking. DOE 
summarizes and addresses these concerns in the sections immediately 
below. DOE did not receive public comments relevant to the screening

[[Page 38154]]

analysis criteria for the other remaining technology options.
High-Efficiency Motors
    In response to the preliminary analysis, manufacturers stated that 
there are a limited number of ECM motor suppliers to furnace fan 
manufacturers, and that it is a proprietary technology. Manufacturers 
also stated that no alternative ECM exists at the scale of Regal Beloit 
ECMs and that limiting PSC applicability would reduce product 
flexibility.
    Motor manufacturers disagreed with residential furnace fan 
manufacturers, claiming that there is more than just a single motor 
manufacturer offering ECM technology. Motor manufacturers also 
supported DOE's assumption that after implementation of furnace fan 
efficiency standards, brushless permanent magnet motor technologies 
will become increasingly available over time. DOE discovered during 
interviews with manufacturers that there are multiple suppliers of BPM 
motors. DOE also found further evidence that some manufacturers 
purchase BPM motors from multiple suppliers. EEI stated that the 
expiration of Regal Beloit ECM patents around 2020 may increase the 
availability of this motor type while decreasing cost. (EEI, PA Public 
Meeting Transcript, No. 43 at p. 127)
    In the preliminary analysis, DOE requested comment as to whether 
manufacturers could alternatively develop BPM motor controls in-house 
when using high-efficiency motors from other, non-Regal Beloit, 
suppliers. Most furnace fan manufacturers claimed that development of 
in-house controls for BPM motors is not an option. 78 FR 64087.
    While DOE recognizes that Regal Beloit possesses a number of 
patents in the BPM motor space, other motor manufacturers (e.g., Broad 
Ocean, ebm-papbst, and NMC) also offer BPM models. Additionally, DOE is 
aware that in years past, residential furnace fans paired with 
constant-airflow BPM motors accounted for 30 percent of the market. 
While DOE estimates that constant-airflow BPM motors represent only 10-
15 percent of the current furnace fan market, the manufacturing 
capability to meet BPM motor demand exists. Thus, DOE continues to 
expect that BPM motor technology is currently available from more than 
one source and will become increasingly available to residential 
furnace fan manufacturers. 78 FR 64087.
    Also in response to the preliminary analysis, some fan 
manufacturers expressed concern that high-efficiency motor reliance on 
rare earth metals would impact supply. However, DOE is aware of high-
efficiency motors that do not contain rare earth materials. DOE is also 
confident, after discussions with manufacturers, that if BPM motors are 
adopted as a means to meet a future residential furnace fan energy 
conservation standard, manufacturers would have a number of cost- and 
performance-competitive suppliers from which to choose who have 
available, or could rapidly develop, control systems independently of 
the motor manufacturer. 78 FR 64087.
    DOE did not receive additional comment or information in response 
to the NOPR about high-efficiency motors related to the screening 
criteria. Thus DOE included high-efficiency motors as a technology 
option in the engineering analysis.
Backward-Inclined Impellers
    In response to the preliminary analysis, furnace fan manufacturers 
stated that backward-inclined impellers must have larger diameter and 
operate at higher speed than forward-curve impellors in order to attain 
equivalent performance (i.e., flow and pressure rise). However, ebm-
papst stated that they retrofitted existing equipment with backward-
inclined impellers, which only required making minor changes to the 
airflow path within the equipment. 78 FR 64088.
    Manufacturers were also concerned with the potential impacts that 
backward-inclined impellers could have on heat exchanger temperatures. 
Some commenters also argued that backward-inclined impellers may affect 
furnace fan utility, because the noise produced by this impeller type 
may limit product application. Utilities claimed that a backward-
inclined impeller, in combination with increased fan motor speeds to 
achieve higher efficiency, leads to amplified noise levels. 78 FR 
64088.
    For the NOPR, DOE found that there are multiple approaches to 
implementing backward-inclined impellers to reduce furnace fan energy 
consumption. DOE recognized that one approach is to use a backward-
inclined impeller that is larger than a standard forward-curved 
impeller, which may lead to larger HVAC products. Another approach is 
to pair the backward-inclined impeller with a motor that operates at 
increased RPM. Ebm-papst tests show a significant potential to reduce 
fan electrical energy consumption for a backward-inclined impeller 
assembly that uses existing motor technology at higher RPMs and is 
implemented in existing HVAC products (i.e., no increase in product 
size required). Ebm-papst does not believe that achieving higher RPMs 
with existing motor technology is an obstacle for implementing this 
technology. DOE believed that this prototype represented a backward-
inclined implementation approach that could achieve fan energy savings 
while avoiding the negative impacts listed by manufacturers. 
Consequently, DOE decided not to screen out the backward-inclined 
impeller technology option in the NOPR. 78 FR 64088.
    DOE did not receive additional comment or information about 
backward-inclined impellers related to the screening criteria. Thus, 
DOE decided not to screen out backward-inclined impellers in the Final 
Rule.

C. Engineering Analysis

    In the engineering analysis (corresponding to chapter 5 of the 
Final Rule TSD), DOE establishes the relationship between the 
manufacturer selling price (MSP) and improved residential furnace fan 
efficiency. This relationship serves as the basis for cost-benefit 
calculations for individual consumers, manufacturers, and the Nation. 
DOE typically structures the engineering analysis using one of three 
approaches: (1) Design option; (2) efficiency level; or (3) reverse 
engineering (or cost-assessment). The design-option approach involves 
adding the estimated cost and efficiency of various efficiency-
improving design changes to the baseline to model different levels of 
efficiency. The efficiency-level approach uses estimates of cost and 
efficiency at discrete levels of efficiency from publicly-available 
information, and information gathered in manufacturer interviews that 
is supplemented and verified through technology reviews. The reverse 
engineering approach involves testing products for efficiency and 
determining cost from a detailed bill of materials derived from reverse 
engineering representative products. The efficiency values range from 
that of a least-efficient furnace fan sold today (i.e., the baseline) 
to the maximum technologically feasible efficiency level. For each 
efficiency level examined, DOE determines the MSP; this relationship is 
referred to as a cost-efficiency curve.
1. Efficiency Levels
    In this rulemaking, DOE used an efficiency-level approach in 
conjunction with a design-option approach to identify incremental 
improvements in efficiency for each product class. An efficiency-level 
approach enabled DOE to identify incremental improvements in efficiency 
for efficiency-improving

[[Page 38155]]

technologies that furnace fan manufacturers already incorporate in 
commercially-available models. A design-option approach enabled DOE to 
model incremental improvements in efficiency for technologies that are 
not commercially available in residential furnace fan applications. In 
combination with these approaches, DOE used a cost-assessment approach 
to determine the manufacturing production cost (MPC) at each efficiency 
level identified for analysis. This methodology estimates the 
incremental cost of increasing product efficiency. When analyzing the 
cost of each efficiency level, the MPC is not for the entire HVAC 
product, because furnace fans are a component of the HVAC product in 
which they are integrated. The MPC includes costs only for the 
components of the HVAC product that impact FER.
Baseline
    During the preliminary analysis, DOE selected baseline units 
typical of the least-efficient furnace fans used in commercially-
available, residential HVAC models that have a large number of annual 
shipments. This sets the starting point for analyzing potential 
technologies that provide energy efficiency improvements. Additional 
details on the selection of baseline units may be found in chapter 5 of 
the Final Rule TSD. DOE compared the FER at higher energy efficiency 
levels to the FER of the baseline unit and compared baseline MPCs to 
the MPCs at higher efficiency levels.
    DOE reviewed FER values that it calculated using test data and 
performance information from publicly-available product literature to 
determine baseline FER ratings. Table IV.4 presents the baseline FER 
values identified in the preliminary analysis for each product class.

                                  Table IV.4--Preliminary Analysis Baseline FER
----------------------------------------------------------------------------------------------------------------
                       Product class                                          FER  (W/1,000 cfm)
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan............  380
Non-Weatherized, Condensing Gas Furnace Fan................  393
Weatherized, Non-Condensing Gas Furnace Fan................  333
Non-Weatherized, Non-Condensing Oil Furnace Fan............  333
Electric Furnace/Modular Blower Fan........................  312
Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan  295
Mobile Home Non-Weatherized, Condensing Gas Furnace Fan....  319
Mobile Home Electric Furnace/Modular Blower Fan............  243
----------------------------------------------------------------------------------------------------------------

    In response to the preliminary analysis, manufacturers asserted 
that the baseline FER values presented were not representative of the 
furnace fans in the least-efficient residential HVAC models offered for 
sale today. Some manufacturers also requested that DOE alter FER to 
better reflect unit capacity. Specifically, some manufacturers stated 
that residential furnace fans having a larger capacity also have higher 
FERs and recommended that DOE adjust baseline FER values to include the 
largest-capacity fan within a product class. 78 FR 64089.
    In the NOPR, DOE evaluated the feedback it received and used the 
data provided by interested parties to generate new FER values and to 
revise its baseline, intermediate efficiency levels, and max-tech FER 
estimates. DOE's revisions included FER results for furnace fan models 
that span the capacity range of residential products. After reviewing 
all of the available FER values based on new data, DOE concluded that 
FER can best be represented as a linear function of airflow capacity 
(i.e., a first constant added to airflow multiplied by a second 
constant). The slope of the linear fit characterizes the change in FER 
for each unit of airflow capacity increase, and the y-intercept 
represents where the FER line intersects the y-axis (where airflow 
capacity is theoretically zero). For the NOPR, DOE proposed to use such 
linear functions to represent FER for the different efficiency levels 
of the different product classes. 78 FR 64089.
    Table IV.5 shows the revised FER baseline efficiency levels 
estimates that DOE used for the NOPR.

                                     Table IV.5--NOPR Baseline FER Estimates
----------------------------------------------------------------------------------------------------------------
                       Product class                                         FER*  (W/1,000 cfm)
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan............  FER = 0.057 x QMax + 362.
Non-Weatherized, Condensing Gas Furnace Fan................  FER = 0.057 x QMax + 395.
Weatherized Non-Condensing Gas Furnace Fan.................  FER = 0.057 x QMax + 271.
Non-Weatherized, Non-Condensing Oil Furnace Fan............  FER = 0.057 x QMax + 336.
Electric Furnace/Modular Blower Fan........................  FER = 0.057 x QMax + 331.
Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan  FER = 0.057 x QMax + 271.
Mobile Home Non-Weatherized, Condensing Gas Furnace Fan....  FER = 0.057 x QMax + 293.
Mobile Home Electric Furnace/Modular Blower Fan............  FER = 0.057 x QMax + 211.
Mobile Home Weatherized Gas Furnace Fan....................  Reserved.
Mobile Home Non-Weatherized Oil Furnace Fan................  Reserved.
----------------------------------------------------------------------------------------------------------------
*QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the proposed DOE test
  procedure at the time of the ECS NOPR publication. 78 FR 19606, 19627 (April 2, 2013).

    Manufacturers stated that the baseline FER values presented in the 
NOPR need to be re-evaluated to determine the appropriate baseline. 
Because the test procedure was not finalized at the time of the ECS 
NOPR publication, Lennox believes that assumptions were made by DOE to 
determine the baseline from other sources, leading to overstated energy 
savings and misleading conclusions. (Lennox, No. 100 at p. 3) Goodman 
believes that the NOPR

[[Page 38156]]

baseline values are too high. Goodman initially commented that baseline 
values were too low for the preliminary analysis. Based on the product 
testing per the April 2013 test procedure SNOPR, Goodman feels the 
increased values for baseline FER are too high, and should be closer 
(but still higher than) the original TSD estimated values. (Goodman, 
No. 102 at p. 8) Morrison, NEEA, and NPPC also commented that because 
there was no finalized test procedure at the time the ECS NOPR was 
published, DOE should not be using test data from public literature to 
generate FER values. (Morrison, No. 91 at p. 124; NEEA, NPCC, No. 96 at 
p. 2) Ingersoll-Rand echoed Lennox's and Morrison's comments, stating 
that it is difficult to get furnace fan power data from public 
literature, and that DOE's baseline FER values are over-estimated. 
(Ingersoll-Rand, No. 91 at pp. 110-111) Rheem and Lennox questioned 
whether the efficiency levels are based off of FER or the average 
annual auxiliary electrical energy consumption (Eae). 
(Rheem, No. 83 at p. 4; Lennox, No. 100 at p. 3) Lennox and Ingersoll-
Rand also commented specifically about the baseline FER for weatherized 
gas furnaces, citing a dramatic difference in DOE's baseline 
performance level as compared to their product offerings. Additionally, 
when the performance improvement factors are applied to DOE's baseline, 
the result is a very aggressive mandated increase in performance. 
(Lennox, No. 100 at p. 3; Ingersoll-Rand, No. 107 at p. 4) AHRI also 
commented on the FER for weatherized gas furnaces, stating that the FER 
values for weatherized gas furnace fans and non-weatherized condensing 
gas furnace fans should be the same because the test procedure is the 
same for both products, except for a difference in ESP. AHRI explained 
the difference in ESP accounts for the cooling coil within the 
weatherized gas furnace, therefore, in effect, the furnace fan 
assemblies for weatherized and non-weatherized gas furnaces are subject 
to the same ESP. (AHRI, No. 91 at pp. 127-129) Goodman agreed with AHRI 
that weatherized gas furnace fans should have the save efficiency 
levels as non-weatherized gas, non-condensing furnace fans. (Goodman, 
No. 102 at p. 3)
    DOE did not use Eae as an input for the engineering 
analysis. All efficiency levels considered by DOE throughout this 
rulemaking, including the baseline, are based on FER data, not 
Eae. DOE used Eae as a proxy for FER to evaluate 
market-wide energy performance of furnace fans in the market and 
technology assessment only. Further description of this 
characterization is found in chapter 3 of the Final Rule TSD. DOE 
disagrees with Lennox, Morrison, NEEA, and NPPC that FER values that 
DOE generated prior to the final test procedure or based on public 
literature should not be considered in this Final Rule. DOE outlines in 
detail in section III.A the reasons that FER data from previous stages 
of the rulemaking and public literature are relevant. Section III.A 
also explains how DOE's changes to the test procedure between the test 
procedure SNOPR and final rule should not result in significant 
differences in FER values for many covered products. Thus, DOE 
disagrees with Ingersoll Rand, Lennox, Goodman, and Morrison's claims 
that, in the absence of a final test procedure or because of changes in 
the final test procedure, DOE used unreliable information to calculate 
FER and model efficiency levels for the NOPR. Regardless, DOE agrees 
with interested parties that DOE should re-update its NOPR baseline 
equations based on new data. DOE received some baseline FER data from 
interested parties in response to the NOPR. As discussed in section 
III.A, DOE also conducted testing prior to and during the development 
of the test procedure final rule that generated a broad enough set of 
results to enable DOE to derive FER values that are consistent with the 
requirements of the final test procedure. DOE used this new baseline 
FER data to revise its baseline equations.
    DOE investigated interested party claims that DOE's proposed 
baseline equation for weatherized gas furnace fans did not match 
manufacturer performance estimates. DOE did not receive additional 
baseline FER data for weatherized gas furnace fans. However, DOE did 
derive additional FER values from data from specification sheets and 
testing of weatherized gas furnaces at higher efficiency levels (i.e., 
weatherized gas furnaces that use constant-torque and constant-airflow 
BPM motors). DOE was able to collect more reliable FER data for more 
efficient weatherized gas furnace fans than for baseline weatherized 
gas furnace fans. Consequently, DOE estimated the weatherized gas 
furnace fan baseline FER by multiplying the market and capacity 
weighted FER value for weatherized gas furnace fans with constant-
airflow BPM motor and multi-staging by the expected percent increase in 
FER (i.e., the inverse of the expected percent reduction in FER for 
constant-airflow BPM and multi-staging). DOE then developed a 
conversion factor from the non-weatherized, non-condensing gas furnace 
fan baseline FER to generate a y-intercept for the weatherized non-
condensing gas furnace fan baseline FER equation. This approach 
significantly increased DOE's estimated baseline FER for weatherized 
non-condensing gas furnace fans to a level consistent with the revised 
baseline for non-weatherized, condensing gas furnace fans. Even though 
they are not identical, DOE concludes that the approach described is 
appropriate based on interested party feedback. The airflow path design 
of weatherized non-condensing gas and non-weatherized, condensing gas 
furnaces are very different, which impacts furnace fan performance, 
accounting for the slightly different FER equations.
    DOE also received comments from interested parties regarding the 
slopes in the NOPR FER equations. Rheem and Lennox commented that the 
slope characterizing the relationship between FER and airflow capacity 
is too flat, adding that higher-capacity models are space constrained, 
and their FER values do not meet the proposed FER levels in the NOPR. 
(Rheem, No. 83 at p. 8; Lennox, No. 100 at p. 6) Ingersoll-Rand 
commented that for condensing furnaces and furnaces using improved PSC 
motors and multi-staging controls, FER tends to decrease as capacity 
increases, creating a negative slope. (Ingersoll-Rand, No. 91 at pp. 
110-111; Ingersoll-Rand, No. 107 at pp. 3-4) Ingersoll-Rand also 
commented that even though FER values for furnace fans with PSC motors 
follow a linear trend, FER values for furnace fans that use BPM motor 
technologies do not because they react differently to changes in static 
pressure (Ingersoll-Rand, No. 107 at p. 5) ACEEE, Goodman, and Mortex 
questioned whether a linear slope is the best way to characterize the 
relationship between FER and airflow capacity. AHRI and Goodman added 
that there is a cubic relationship between fan input power and airflow, 
thus, a non-linear slope may be more appropriate. (ACEEE, No. 94 at p. 
3; Goodman, No. 102 at p. 13; Mortex, No. 104 at p. 3; AHRI, No. 98 at 
p. 3)
    In response to interested party comments, DOE recalculated FER 
versus airflow capacity slopes using new data from baseline series for 
both non-weatherized, non-condensing gas furnace fans and non-
weatherized, condensing gas furnace fans. DOE found that the average 
baseline slope increased dramatically from 0.057 to 0.081. DOE is aware 
that some instances of furnace series models will not match DOE's slope 
analysis results. The data, that DOE has, shows a positive slope when 
characterizing the relationship between

[[Page 38157]]

FER and airflow capacity. Furthermore, DOE did not determine that a 
linear fit was the best fit statistically. DOE believes a linear fit is 
the best representation of furnace fan performance given the level of 
data available. DOE finds that linear fits result in a distribution of 
efficiency levels that match the distribution of furnace fan 
performance by technology option used. Additionally, a cubic trend-line 
does not account for changes in furnace envelope size, heat exchanger 
size, furnace fan outlet size, and other factors the affect furnace fan 
performance. Using a cubic trend-line would only be appropriate if 
these other factors were held constant. DOE finds that input power to a 
PSC-driven furnace fan decreases because the airflow provided by the 
fan decreases as static pressure rises (i.e., the fan does not have to 
work as hard in the face of increased resistance because the fan is not 
providing as much air). Input power to a constant-airflow BPM motor-
driven furnace fan, on the other hand, will increase as static pressure 
rises because the BPM motor-driven fan is designed to maintain the 
desired level of airflow. Recognizing that this behavior could 
complicate comparing the relative performance of these motor 
technologies, DOE's rating metric, FER, is normalized by airflow to 
result in ratings that are in units of watts/cfm.
    Table IV.5 shows the revised FER baseline efficiency levels 
estimates that DOE used for the Final Rule.

                                  Table IV.6--Final Rule Baseline FER Estimates
----------------------------------------------------------------------------------------------------------------
                       Product class                                         FER * (W/1,000 cfm)
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan............  FER = 0.081 x QMax + 335.
Non-Weatherized, Condensing Gas Furnace Fan................  FER = 0.081 x QMax + 358.
Weatherized Non-Condensing Gas Furnace Fan.................  FER = 0.081 x QMax + 365.
Non-Weatherized, Non-Condensing Oil Furnace Fan............  FER = 0.081 x QMax + 433.
Electric Furnace/Modular Blower Fan........................  FER = 0.081 x QMax + 304.
Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan  FER = 0.081 x QMax + 252.
Mobile Home Non-Weatherized, Condensing Gas Furnace Fan....  FER = 0.081 x QMax + 273.
Mobile Home Electric Furnace/Modular Blower Fan............  FER = 0.081 x QMax + 186.
Mobile Home Weatherized Gas Furnace Fan....................  Reserved.
Mobile Home Non-Weatherized Oil Furnace Fan................  Reserved.
----------------------------------------------------------------------------------------------------------------
* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the final DOE test
  procedure. 79 FR 499, 524 (January 3, 2014).

Percent Reduction in FER
    For the preliminary analysis, DOE determined average FER reductions 
for each efficiency level for a subset of key product classes and 
applied these reductions to all product classes. DOE found from 
manufacturer feedback and its review of publically-available product 
literature that manufacturers use similar furnace fan components and 
follow a similar technology path to improving efficiency across all 
product classes. DOE does not expect the percent reduction in FER 
associated with each design option, whether commercially available or 
prototype, to differ across product classes as a result. Table IV.7 
includes DOE's preliminary analysis estimates for the percent reduction 
in FER from baseline for each efficiency level.

 Table IV.7--Preliminary Analysis Estimates for Percent Reduction in FER From Baseline for Each Efficiency Level
----------------------------------------------------------------------------------------------------------------
                                                                                                      Percent
                                                                                                   reduction in
            Efficiency level  (EL)                                Design option                      FER from
                                                                                                     baseline
----------------------------------------------------------------------------------------------------------------
1.............................................  Improved PSC....................................               2
2.............................................  Inverter-Driven PSC.............................              10
3.............................................  Constant-Torque BPM Motor.......................              45
4.............................................  Constant-Airflow BPM Motor + Multi-Staging......              59
5.............................................  Premium Constant-Airflow BPM Motor + Multi-                 * 63
                                                 Staging + Backward-Inclined Impeller.
----------------------------------------------------------------------------------------------------------------
* DOE estimates that implementing a backward-inclined impeller at EL 5 results in a 10% reduction in FER from EL
  4. This is equivalent to a reduction of 4% percent of the baseline FER. The total percent reduction in FER
  from baseline for EL 5 includes the 59% reduction from EL 4 and the 4% net reduction of the backward-inclined
  impeller for a total percent reduction of 63% from baseline.

    Interested parties questioned DOE's estimates for the FER reduction 
for high-efficiency motors. Specifically, interested parties noted that 
DOE underestimated the efficiency gain of improved PSC motors over 
standard PSC motors, and overestimated the efficiency improvement of 
BPM motor technology options. 78 FR 64090.
    For the NOPR, DOE reviewed its estimates of percent reduction in 
FER from baseline for each efficiency level based on interested party 
feedback. In addition to the comments summarized above, interested 
parties also provided FER values for higher-efficiency products in 
manufacturer interviews. DOE used these data to revise its percent 
reduction estimates. Table IV.8 shows DOE's revised estimates for the 
percent reduction in FER for each efficiency level that DOE used in the 
NOPR. For a given product class, DOE applied the percent reductions 
below to both the slope and y-intercept of the baseline FER equation to 
generate FER equations to represent each efficiency level above 
baseline.

[[Page 38158]]



         Table IV.8--NOPR Estimates for Percent Reduction in FER From Baseline for Each Efficiency Level
----------------------------------------------------------------------------------------------------------------
                                                                                                      Percent
                                                                                                   reduction  in
            Efficiency level  (EL)                                Design option                      FER from
                                                                                                     baseline
----------------------------------------------------------------------------------------------------------------
1.............................................  Improved PSC....................................              10
2.............................................  Inverter-Driven PSC.............................              25
3.............................................  Constant-Torque BPM Motor.......................              42
4.............................................  Constant-Torque BPM Motor and Multi-Staging.....              50
5.............................................  Constant-Airflow BPM Motor and Multi-Staging....              53
6.............................................  Premium Constant-Airflow BPM Motor and Multi-               * 57
                                                 Staging + Backward-Inclined Impeller.
----------------------------------------------------------------------------------------------------------------
* DOE estimates that implementing a backward-inclined impeller at EL 6 results in a 10% reduction in FER from EL
  5. This is equivalent to a 4% percent reduction in FER from baseline. The total percent reduction in FER from
  baseline for EL 6 includes the 53% reduction from EL 5 and the 4% net reduction from the backward-inclined
  impeller for a total percent reduction of 57% from baseline.

    Note that EL 4 in the table above was a newly proposed efficiency 
level in the NOPR. As discussed in section IV.A.3, DOE analyzed multi-
staging as a separate technology option. For the NOPR, DOE also 
evaluated a separate efficiency level representing applying multi-
staging to a furnace fan with a constant-torque BPM motor. 78 FR 64091.
    In response to the NOPR, AHRI asked if DOE considered pairing PSC 
motors with multi-stage furnace controls in its analysis. (AHRI, No. 91 
at p. 310) While DOE did gather data for and investigated PSC-driven 
furnace fans in multi-stage products, DOE did not include this 
combination as an efficiency level for the Final Rule. In the 
engineering analysis, DOE assesses technology options in order of cost-
effectiveness. DOE finds that constant-torque BPM motors are more cost-
effective than PSC motors with multi-staging. While the cost of multi-
staging for each motor type is approximately the same, multi-staging 
results in significantly less energy savings when used with a PSC 
motor. DOE expects this is the result of a limited turndown ratio as 
discussed in section III.A.4.
    Interested parties commented on the NOPR percent reductions in FER 
from the baseline and resulting efficiency level equations. Nidec 
stated that the percent reductions do not reflect furnace fan 
performance improvements when using higher-efficiency PSC motors. 
(Nidec, No. 91 at p. 147) Many manufacturers stated that the proposed 
efficiency levels are not consistent with product performance using the 
varying design options. Rheem, Allied Air, Daikin, Lennox, and 
Ingersoll-Rand stated that only their multi-staging furnace lines that 
use constant-airflow BPM motors would meet the proposed standard level. 
(Rheem, No, 83 at pp. 1-2; Allied Air, No. 91 at p. 105; Daikin, No. 91 
at p. 105; Lennox, No. 100 at p. 5; Ingersoll-Rand, No. 91 at pp. 102-
103) Goodman and AHRI submitted similar comments stating that there are 
existing products that use the design options specified within TSL 5 
that will not even meet the proposed energy conservation standards. 
(AHRI, No. 98 at p. 3; and Goodman, No 102 at pp. 4 and 7) In a joint 
comment submitted by Appliance Standards Awareness Project (ASAP), 
Alliance to Save Energy (ASE), National Consumer Law Center (NCLC), and 
National Resources Defense Council (NRDC) and in a separate comment 
submitted by California Investor-Owned Utilities (CA IOUs), interested 
parties recommended that DOE conduct additional testing of furnace fans 
with constant-torque BPM motors with multi-staging controls to verify 
the accuracy of the proposed FER standard level equations, and to 
ensure that the majority of products containing constant-torque BPM 
motors with multi-staging controls meet the standard. (ASAP, et al., 
No. 105 at p. 2; CA IOU, No. 106 at p. 3)
    DOE carefully considered the feedback received from interested 
parties on the percent reductions in FER from baseline that the 
Department proposed in the NOPR. DOE shares manufacturers' concerns 
that their products are not meeting the levels proposed in the NOPR 
despite those models using the technologies (or more efficient 
technologies) on which those levels are based. DOE used data provided 
by interested parties, conducted additional testing using the final DOE 
test procedure, and gathered data from additional product specification 
sheets to generate new FER values. DOE used this new FER data to revise 
its estimates of percent reduction in FER from baseline for each 
efficiency level. In response to Nidec, DOE did analyze an efficiency 
level associated with improved PSC motors. However, DOE did not receive 
and could not gather any new FER data with which to revise its 
estimated percent reduction in FER from baseline for this technology. 
Using the revised estimates of percent reduction in FER from baseline, 
DOE revised its FER equations. Then, for the product classes with the 
highest shipments, DOE assessed how many models for which DOE has an 
FER value met the revised EL 4. DOE finds that over 90% of the non-
weatherized, non-condensing gas, non-weatherized, condensing gas and 
weatherized non-condensing gas furnace fans for which DOE has FER 
values that use constant-torque BPM motors and multi-staging meet the 
revised EL 4. DOE finds that many models in those product classes for 
which DOE has FER data that use constant-torque BPM motors without 
multi-staging would also meet the revised EL 4. DOE feels that the 
percentage of models that meet the revised EL 4 show that the Final 
Rule efficiency levels are reflective of the performance of the 
technologies on which they are based.
    Ingersoll Rand stated that percent reduction in FER from the 
baseline should not be constant across all capacities for products 
using constant-torque BPM motor technologies. Specifically, Ingersoll-
Rand noted that efficiency improvements with this technology decrease 
with increasing furnace capacity, and that at high airflow capacities, 
there is little or no difference in FER values between furnace fans 
using improved PSC motors and those using constant-torque BPM motors. 
(Ingersoll-Rand, No. 107 at p. 5) Additionally, Ingersoll-Rand stated 
that wider cabinets for furnaces with more cooling capacity but the 
same heating input will have lower FERs. (Ingersoll-Rand, NOPR Public 
Meeting Transcript, No. 91 at p. 94) Ingersoll-Rand and Mortex disagree 
with DOE using the same slope for FER equations for both mobile home 
furnaces as well as non-mobile home furnaces. These parties cite that 
there are space constraints associated with mobile home applications, 
and that it is more difficult to meet the proposed standard at higher 
capacities because the cabinet

[[Page 38159]]

size must remain the same. (Ingersoll-Rand, No. 91 at pp. 116-117; 
Mortex, No. 91 at pp. 129-131)
    DOE recognizes that percent reduction in FER from baseline for a 
given technology option varies with capacity. DOE's estimates of 
percent reduction in FER from baseline are based on market-weighted 
averages of FER values from across the entire range of furnace fan 
airflow capacities to account for this variation. As discussed above, 
DOE finds that constant percent reductions in FER from baseline result 
in a distribution of efficiency levels that match the distribution of 
furnace fan performance by technology option used across the entire 
range of furnace fan airflow capacities. Thus, DOE believes that a 
constant percent reduction in FER from baseline across all airflow 
capacities is appropriate. DOE is also aware that in some instances FER 
may decrease for furnaces with higher cooling capacities but the same 
heating input. DOE's analysis includes FER data for furnace fans that 
have differing heating capacity to cooling capacity ratios. DOE 
recognizes that these ratios indicate design differences that impact 
fan performance. However, a significant majority of the models for 
which DOE has FER data are meeting the ELs associated with the 
technologies that they use. Of the few models that do not, DOE observes 
no pattern related to the ratio of heating capacity to cooling 
capacity. DOE recognizes that mobile home products are more space-
constrained than the other products covered by this standard. DOE did 
not receive mobile home FER data in response to the NOPR. Despite DOE 
using the same slope for mobile home product classes to characterize 
the relationship between FER and airflow capacity for all product 
classes, the resulting ELs for mobile home furnace fans are less 
stringent than those for non-mobile home furnaces at higher capacities. 
EL 4 for MH-NWG-NC and NWG-NC both have slopes of 44 FER per 1000 cfm, 
for example. Thus, for an increase in airflow capacity of 1000 cfm, EL 
4 allows for an increase of 44 in FER for both classes. At 1,200 cfm, 
EL 4 is represented by and FER of 235 for NWG-NC and 190 for MH-NWG-NC. 
An increase of 44 in FER would represent an increase in FER of 
approximately 18 percent for the NWG-NC furnace fan, but an increase in 
FER of approximately 23% for the MH-NWG-NC furnace fan. Consequently, 
the allowable increase in FER as capacity increases is more lenient for 
mobile home furnaces. DOE believes this leniency is appropriate 
considering the more rigid space constraints mobile home furnaces must 
meet. DOE recognizes that the same variation in stringency occurs as a 
result of DOE's method for establishing baseline FER equations using 
conversion factors as described in more detail in chapter 5 of the 
Final Rule TSD. However, the difference in FER values between mobile 
home and non-mobile home furnace fans is much greater than the 
difference between FER values amongst non-mobile home furnace fans. The 
variation in stringency for non-mobile home products is minimal as a 
result.
    Table IV.9 shows DOE's revised estimates for the percent reduction 
in FER for each efficiency level that DOE used in the Final Rule 
analyses.

      Table IV.9--Final Rule Estimates for Percent Reduction in FER from Baseline for Each Efficiency Level
----------------------------------------------------------------------------------------------------------------
                                                                                                      Percent
                                                                                                   reduction  in
            Efficiency level  (EL)                                Design option                      FER from
                                                                                                     baseline
----------------------------------------------------------------------------------------------------------------
1.............................................  Improved PSC....................................              12
2.............................................  Inverter-Driven PSC.............................              25
3.............................................  Constant-Torque BPM Motor.......................              41
4.............................................  Constant-Torque BPM Motor and Multi-Staging.....              46
5.............................................  Constant-Airflow BPM Motor and Multi-Staging....              51
6.............................................  Premium Constant-Airflow BPM Motor and Multi-               * 56
                                                 Staging + Backward-Inclined Impeller.
----------------------------------------------------------------------------------------------------------------
* DOE estimates that implementing a backward-inclined impeller at EL 6 results in a 10% reduction in FER from EL
  5. This is equivalent to a 5% percent reduction in FER from baseline. The total percent reduction in FER from
  baseline for EL 6 includes the 51% reduction from EL 5 and the 5% net reduction from the backward-inclined
  impeller for a total percent reduction of 56% from baseline.

    Ingersoll Rand provided a significant amount of FER data in its 
written comment to support its statements. (Ingersoll Rand, No. 107 at 
pp. 3, 12-16) DOE appreciates this information and included these FER 
values in its revision of the engineering analysis to account for the 
furnace fan performance behaviors described by Ingersoll Rand.
2. Manufacturer Production Cost (MPC)
    In the preliminary analysis, DOE estimated the manufacturer 
production cost associated with each efficiency level to characterize 
the cost-efficiency relationship of improving furnace fan performance. 
The MPC estimates are not for the entire HVAC product because furnace 
fans are a component of the HVAC product in which they are integrated. 
The MPC estimates includes costs only for the components of the HVAC 
product that impact FER, which DOE considered to be the:

 Fan motor and integrated controls;
 Primary control board (PCB);
 Multi-staging components;
 Impeller;
 Fan housing; and
 Components used to direct or guide airflow.

    DOE separated the proposed product classes into high-volume and 
low-volume product classes and generated high-volume and low-volume MPC 
estimates to account for the increased purchasing power of high-volume 
manufacturers.\26\
---------------------------------------------------------------------------

    \26\ High-volume and low-volume product classes are discussed 
further in chapter 5 of the Final Rule TSD.
---------------------------------------------------------------------------

Production Volume Impacts on MPC
    In response to the preliminary analysis, manufacturers commented 
that they use different manufacturing processes for high and low-volume 
products. In the NOPR analysis, DOE found that 94 percent of the MPC 
for furnace fans is attributed to materials (included purchased parts 
like fan motors), which are not impacted by process differences. DOE's 
estimates also already accounted for process differences between 
manufacturers for high-volume and low-volume products. The products 
that DOE evaluated to support calculation of MPC included furnace fans 
from various manufacturers, including both high-volume and low-volume 
models. Observed process differences are reflected in the bills of 
materials for

[[Page 38160]]

those products. DOE believed that its approach to distinguish between 
high-volume and low-volume product classes accounts for the expected 
difference in MPC between high-volume and low-volume product classes. 
78 FR 64091.
    DOE did not receive comment or additional information on production 
volume impacts on MPC, thus, DOE is taking the same approach to 
distinguish between high-volume and low-volume product classes in the 
Final Rule.
Inverter-Driven PSC Costs
    In the preliminary analysis, DOE estimated that the MPC of inverter 
control for a PSC motor is $10-$12, depending on production volume. 
Interested parties commented that DOE was underestimating the cost of 
adding an inverter to a PSC motor, and questioned if DOE's cost 
estimate was for wave chopper technology and not inverters. In the 
NOPR, DOE stated that the preliminary analysis estimate for the MPC of 
an inverter-driven PSC was indeed based on a wave chopper drive. DOE 
found that more sophisticated and costly inverters are required to 
achieve the efficiencies reflected in DOE's analysis. Consequently, DOE 
adjusted its cost estimate for PSC inverter technology. DOE gathered 
more information about the cost of inverters that are suited for 
improving furnace fan efficiency. In addition to receiving cost 
estimates during manufacturer interviews, DOE also reviewed its cost 
estimates for inverter drives used in other residential applications, 
such as clothes washers. DOE found that $30 for high-volume products 
and $42.29 for low-volume products are better estimates of the MPC for 
inverters used to drive PSC furnace fan motors. Accordingly, DOE 
updated those values for the NOPR. 78 FR 64091-64092.
    DOE did not receive comment or additional information on cost 
estimates for inverter-driven PSC motors, thus, DOE is not making 
changes to the MPC estimates for inverters used to drive PSC furnace 
fan motors in the Final Rule.
Furnace Fan Motor MPC
    In response to the preliminary analysis, manufacturers stated that 
DOE underestimated the incremental MPC to implement high-efficiency 
motors in HVAC products, other than oil furnaces. Most manufacturers 
stated that the cost increase to switch from PSCs to more-efficient 
motor technologies was at least twice that of the DOE's estimate. Based 
upon the input received from interested parties, DOE adjusted its motor 
cost estimates in the NOPR analysis. In general, DOE increased its 
estimates by approximately 10 to 15 percent, which is consistent with 
the feedback DOE received. 78 FR 64092.
    Goodman stated that DOE significantly underestimated the costs of 
the increasing levels of fan motor cost. (Goodman, No. 102 at p. 9) 
Lennox stated that DOE underestimated the total cost of furnace fans 
with BPM motor technology by 10 to 30 percent, therefore, the 
incremental costs are underestimated by 20 to 120 percent. (Lennox, No. 
100 at p. 6) Conversely, ACEEE commented that DOE has a well-
established record of over-estimating the cost of complying with 
standards, thus, DOE's cost estimates should be discounted to further 
improve the economics of advanced technology options. (ACEEE, No. 94 at 
p. 3) Rheem questioned if the DOE motor cost estimates included power 
factor correction filters for BPM motors, as those can cost $10 to $20. 
(Rheem, No. 91 at p. 165)
    DOE recognizes that BPM motor use contributes to concerns regarding 
total harmonic distortion. However, the use of power factor correction 
filters for BPM motor technologies is currently not required under 
federal regulations. The DOE cost estimates reflect what is currently 
available on the market, thus, the added cost of filters for BPM motor 
technologies is not included in DOE's MPC estimates for BPM motors. DOE 
believes the motor MPC estimates presented in the NOPR are 
representative of current motor costs. Thus, DOE is keeping the same 
furnace fan motor cost estimates presented in the NOPR for the Final 
Rule analysis. Details regarding DOE's MPC estimates are provided in 
chapter 5 of the Final Rule TSD.
Motor Control Costs
    In the preliminary analysis, DOE estimated that the MPC of the 
primary control board (PCB) increases with each conversion to a more-
efficient motor type (i.e., from PSC to constant-torque BPM motor and 
from constant-torque to constant-airflow BPM motor). Manufacturers 
confirmed that higher-efficiency motors and modulating motors require 
more sophisticated and costly controls. DOE also received feedback 
regarding the cost of the PCBs associated with each motor type during 
manufacturer interviews. In general, manufacturers commented that the 
PCBs used with constant-torque BPM motors are more costly. However, 
other manufacturer interview participants stated that the MPC of the 
PCB used with these motors should be equivalent or even less expensive 
than the PCBs used with PSC motors. 78 FR 64092.
    In the NOPR, DOE agreed with interested parties that the MPC of the 
PCB needed for a constant-airflow BPM motor is higher than for the PCB 
paired with a PSC motor. DOE estimated that the MPC of a PCB paired 
with a constant-airflow BPM motor is roughly twice as much as for a PCB 
paired with a constant-torque BPM motor or PSC. DOE also agreed with 
the interested parties that stated that the MPC for a PCB paired with a 
constant-torque BPM motor is equivalent to that of a PCB needed for a 
PSC motor. DOE revised its analysis to reflect this assumption in the 
NOPR as a result.
    DOE did not receive comment or additional information on motor 
control costs, thus, DOE is not making changes to this in the Final 
Rule.
Backward-Inclined Impeller MPC
    Interested parties commented that DOE's preliminary analysis 
estimate for the incremental MPC associated with implementing a 
backward-inclined impeller, in combination with a premium constant-
airflow BPM motor and multi-staging, is too low. Manufacturers also 
commented that tighter tolerances and increased impeller diameter lead 
to increased material costs, as well as increased costs associated with 
motor mount structure and reverse forming fabrication processes.
    During the NOPR, DOE reviewed its manufacturer production cost 
estimates for the backward-inclined impeller technology option based on 
interested party comments. During manufacturer interviews, some 
manufacturers reiterated or echoed that DOE's estimated MPC for 
backward-inclined impellers is too low, but they did not provide 
quantification of the total MPC of backward-inclined impellers or the 
incremental MPC associated with the changes needed to implement them. 
Other manufacturers did quantify the MPC of backward-inclined impeller 
solutions and their estimates were consistent with DOE's preliminary 
analysis estimate. Consequently, DOE did not modify its preliminary 
analysis estimated MPC for backward-inclined impellers in the NOPR. 78 
FR 64092.
    In response to the NOPR, Mortex questioned whether the price 
differential between backward-inclined impellers manufactured at high 
volume and those manufactured at low volume should be greater than 
DOE's estimate of 32 cents. (Mortex, No. 91 at p. 163)
    DOE reviewed its manufacturer production cost estimates for the 
backward-inclined impeller technology option based on interested party 
comments. DOE did not receive any

[[Page 38161]]

quantification of the total MPC of backward-inclined impellers or the 
incremental MPC associated with the changes needed to implement them. 
Consequently, DOE did not modify its NOPR estimated MPC for backward-
inclined impellers in the Final Rule. Regardless, DOE finds that EL 6, 
which represents use of a backward-inclined impeller, is not 
economically justified. Modifying the MPC estimate for this technology 
would not impact the standard set by this Final Rule as a result.
Other Components
    In response to the MPCs presented in the NOPR, Goodman commented 
that there are likely additional components for the furnace that may 
need to be added if significant changes to the blower system are 
implemented. For example, improving air moving efficiency may require 
an increase in cabinet size, or the addition of internal baffling to 
direct airflow over the heat exchanger. None of these additional 
components or modifications were accounted for in the furnace fan MPC. 
(Goodman, No. 102 at p. 13)
    As discussed in section III.B.1 and chapter 4 of the Final Rule 
TSD, DOE did not include housing design modifications in the 
engineering analysis. Thus, DOE did not develop cost estimates for 
housing design modifications. DOE recognizes that the airflow path 
design of the HVAC product in which the furnace fan is integrated 
impacts efficiency. DOE anticipates that modifying the size of the 
cabinet and the geometry of the heat exchanger(s) would be the primary 
considerations for improving airflow path design. Alterations to the 
design and configuration of internal components, such as the heat 
exchanger, could impact the thermal performance of the HVAC product, 
potentially reducing or eliminating product availability for certain 
applications. While DOE did not consider airflow path design as a 
technology option, as described in section III.B.1, DOE did account for 
the components used to direct or guide airflow in the MPC estimates.

D. Markups Analysis

    DOE uses manufacturer-to-consumer markups to convert the 
manufacturer selling price estimates from the engineering analysis to 
consumer prices, which are then used in the LCC and PBP analysis and in 
the manufacturer impact analysis. Before developing markups, DOE 
defines key market participants and identifies distribution channels. 
Generally, the furnace distribution chain (which is relevant to the 
residential furnace fan distribution chain) includes distributors, 
dealers, general contractors, mechanical contractors, installers, and 
builders. For the markups analysis, DOE combined mechanical 
contractors, dealers, and installers in a single category labeled 
``mechanical contractors,'' because these terms are used 
interchangeably by the industry. Because builders serve the same 
function in the HVAC market as general contractors, DOE included 
builders in the ``general contractors'' category.
    DOE used the same distribution channels for furnace fans as it used 
for furnaces in the recent energy conservation standards rulemaking for 
those products. DOE believes that this is an appropriate approach, 
because the vast majority of the furnace fans covered in this 
rulemaking is a component of a furnace. Manufactured housing furnace 
fans in new construction have a separate distribution channel in which 
the furnace and fan go directly from the furnace manufacturer to the 
producer of mobile homes. DOE has concluded that there is insufficient 
evidence of a replacement market for furnace fans to establish a 
separate distribution channel on that basis.
    DOE develops baseline and incremental markups to transform the 
manufacturer selling price into a consumer product price. DOE uses the 
baseline markups, which cover all of a distributor's or contractor's 
costs, to determine the sales price of baseline models. Incremental 
markups are separate coefficients that DOE applies to reflect the 
incremental cost of higher-efficiency models.
    Ingersoll Rand stated that the incremental markup percentages do 
not represent real life practices and are too low. It commented that 
once the new rule goes into effect, the more expensive furnaces will 
become the baseline and will need to be marked up appropriately for 
manufacturers, distributors, and dealers to remain viable. (Ingersoll 
Rand, No. 107 at p. 8) However, the commenter provided no data to 
support its expectation of how the actors respond in terms of pricing 
when confronted with more-stringent energy conservation standards.
    DOE acknowledges that detailed information on actual distributor 
and contractor practices would be helpful in evaluating their markups 
on furnaces. In the absence of such information, DOE has concluded that 
its approach, which is consistent with expected business behavior in 
competitive markets, is reasonable to apply. If the cost of goods sold 
increases due to efficiency standards, DOE continues to assume that 
markups would decline slightly, leaving profit unchanged, and, thus, it 
uses lower markups on the incremental costs of higher-efficiency 
products.
    Goodman stated that lower markups on incremental costs of higher-
efficiency products is an invalid practice because manufacturers will 
attempt to have higher margin dollars to offset overall lower volumes. 
(Goodman, No. 102 at p. 9) For the LCC and NIA analyses, DOE does not 
use a lower markup on the incremental manufacturer selling price of 
higher-efficiency products. Instead, it assumes that manufacturers are 
able to maintain existing average markups in response to new standards. 
The MIA considers different markup scenarios for manufacturers (see 
section IV.J.2.b).

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of residential furnace fans in representative U.S. 
homes and to assess the energy savings potential of increased furnace 
fan efficiency. In general, DOE estimated the annual energy consumption 
of furnace fans at specified energy efficiency levels across a range of 
climate zones. The annual energy consumption includes the electricity 
use by the fan, as well as the change in natural gas, liquid petroleum 
gas (LPG), electricity, or oil use for heat production as result of the 
change in the amount of useful heat provided to the conditioned space 
as a result of the furnace fan. The annual energy consumption of 
furnace fans is used in subsequent analyses, including the LCC and PBP 
analysis and the national impact analysis.
    DOE used the existing DOE test procedures for furnaces and air 
conditioners to estimate heating and cooling mode operating hours for 
the furnace fan. The power consumption of the furnace fan is determined 
using the individual sample housing unit operating conditions (the 
pressure and airflow) at which a particular furnace fan will operate 
when performing heating, cooling, and constant-circulation functions. 
The methodology and the data are fully described in chapter 7 of the 
final rule TSD.
    DOE used the Energy Information Administration's (EIA) Residential 
Energy Consumption Survey (RECS) \27\ to establish a sample of 
households using furnace fans for each furnace fan

[[Page 38162]]

product class. RECS data provide information on the age of furnaces 
with furnace fans, as well as heating and cooling energy use in each 
household. The survey also includes household characteristics such as 
the physical characteristics of housing units, household demographics, 
information about other heating and cooling products, fuels used, 
energy consumption and expenditures, and other relevant data. DOE uses 
the household samples not only to determine furnace fan annual energy 
consumption, but also as the basis for conducting the LCC and PBP 
analysis.
---------------------------------------------------------------------------

    \27\ Energy Information Administration, 2009 Residential Energy 
Consumption Survey (Available at: http://www.eia.gov/consumption/residential/data/2009/index.cfm?view=consumption).
---------------------------------------------------------------------------

    DOE used RECS 2009 \28\ heating and cooling energy use data to 
determine heating and cooling operating hours. DOE used data from RECS 
2009, American Housing Survey (AHS) 2011,\29\ and the Census Bureau 
\30\ to project household weights in 2019, which is the anticipated 
compliance date of any new energy efficiency standard for residential 
furnace fans. These adjustments account for housing market changes 
since 2009, as well as for projected product and demographic changes.
---------------------------------------------------------------------------

    \28\ See http://www.eia.gov/consumption/residential/data/2009/.
    \29\ See http://www.census.gov/housing/ahs/data/national.html.
    \30\ See http://www.census.gov/popest/.
---------------------------------------------------------------------------

    The power consumption (and overall efficiency) of a furnace fan 
depends on the speed at which the motor operates, the external static 
pressure difference across the fan, and the airflow through the fan. To 
calculate furnace fan electricity consumption, DOE determined the 
operating conditions (the pressure and airflow) at which a particular 
furnace fan will operate in each RECS housing unit when performing 
heating, cooling, and constant-circulation functions. For the final 
rule, DOE adjusted the furnace fan energy use estimated from RECS 2009 
data to account for projected changes in heating and cooling loads due 
to climate change (as projected by EIA in AEO 2013).
    DOE gathered field data from available studies and research reports 
to determine an appropriate distribution of external static pressure 
(ESP) values. DOE compiled over 1,300 field ESP measurements from 
several studies that included furnace fans in single-family and mobile 
homes in different regions of the country. The average ESP value in the 
cooling operating mode from these studies results in an average 0.65 
in. w.c. for single-family households and 0.30 in. w.c. for mobile 
homes.
    Rheem stated that substitution of a BPM motor can increase the 
conditioned air that is leaked to the atmosphere. (Rheem, No. 83 at p. 
13) However, the commenter provided no data to support its view on 
increased air leakage associated with BPM motors.
    DOE agrees that if a BPM motor maintains flow in a high-resistance 
duct system that has leakage, it may lead to higher duct leakage 
compared to a PSC motor. However, in cases where the heating load can 
be met with low air flow, the BPM motor may have lower air leakage. 
Given that the magnitude of these effects is uncertain and may offset, 
DOE did not include it in its analysis. DOE notes that the constant-
torque BPM motor, which meets the standards in today's final rule, may 
not maintain the flow in leaky and overly-restrictive ducts, and, thus, 
would be expected to have similar losses as a PSC motor.
    NEEA stated that their field measurements of ESP for the past 40 
years are consistent with DOE's analysis. (NEEA, No. 91 at p. 222) 
Daikin stated that, from experience over the past 30 plus years, mobile 
homes have higher external static pressure than the typical site-built 
home in the preponderance of cases. (Daikin, No. 91 at p. 222)
    The data that DOE has seen (described in appendix 7B of the final 
rule TSD) do not indicate that mobile homes have higher external static 
pressure. Furthermore, the HUD static pressure criteria for mobile 
homes \31\ are supportive of DOE's assumptions regarding ESP. 
Consequently, DOE has maintained its approach regarding ESP for this 
final rule.
---------------------------------------------------------------------------

    \31\ HUD for Mobile Home with comfort cooling certificate -0.3 
inches WC at cooling airflow setting [Title 24 of the HUD code PART 
3280--Mobile Home Construction and Safety Standards, Part 
3280.715(a)(3)(ll)].
---------------------------------------------------------------------------

    DOE determined furnace fan operating hours in heating mode by 
calculating the furnace burner operating hours and adjusting them for 
delay times between burner and fan operation. Burner operating hours 
are a function of annual house heating load, furnace efficiency, and 
furnace input capacity.
    For the NOPR, to estimate use of constant circulation in the sample 
homes, DOE evaluated the available studies, which include a 2010 survey 
in Minnesota \32\ and a 2003 Wisconsin field monitoring of residential 
furnaces.\33\ DOE did not use these data directly, however, because it 
believes they are not representative of consumer practices for the U.S. 
as a whole. In these northern States, many homes have low air 
infiltration, and there is a high awareness of indoor air quality 
issues, which could lead to significant use of constant circulation. To 
develop appropriate assumptions for other regions, DOE modified the 
data from these States using information from manufacturer product 
literature (which suggests very little use in humid climates) and 
consideration of climate conditions in other regions. For the NOPR, DOE 
used the same assumptions for use of constant circulation as were used 
in the proposed DOE test procedure for furnace fans. 77 FR 28674 (May 
15, 2012). The average value that emerges is approximately 400 hours 
per year. The shares of homes using the various constant-circulation 
modes are presented in Table IV.10.
---------------------------------------------------------------------------

    \32\ Provided in CEE, No. 22 at pp. 1-2.
    \33\ Pigg, S., ``Electricity Use by New Furnaces: A Wisconsin 
Field Study'' (October 2003) (Available at http://www.ecw.org/sites/default/files/230-1.pdf)
---------------------------------------------------------------------------

    NEEA and NPCC commented that DOE's estimate of 400 hours per year 
of continuous-circulation mode may be overly conservative, and they 
disagree with stakeholders who suggest that 400 hours per year is too 
high. (NEEA, NPCC, No. 32 at p. 5)
    For the final rule, DOE examined a newly-released proprietary 
survey that broadly evaluates the use of continuous circulation across 
the U.S.\34\ This survey shows a higher number of continuous-
circulation hours than DOE used for the NOPR. DOE has concerns about 
the representativeness of the data, however, because the survey only 
included homeowners who had been involved in the purchase of central 
HVAC equipment in the past two years. The practices of these consumers 
may not accurately portray the use of continuous circulation across the 
entire stock of homes with central HVAC equipment. Given the 
uncertainty regarding the survey data, DOE decided that it would not be 
appropriate to change the continuous-circulation hours for the final 
rule.
---------------------------------------------------------------------------

    \34\ Decision Analysts, 2013 American Home Comfort Study (2013) 
(Available at: http://www.decisionanalyst.com/Syndicated/HomeComfort.dai).
---------------------------------------------------------------------------

    Southern Company stated that if DOE is assuming a greater 
percentage of variable speed fans in the future, the need for constant 
circulation will be reduced. (Southern Company, No. 91 at p. 233) DOE 
accounted for the reduced hours of operation during constant-
circulation mode when variable speed motors are applied (see appendix 
7-C). Variable speed fans tend to increase the operating hours in 
heating and cooling modes, which would result in a smaller fraction of 
time in continuous-fan mode.

[[Page 38163]]

    DOE also performed a sensitivity analysis to estimate the effect on 
the LCC results if it assumed half as much use of constant circulation. 
These results are discussed in section V.B.1 of this document.

      Table IV.10--Constant-Circulation Test Procedure Assumptions Used for Furnace Fans Standards Analysis
----------------------------------------------------------------------------------------------------------------
                                                                                     Estimated
                                                                      Assumed     share of homes     Estimated
                                                                      average      in north and   share of homes
                  Constant-circulation fan use                       number of     south-hot dry   in south-hot
                                                                       hours          regions      humid region
                                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
No constant fan.................................................               0              84              97
Year-round......................................................            7290               7               1
During heating season...........................................            1097               2             0.4
During cooling season...........................................             541               2             0.4
Other (some constant fan).......................................             365               5               1
                                                                 -----------------------------------------------
    Total.......................................................  ..............             100             100
----------------------------------------------------------------------------------------------------------------

    Morrison stated that not all the energy used in circulation is 
wasted heat because the energy consumed for circulation during the 
heating season is useful energy. Morrison recommended that for a more 
accurate analysis of energy use in circulation mode, DOE should split 
heating and cooling hours. (Morrison, No. 108 at p. 2) DOE adjusted its 
analysis so that heat generated by constant-circulation fan operation 
reduces furnace heating energy use in the heating season, and in the 
cooling season, it adds to the operating hours of the air conditioner.
    In the NOPR, DOE recognized that the energy savings in cooling mode 
from higher-efficiency furnace fans used in some higher-efficiency CAC 
and heat pumps was already accounted for in the analysis related to the 
energy conservation standards for those products. To avoid double-
counting, the analysis for furnace fans did not include furnace fan 
electricity savings that were counted in DOE's rulemaking for CAC and 
heat pump products.\35\
---------------------------------------------------------------------------

    \35\ U.S. Department of Energy--Energy Efficiency & Renewable 
Energy, Final Rule Technical Support Document: Energy Efficiency 
Standards for Consumer Products: Central Air Conditioners, Heat 
Pumps, and Furnaces (2011) (Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2011-BT-STD-0011-0012).
---------------------------------------------------------------------------

    Several stakeholders stated that DOE may be double-counting energy 
savings in cooling mode in this rulemaking by accounting for the 
central air conditioner blower output used for calculating SEER. (JCI, 
No. 95 at pp. 4-5; Morrison, No. 108 at p. 2; AHRI, No. 98 at p.6; 
Goodman, No. 102 at p. 5) EEI stated that a large share of the 
estimated furnace fan energy savings are a result of the air 
conditioner and heat pump energy efficiency standards, so some or all 
of these estimated energy savings should be removed from the furnace 
fan analyses. (EEI, No. 87 at p. 5)
    DOE's rulemaking analysis for CAC and heat pump products included 
savings from those households purchasing a CAC or heat pump at SEER 15 
or above that would need to have a BPM motor-driven fan in the furnace 
to achieve that efficiency level. The base-case efficiency distribution 
of fans used in the current analysis includes the presence of those BPM 
motor-driven fans in homes with the higher-efficiency CAC or heat 
pumps. Because the energy savings from the considered fan efficiency 
levels are measured relative to the base-case efficiencies, any savings 
reported here for furnace fans are over and above those counted in the 
CAC and heat pump rulemaking.
    Morrison stated that any reduction in energy use by the fan from 
this rulemaking would be a de facto improvement in SEER and an unlawful 
change to the current SEER regulations. It noted that if there is no 
change to SEER, then there will be no energy savings when operated in 
the cooling mode. (Morrison, No. 108 at p. 2)
    A reduction in energy use by the furnace fan resulting from this 
rulemaking would improve the CAC operating efficiency (for homes with 
both furnace and CAC), but DOE is not increasing the energy 
conservation standard for CAC or requiring a change to the reported 
current SEER ratings for CAC. DOE has clear and explicit statutory 
authority to regulate furnace fans under 42 U.S.C. 6295(f)(4)(D), and 
any related improvements to CAC efficiency would simply be an added 
benefit.
    Recognizing the possibility of consumers using higher-efficiency 
furnace fans more than baseline furnace fans, DOE included a rebound 
effect in its preliminary analysis. DOE used a 2009 program evaluation 
report from Wisconsin \36\ to estimate the extent to which increased 
use of constant circulation under a standard requiring BPM furnace fans 
is likely to cancel out some of the savings from such a fan. The 
specific assumptions are described in chapter 7 of the final rule TSD.
---------------------------------------------------------------------------

    \36\ State of Wisconsin, Public Service Commission of Wisconsin, 
Focus on Energy Evaluation Semiannual Report, Final (April 8, 2009) 
(Available at: https://focusonenergy.com/sites/default/files/semiannualreport18monthcontractperiodfinalrevisedoctober192009_evaluationreport.pdf).
---------------------------------------------------------------------------

    Commenting on the average energy use estimates reported in the 
final rule TSD, EEI stated that the baseline energy use values seem to 
be overstated, because baseline values reported in the market and 
technology assessment are lower than what was used in following 
analyses. Consequently, the estimated energy savings and energy cost 
savings are overstated as well, because they are shown in the NOPR as 
percentage savings based on the design options. (EEI, No. 87 at pp. 4-
5) Goodman believes that the calculated baseline values, and thus the 
projected energy savings, are too high based on product testing for the 
April 2013 test procedure SNOPR. (Goodman, No. 102 at p. 8)
    The baseline values reported in the market and technology 
assessment are based on the test procedure. The energy use analysis is 
not based on test procedure conditions, but instead reflects actual 
usage in the field, which is more appropriate for estimating the 
impacts of higher furnace fan efficiency on consumers. Therefore, the 
estimated energy savings and energy cost savings are not overstated.
    JCI and AHRI stated that DOE needs to ensure that it avoids double-
counting energy consumption associated with standby mode, noting that 
there is no standby mode and off mode energy use associated with 
furnace fans that would

[[Page 38164]]

not already be measured by the established test procedures, because 
they are integrated in the electrical systems of the HVAC products in 
which they are used. (JCI, No. 95 at p. 5; AHRI, No. 98 at p. 6)
    The proposed furnace fan energy rating metric would not account for 
the electrical energy consumption in standby mode and off mode, because 
energy consumption in those modes is already accounted for in the 
energy conservation standards for residential furnaces and residential 
CAC and HP. Accordingly, DOE did not include standby mode and off mode 
energy use associated with furnace fans in the present analysis. 
Consequently, there should not be any problems associated with double-
counting of standby mode and off mode energy consumption.

F. Life-Cycle Cost and Payback Period Analysis

    In determining whether an energy conservation standard is 
economically justified, DOE considers the economic impact of potential 
standards on consumers. The effect of new or amended energy 
conservation standards on individual consumers usually involves a 
reduction in operating cost and an increase in purchase cost. DOE uses 
the following two metrics to measure consumer impacts:
     Life-cycle cost (LCC) is the total consumer cost of an 
appliance or product, generally over the life of the appliance or 
product. The LCC calculation includes total installed cost (equipment 
manufacturer selling price, distribution chain markups, sales tax and 
installation cost), operating costs (energy, repair, and maintenance 
costs), equipment lifetime, and discount rate. Future operating costs 
are discounted to the time of purchase and summed over the lifetime of 
the product.
     Payback period (PBP) measures the amount of time it takes 
consumers to recover the assumed higher purchase price of a more 
energy-efficient product through reduced operating costs. Inputs to the 
payback period calculation include the installed cost to the consumer 
and first-year operating costs.
    DOE analyzed the net effect of potential residential furnace fan 
standards on consumers by calculating the LCC and PBP for each 
efficiency level for each sample household. DOE performed the LCC and 
PBP analyses using a spreadsheet model combined with Crystal Ball (a 
commercially-available software program used to conduct stochastic 
analysis using Monte Carlo simulation and probability distributions) to 
account for uncertainty and variability among the input variables 
(e.g., energy prices, installation costs, and repair and maintenance 
costs). It uses weighting factors to account for distributions of 
shipments to different building types and States to generate LCC 
savings by efficiency level. Each Monte Carlo simulation consists of 
10,000 LCC and PBP calculations. The model performs each calculation 
using input values that are either sampled from probability 
distributions and household samples or characterized with single-point 
values. The analytical results include a distribution of points showing 
the range of LCC savings and PBPs for a given efficiency level relative 
to the base-case efficiency forecast. The results of DOE's LCC and PBP 
analysis are summarized in section IV.F and described in detail in 
chapter 8 of the final rule TSD.
1. Installed Cost
    The installed cost at each efficiency level is based on the product 
price, distribution chain markups, sales tax, and installation cost.
    The current product price comes from the engineering analysis. DOE 
believes that price trends for integral horsepower electric motors are 
a reasonable proxy for trends in prices of furnace fans, and for the 
NOPR DOE evaluated the historic real (i.e., adjusted for inflation) 
producer price index (PPI) of such motors. DOE found that this index 
has been decreasing except for the last few years, when it started to 
increase (see appendix 10-C of the final rule TSD). Given the 
uncertainty about whether the recent trend will continue or instead 
revert to the historical mean, DOE elected to use constant prices at 
the most recent level as the default price assumption to project future 
prices of furnace fans. 78 FR 64068, 64096 (Oct. 25, 2013).
    Morrison stated that motor prices have remained flat in the last 
decade because production of motors moved offshore and foreign 
competitors entered the marketplace. It stated that in the coming 
decades, motor prices will increase at the rate of long run prices for 
commodities (e.g. copper, steel, aluminum). (Morrison, No. 108 at p. 2) 
Goodman believes that it is incorrect to use constant prices at the 
most recent level of motor cost, which has shown a recent increasing 
trend, as the default price assumption to project future prices of 
furnace fans. (Goodman, No. 102 at p. 9)
    DOE continues to believe that it is unclear whether the increasing 
trend in motor prices since 2004 will continue in the future. Part of 
the recent growth in prices of commodities used in motors was due to 
strong demand from China. Current projections envision slower growth in 
China, which would likely dampen commodity prices. Given the 
uncertainty, DOE continued to use constant prices at the most recent 
level as the default price assumption for the final rule. For the NIA, 
DOE also conducted sensitivity analysis using alternative price growth 
assumptions.
    Because furnace fans are installed in furnaces in the factory, 
there is generally no additional installation cost at the home. 
However, furnace fans that employ a constant-airflow BPM design may 
require additional installation costs. DOE assumed that all constant-
airflow BPM furnace fan installations will require extra labor at 
startup to check and adjust airflow.
    Goodman stated that it is acceptable for relative product cost 
comparison to include costs only for the components of the HVAC product 
that impact FER in the manufacturing cost, but it disagrees with using 
the cost of only the furnace fan portion of the furnace in the LCC, 
GRIM, and other aspects of the financial analysis. The real upfront 
costs for the consumer will be significantly higher (likely two to four 
times more) than DOE has included in the analysis using only the 
furnace fan portion. (Goodman, No. 102 at p. 9) DOE believes that the 
commenter is claiming that the consumer will face higher costs when 
buying a furnace because the proposed furnace fan standards would 
require changes in furnace design. As discussed in section IV.B.1, DOE 
screened out fan housing and airflow path design modifications from 
further analysis. Accordingly, it is unlikely that significant changes 
in furnace design would be required to accommodate furnace fans that 
meet today's standards. Therefore, DOE concludes that using the 
incremental costs of the furnace fan portion is reasonable.
2. Operating Costs
    To estimate the annual energy costs for operating furnace fans at 
different efficiency levels, DOE used the annual energy use results 
from the energy use analysis and projections of residential energy 
prices. DOE derived average monthly energy prices for a number of 
geographic areas in the United States using the latest data from EIA 
\37\ and monthly energy price factors that it

[[Page 38165]]

developed. Electricity and natural gas prices were adjusted using 
seasonal marginal price factors to come up with monthly marginal 
electricity and natural gas prices. DOE assigned an appropriate price 
to each household in the sample, depending on its location.
---------------------------------------------------------------------------

    \37\ U.S. Department of Energy--Energy Information 
Administration, Form EIA-826 Database Monthly Electric Utility Sales 
and Revenue Data, 2013. http://www.eia.doe.gov/cneaf/electricity/page/eia826.html; U.S. Department of Energy--Energy Information 
Administration, Natural Gas Navigator. 2013. http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm.
---------------------------------------------------------------------------

    Laclede stated that using average utility rates leads to 
significantly overstating consumer savings. DOE should use marginal 
energy rates in its consumer energy savings calculations. (Laclede, No. 
86 at p. 4) As described above, DOE did derive marginal electricity and 
natural gas prices based on recent data. (For a discussion of the 
development of marginal energy price factors, see appendix 8-C of the 
final rule TSD). To arrive at marginal prices in future years, DOE 
multiplied the current marginal prices by values in the Reference case 
projection of annual average residential electricity and natural gas 
price changes in EIA's AEO 2013. The price trends projected in the AEO 
2013 Reference case are shown in chapter 8 of the final rule TSD. For 
electricity prices, which are primarily of interest in this rulemaking, 
the AEO 2013 projection shows the average residential price growing 
from 0.119 $/kWh in 2020 to 0.122 $/kWh in 2030 and 0.131 $/kWh in 2040 
(constant dollars).
    To estimate annual maintenance costs, DOE derived labor hours and 
costs for annual maintenance from RS Means data.\38\ The frequency with 
which the maintenance occurs was derived from a consumer survey \39\ on 
the frequency with which owners of different types of furnaces perform 
maintenance.
---------------------------------------------------------------------------

    \38\ RS Means Company Inc., Means Facilities Maintenance & 
Repair Cost Data. 2012. Kingston, MA.
    \39\ Decision Analysts, 2008 American Home Comfort Study: Online 
Database Tool, 2009. Arlington, Texas. http://www.decisionanalyst.com/Syndicated/HomeComfort.dai.
---------------------------------------------------------------------------

    For the NOPR, DOE used the same maintenance costs for furnace fans 
at different efficiency levels. 78 FR 64096. Goodman stated that it is 
invalid to assume that the maintenance costs for all efficiency levels 
are the same regardless of technology, as higher technology products 
will take a higher skill level of technician, and will require more 
costly equipment for service than baseline products. (Goodman, No. 102 
at p. 9) Allied Air stated that in shifting from a primarily single-
stage PSC market to multistage constant torque, the maintenance cost 
could be two to three times current costs. (Allied Air, No. 43 at pp. 
252-253)
    DOE understands that furnace fans require very little maintenance, 
and it did not find any evidence that there is any additional 
maintenance cost associated with higher efficiency equipment. It seems 
likely that the commenters are including repair costs under the term 
``maintenance.'' DOE's treatment of repair costs is discussed below.
    The most important element of repair costs for furnace fans is 
replacement of the fan motor. For the NOPR, to estimate rates of fan 
motor failure, DOE developed a distribution of fan motor lifetime 
(expressed in operating hours) by motor size using data developed for 
DOE's small electric motors final rule. 75 FR 10874 (March 9, 2010). 
DOE then paired these data with the calculated number of annual 
operating hours for each sample furnace, including constant circulation 
as appropriate. DOE did not have a firm basis for quantifying whether 
constant-torque BPM motors and constant-airflow BPM motors have 
different failure rates than PSC motors. Thus, it used the same motor 
lifetime for each fan efficiency level in terms of total operating 
hours (the lifetime in terms of years is lower for constant-torque BPM 
and constant-airflow BPM motors because they are more frequently used 
in multi-stage heating mode). 78 FR 64097.
    Rheem stated that DOE did not justify the assumption that furnace 
fan motor lifetimes are equal to furnace lifetimes. (Rheem, No. 83 at 
p. 4) DOE modeled overall furnace fan lifetime based on furnace 
lifetimes (see discussion below), but it used the approach described 
above for furnace fan motor lifetime.
    Morrison stated that multi-staged BPM assemblies will have longer 
operating times within a given period (to account for lower fire rates 
and heat output) and therefore, all else being equal, will have a 
shorter life expectancy. (Morrison, No. 108 at p. 5) DOE's approach is 
consistent with the comment; a multi-staged BPM motor has a shorter 
lifetime measured in years.
    A number of stakeholders stated that failure rates are higher for 
BPM motors than for PSC motors, leading to shorter lifetime. Rheem 
stated that the PSC motor life, which it estimated to be 15 years, is 
much longer than the BPM motor life. (Rheem, No. 83 at pp. 2 and 13) 
Mortex stated that, based on their experience, BPM lifetime is half 
that of PSC motors. (Mortex, No. 104 at p. 2) Lennox estimated that 
constant-airflow BPM motors have failure rates that are 50% higher than 
PSC motors at 5 and 10 years, and furnaces with constant-torque BPM 
motors have failure rates that are 385% higher than PSC motors at 5 and 
10 years. (Lennox, No. 100 at p. 8) Ingersoll Rand stated that its data 
indicate that BPM motors fail at 2.3 times the rate of PSC motors in 
the 5 to 10 year time frame. (Ingersoll Rand, No. 107 at pp. 6-7) AHRI 
stated that the failure rate for a high efficiency motor is typically 
higher than that of a PSC motor because the electronics added to a high 
efficiency motor introduce additional failure modes associated with the 
life of electronic controls in damp, very cold and very hot conditions. 
AHRI has collected data from manufacturers that show that the failure 
rates associated with constant-torque BPM and constant-airflow BPM 
technologies are higher than PSC motors over an extended time period. 
(AHRI, No. 98 at p. 7) Morrison and Ingersoll Rand cited recent data 
from an AHRI survey of manufacturers that indicate failure rates at 1, 
5 and 10 years are 24%, 87% and 165% greater for BPM motors than PSC 
ones. (Morrison, No. 108 at p. 5, Ingersoll Rand, No. 107 at p. 6) JCI 
stated that, based on an analysis of JCI's residential warranty data, 
failure rates associated with constant-torque BPM and constant-airflow 
BPM technologies are significantly higher than those experienced by 
standard PSC motors due to the added electronic controls that are 
required as part of the BPM motor designs, which are more susceptible 
to failure due to power fluctuations and other factors. (JCI, No. 95 at 
p. 7) Ingersoll Rand stated that repair of the electronics is not 
possible for the constant-torque BPM motors available today, so an 
electronics failure will result in a complete motor replacement. 
(Ingersoll Rand, No. 107 at pp. 7-8)
    In contrast, NEEA and NPCC believe that the NOPR analysis 
assumptions may unfairly penalize BPM motors, as the Department has 
insufficient data to properly estimate the frequency and nature of BPM 
motor repair. (NEEA, NPCC, No. 96 at p. 5)
    DOE notes that BPM motors had higher level of failure in the late 
1990s and early 2000s when the electronics technologies went through 
major renovations. The comments from furnace manufacturers may reflect 
this past experience. For example, the cited data from an AHRI survey 
of manufacturers would reflect BPM technology in the early 2000s. For 
the final rule, DOE searched for more information on the lifetime of 
BPM and PSC motors. This information (discussed in appendix 8-E) 
suggests that BPM and PSC motors have similar lifetimes, as BPM designs 
have improved over the years. While BPM motor designs could have 
additional failures due to the additional controls or

[[Page 38166]]

electronics, furnace fan motor manufacturers claim longer mechanical 
life for BPM designs due to better bearings and less heat generated by 
inefficiency. Between now and the compliance date, future BPM motor 
enhancements could further strengthen product reliability and reduce 
failures. In this analysis, DOE assumes higher failures for BPM designs 
due to longer operating hours (because of multi-stage operating at more 
hours and more constant circulation operation of BPM motors), as well 
as additional control failures. For example, DOE estimates that 43% for 
BPM constant torque multi-stage designs experience failure during the 
lifetime of the furnace, compared to 35% of PSC designs.
    Recognizing that there exists some uncertainty regarding the 
lifetime of BPM motors, DOE conducted a sensitivity analysis using 
alternative assumptions, as requested in a comment by Mortex. (Mortex, 
No. 43 at pp. 264-265) This analysis is described in appendix 8-E of 
the final rule TSD.
    For the NOPR, the replacement motor costs were based on costs 
developed in the engineering analysis for each motor type, and the 
labor time and unit costs were based on RS Means data.\40\ 78 FR 64097. 
DOE included additional labor hours to repair constant-torque BPM and 
constant-airflow BPM motors, as well as higher equipment cost for the 
BPM motors. DOE assumed that when replacement is necessary, consumers 
replace the failed motor with the same type of motor.
---------------------------------------------------------------------------

    \40\ RS Means Company Inc., RS Means Residential Cost Data 
(2012); RS Means Company Inc., Facilities Maintenance & Repair Cost 
Data (2012).
---------------------------------------------------------------------------

    A number of stakeholders stated that the replacement cost of BPM 
motors is higher than the cost DOE used in its analysis. (Morrison, No. 
108 at p. 2; Goodman, No 102 at p. 8; APGA, No. 110 at p. 3) Mortex 
stated that DOE substantially underestimated BPM replacement costs, 
which in its experience are 2-3 times that of a PSC. (Mortex, No. 104 
at p. 2) Ingersoll Rand stated that replacement costs are significantly 
underestimated for constant-torque BPM and constant-airflow BPM motors. 
It added that the difference between PSC motor replacement and 
constant-torque BPM motor replacement should be at least $225, and the 
PSC to constant-airflow BPM difference should be at least $295. 
(Ingersoll Rand, No. 107 at pp. 7-8) JCI stated that outside the 
warranty periods (typically 10 years for parts), ECM motors can cost 3 
to 5 times the replacement costs of PSC motors due to the complexity of 
those motors and the electronic controls required to use them. (JCI, 
No. 95 at p. 6)
    The replacement equipment cost of BPM and PSC motors used in DOE's 
LCC analysis is based on costs derived in the engineering analysis, 
which DOE believes are accurate. It is possible that the stakeholders 
believe that the higher BPM replacement costs are largely due to extra 
labor charges by contractors. DOE determined that for a constant torque 
BPM motor any such extra charges would be minimal. In the analysis for 
today's final rule, on average the replacement cost is $407 for a 
constant torque multi-stage BPM (EL 4) and $356 for the PSC design (EL 
0).
    Several stakeholders stated that the replacement cost of an 
aftermarket furnace fan is 2-3 times higher than DOE's estimated 
manufacturer production costs for low-volume product classes. They 
added that DOE's material cost estimate of $0.00 for furnace fan 
replacements is incorrect. (JCI, No. 95 at p. 6; Morrison, No. 108 at 
p. 5; AHRI, No. 98 at p. 8; Lennox, No. 100 at p. 8; Unico, No. 93 at 
p. 5)
    DOE believes that the first comment above refers to a replacement 
motor. DOE applies markups to the motor MPC, such that the cost to the 
consumer is two to three times higher than the MPC. The material cost 
is listed as $0.00 in the cited tables because these tables refer to 
labor costs only (as stated in the table captions).
    Ingersoll Rand stated that motors that fail in-warranty are not 
free, as standard product warranties in the HVAC industry cover parts 
only, and do not typically include labor charges, which the homeowner 
must pay. (Ingersoll Rand, No. 107 at p. 7) DOE excluded labor charges 
only if the consumer has a service contract or if the motor fails the 
first year (which is rare).
    Southern Company stated that DOE unrealistically considered 
component failures as independent events rather than interdependent 
ones. It stated that in actual consumer settings, rather than a lab, it 
is likely that a capacitor failure will not be detected until it 
results in a motor failure. (Southern Company, No. 85 at p. 3) 
Undetected capacitor failure that leads to motor failure (as may occur 
for PSC motors) is reflected in DOE's distribution of motor lifetimes.
3. Furnace Fan Lifetime
    DOE used the same modeling for furnace fan lifetime (meaning the 
life of the overall equipment not including the motor) as in the 
NOPR.78 FR 64097. Chapter 8 of the final rule TSD describes the 
approach. DOE used the same lifetime for furnace fans at different 
efficiency levels because there are no data that indicate variation of 
lifetime with efficiency. For the NOPR analysis, DOE assumed that the 
lifetime for the fans installed in electric furnaces and gas furnaces 
is the same.
    Rheem stated that the lifetime of a residential furnace fan is 
limited by the lifetime of the electronic control, and advanced 
controls may shorten the lifetime of the product. (Rheem, No. 83 at pp. 
6, 13) JCI stated that the repair costs for furnace fans are generally 
the cost of replacing the motors used, as there are very few failures 
of fan components other than the motor. (JCI, No. 95 at p. 6)
    DOE believes that with current technology there are few failures of 
the electronic control, as stated by JCI. DOE also expects that the 
reliability of the electronic controls is likely to increase as the 
technology matures. Nonetheless, DOE accounts for failure of capacitors 
and motor electronic controls in its repair cost analysis.
    APGA stated that 23.6 years lifetime for gas-fired furnace fans in 
the LCC analysis is unrealistic, and DOE should employ more realistic 
furnace fan lives based on documented motor lives. (APGA, No. 110 at p. 
3) It would appear that APGA misinterpreted DOE's approach. Motor 
failure, which occurs on average at around 15 years, is counted as a 
repair cost. However, DOE believes that the rest of the furnace fan 
would last as long as the furnace itself.
    Southern Company stated that because the analysis shows at least 
50% greater shipments of furnace fans than furnaces, the data seems to 
indicate a shorter lifetime for furnace fans than furnaces. (Southern 
Company, No. 85 at p. 3) DOE did not calculate the shipments of furnace 
fans. Since furnace fans are a component of furnaces, the shipments in 
the NIA analysis are limited to furnace shipments only.
4. Discount Rates
    For the NOPR, DOE used distributions of discount rates based on a 
variety of financial data. 78 FR 64097. For replacement furnaces, the 
average rate was 5.0 percent.
    Miller stated that, based on a literature review of consumer 
discount rates for energy-using durables, the 3-percent and 7-percent 
discount rates used in the analysis only represent high-income 
households; other consumers may use much higher discount rates. 
Consumers with higher discount rates--including median-income 
Americans, low-income Americans, and the elderly--are much less likely 
to benefit from higher efficiency furnace fans. (Miller, No. 79 at pp. 
10-13)

[[Page 38167]]

    DOE uses 3-percent and 7-percent discount rates to measure net 
consumer benefits from energy efficiency standards from a national 
perspective (see section IV.H). DOE recognizes that a wide range of 
discount rates may be appropriate for consumers, and thus it uses 
distributions of discount rates when it evaluates consumer impacts in 
the LCC analysis. For the final rule, DOE developed specific 
distributions of discount rates for each of six consumer income groups. 
Chapter 8 of the final rule TSD describes the approach. The estimated 
impacts of today's standards on low-income households are discussed in 
section V.B.1.\41\
---------------------------------------------------------------------------

    \41\ The comment refers to high discount rates based on studies 
of implicit consumer discount rates using the purchase of energy-
using durables (such as air conditioners, dishwashers, and 
refrigerators) to measure consumer time preferences. While these 
studies of implicit consumer discount rates provide a way of 
characterizing consumer behavior, they do not necessarily measure 
consumer time preferences. What appears to be low valuation of 
future energy cost savings from higher-efficiency appliances instead 
may be partially a result of lack of information on the magnitude of 
savings or inability to evaluate the available information.
---------------------------------------------------------------------------

5. Compliance Date
    In the NOPR, DOE proposed a 5-year compliance date for residential 
furnace fan standards. 78 FR 64103. A number of stakeholders encouraged 
DOE to adopt a three-year period between the final rule publication and 
the compliance date rather than the five years proposed in the NOPR. 
(ACEEE, No. 94 p. 6; NEEP, No. 109 at p. 2; Earthjustice, No. 101 at p. 
3; CA IOU, No. 106 at p. 3; Joint Advocates, No. 105 at p. 4; NEEA, 
NPCC, No. 96 at p. 3) ACEEE, CA IOU, the Joint Advocates, and NEEA and 
NPCC stated that the technologies assumed to be required to meet TSL 4 
are well-established in the market and commercially available. (ACEEE, 
No. 94 at p. 6; CA IOU, No. 106 at p. 3; Joint Advocates, No. 105 at p. 
4; NEEA, NPCC, No. 96 at p. 3) NEEP stated that three years should 
provide adequate time for manufacturers to adjust product lines. (NEEP, 
No. 109 at p. 2) The Joint Advocates stated that constant-torque BPM 
motors are essentially drop-in replacements for PSC motors, and capital 
conversion costs are not required. (Joint Advocates, No. 105 at p. 4) 
NEEA and NPCC believe that three years of lead time should be 
sufficient to allow a ramping up of motor manufacturing capacity and a 
gradual shift of air handler manufacturing lines to incorporate them. 
The technology required to meet the TSL 4 standards requires little 
more than expansion of current production capacity for these models, 
which mostly means buying different furnace fan motors and the 
associated controls. (NEEA, NPCC, No. 96 at p. 3) Earthjustice stated 
that DOE must choose a compliance date based on an assessment that 
includes a consideration of factors beyond the impact on manufacturers. 
(Earthjustice, No. 101 at p. 3)
    JCI, Morrison, AHRI, Lennox, and HARDI support the five-year period 
between the final rule publication and the compliance date as proposed 
in the NOPR. (JCI, No. 95 at p. 2; Morrison, No. 108 at p. 2; AHRI, No. 
98 at p. 2; Lennox, No. 100 at p. 4; HARDI, No. 103 at p. 2) JCI, AHRI, 
and Lennox stated that to comply with the proposed standard, 
manufacturers would not only have to alter the designs and fabrication 
processes for the furnace fan assembly but also modify the broader 
product design of the furnaces, air handlers, modular blowers, and 
residential single package units that include those furnace fans. (JCI, 
No. 95 at p. 2; AHRI, No. 98 at p. 2; Lennox, No. 100 at pp. 4-5) AHRI 
stated that similar products that require similar actions for 
compliance typically have lead times of five years. (AHRI, No. 98 at p 
2) Ingersoll Rand agrees with AHRI's comments. (Ingersoll Rand, No. 107 
at p. 11)
    DOE continues to believe a 5-year lead time is appropriate. Since 
EPCA does not mandate a specific lead time for furnace fan standards, 
DOE considered the actions required by manufacturers to comply with 
today's standards. As discussed in the NOPR, during manufacturer 
interviews, DOE found that standards would result in manufacturers' 
extending R&D beyond the furnace fan assembly to understand the impacts 
on the design and performance of the furnace or modular blower in which 
the furnace fan is integrated. 78 FR 64103. To comply with the 
standards, manufacturers may have to alter not only the designs and 
fabrication processes for the furnace fan assembly, but also for the 
furnace or modular blower into which the furnace fan is integrated. 
Similar products that require similar actions for compliance typically 
have lead times of five years. For these reasons, DOE selected a 5-year 
lead time, which would place the compliance date in 2019. For the 
purposes of the LCC and PBP analysis, DOE assumed that all relevant 
consumers purchase a furnace fan in 2019.
6. Base-Case Efficiency Distribution
    To estimate the share of consumers that would be affected by an 
energy conservation standard at a particular efficiency level, DOE's 
LCC and PBP analysis considers the projected distribution (i.e., market 
shares) of product efficiencies in the first compliance year under the 
base case (i.e., the case without new or amended energy conservation 
standards).
    For the NOPR, DOE reviewed the information provided by the 
manufacturers and estimated that the combined market share of constant-
torque BPM fans and constant-airflow BPM fans will be 35 percent in 
2019. The shares are 13 percent for constant-torque BPM fans and 22 
percent for constant-airflow BPM fans. DOE estimated separate shares 
for replacement and new home applications.78 FR 64097.
    The market shares of efficiency levels within the constant-torque 
BPM motor and constant-airflow BPM motor categories were derived from 
AHRI data on number of models.\42\ No such data were available for the 
PSC fan efficiency levels, so DOE used the number of models it tested 
or could measure using product literature to estimate that 40 percent 
of shipments are at the baseline level and 60 percent are improved PSC 
fans. There are currently no models of PSC with a controls design, so 
DOE assumed zero market share for such units. Id
---------------------------------------------------------------------------

    \42\ DOE used the AHRI Directory of Certified Furnace Equipment 
(Available at: http://www.ahridirectory.org/ahridirectory/pages/home.aspx) as well as manufacturer product literature.
---------------------------------------------------------------------------

    No comments were received on the base case efficiency distribution, 
and DOE retained the NOPR assumptions for the final rule. The details 
of DOE's approach are described in chapter 8 of the final rule TSD.
7. Payback Period
    To calculate PBPs for the considered efficiency levels, DOE uses 
the same inputs as for LCC analysis, except that discount rates are not 
required.
    Goodman stated that not including repair costs from later years in 
the PBP does not provide a realistic picture of what most consumers 
will face. It noted that while repair costs later in the product life 
cycle may allow the initial investment to balance out faster, the 
overall life-cycle costs can be very negatively impacted by such 
repairs. (Goodman, No 102 at p. 10)
    DOE recognizes that the PBP metric does not provide a complete 
assessment of all costs that consumers may face, but it has found that 
the results are of interest in standards rulemakings. The LCC analysis 
does include all costs, and in part for this reason, DOE expresses the 
share of consumers who benefit

[[Page 38168]]

from standards in terms of the change in LCC.
    As discussed in section III.E.2, EPCA provides that a rebuttable 
presumption is established that an energy conservation standard is 
economically justified if the additional cost to the consumer of a 
product that meets the standard is less than three times the value of 
the first year's energy savings resulting from the standard, as 
calculated under the applicable DOE test procedure. (42 U.S.C. 
6295(o)(2)(B)(i)) The calculation of this so-called rebuttable 
presumption payback period uses the same inputs as the calculation of 
the regular PBP for each sample household, but it uses average values 
instead of distributions, and the derivation of energy consumption and 
savings only uses the parameters specified by the proposed DOE test 
procedure for furnace fans rather than the method applied in the energy 
use analysis (described in section IV.E), which considers the 
characteristics of each sample household.
    DOE's LCC and PBP analyses generate values that calculate the 
payback period for consumers of potential energy conservation 
standards, which includes, but is not limited to, the three-year 
payback period contemplated under the rebuttable presumption test 
discussed above. However, DOE routinely conducts a full economic 
analysis that considers the full range of impacts, including those to 
the consumer, manufacturer, Nation, and environment, as required under 
42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the 
basis for DOE to definitively evaluate the economic justification for a 
potential standard level (thereby supporting or rebutting the results 
of any preliminary determination of economic justification).

G. Shipments Analysis

    DOE uses forecasts of product shipments to calculate the national 
impacts of standards on energy use, NPV, and future manufacturer cash 
flows. DOE develops shipment projections based on historical data and 
an analysis of key market drivers for each product.
    The vast majority of furnace fans are shipped installed in 
furnaces, so DOE estimated furnace fan shipments by projecting furnace 
shipments in three market segments: (1) Replacements; (2) new housing; 
and (3) new owners in buildings that did not previously have a central 
furnace.
    To project furnace replacement shipments, DOE developed retirement 
functions for furnaces from the lifetime estimates and applied them to 
the existing products in the housing stock. The existing stock of 
products is tracked by vintage and developed from historical shipments 
data. The shipments analysis uses a distribution of furnace lifetimes 
to estimate furnace replacement shipments.
    To project shipments to the new housing market, DOE utilized 
projected new housing construction and historic saturation rates of 
various furnace and cooling product types in new housing. For the final 
rule, DOE used AEO 2013 for projections of new housing. Furnace 
saturation rates in new housing are provided by the U.S. Census 
Bureau's Characteristics of New Housing.\43\
---------------------------------------------------------------------------

    \43\ Available at: http://www.census.gov/construction/chars/.
---------------------------------------------------------------------------

    DOE also included a small market segment consisting of households 
that become ``new owners'' of a gas furnace. This segment consists of 
households that have central air conditioning and non-central heating 
or central air conditioning and electric heating and choose to install 
a gas furnace.
    Lennox stated that the shipment projections do not appear to be 
supported by the record or recent sales figures, as historical 
shipments data from AHRI for gas and oil warm air furnaces show a 
downward trend in shipments. (Lennox, No. 100 at pp. 6-7) AHRI stated 
that DOE's shipment projections are inaccurate and the projected 
numbers significantly skew the national energy savings estimates. 
(AHRI, No. 98 at pp. 4-5)
    DOE's shipments projections are based on replacement of furnaces 
installed over the past few decades and furnaces installed in future 
new homes. Most of the recent downward trend in shipments is due to 
lower new construction in the wake of the financial crisis. DOE updated 
historical shipments with 2013 data, which shows a growth in gas 
furnace shipments. DOE also updated the new construction forecast based 
on AEO 2013 projections, which reflect improving economic conditions 
and a future increase of the new construction market. In addition, the 
replacements reflect an updated furnace retirement function based on 
the latest furnace lifetime data. Oil furnace shipments are projected 
to continue to drop in the future.
    JCI and AHRI stated that the projected shipments should account for 
an echo effect loss in replacement sales for the furnaces that were not 
sold in the years 2008-2012. (JCI, No. 95 at p. 10; AHRI, No. 98 at pp. 
4-5) The projection for today's final rule shows a lower level of 
replacement shipments in the 2025-2030 period, which is a consequence 
(i.e., an echo) of the decline in historical shipments in 2006-2009.
    JCI believes that the shipment projections for furnaces are too 
optimistic. It noted that during the years prior to 2006, demand for 
large homes with multiple furnace systems was more common than it is 
today. (JCI, No. 95 at pp. 9-10) Mortex stated that forecasts of future 
shipments are unrealistically high because new homes are smaller and 
less likely to have two furnaces. (Mortex, No. 104 at p. 3) In DOE's 
final rule analysis, DOE assumed that new homes would not have multiple 
furnaces.
    It is reasonable to expect that energy conservation standards for 
residential furnace fans that result in higher furnace prices would 
have some dampening effect on sales. Some consumers might choose to 
repair their existing furnace rather than purchase a new one, or 
perhaps install an alternative space heating product. To estimate the 
impact on shipments of the price increase for the considered efficiency 
levels, DOE used a relative price elasticity approach. This approach 
also gives some weight to the operating cost savings from higher-
efficiency products.
    Ingersoll Rand stated that the shipment projections do not account 
for a drop off in sales due to higher furnace prices that will result 
from using more expensive components. (Ingersoll Rand, No. 107 at p. 9) 
The comment is incorrect; the relative price elasticity approach does 
estimate the impact on shipments of the price increase for the 
considered efficiency levels for the NOPR and the final rule.
    Several stakeholders raised issues with DOE's relative price 
elasticity approach. They stated that the household income data and 
data used to derive the elasticity are outdated and do not reflect 
current trends, and the household appliances used to derive the 
relative price elasticity (refrigerators, clothes washers and 
dishwashers) are inappropriate for this rulemaking. (JCI, No. 95 at p. 
10; Morrison, No. 108 at p. 8; AHRI, No. 98 at pp. 12-13; Goodman, No. 
102 at p. 13) Rheem expressed similar concerns. (Rheem, No. 83 at p. 
12)
    In response, DOE notes that there are very few estimates of 
consumer demand elasticity for durable goods. Although the data that 
DOE used to estimate relative price elasticity are not current, and the 
analysis focused on products that differ from furnaces, DOE believes 
that consumer behavior with respect to the impact of higher appliance 
price on

[[Page 38169]]

demand is not likely to have changed significantly. One recent paper 
suggests that demand elasticity for air conditioners is inelastic--
holding efficiency constant, a 10% rise in price leads to a 1.4% 
decline in sales.\44\ This is a lower elasticity than DOE uses in its 
analysis. Therefore, DOE believes that it is reasonable to use the 
relative price elasticity approach for today's final rule. See chapter 
9 in the final rule TSD for a description of the method.
---------------------------------------------------------------------------

    \44\ David Rapson. Durable Goods and Long-Run Electricity 
Demand: Evidence from Air Conditioner Purchase Behavior. Department 
of Economics, University of California, Davis. Available at: 
www.econ.ucdavis.edu/faculty/dsrapson/Rapson_LR_electricity.pdf.
---------------------------------------------------------------------------

    Mortex stated that a big increase in the installed cost of a new 
furnace under the proposed energy conservation standards will lead many 
consumers to repair rather than replace with a new furnace. (Mortex, 
No. 104 at p. 3) In terms of the overall cost of a new furnace, the 
increase attributable to using a more energy-efficient furnace fan is 
relatively small--less than 10 percent--for fans meeting today's 
standards. In any case, the price elasticity approach described above 
captures the potential consumer response to higher furnace prices, 
which often would consist of choosing to repair an existing furnace 
rather than replace it with a new furnace.
    AGA urged the Department to include a robust fuel switching 
analysis, including the competing economics of natural gas furnaces 
versus both electric furnaces and heat pumps. (AGA, No. 110 at p. 3) 
There is a possibility that for some consumers considering replacement 
of a non-condensing gas furnace, the higher price of a gas furnace due 
to today's standards could lead to some switching to heat pumps. 
However, this switching would only occur if the CAC is replaced at the 
same time as the furnace. Furthermore, switching to a heat pump would 
require additional cost to install backup electric resistance heating 
elements. Based on the above considerations, DOE believes that any 
switching to heat pumps due to today's standards would be minimal. The 
standards would not create any incentive to switch to electric furnaces 
because electric furnaces are subject to the furnace fan standard and 
would see a similar incremental cost as a gas furnace.

H. National Impact Analysis

    The NIA assesses the NES and the NPV from a national perspective of 
total consumer costs and savings expected to result from new or amended 
energy conservation standards at specific efficiency levels. DOE 
determined the NPV and NES for the potential standard levels considered 
for the furnace fan product classes analyzed. To make the analysis more 
accessible and transparent to all interested parties, DOE prepared a 
computer spreadsheet that uses typical values (as opposed to 
probability distributions) as inputs. To assess the effect of input 
uncertainty on NES and NPV results, DOE has developed its spreadsheet 
model to conduct sensitivity analyses by running scenarios on specific 
input variables.
    Analyzing impacts of potential energy conservation standards for 
residential furnace fans requires comparing projections of U.S. energy 
consumption with new or amended energy conservation standards against 
projections of energy consumption without the standards. The forecasts 
include projections of annual appliance shipments, the annual energy 
consumption of new appliances, and the purchase price of new 
appliances.
    A key component of DOE's NIA analysis is the energy efficiencies 
projected over time for the base case (without new standards) and each 
of the standards cases. The projected efficiencies represent the annual 
shipment-weighted energy efficiency of the products under consideration 
during the shipments projection period (i.e., from the assumed 
compliance date of a new standard to 30 years after compliance is 
required).
    For the NOPR, DOE reviewed the information provided by the 
manufacturers and modified its estimate of the long-run trend in market 
shares of constant-torque BPM and constant-airflow BPM motor furnace 
fans. The NOPR analysis assumes a long-run trend that results in market 
share of the constant-torque BPM and constant-airflow BPM furnace fans 
reaching 45 percent in 2048. 78 FR 64099. No comments were received on 
this issue and DOE retained the same approach for the final rule.
    For the NOPR, DOE used a roll-up scenario for estimating the 
impacts of the potential energy conservation standards for residential 
furnace fans. Under the roll-up scenario, DOE assumes: (1) Products 
with efficiencies in the base case that do not meet the standard level 
under consideration would roll up to meet the new standard level; and 
(2) products with efficiencies above the standard level under 
consideration would not be affected. Id.
    Rheem stated that DOE's assumption that the sale of premium 
products above the standard level will be unaffected is unreasonable. 
(Rheem, No. 83 at p. 3) DOE acknowledges that the market shares of fans 
with efficiency levels above a given standard level could change after 
compliance with the new standards is required. Estimating how 
manufacturers will respond to new standards with regard to their 
marketing strategy for ``above-standard'' products is very difficult, 
however. Rather than speculate, DOE believes that it is preferable to 
retain a roll-up scenario for today's final rule.
    For the standards cases, the assumed efficiency trend after the 
compliance year varies depending on the particular standard. For the 
case with today's standards, the overall BPM motor market share goes to 
100 percent in 2019 and remains at that level. The shares of the 
specific BPM motor designs (i.e., constant-torque BPM, constant-torque 
BPM motor + multi-stage, constant-airflow BPM motor + multi-stage, and 
constant-airflow BPM motor + multi-stage + backward-inclined impeller) 
remain at the levels of 2019. The details are provided in chapter 10 of 
the final rule TSD.
1. National Energy Savings Analysis
    The national energy savings analysis involves a comparison of 
national energy consumption of the considered products in each 
potential standards case (TSL) with consumption in the base case with 
no new or amended energy conservation standards. DOE calculated the 
national energy consumption by multiplying the number of units (stock) 
of each product (by vintage or age) by the unit energy consumption 
(also by vintage). Vintage represents the age of the product. DOE 
calculated annual NES based on the difference in national energy 
consumption for the base case (without new efficiency standards) and 
for each higher efficiency standard. DOE estimated energy consumption 
and savings based on site energy and converted the electricity 
consumption and savings to primary energy. Cumulative energy savings 
are the sum of the NES for each year over the timeframe of the 
analysis.
    DOE calculates primary energy savings (power plant consumption) 
from site electricity savings by applying a factor to account for 
losses associated with the generation, transmission, and distribution 
of electricity. For the NOPR, DOE derived marginal site-to-power plant 
factors based on the version of the National Energy Modeling System 
(NEMS) that corresponds to AEO 2012. 78 FR 64099. The factors change 
over time in response to projected changes in the types of power plants 
projected to provide electricity to the country.

[[Page 38170]]

    Commenting on DOE's approach, AGA stated that it is highly unlikely 
and unrealistic that all of the projected changes in types of power 
plant used to generate electricity in this country will occur between 
2019 and 2021 and that essentially no change will occur from 2031 
through 2048. AGA stated that realistic trend lines to 2048 including a 
linear forecast of declining site-to-power plant energy use should be 
provided. (AGA, No. 110 at p. 3)
    For the final rule, DOE derived site-to-power plant factors based 
on the version of NEMS that corresponds to AEO 2013. As shown in Figure 
10.3.1 in the final rule TSD, the factor (expressed as primary energy 
per site kWh) declines through 2030 as more efficient power plants gain 
share in power generation. After 2035, there is an increase due to 
lower projected share of highly-efficient combined-cycle power plants. 
DOE acknowledges that projections after 2035 are uncertain, but it 
believes that NEMS provides a reasonable projection.
    DOE has historically presented NES in terms of primary energy 
savings. In response to the recommendations of a committee on ``Point-
of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency 
Standards'' appointed by the National Academy of Science, DOE announced 
its intention to use full-fuel-cycle (FFC) measures of energy use and 
greenhouse gas and other emissions in the national impact analyses and 
emissions analyses included in future energy conservation standards 
rulemakings. 76 FR 51281 (August 18, 2011). After evaluating the 
approaches discussed in the August 18, 2011 notice, DOE published a 
statement of amended policy in the Federal Register in which DOE 
explained its determination that NEMS is the most appropriate tool for 
its FFC analysis and its intention to use NEMS for that purpose. 77 FR 
49701 (August 17, 2012). The approach used for today's final rule is 
described in appendix 10-C of the final rule TSD.
    JCI and AHRI stated that, for cooling mode, the NIA spreadsheet 
model does not indicate how DOE used the average annual electricity use 
values from the energy use analysis to determine national energy 
savings. (JCI, No. 95 at pp. 4-5; AHRI, No. 98 at p. 6) In the NIA 
spreadsheet, the LCC Inputs worksheet shows how the average annual 
electricity use values are used over the analysis period.
    Several stakeholders questioned the accuracy of the doubling in FFC 
energy savings from TSL 3 to TSL 4 from an incremental efficiency level 
improvement of 8 percent for five of the product classes from adding 
the multi-staging option. (JCI, No. 95 at p 4; EEI, No. 91 at pp. 307, 
309; Morrison, No. 108 at p. 4; AHRI, No. 98 at pp. 4-5; Lennox, No. 
100 at p. 2; Ingersoll Rand, No. 107 at p. 9) Similarly, AHRI stated 
that if the effect of multi-staging was indeed prominent enough to 
nearly double the estimated FFC energy savings between TSLs 3 and 4, 
DOE should have evaluated this effect for PSC motors as well. (AHRI, 
No. 98 at p. 5) Morrison stated that for non-weatherized gas furnace 
fans, it is inconsistent that TSL 4 could produce a very large increase 
in FFC energy savings over TSL 3 while TSL 2 and 3 have the same 
national energy savings; compared to the difference in energy use 
between TSL 2 and TSL 3, TSL 4 has a much lower incremental average 
electricity savings and higher additional fuel use compared to TSL 3. 
(Morrison, No. 108 at p. 4)
    For the final rule, DOE incorporated new test data on the fan 
efficiency levels that were included in TSL 3 (constant torque BPM 
motors) and TSL 4 (constant torque BPM motors (multi-stage)). These 
data contributed to a decrease in efficiency for TSL 4 (see section 
IV.C.1) With this change, the increase in savings from TSL 3 to TSL 4 
is now smaller than in the NOPR. The NIA results are presented in 
section V.B.3.
    Several stakeholders stated that it is implausible that the furnace 
fan standard will save about as much energy as the 2006 13 SEER 
rulemaking (76 FR 7185) or the 2013/2015 90% AFUE furnace and 14 SEER 
rulemaking (76 FR 37412). (AHRI, No. 98 at p. 6; Ingersoll Rand, No. 
107 at p. 9; Lennox, No. 100 at p. 2; Goodman, No. 102 at p. 6) 
Ingersoll Rand stated that the energy savings from the proposed rule 
claim to be greater than savings from the 13 SEER rule, but the energy 
savings of a furnace switching from a PSC motor to a constant torque 
BPM is nearly an order of magnitude less than the energy use of the 
furnace or heat pump. (Ingersoll Rand, No. 107 at p. 9)
    DOE reviewed the methodology used to assess the energy savings 
estimated for the proposed standards, as discussed in previous parts of 
this notice, and believes that the energy savings estimated for the 
considered TSLs are reasonable. Comparison with other rules must be 
done with caution, as the savings in those rules depends on both the 
stringency of the standards and the base case that was chosen in the 
analysis. The fact that the energy savings of a furnace switching from 
a PSC motor to a constant torque BPM is much less than the energy use 
of the furnace or heat pump is not relevant to the energy savings 
associated with standards for furnaces or heat pumps.
2. Net Present Value Analysis
    The inputs for determining NPV are: (1) Total annual installed 
cost; (2) total annual savings in operating costs; (3) a discount 
factor to calculate the present value of costs and savings; (4) present 
value of costs; and (5) present value of savings. DOE calculated net 
savings each year as the difference between the base case and each 
standards case in terms of total savings in operating costs versus 
total increases in installed costs. DOE calculated savings over the 
lifetime of products shipped in the forecast period. DOE calculated NPV 
as the difference between the present value of operating cost savings 
and the present value of total installed costs. DOE used a discount 
factor based on real discount rates of 3 and 7 percent to discount 
future costs and savings to present values.
    For the NPV analysis, DOE calculates increases in total installed 
costs as the difference in total installed cost between the base case 
and standards case (i.e., once the standards take effect).
    DOE assumed no change in residential furnace fan prices over the 
2019-2048 period. In addition, DOE conducted a sensitivity analysis 
using alternative price trends, specifically one in which prices 
decline over time, and another in which prices rise. These price trends 
are described in appendix 10-C of the final rule TSD.
    DOE expresses savings in operating costs as decreases associated 
with the lower energy consumption of products bought in the standards 
case compared to the base efficiency case. Total savings in operating 
costs are the product of savings per unit and the number of units of 
each vintage that survive in a given year.
    DOE estimates the NPV of consumer benefits using both a 3-percent 
and a 7-percent real discount rate. DOE uses these discount rates in 
accordance with guidance provided by the Office of Management and 
Budget (OMB) to Federal agencies on the development of regulatory 
analysis.\45\ The NPV results for the residential furnace fan TSLs are 
presented in section V.B.3 of this document.
---------------------------------------------------------------------------

    \45\ OMB Circular A-4 (Sept. 17, 2003), section E, ``Identifying 
and Measuring Benefits and Costs.''
---------------------------------------------------------------------------

I. Consumer Subgroup Analysis

    A consumer subgroup comprises a subset of the population that may 
be affected disproportionately by new or revised energy conservation 
standards (e.g., low-income consumers, seniors).

[[Page 38171]]

The purpose of a consumer subgroup analysis is to determine the extent 
of any such disproportional impacts.
    For today's final rule, DOE evaluated impacts of potential 
standards on two subgroups: (1) Senior-only households and (2) low-
income households. DOE identified these households in the RECS sample 
and used the LCC spreadsheet model to estimate the impacts of the 
considered efficiency levels on these subgroups. The consumer subgroup 
results for the residential furnace fan TSLs are presented in section 
V.B.1 of this document.

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impact of new energy 
conservation standards on manufacturers of residential furnace fans and 
to calculate the potential impact of such standards on employment and 
manufacturing capacity. The MIA has both quantitative and qualitative 
aspects. The quantitative part of the MIA primarily relies on the 
Government Regulatory Impact Model (GRIM), an industry cash-flow model 
with inputs specific to this rulemaking. The key GRIM inputs are data 
on the industry cost structure, product costs, shipments, and 
assumptions about markups and conversion expenditures. The key output 
is the industry net present value (INPV). Different sets of assumptions 
(markup scenarios) will produce different results. The qualitative part 
of the MIA addresses factors such as product characteristics, impacts 
on particular subgroups of firms, and important market and product 
trends. The complete MIA is outlined in chapter 12 of the final rule 
TSD.
    For this rulemaking, DOE considers the ``furnace fan industry'' to 
consist of manufacturers who assemble furnace fans as a component of 
the HVAC products addressed in this rulemaking.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the residential furnace fans 
industry that includes a top-down cost analysis of manufacturers used 
to derive preliminary financial inputs for the GRIM (e.g., sales, 
general, and administration (SG&A) expenses; research and development 
(R&D) expenses; and tax rates). DOE used public sources of information, 
including company SEC 10-K filings,\46\ corporate annual reports, the 
U.S. Census Bureau's Economic Census,\47\ and Hoover's reports.\48\
---------------------------------------------------------------------------

    \46\ U.S. Securities and Exchange Commission, Annual 10-K 
Reports (Various Years) (Available at: http://sec.gov).
    \47\ U.S. Census Bureau, Annual Survey of Manufacturers: General 
Statistics: Statistics for Industry Groups and Industries (Available 
at: http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t).
    \48\ Hoovers Inc. Company Profiles (Various Companies) 
(Available at: http://www.hoovers.com).
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis 
to quantify the potential impacts of a new energy conservation 
standard. In general, energy conservation standards can affect 
manufacturer cash flow in three distinct ways: (1) Create a need for 
increased investment; (2) raise production costs per unit; and (3) 
alter revenue due to higher per-unit prices and possible changes in 
sales volumes.
    In Phase 3 of the MIA, DOE conducted structured, detailed 
interviews with a representative cross-section of manufacturers. During 
these interviews, DOE discussed engineering, manufacturing, 
procurement, and financial topics to validate assumptions used in the 
GRIM and to identify key issues or concerns. Section IV.J.4 of the NOPR 
contains a description of the key issues manufacturers raised during 
the interviews. 78 FR 64068, 64104-05 (Oct. 25, 2013).
    Additionally, in Phase 3, DOE evaluated subgroups of manufacturers 
that may be disproportionately impacted by new standards or that may 
not be accurately represented by the average cost assumptions used to 
develop the industry cash-flow analysis. For example, small 
manufacturers, niche players, or manufacturers exhibiting a cost 
structure that largely differs from the industry average could be more 
negatively affected. DOE identified one subgroup (i.e., small 
manufacturers) for a separate impact analysis.
    DOE applied the small business size standards published by the 
Small Business Administration (SBA) to determine whether a company is 
considered a small business. 65 FR 30836, 30848 (May 15, 2000), as 
amended at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at 13 CFR 
part 121. To be categorized as a small business under North American 
Industry Classification System (NAICS) code 333415, ``Air-Conditioning 
and Warm Air Heating Equipment and Commercial and Industrial 
Refrigeration Equipment Manufacturing,'' a residential furnace fan 
manufacturer and its affiliates may employ a maximum of 750 employees. 
The 750-employee threshold includes all employees in a business's 
parent company and any other subsidiaries. Based on this 
classification, DOE identified 15 residential furnace fan manufacturers 
that qualify as small businesses. The residential furnace fan small 
manufacturer subgroup is discussed in chapter 12 of the final rule TSD 
and in section V.B.2.d of this document.
2. Government Regulatory Impact Model
    DOE uses the GRIM to quantify the changes in cash flow due to new 
standards that result in a higher or lower industry value. The GRIM 
analysis uses a standard, annual cash-flow analysis that incorporates 
manufacturer costs, markups, shipments, and industry financial 
information as inputs. The GRIM model changes in costs, distribution of 
shipments, investments, and manufacturer margins that could result from 
new energy conservation standards. The GRIM spreadsheet uses the inputs 
to arrive at a series of annual cash flows, beginning in 2014 and 
continuing to 2048. DOE calculated INPVs by summing the stream of 
annual discounted cash flows during this period. For residential 
furnace fan manufacturers, DOE used a real discount rate of 7.8 
percent, which was derived from industry financials and then modified 
according to feedback received during manufacturer interviews.
    The GRIM calculates cash flows using standard accounting principles 
and compares changes in INPV between a base case and each standards 
case. The difference in INPV between the base case and a standards case 
represents the financial impact of the new energy conservation standard 
on manufacturers. As discussed previously, DOE collected this 
information on the critical GRIM inputs from a number of sources, 
including publicly-available data and interviews with a number of 
manufacturers (described in the next section). The GRIM results are 
shown in section V.B.2.a. Additional details about the GRIM, the 
discount rate, and other financial parameters can be found in chapter 
12 of the final rule TSD.
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
    Manufacturing a higher-efficiency product is typically more 
expensive than manufacturing a baseline product due to the use of more 
complex components, which are typically more costly than baseline 
components. The changes in the MPCs of the analyzed products can affect 
the revenues, gross

[[Page 38172]]

margins, and cash flow of the industry, making these product cost data 
key GRIM inputs for DOE's analysis.
    In the MIA, DOE used the MPCs for each considered efficiency level 
calculated in the engineering analysis, as described in section IV.C 
and further detailed in chapter 5 of the final rule TSD. In addition, 
DOE used information from its teardown analysis, described in chapter 5 
of the TSD, to disaggregate the MPCs into material, labor, and overhead 
costs. To calculate the MPCs for equipment above the baseline, DOE 
added the incremental material, labor, and overhead costs from the 
engineering cost-efficiency curves to the baseline MPCs. These cost 
breakdowns and product markups were validated and revised with 
manufacturers during manufacturer interviews.
Shipments Forecast
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of these values by efficiency 
level. Changes in sales volumes and efficiency mix over time can 
significantly affect manufacturer finances. For this analysis, the GRIM 
uses the NIA's annual shipment forecasts derived from the shipments 
analysis from 2014 (the base year) to 2048 (the end year of the 
analysis period). See chapter 9 of the final rule TSD for additional 
details.
Product and Capital Conversion Costs
    New energy conservation standards would cause manufacturers to 
incur one-time conversion costs to bring their production facilities 
and product designs into compliance. DOE evaluated the level of 
conversion-related expenditures that would be needed to comply with 
each considered efficiency level in each product class. For the MIA, 
DOE classified these conversion costs into two major groups: (1) 
Product conversion costs; and (2) capital conversion costs. Product 
conversion costs are one-time investments in research, development, 
testing, marketing, and other non-capitalized costs necessary to make 
product designs comply with the new energy conservation standard. 
Capital conversion costs are one-time investments in property, plant, 
and equipment necessary to adapt or change existing production 
facilities such that new product designs can be fabricated and 
assembled.
    To evaluate the level of capital conversion expenditures 
manufacturers would likely incur to comply with new energy conservation 
standards, DOE used manufacturer interviews to gather data on the 
anticipated level of capital investment that would be required at each 
efficiency level. DOE validated manufacturer comments through estimates 
of capital expenditure requirements derived from the product teardown 
analysis and engineering analysis described in chapter 5 of the TSD.
    DOE assessed the product conversion costs at each considered 
efficiency level by integrating data from quantitative and qualitative 
sources. DOE considered market-share-weighted feedback regarding the 
potential costs of each efficiency level from multiple manufacturers to 
determine conversion costs such as R&D expenditures and certification 
costs. Manufacturer data were aggregated to better reflect the industry 
as a whole and to protect confidential information.
    In general, DOE assumes that all conversion-related investments 
occur between the year of publication of the final rule and the year by 
which manufacturers must comply with the new standard. The investment 
figures used in the GRIM can be found in section IV.J.2 of this notice. 
For additional information on the estimated product and capital 
conversion costs, see chapter 12 of the final rule TSD.
b. Government Regulatory Impact Model Scenarios
Shipment Scenarios
    In the NIA, DOE modeled shipments with a roll-up scenario to 
represent possible standards-case efficiency distributions for the 
years beginning 2019 (the year that compliance with new standards would 
be required) through 2048 (the end of the analysis period). The roll-up 
scenario represents the case in which all shipments in the base case 
that do not meet the new standard would roll up to meet the new 
standard level, with the efficiency of products already at the new 
standard level remaining unchanged. Consumers in the base case who 
purchase products above the standard level are not affected as they are 
assumed to continue to purchase the same product in the standards case. 
See chapter 9 of the final rule TSD for more information.
Markup Scenarios
    As discussed above, MSPs include direct manufacturing production 
costs (i.e., labor, materials, and overhead estimated in DOE's MPCs) 
and all non-production costs (i.e., SG&A, R&D, and interest), along 
with profit. To calculate the MSPs in the GRIM, DOE applied non-
production cost markups to the MPCs estimated in the engineering 
analysis for each product class and efficiency level. Modifying these 
markups in the standards case yields different sets of impacts on 
manufacturers. For the MIA, DOE modeled two standards-case markup 
scenarios to represent the uncertainty regarding the potential impacts 
on prices and profitability for manufacturers following the 
implementation of new energy conservation standards: (1) A preservation 
of gross margin percentage markup scenario; and (2) a preservation of 
per unit operating profit markup scenario. These scenarios lead to 
different markups values that, when applied to the inputted MPCs, 
result in varying revenue and cash flow impacts.
    Under the preservation of gross margin percentage scenario, DOE 
applied a single uniform ``gross margin percentage'' markup across all 
efficiency levels, which assumes that manufacturers would be able to 
maintain the same amount of profit as a percentage of revenues at all 
efficiency levels within a product class. As production costs increase 
with efficiency, this scenario implies that the absolute dollar markup 
will increase as well. Based on publicly-available financial 
information for manufacturers of residential furnace fans and comments 
from manufacturer interviews, DOE assumed the non-production cost 
markup--which includes SG&A expenses, R&D expenses, interest, and 
profit--to be the following for each residential furnace fan product 
class:

   Table IV.11--Manufacturer Markup by Residential Furnace Fan Product
                                  Class
------------------------------------------------------------------------
                       Product class                            Markup
------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG-NC)...         1.30
Non-Weatherized, Condensing Gas Furnace Fan (NWG-C)........         1.31
Weatherized, Non-condensing Gas Furnace Fan (WG-NC)........         1.27
Non-Weatherized, Non-condensing Oil Furnace Fan (NWO-NC)...         1.35
Electric Furnace/Modular Blower Fan (EF/MB)................         1.19

[[Page 38173]]

 
Mobile Home Non-Weatherized, Non-condensing Gas Furnace Fan         1.25
 (MH-NWG-NC)...............................................
Mobile Home Non-Weatherized, Condensing Gas Furnace Fan (MH-        1.25
 NWG-C)....................................................
Mobile Home Electric Furnace/Modular Blower Fan (MH-EF/MB).         1.15
------------------------------------------------------------------------

    Because this markup scenario assumes that manufacturers would be 
able to maintain their gross margin percentage markups as production 
costs increase in response to a new energy conservation standard, it 
represents a high bound to industry profitability.
    In the preservation of per unit operating profit scenario, 
manufacturer markups are set so that operating profit one year after 
the compliance date of the new energy conservation standard is the same 
as in the base case on a per unit basis. Under this scenario, as the 
costs of production increase under a standards case, manufacturers are 
generally required to reduce their markups to a level that maintains 
base-case operating profit per unit. The implicit assumption behind 
this markup scenario is that the industry can only maintain its 
operating profit in absolute dollars per unit after compliance with the 
new standard is required. Therefore, operating margin in percentage 
terms is squeezed (reduced) between the base case and standards case. 
DOE adjusted the manufacturer markups in the GRIM at each TSL to yield 
approximately the same earnings before interest and taxes in the 
standards case as in the base case. This markup scenario represents a 
low bound to industry profitability under a new energy conservation 
standard.
3. Discussion of Comments
    During the NOPR public meeting, interested parties commented on the 
assumptions and results of the NOPR analysis TSD. Oral and written 
comments addressed several topics, including conversion costs, 
cumulative regulatory burdens, scope of MIA coverage, markups analysis, 
employment impacts, consumer utility impacts, and impacts on small 
businesses.
a. Conversion Costs
    Several manufacturers expressed concern regarding the DOE's 
estimates of the capital and product conversion costs, including costs 
relating to testing and certification.
    Regarding capital conversion costs associated with a furnace fans 
standard, Goodman commented that DOE's estimate of zero capital 
conversion costs at TSL 4 does not properly reflect feedback from 
manufacturer interviews. (Goodman, No. 102 at p. 10) AHRI stated that 
the technology option associated with TSL 4 would necessitate changes 
in manufacturers' assembly and subassembly production lines, including 
the modification and/or elimination of current fan housings, heat 
exchanger types, and furnace cabinet sizes, at a cost of $103 million 
for the industry. (AHRI, No. 98 at p. 10) Johnson Controls commented 
that compliance with the proposed standard would likely require them to 
make a capital investment ranging from $2.8 million to $4 million. 
(JCI, No. 95 at p. 2)
    In the engineering analysis, most of the technology options being 
considered require only a change in the type of motor used. At the NOPR 
stage, DOE tentatively concluded that TSLs 1 through 5 would not 
require manufacturers to incur capital expenditures for new tooling or 
equipment. However, in response to the above-mentioned public comments 
received during the NOPR period, DOE has revised its methodology for 
estimating capital conversion costs at all TSLs for the final rule. DOE 
incorporated all capital conversion cost values submitted by 
manufacturers during the course of MIA interviews and used a product 
listing weighted-average of feedback (based on basic model listings in 
the AHRI directory) to determine conversion costs for the industry. As 
a result, capital conversion costs were revised upward at all TSLs, as 
shown in Table IV.12.

                             Table IV.12--Final Rule Capital Conversion Costs (CCC)
----------------------------------------------------------------------------------------------------------------
                                             TSL 1       TSL 2       TSL 3       TSL 4       TSL 5       TSL 6
----------------------------------------------------------------------------------------------------------------
Total Industry CCCs ($ millions)........        8.8        11.1        11.8        15.1        15.7       134.7
----------------------------------------------------------------------------------------------------------------

    DOE notes that the conversion costs submitted by AHRI and Johnson 
Controls are generally consistent with DOE's estimates of conversion 
costs at TSL 6 in the final rule. However, without a more detailed 
breakdown of the conversion costs by TSL from those stakeholders, it 
was not feasible for DOE to determine the discrepancies in capital 
conversion cost values or to incorporate their feedback into the GRIM 
model.
    With regards to product conversion costs, including costs 
associated with compliance, certification, and enforcement (CC&E), both 
Trane and Johnson Controls provided their own estimates in support of 
the notion that there will be significant testing burden associated 
with standards compliance. (Trane, No. 107 at pp. 2, 6, and JCI, No. 95 
at p. 8) Goodman also stated that investments in additional testing 
equipment may be required in order to keep pace with current and future 
testing requirements. (Goodman, No. 102 at p. 11) AHRI and multiple 
manufacturers commented that the performance standard associated with 
TSL 4 would require total industry product conversion costs of $6.2 
million. (AHRI, No. 98 at p. 10)
    DOE acknowledges manufacturers' concerns regarding product 
conversion cost estimates, including those relating to testing and 
certification. Similar to the capital conversion cost analysis, DOE 
refined its final rule modeling of product conversion costs to better 
reflect information received during manufacturer interviews. DOE used a 
product listing weighted-average (based on basic model listings in the 
AHRI directory) to extrapolate individual manufacturer feedback to an 
industry value for each efficiency level and for each product class. 
Additionally, for the final rule, DOE explicitly incorporated 
certification costs into the product conversion cost estimates used in 
the GRIM. These certification costs occur in the base case and apply in 
the standards cases. DOE modeled testing and certification costs under 
the assumption

[[Page 38174]]

that larger manufacturers have would conduct all FER testing in-house, 
while small manufacturers would outsource all certification testing. 
DOE assumed a cost of $175 per test per basic model for large 
manufacturers (derived from the test procedure estimate of a maximum of 
4 hours per test) (79 FR 500 (Jan. 3, 2014)) and a cost of $2,000 per 
test per basic model for small manufacturers (77 FR 28674 (May 15, 
2012)). See Table IV.13 and Table IV.14 below for a summary of testing 
and certification cost calculations and overall product conversion 
costs. Conversion costs are discussed in detail in section V.B.2.a of 
today's document and in chapter 12 of the final rule TSD.

              Table IV.13--Testing and Certification Costs
------------------------------------------------------------------------
                                                                Value
------------------------------------------------------------------------
General assumptions:
    [a] Number of FER tests required per Basic Model.......            2
    [b] Total Industry Number of Basic Models \1\..........        2,254
    [c] Number of Basic Models for Large Manufacturers.....        1,943
    [d] Number of Basic Models for Small Manufacturers.....          311
Large manufacturer assumptions:
    [e] Labor rate ($/hr) \2\..............................        43.73
    [f] Time required per test (hours) \3\.................            4
Small manufacturer assumptions:
    [g] Cost per FER test (outsource) ($) \4\ =............       $2,000
    [h] FER costs per model for Large Manufacturer ($) =            $350
     [a]*[e]*[f]...........................................
    [i] FER costs per model for Small Manufacturer ($) =          $4,000
     [a]*[g]...............................................
    Total Industry FER costs ($ millions) = [h]*[c] +               $1.9
     [i]*[d]...............................................
    Total Industry FER costs rescaled to account for EF/MB          $2.2
     and MH-EF/MB product classes ($ millions) \5\.........
------------------------------------------------------------------------
\1\ AHRI Directory: Residential Furnaces.
\2\ Bureau of Labor Statistics, 2012 mean hourly wage for all engineers.
\3\ 2012-05-15 Test Procedures for Residential Furnace Fans; Notice of
  proposed rulemaking, section IV, part B.
\4\ 2012-05-15 Test Procedures for Residential Furnace Fans; Notice of
  proposed rulemaking, section IV, part B.
\5\ The AHRI residential furnaces database does not contain electric
  furnaces/modular blowers. In order to account for CC&E costs relates
  to these products (standard and MH), DOE rescaled the $1.9 value by
  12%, which is the estimated proportion of shipments for these two
  categories combined. $2.2 is the value used in the GRIM.


                                      Table IV.14--Product Conversion Costs
----------------------------------------------------------------------------------------------------------------
                               Baseline      TSL 1       TSL 2       TSL 3       TSL 4       TSL 5       TSL 6
----------------------------------------------------------------------------------------------------------------
Total Number of Basic Models       2,254  ..........  ..........  ..........  ..........  ..........  ..........
 \1\........................
Average Testing and                  853       8,449      10,577      11,356      11,434      12,157      13,182
 Certification Costs + R&D
 Costs per Basic Model ($)..
Total Industry PCCs ($               2.2        18.8        23.6        25.3        25.5        27.1        29.4
 millions)..................
----------------------------------------------------------------------------------------------------------------
\1\ AHRI Directory: Residential Furnaces.

b. Cumulative Regulatory Burden
    Interested parties expressed concern over the cumulative regulatory 
burden that would result from a residential furnace fan energy 
conservation standard. AHRI, Morrison, and Lennox commented that DOE 
did not account for the cumulative impacts of additional DOE 
regulations, including energy conservation standards or potential 
standards for commercial and industrial fans and blowers, commercial 
package air conditioners and heat pumps, and commercial warm air 
furnaces. The three stakeholders also asserted that DOE did not address 
testing burdens associated with the recently finalized test procedures 
for two-stage and modulating condensing furnaces and boilers, and 
potential updates to test procedures for residential furnaces and 
boilers. (AHRI, No. 98 at p. 8-9; Morrison, No. 108 at p. 6; Lennox, 
No. 100 at p. 8) Rheem argued that DOE failed to address cumulative 
burdens relating to regulations for water heaters, boilers, pool 
heaters, and commercial refrigeration equipment. (Rheem, No. 83 at p. 
14)
    DOE notes that the energy conservation standard rulemakings for 
commercial and industrial fans and blowers, commercial package air 
conditioners and heat pumps, commercial warm air furnaces, water 
heaters, residential boilers, commercial boilers, and pool heaters are 
all regulation currently in progress. No standards have been proposed, 
and no final regulations have been issued for these rulemakings. It is 
DOE's policy not to include the impacts of regulatory proposals until 
the analyses are complete and the standards are finalized. Until such 
rulemaking is complete, it is unclear what, if any, requirements will 
be adopted for the products in question. Consequently, it would be 
speculative to try to include incomplete regulatory actions in an 
assessment of cumulative regulatory burden. With regard to the test 
procedure final rule for residential furnaces and boilers published on 
July 10, 2013, the changes have a compliance date of January 6, 2014. 
78 FR 41265. Because the regulation goes into effect before 2016, it is 
outside of the 3-year window set for consideration in the cumulative 
regulatory burden analysis. With regard to the commercial refrigeration 
equipment (CRE) energy conservation standard rulemaking, at the time of 
the residential furnace fan rulemaking NOPR publication, the final rule 
for CRE standards had not yet been published. The final rule for CRE 
standards was published on March 28, 2014 and is now included in the 
final rule cumulative regulatory burden review in section V.B.2.e. 79 
FR 17725.
    Johnson Controls commented that DOE should consider the cumulative 
impacts of State or local weatherization programs that may be 
restrictive on HVAC equipment selections, as well as building code 
standards at State, national, and international levels. In addition, 
JCI believes DOE should include the impact of commercial product energy 
efficiency standards,

[[Page 38175]]

alternate refrigeration requirements, and modifications to existing or 
the generation of new building performance standards, such as ASHRAE 
standards. (JCI, No. 95 at p. 7).
    DOE considers cumulative regulatory burden pursuant to the 
directions in the Process Rule (10 CFR part 430, subpart C, appendix 
A). DOE notes that States and localities are generally preempted from 
requiring HVAC standards beyond the Federal minimum through building 
codes or other regulatory requirements. Once finalized, Federal 
commercial energy efficiency standards, alternative refrigeration 
requirements, and ASHRAE 90.1 standards that go into effect within 3 
years of the effective date of today's standard are considered in the 
cumulative regulatory burden analysis.
    AHRI and Morrison commented that DOE failed to provide quantitative 
estimates of the incremental burden imposed by the additional DOE 
standards impacting furnace fan manufacturers. As a result, both 
parties do not feel that such impacts were adequately reflected in the 
GRIM. (AHRI, No. 98 at p. 9, and Morrison, No. 108 at p. 7).
    In the final rule cumulative regulatory burden section, DOE has 
provided an explicit review of the conversion costs associated with DOE 
energy conservation standards that impact the manufacturers covered 
under the residential furnace fan rulemaking. For more information, 
please see section V.B.2.e of this document.
c. Scope of MIA Coverage
    AHRI and Rheem commented that impacts on motor manufacturers should 
be included in the manufacturing impact analysis. (AHRI, No. 43 at p. 
151, and Rheem, No. 83 at p. 6)
    DOE's manufacturer impact analysis focuses on the manufacturers 
that have the direct burden of complying with the energy conservation 
standard. In this rulemaking, the manufacturer of the residential 
furnace has the burden of certifying and labeling the furnace fan 
performance. Motors manufacturers are a component supplier but do not 
have a direct compliance burden associated with this rule.
d. Markups Analysis
    AHRI provided comments relating to both markup scenarios used in 
the GRIM. With regards to the preservation of gross margin percentage 
markup scenario, AHRI commented that it is unreasonable for DOE to 
assume that, as manufacturer production costs increase in response to 
an energy conservation standard, manufacturers would be able to 
maintain the same gross margin percentage markup as the base case. 
(AHRI, No. 98 at p. 10) AHRI continued by commenting that the 
preservation of operating profit scenario is also inaccurate since it 
implies that manufacturer markups are set so that operating profit one 
year after the compliance date of the new energy conservation standards 
is the same as in the base case. AHRI believes that the one year time 
period is an extremely optimistic assumption and that a five-year time 
period would be a more realistic average for the industry. (AHRI, No. 
98 at p. 10)
    DOE intends for the preservation of gross margin percentage and 
preservation of per-unit operating profit markup scenarios to represent 
the upper and lower bounds for the performance of the industry as a 
result of new standards. The preservation of gross margin percentage 
scenario assumes that manufacturers are able to pass on all increases 
in MPC that result from standards to their first customers. 
Additionally, the scenario assumes manufacturers are able to maintain 
the existing markup on the incremental manufacturer production costs 
that result from the standard, thereby allowing manufacturers to 
recover portions of their conversion cost investments. The preservation 
of per-unit operating profit scenario assumes that manufacturers are 
not able to generate greater operating profit per unit sold in the 
standards case. Additionally, the scenario assumes that manufacturers 
are not able to recover any of their conversion cost investments. By 
applying these two scenarios, DOE models examine the range of potential 
industry impacts that reflect manufacturers' varying ability to pass 
costs on to customers and recover conversion costs. The scenario 
described by AHRI appears to relate to manufacturers' ability to 
recover conversion costs, which is likely not possible by one year 
following the standard year. However, the preservation of operating 
profit per-unit markup scenario assumes only that manufacturers will 
maintain the same annual operating profit as in the base case in the 
year after the standards go into effect. DOE believes that 
manufacturers' annual operating profit will be relatively constant in 
the years following the standard, and, accordingly, the choice between 
a one-year and five-year time horizon for this scenario is arbitrary.
e. Employment Impacts
    AHRI and EEI commented that it is unrealistic to assume there would 
be no reductions in domestic production employment at TSLs 1 through 5. 
This is because labor costs will increase with higher design options, 
and, subsequently, manufacturers will try to compensate by reducing 
labor. (AHRI, No. 98 at p. 10 and EEI, No. 43 at p. 349) Additionally, 
AHRI commented that subsection 12.7.1 in the NOPR TSD accounts for 
line-supervisors as production workers who contribute towards the 
manufacture of furnace fans, but should also account for engineers and 
managers in supervisory roles who may not be involved in the day-to-day 
assembly line operations. (AHRI, No. 98 at p. 11)
    At the NOPR stage, DOE's employment analysis only provided an upper 
bound to employment changes. These upper bound impacts were directly 
correlated to changes in shipments and changes in per-unit labor 
inputs. For the final rule, DOE uses the same employment model to 
determine the upper bound of employment impacts. At the lower bound, 
DOE models the scenario in which all production moves to lower 
production cost countries. In reference to AHRI's second comment, DOE 
does account for non-production workers in the GRIM and presents these 
results along with revised estimates of domestic production employment 
in chapter 12 of the final rule TSD.
f. Consumer Utility
    Morrison commented in support of DOE's previously-stated concern 
relating to the use of multiple rating systems on a given product. 
Morrison emphasized that this would indeed lead to consumer confusion. 
(Morrison, No. 108 at p. 2)
    DOE understands manufacturer concern relating to multiple ratings. 
However, DOE is required by legislation to set a separate standard and 
an associated metric for the covered product, furnace fans.
g. Small Businesses
    In reference to the Regulatory Flexibility Analysis contained in 
the NOPR, Mortex expressed concern that DOE significantly 
underestimated capital and product conversion costs. According to 
Mortex, even at the underestimated level, the calculated impact to 
small businesses (conversion costs of 5.1 percent of annual revenues) 
would be highly detrimental. (Mortex, No. 104 at pp. 2-3)
    DOE has revised its analysis of conversion costs for the final 
rule. The increase in conversion costs is reflected in the Final 
Regulatory Flexibility Analysis (FRFA), in section VI.B of this notice. 
To help portray the magnitude of

[[Page 38176]]

the conversion costs relative to the size of the average small 
business, the conversion costs (which are invested over a five-year 
period) are compared to the financial metric of a single year's 
operation.

K. Emissions Analysis

    In the emissions analysis, DOE estimated the reduction in power 
sector emissions of carbon dioxide (CO2), nitrogen oxides 
(NOX), sulfur dioxide (SO2), and mercury (Hg) 
from potential energy conservation standards for the considered 
products (here, furnace fans). In addition to estimating impacts of 
standards on power sector emissions, DOE estimated emissions impacts in 
production activities (extracting, processing, and transporting fuels) 
that provide the energy inputs to power plants. These are referred to 
as ``upstream'' emissions. Together, these emissions account for the 
full-fuel-cycle (FFC). In accordance with DOE's FFC Statement of Policy 
(76 FR 51281 (August 18, 2011) as amended at 77 FR 49701 (August 17, 
2012)), this FFC analysis also includes impacts on emissions of methane 
(CH4) and nitrous oxide (N2O), both of which are 
recognized as greenhouse gases.
    DOE primarily conducted the emissions analysis using emissions 
factors for CO2 and most of the other gases derived from 
data in AEO 2013, supplemented by data from other sources. DOE 
developed separate emissions factors for power sector emissions and 
upstream emissions. The method that DOE used to derive emissions 
factors is described in chapter 13 of the final rule TSD.
    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO2eq). Gases are converted to CO2eq 
by multiplying each ton of the greenhouse gas by the gas's global 
warming potential (GWP) over a 100-year time horizon. Based on the 
Fourth Assessment Report of the Intergovernmental Panel on Climate 
Change,\49\ DOE used GWP values of 25 for CH4 and 298 for 
N2O.
---------------------------------------------------------------------------

    \49\ Forster, P., V. Ramaswamy, P. Artaxo, T. Berntsen, R. 
Betts, D.W. Fahey, J. Haywood, J. Lean, D.C. Lowe, G. Myhre, J. 
Nganga, R. Prinn, G. Raga, M. Schulz and R. Van Dorland, 2007: 
Changes in Atmospheric Constituents and in Radiative Forcing. In 
Climate Change 2007: The Physical Science Basis. Contribution of 
Working Group I to the Fourth Assessment Report of the 
Intergovernmental Panel on Climate Change. S. Solomon, D. Qin, M. 
Manning, Z. Chen, M. Marquis, K.B. Averyt, M. Tignor and H.L. 
Miller, Editors (2007) Cambridge University Press, Cambridge, United 
Kingdom and New York, NY, USA. p. 212.
---------------------------------------------------------------------------

    EIA prepares the Annual Energy Outlook using the National Energy 
Modeling System (NEMS). Each annual version of NEMS incorporates the 
projected impacts of existing air quality regulations on emissions. AEO 
2013 generally represents current legislation and environmental 
regulations, including recent government actions, for which 
implementing regulations were available as of December 31, 2012.
    SO2 emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap-and-trade 
programs. Title IV of the Clean Air Act sets an annual emissions cap on 
SO2 for affected EGUs in the 48 contiguous States (42 U.S.C. 
7651 et seq.) and the District of Columbia (DC). SO2 
emissions from 28 eastern States and DC were also limited under the 
Clean Air Interstate Rule (CAIR; 70 FR 25162 (May 12, 2005)), which 
created an allowance-based trading program. CAIR was remanded to the 
U.S. Environmental Protection Agency (EPA) by the U.S. Court of Appeals 
for the District of Columbia, but it remained in effect.\50\ See North 
Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 
531 F.3d 896 (D.C. Cir. 2008). In 2011, EPA issued a replacement for 
CAIR, the Cross-State Air Pollution Rule (CSAPR). 76 FR 48208 (August 
8, 2011). On August 21, 2012, the DC Circuit issued a decision to 
vacate CSAPR.\51\ The court ordered EPA to continue administering CAIR. 
The AEO 2013 emissions factors used for today's final rule assume that 
CAIR remains a binding regulation through 2040.
---------------------------------------------------------------------------

    \50\ See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); 
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).
    \51\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696, 
81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).
---------------------------------------------------------------------------

    The attainment of emissions caps is typically flexible among EGUs 
and is enforced through the use of tradable emissions allowances. Under 
existing EPA regulations, any excess SO2 emissions 
allowances resulting from the lower electricity demand caused by the 
adoption of a new or amended efficiency standard could be used to allow 
offsetting increases in SO2 emissions by any regulated EGU. 
In past rulemakings, DOE recognized that there was uncertainty about 
the effects of efficiency standards on SO2 emissions covered 
by the existing cap-and-trade system, but it concluded that negligible 
reductions in power sector SO2 emissions would occur as a 
result of standards.
    Beginning in 2015, however, SO2 emissions will fall as a 
result of the Mercury and Air Toxics Standards (MATS) for power plants. 
77 FR 9304 (Feb. 16, 2012). In the final MATS rule, EPA established a 
standard for hydrogen chloride as a surrogate for acid gas hazardous 
air pollutants (HAP), and also established a standard for 
SO2 (a non-HAP acid gas) as an alternative equivalent 
surrogate standard for acid gas HAP. The same controls are used to 
reduce HAP and non-HAP acid gas; thus, SO2 emissions will be 
reduced as a result of the control technologies installed on coal-fired 
power plants to comply with the MATS requirements for acid gas. AEO2013 
assumes that, in order to continue operating, coal plants must have 
either flue gas desulfurization or dry sorbent injection systems 
installed by 2015. Both technologies, which are used to reduce acid gas 
emissions, also reduce SO2 emissions. Under the MATS, NEMS 
shows a reduction in SO2 emissions when electricity demand 
decreases (e.g., as a result of energy efficiency standards). Emissions 
will be far below the cap that would be established by CAIR, so it is 
unlikely that excess SO2 emissions allowances resulting from 
the lower electricity demand would be needed or used to allow 
offsetting increases in SO2 emissions by any regulated EGU. 
Therefore, DOE believes that energy efficiency standards will reduce 
SO2 emissions in 2015 and beyond.
    CAIR established a cap on NOX emissions in 28 eastern 
States and the District of Columbia. Energy conservation standards are 
expected to have little effect on NOX emissions in those 
States covered by CAIR because excess NOX emissions 
allowances resulting from the lower electricity demand could be used to 
allow offsetting increases in NOX emissions. However, 
standards would be expected to reduce NOX emissions in the 
States not affected by the caps, so DOE estimated NOX 
emissions reductions from the standards considered in today's final 
rule for these States.
    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps, and, as such, DOE's energy conservation 
standards would likely reduce Hg emissions. DOE estimated mercury 
emissions reduction using emissions factors based on AEO 2013, which 
incorporates the MATS.
    JCI and EEI stated that DOE did not consider the impact of the EPA 
rulemakings on new and existing power plants, which likely will 
materially affect the projections of CO2 emissions 
reductions on which the DOE's SCC benefit calculations are based. (JCI, 
No. 95 at p. 10-11; EEI, No. 87 at p. 9) Consistent with past practice, 
DOE has

[[Page 38177]]

concluded that it would not be appropriate for its analysis to assume 
implementation of regulations that are not in effect at this time. The 
shape of any final EPA regulations is uncertain, as is the outcome of 
potential legal challenges to those regulations.
    EEI stated that, to be consistent with other rulemakings, DOE 
should use modeling that calculates no emissions reductions as a result 
of efficiency standards where such emissions are capped by State, 
regional, or Federal regulations. In particular, DOE should eliminate 
any estimated CO2 reductions in California and in the 
Northeastern/Mid-Atlantic states that participate in the Regional 
Greenhouse Gas Initiative (RGGI). (EEI, No. 87 at p. 10) Morrison 
stated that different agencies simultaneously addressing similar 
sources of CO2 emissions should not double-count emissions 
reductions. (Morrison, No. 108 at p. 10)
    As stated above, DOE based its emissions analysis on AEO 2013, 
which represents current legislation and environmental regulations, 
including recent government actions, for which implementing regulations 
were available as of December 31, 2012. AEO 2013 accounts for the 
implementation of regional and State air emissions regulations, 
including those cited by EEI.\52\ Its analysis also considers the 
impact of caps set by Federal regulations, as discussed above. 
Consequently, the emissions reductions estimated to result from today's 
standards are over and above any reductions attributable to other 
State, regional, or Federal regulations.
---------------------------------------------------------------------------

    \52\ See Assumptions to AEO 2013 (Available at: http://www.eia.gov/forecasts/aeo/assumptions/).
---------------------------------------------------------------------------

    EEI stated that DOE's analysis significantly overestimates the 
future emissions from power plants, as coal-fired power plants are 
being retired and large amounts of wind and solar capacity are being 
added. It stated that due to these factors, along with EPA regulations, 
there will be a significant reduction in the baseline emissions from 
power plants and a reduced emissions impact from any efficiency 
standard. (EEI, No. 87 at p. 9)
    DOE bases its emissions analysis on the latest projections from the 
AEO, which consider retirement of coal-fired power plants, addition of 
wind and solar capacity, and current EPA regulations. Decline in 
baseline emissions from power plants does not mean that there would be 
reduced impact from any efficiency standard, however. The impact of 
standards on electricity demand takes place at the margin, and DOE's 
analysis endeavors to reflect this marginal impact.
    EEI stated that it is not clear how or why the power plant 
emissions factors would increase for any regulated emission 
(SO2, NOX, Hg, and CO2) after 2025 or 
2030, based on current trends and Federal and State regulations. (EEI, 
No. 87 at p. 10) DOE agrees that average power plant emissions factors 
for the Nation as a whole would likely not increase after 2025 or 2030. 
DOE's analysis uses marginal emissions factors, however, which depend 
on changes to the mix of generation capacity by fuel type induced by a 
marginal reduction in electricity demand for a particular end use 
(e.g., residential heating). The behavior of marginal emissions factors 
can be significantly different from the behavior of average emissions 
factors. Marginal emissions factors are very sensitive to shifts in the 
capacity mix relative to the AEO reference case, whereas average 
emissions factors are not affected by these small shifts.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of the standards in this final rule, DOE 
considered the estimated monetary benefits from the reduced emissions 
of CO2 and NOX that are expected to result from 
each of the TSLs considered. In order to make this calculation 
analogous to the calculation of the NPV of consumer benefit, DOE 
considered the reduced emissions expected to result over the lifetime 
of equipment shipped in the forecast period for each TSL. This section 
summarizes the basis for the monetary values used for each of these 
emissions and presents the values considered in this final rule.
    For today's final rule, DOE is relying on a set of values for the 
SCC that was developed by a Federal interagency process. The basis for 
these values is summarized below, and a more detailed description of 
the methodologies used is provided as an appendix to chapter 14 of the 
final rule TSD.
1. Social Cost of Carbon
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) changes in net agricultural 
productivity, human health, property damages from increased flood risk, 
and the value of ecosystem services. Estimates of the SCC are provided 
in dollars per metric ton of carbon dioxide. A domestic SCC value is 
meant to reflect the value of damages in the United States resulting 
from a unit change in carbon dioxide emissions, while a global SCC 
value is meant to reflect the value of damages worldwide.
    Under section 1(b) of Executive Order 12866, agencies must, to the 
extent permitted by law, ``assess both the costs and the benefits of 
the intended regulation and, recognizing that some costs and benefits 
are difficult to quantify, propose or adopt a regulation only upon a 
reasoned determination that the benefits of the intended regulation 
justify its costs.'' The purpose of the SCC estimates presented here is 
to allow agencies to incorporate the monetized social benefits of 
reducing CO2 emissions into cost-benefit analyses of 
regulatory actions. The estimates are presented with an acknowledgement 
of the many uncertainties involved and with a clear understanding that 
they should be updated over time to reflect increasing knowledge of the 
science and economics of climate impacts.
    As part of the interagency process that developed these SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
Monetizing Carbon Dioxide Emissions
    When attempting to assess the incremental economic impacts of 
carbon dioxide emissions, the analyst faces a number of challenges. A 
report from the National Research Council \53\ points out that any 
assessment will suffer from uncertainty, speculation, and lack of 
information about: (1) Future emissions of GHGs; (2) the effects of 
past and future emissions on the climate system; (3) the impact of 
changes in climate on the physical and biological environment; and (4) 
the translation of these environmental impacts into economic damages. 
As a result, any effort to quantify and monetize the harms associated 
with climate change will raise questions of science, economics, and 
ethics and should be viewed as provisional.
---------------------------------------------------------------------------

    \53\ National Research Council. Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use (2009) National Academies 
Press: Washington, DC.

---------------------------------------------------------------------------

[[Page 38178]]

    Despite the limits of both quantification and monetization, SCC 
estimates can be useful in estimating the social benefits of reducing 
CO2 emissions. The agency can estimate the benefits from 
reduced (or costs from increased) emissions in any future year by 
multiplying the change in emissions in that year by the SCC values 
appropriate for that year. The net present value of the benefits can 
then be calculated by multiplying each of these future benefits by an 
appropriate discount factor and summing across all affected years.
    It is important to emphasize that the interagency process is 
committed to updating these estimates as the science and economic 
understanding of climate change and its impacts on society improves 
over time. In the meantime, the interagency group will continue to 
explore the issues raised by this analysis and consider public comments 
as part of the ongoing interagency process.
Development of Social Cost of Carbon Values
    In 2009, an interagency process was initiated to offer a 
preliminary assessment of how best to quantify the benefits from 
reducing carbon dioxide emissions. To ensure consistency in how 
benefits are evaluated across Federal agencies, the Administration 
sought to develop a transparent and defensible method, specifically 
designed for the rulemaking process, to quantify avoided climate change 
damages from reduced CO2 emissions. The interagency group 
did not undertake any original analysis. Instead, it combined SCC 
estimates from the existing literature to use as interim values until a 
more comprehensive analysis could be conducted. The outcome of the 
preliminary assessment by the interagency group was a set of five 
interim values: Global SCC estimates for 2007 (in 2006$) of $55, $33, 
$19, $10, and $5 per metric ton of CO2. These interim values 
represented the first sustained interagency effort within the U.S. 
government to develop an SCC for use in regulatory analysis. The 
results of this preliminary effort were presented in several proposed 
and final rules.
Current Approach and Key Assumptions
    After the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
Specially, the group considered public comments and further explored 
the technical literature in relevant fields. The interagency group 
relied on three integrated assessment models commonly used to estimate 
the SCC: the FUND, DICE, and PAGE models. These models are frequently 
cited in the peer-reviewed literature and were used in the last 
assessment of the Intergovernmental Panel on Climate Change (IPCC). 
Each model was given equal weight in the SCC values that were 
developed.
    Each model takes a slightly different approach to model how changes 
in emissions result in changes in economic damages. A key objective of 
the interagency process was to enable a consistent exploration of the 
three models, while respecting the different approaches to quantifying 
damages taken by the key modelers in the field. An extensive review of 
the literature was conducted to select three sets of input parameters 
for these models: climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the interagency group used a range of scenarios for the 
socio-economic parameters and a range of values for the discount rate. 
All other model features were left unchanged, relying on the model 
developers' best estimates and judgments.
    The interagency group selected four sets of SCC values for use in 
regulatory analyses. Three sets of values are based on the average SCC 
from the three IAMs, at discount rates of 2.5, 3, and 5 percent. The 
fourth set, which represents the 95th percentile SCC estimate across 
all three models at a 3-percent discount rate, was included to 
represent higher-than-expected impacts from temperature change further 
out in the tails of the SCC distribution. The values grow in real terms 
over time. Additionally, the interagency group determined that a range 
of values from 7 percent to 23 percent should be used to adjust the 
global SCC to calculate domestic effects,\54\ although preference is 
given to consideration of the global benefits of reducing 
CO2 emissions. Table IV.15 presents the values in the 2010 
interagency group report,\55\ which is reproduced in appendix 14A of 
the DOE final rule TSD.
---------------------------------------------------------------------------

    \54\ It is recognized that this calculation for domestic values 
is approximate, provisional, and highly speculative. There is no a 
priori reason why domestic benefits should be a constant fraction of 
net global damages over time.
    \55\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866. Interagency Working Group on Social Cost of 
Carbon, United States Government (February 2010) (Available at: 
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).

                     Table IV.15--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                     Discount rate
                                     ---------------------------------------------------------------------------
                Year                          5%                 3%                2.5%                3%
                                     ---------------------------------------------------------------------------
                                           Average            Average            Average        95th percentile
----------------------------------------------------------------------------------------------------------------
2010................................                4.7               21.4               35.1               64.9
2015................................                5.7               23.8               38.4               72.8
2020................................                6.8               26.3               41.7               80.7
2025................................                8.2               29.6               45.9               90.4
2030................................                9.7               32.8               50.0              100.0
2035................................               11.2               36.0               54.2              109.7
2040................................               12.7               39.2               58.4              119.3
2045................................               14.2               42.1               61.7              127.8
2050................................               15.7               44.9               65.0              136.2
----------------------------------------------------------------------------------------------------------------


[[Page 38179]]

    The SCC values used for today's notice were generated using the 
most recent versions of the three integrated assessment models that 
have been published in the peer-reviewed literature.\56\
---------------------------------------------------------------------------

    \56\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866, Interagency 
Working Group on Social Cost of Carbon, United States Government 
(May 2013; revised November 2013) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).
---------------------------------------------------------------------------

    Table IV.16 shows the updated sets of SCC estimates in 5-year 
increments from 2010 to 2050. The full set of annual SCC estimates 
between 2010 and 2050 is reported in appendix 14B of the DOE final rule 
TSD. The central value that emerges is the average SCC across models at 
the 3-percent discount rate. However, for purposes of capturing the 
uncertainties involved in regulatory impact analysis, the interagency 
group emphasizes the importance of including all four sets of SCC 
values.

                     Table IV.16--Annual SCC Values From 2013 Interagency Report, 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                     Discount rate
                                     ---------------------------------------------------------------------------
                Year                          5%                 3%                2.5%                3%
                                     ---------------------------------------------------------------------------
                                           Average            Average            Average        95th percentile
----------------------------------------------------------------------------------------------------------------
2010................................                 11                 32                 51                 89
2015................................                 11                 37                 57                109
2020................................                 12                 43                 64                128
2025................................                 14                 47                 69                143
2030................................                 16                 52                 75                159
2035................................                 19                 56                 80                175
2040................................                 21                 61                 86                191
2045................................                 24                 66                 92                206
2050................................                 26                 71                 97                220
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable because they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The 2009 National 
Research Council report mentioned above points out that there is 
tension between the goal of producing quantified estimates of the 
economic damages from an incremental ton of carbon and the limits of 
existing efforts to model these effects. There are a number of 
analytical challenges that are being addressed by the research 
community, including research programs housed in many of the Federal 
agencies participating in the interagency process to estimate the SCC. 
The interagency group intends to periodically review and reconsider 
those estimates to reflect increasing knowledge of the science and 
economics of climate impacts, as well as improvements in modeling.
    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used the values from the 
2013 interagency report adjusted to 2013$ using the GDP price deflator. 
For each of the four sets of SCC values, the values for emissions in 
2015 were $12.0, $40.5, $62.4, and $119 per metric ton avoided (values 
expressed in 2013$). DOE derived values after 2050 using the relevant 
growth rates for the 2040-2050 period in the interagency update.
    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SCC value for that year in each of the four cases. To 
calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the four cases using the specific 
discount rate that had been used to obtain the SCC values in each case.
    In responding to the NOPR, many commenters questioned the 
scientific and economic basis of the SCC values.
    A number of stakeholders stated that DOE should not use SCC values 
to establish monetary figures for emissions reductions until the SCC 
undergoes a more rigorous notice, review, and comment process. 
(Morrison, No. 108 at p. 9; JCI, No. 95 at p. 10; AHRI, No. 98 at pp. 
12-13; The Associations, No. 99 at p. 2; NAM, No. 84 at p. 1-2; Cato 
Institute, No. 81 at p. 2) Ingersoll Rand agrees with AHRI's comments. 
(Ingersoll Rand, No. 107 at p. 11) Rheem stated that the Federal 
Interagency Working Group has failed to disclose and quantify key 
uncertainties to inform decision makers and the public about the 
effects and uncertainties of alternative regulatory actions, as 
required by OMB. (Rheem, No. 83 at p. 9) NAM stated that the SCC 
estimates were developed without sufficient transparency, inadequate 
supporting information related to assumptions and other data, and a 
failure to peer-review critical model inputs. (NAM, No. 84 at pp. 1-2) 
Morrison stated that the SCC estimates are the product of an opaque 
process and that any pretensions to their supposed accuracy are 
unsupportable. (Morrison, No. 108 at p. 9) JCI stated that the SCC has 
not been adequately noticed and reviewed before being used in this NOPR 
or any other rulemaking. JCI added that it is aware that the SCC 
process is undergoing a current review and comment process, which has 
the potential for significant changes in how those SCC calculations are 
used in any rulemakings. (JCI, No. 95 at p. 10) Rheem stated that even 
if the SCC estimate development process were transparent, rigorous, and 
peer-reviewed, the modeling conducted in this effort does not offer a 
reasonably acceptable range of accuracy for use in policymaking. 
(Rheem, No. 83 at p. 9)
    In conducting the interagency process that developed the SCC 
values, technical experts from numerous agencies met on a regular basis 
to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. Key 
uncertainties and model differences transparently and consistently 
inform the range of SCC estimates. These uncertainties and model 
differences are discussed in the interagency working group's reports, 
which are reproduced in appendix 14A and 14B of the final rule TSD, as 
are the major assumptions. The 2010 SCC

[[Page 38180]]

values have been used in a number of Federal rulemakings in which the 
public had opportunity to comment. In November 2013, the OMB announced 
a new opportunity for public comment on the TSD underlying the revised 
SCC estimates. See 78 FR 70586 (Nov. 26, 2013). OMB is currently 
reviewing comments and considering whether further revisions to the 
2013 SCC estimates are warranted. DOE stands ready to work with OMB and 
the other members of the interagency working group on further review 
and revision of the SCC estimates as appropriate.
    NAM stated that in using the SCC estimates, DOE fails to adhere to 
its own guidelines for ensuring and maximizing the quality, 
objectivity, utility, and integrity of information disseminated by the 
DOE. (NAM, No. 84 at pp. 1-2) DOE has sought to ensure that the data 
and research used to support its policy decisions--including the SCC 
values--are of high scientific and technical quality and objectivity, 
as called for by the Secretarial Policy Statement on Scientific 
Integrity.\57\ See section VI.J for DOE's evaluation of today's final 
rule and supporting analyses under the DOE and OMB information quality 
guidelines.
---------------------------------------------------------------------------

    \57\ See https://www.directives.doe.gov/directives-documents/0411.2-APolicy.
---------------------------------------------------------------------------

    Rheem stated that the modeling systems used for the SCC estimates 
and the subsequent analyses were not subject to peer review as 
appropriate. (Rheem, No. 83 at p. 9) The Cato Institute stated that the 
determination of the SCC is discordant with the best scientific 
literature on the equilibrium climate sensitivity and the fertilization 
effect of carbon dioxide--two critically important parameters for 
establishing the net externality of carbon dioxide emissions. (Cato 
Institute, No. 81 at p. 2)
    The three integrated assessment models used to estimate the SCC are 
frequently cited in the peer-reviewed literature and were used in the 
last assessment of the IPCC. In addition, new versions of the models 
that were used in 2013 to estimate revised SCC values were published in 
the peer-reviewed literature (see appendix 14B of the final rule TSD). 
The revised estimates that were issued in November 2013 are based on 
the best available scientific information on the impacts of climate 
change. The issue of equilibrium climate sensitivity is addressed in 
section 14A.4 of appendix 14A in the final rule TSD. The EPA, in 
collaboration with other Federal agencies, continues to investigate 
potential improvements to the way in which economic damages associated 
with changes in CO2 emissions are quantified.
    Morrison stated that the CO2 emissions reductions 
benefits are overestimated, because the SCC values do not account for 
any prior changes that impact the baseline emissions trends in previous 
years. According to the commenter, DOE fails to take into consideration 
EPA regulations of greenhouse gas emissions from power plants, which 
would affect the SCC values. (Morrison, No. 108 at p. 10)
    The SCC values are based on projections of global GHG emissions 
over many decades. Such projections are influenced by many factors, 
particularly economic growth rates and prices of different energy 
sources. In the context of these projections, the proposed EPA 
regulations of greenhouse gas emissions from new power plants are a 
minor factor. In any case, it would not be appropriate for DOE to 
account for regulations that are not currently in effect, because 
whether such regulations will be adopted and their final form are 
matters of speculation at this time.
    Miller stated that the Department appears to violate the directive 
in OMB Circular A-4, which states: ``The analysis should focus on 
benefits and costs that accrue to citizens and residents of the United 
States. Where the agency chooses to evaluate a regulation that is 
likely to have effects beyond the borders of the United States, these 
effects should be reported separately.'' Miller stated that instead of 
focusing on domestic benefits and separately reporting any 
international effects, the Department focused on much-larger global 
benefits in the text of the proposed rule and separately reported the 
(much smaller) domestic effects in a chapter of the TSD. (Miller, No. 
79 at pp. 6-7) Similarly, Rheem stated that by presenting only global 
SCC estimates and downplaying domestic SCC estimates in 2013, the IWG 
has severely limited the utility of the SCC for use in benefit-cost 
analysis and policymaking. (Rheem, No. 83 at p. 9) Mercatus stated that 
OMB guidelines specifically require that benefit-cost analysis of 
Federal regulations be reported for domestic estimates, with global 
estimates being optional. Mercatus argued that by using the global 
estimate at a three-percent discount rate, DOE inflated the benefits of 
reducing carbon emissions by almost double compared to using a domestic 
SCC at five percent. (Mercatus, No. 82 at pp. 7-8) EEI stated that the 
use of global SCC values, which are estimates that are based on many 
global assumptions and are subject to a great deal of uncertainty, may 
be important in assessing the overall costs and benefits of particular 
regulations, but using these values in the context of setting energy 
conservation standards is problematic, as the geographic and temporal 
scales of the LCC and SCC values are very different. (EEI, No. 87 at p. 
10-11)
    Although the relevant analyses address both domestic and global 
impacts, the interagency group has determined that it is appropriate to 
focus on a global measure of SCC because of the distinctive nature of 
the climate change problem, which is highly unusual in at least two 
respects. First, it involves a global externality: Emissions of most 
greenhouse gases contribute to damages around the world when they are 
emitted in the United States. Second, climate change presents a problem 
that the United States alone cannot solve. The issue of global versus 
domestic measures of the SCC is further discussed in appendix 14A of 
the final rule TSD.
    NAM stated that under DOE's analysis, the cost-benefit results and 
the proposed rule are legally sufficient without the inclusion of the 
SCC estimate. (NAM, No. 84 at p. 3) In contrast, JCI stated that the 
monetary value of the CO2 emissions reduction plays a 
significant role in DOE's justification to set the TSL 4 levels as the 
national standards. (JCI, No. 95 at p. 10)
    DOE disagrees with NAM's assessment, which suggests that 
consideration of the SCC in the context of this rulemaking is somehow 
unnecessary or unimportant. When selecting a proposed standard level or 
adopting a final standard level, DOE considers and carefully weighs all 
relevant factors. Thus, the monetary value of the CO2 
emissions reduction did play a role in DOE's decision to propose TSL 4 
(and to adopt TSL 4 in today's notice), as appropriate. DOE has 
determined that today's standards are expected to achieve the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified, with or without consideration of the economic 
benefits associated with reduced CO2 emissions.
    Morrison stated that DOE does not conduct the cost-benefit analysis 
for NPV and SCC values over the same time frame and within the same 
scope, an important principle of cost-benefit analysis. (Morrison, No. 
108 at p. 9)
    For the analysis of national impacts of standards, DOE considers 
the lifetime impacts of equipment shipped in a 30-year period. With 
respect to energy and energy cost savings, impacts continue past 30 
years until all of the equipment

[[Page 38181]]

shipped in the 30-year period is retired. With respect to the valuation 
of CO2 emissions reductions, the SCC estimates developed by 
the interagency working group are meant to represent the full 
discounted value (using an appropriate range of discount rates) of 
emissions reductions occurring in a given year. DOE is thus comparing 
the costs of achieving the emissions reductions in each year of the 
analysis, with the carbon reduction value of the emissions reductions 
in those same years. Neither the costs nor the benefits of emissions 
reductions outside the analytic time frame are included in the 
analysis.

M. Utility Impact Analysis

    The utility impact analysis estimates several effects on the power 
generation industry that would result from the adoption of new or 
amended energy conservation standards. In the utility impact analysis, 
DOE analyzes the changes in electric installed capacity and generation 
that result for each trial standard level. The utility impact analysis 
uses a variant of NEMS, which is a public domain, multi-sectored, 
partial equilibrium model of the U.S. energy sector. DOE uses a variant 
of this model, referred to as NEMS-BT,\58\ to account for selected 
utility impacts of new or amended energy conservation standards. DOE's 
analysis consists of a comparison between model results for the most 
recent AEO Reference Case and for cases in which energy use is 
decremented to reflect the impact of potential standards. The energy 
savings inputs associated with each TSL come from the NIA. Chapter 15 
of the final rule TSD describes the utility impact analysis in further 
detail.
---------------------------------------------------------------------------

    \58\ DOE/EIA approves use of the name NEMS to describe only an 
official version of the model without any modification to code or 
data. Because this analysis entails some minor code modifications 
and the model is run under various policy scenarios that are 
variations on DOE/EIA assumptions, DOE refers to it by the name 
``NEMS-BT'' (``BT'' is DOE's Building Technologies Program, under 
whose aegis this work has been performed).
---------------------------------------------------------------------------

    EEI stated that it is not possible under most operational scenarios 
to increase electric capacity and decrease the amount of electric 
generation, as is indicated by DOE's analysis. (EEI, No. 87 at p. 8) In 
response, it would appear that the commenter has misinterpreted Table 
15.3.1 in the NOPR TSD. The figure shows the capacity reduction as a 
positive value; it is not an increase as it might appear at first 
glance.
    EEI stated that it is ironic that DOE is showing that an estimated 
reduction of renewable power plants provides an economic benefit to the 
United States. (EEI, No. 87 at p. 9) DOE reports the projected changes 
in the installed capacity of different types of power plants resulting 
from potential standards. Since the change in demand occurs at the 
margin, it is not surprising that plant types with relatively high 
first cost (such as solar and wind power) would be affected by 
standards. When assessing the energy savings associated with energy 
conservation standards, DOE does not claim that any particular changes 
in installed capacity of different types of power plants provide an 
economic benefit to the Nation relative to other types of power plant 
facilities.
    EEI stated that the analysis appears to ignore the impacts of 
renewable portfolio standards in 29 States and the District of Columbia 
(as well as the renewable power goals in 8 other States). (EEI, No. 87 
at p. 9) DOE disagrees with EEI's assertion regarding DOE's 
consideration of renewable portfolio standards. In the utility impact 
analysis, DOE used the projections of electricity generation by plant 
type in AEO 2013. These projections account for the estimated impacts 
of all renewable portfolio standards that were in place at the end of 
2012.
    Several stakeholders stated that DOE did not adequately consider 
power quality issues, specifically that DOE did not account for the 
effect of such a large number of non-linear power supplies (constant-
torque BPM motors and multi-staging controls) without power factor 
correction on the grid. Several of them stated that the non-linear 
loads produced by constant-torque and constant-airflow BPM motors tend 
to cause harmonic distortions in both voltage and current, and could 
potentially cause voltage control problems within a power grid system. 
(JCI, No. 95 at p. 9; Morrison, No. 108 at p. 7; AHRI, No. 98 at p. 11) 
JCI stated that the Electric Power Research Institute suggests that 
while harmonic emissions from a single system may not have a major 
impact on the grid, the cumulative impact of millions of furnaces could 
be significant on the grid systems within the U.S. (JCI, No. 95 at p. 
9) Southern Company stated that the BPM motors considered in this 
rulemaking typically have poor power factors and emit strong 3rd and 
5th order harmonics, which is likely to cause problems with utility 
systems at a future date when most of the older equipment has been 
retired and replaced by BPM motors. (Southern Company, No. 85 at p. 4) 
JCI, Morrison, and AHRI stated that the mitigation costs associated 
with harmonic distortions would have a significant impact on consumers, 
especially related to failure rates, maintenance and repair costs, and 
the overall economic analysis for life-cycle costs. (JCI, No. 95 at p. 
9; Morrison, No. 108 at p. 7; AHRI, No. 98 at p. 11) Southern Company 
stated that, for furnace fans with BPM motors, DOE could assume a 
percentage of households would require wiring upgrades and some 
additional costs to either the utility or the homeowner for filtering 
of harmonics or power factor correction. (Southern Company, No. 85 at 
p. 4) APGA stated that DOE should include the cost of installation of 
harmonic filters in the LCC analysis and recalculate the economic 
justification of design options incorporating ECM motors. (APGA, No. 
110 at p. 3)
    Regarding these comments, DOE notes that a number of studies assume 
that output from BPM motors is constant at full load at time of use, 
similar to operation of PSC motors. However, BPM motors are 
specifically designed to accommodate reduced-load operation, and, 
therefore, most of the time, they will operate at part load (i.e., at 
lower speeds and higher efficiency). The current of a BPM motor at 
lower-speed operation is significantly lower than a PSC motor at normal 
operation; therefore, total current contribution will not exceed the 
existing system grid capacity. In addition, the harmonic contribution 
is a small part of total circuit loading, at the lower current levels. 
For example, motor performance data from GE \59\ shows an increase in 
power of 133 volt-amperes (VA) from a \1/3\ HP PSC to BPM at full 
output. On average, 5 to 20 residential customers are served per 
distribution transformer, which are normally rated between 15 and 50 
kVA.60 61 An increase of this current would result in an 
increase in loading less than 3 percent at the extreme case. (The 
extreme case is all HVAC at full load concurrently, served by the same 
distribution transformer.) The transformers are normally rated 
approximately 30 percent to 50 percent above predicted peak load.\62\ 
In this case, the increased current draw (VA) would have negligible 
impact. Measured

[[Page 38182]]

performance data \63\ show a decrease in current drawn for cooling 
functionality (152 VA) and an increase for heating functionality (32 
VA) from PSC to equivalent BPM, confirming the small BPM loading 
impact. In addition, an evaluation of increased penetration of BPM 
motors in commercial buildings was presented at the ASHRAE 6 ECM Motor 
Workshop at the CEC, which reviewed California Utility Codes with 
regards to the BPM-specific issue.\64\ It was stated in this study that 
while the power factor could be reduced to 50 percent, a BPM motor will 
have a lower current draw than a PSC motor at 100 percent power factor 
due to efficiency gains.
---------------------------------------------------------------------------

    \59\ GE Industrial Systems, GE ECM 2.3 Series motors datasheet 
(Available at: http://www.columbiaheating.com/page_images/file/GET-8068.pdf).
    \60\ Farmer, C., Hines, P., Dowds, J., Blumsack, S., Modeling 
the Impact of Increasing PHEV Loads on the Distribution 
Infrastructure, Proceedings of the 43rd International Conference on 
System Sciences (2010).
    \61\ NEMA. NEMA TP 1-2002: Guide for Determining Energy 
Efficiency for Distribution Transformers.
    \62\ NEMA Standards Publication TP 1-2002: Guide for Determining 
Energy Efficiency for Distribution Transformers (Available at: 
https://www.nema.org/Standards/Pages/Guide-for-Determining-Energy-Efficiency-for-Distribution-Transformers.aspx?#download).
    \63\ Gusdorf, J., M. Swinton, C. Simpson, E. Enchev, S. Hayden, 
D. Furdas, and B. Castellan, Saving Electricity and Reducing GHG 
Emissions with ECM Furnace Motors: Results from the CCHT and 
Projections to Various Houses and Locations (2004) ACEEE Proceedings 
(Available at: http://aceee.org/files/proceedings/2004/data/papers/SS04_Panel1_Paper12.pdf).
    \64\ Taylor Engineering LLC, ASHRAE 6 ECM Motors, August 17th 
CEC Workshop (2011) California Statewide Utility Code and Standard 
Program (Available at: http://www.energy.ca.gov/title24/2013standards/prerulemaking/documents/2011-08-17_workshop/presentations/08%20EC%20Motors.pdf).
---------------------------------------------------------------------------

    Regarding the EPRI study \65\ referenced in the JCI comment, DOE 
noticed that the power factor impacts are associated with several types 
of loads becoming common in the modern household: Low power factor 
lighting, modern entertainment systems, and electric vehicle chargers, 
as well as HVAC with BPM motors. This reference indicates that the 
power quality issues caused by the BPM motors are a small contributor 
to the total harmonic distortion experienced at the utility level 
compared to all contributing loads. The study indicated that for 
devices with an existing 3rd harmonic resonance, the contribution of 
all new devices would require filtering; however, this correction is 
not attributed to the high penetration of EC motors alone. The BPM's 
third harmonic distortion contributed a 1.5-percent current increase to 
the circuit. The study showed the overall impact on the 3rd, 5th, 7th 
order and included in total harmonic distortion (THD) was within 0.1 
percent of the original harmonic profile applied to the studied feeder. 
In summary, the impact of introducing BPM motors for HVAC under a high 
penetration scenario on a residential line was negligible.
---------------------------------------------------------------------------

    \65\ Sharma, H. M. Rylander, and D. Dorr, Grid Impacts due to 
Increased Penetration of Newer Harmonic Sources, Proceedings of IEEE 
Rural Electric Power Conference (April 2013) pp. B5-1--B5-5 
(Available at: http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=6681854).
---------------------------------------------------------------------------

    With regards to household power quality, furnaces have a minimum 
basic electrical requirement for THD of 5 percent, and individual 
harmonic distortion of 3 percent.66 67 Furnaces supplied 
with voltages with harmonic distortion greater than 8 percent THD may 
not be operated.\68\ The EPRI study, which simulates a harmonic 
spectrum of a large number of BPM-based HVAC, shows that the BPM-
related harmonic distortions are within the 5 percent THD limit, and 
within the 3 percent individual harmonic limit. Therefore, DOE 
concludes the BPM-related harmonic distortions would not cause the 
problems cited by the commenters.
---------------------------------------------------------------------------

    \66\ IEEE Standard 519-1992--IEEE Recommended Practices and 
Requirements for Harmonic Control in Electric Power Systems (April 9 
1993) pp. 1-112 (Available at: http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=210894).
    \67\ Fluke Corporation, Generator power quality and furnaces: 
The effects of harmonic distortion (2009) (Available at: http://support.fluke.com/find-sales/Download/Asset/3497420_6112_ENG_A_W.PDF).
    \68\ Id.
---------------------------------------------------------------------------

    In addition to the analysis described above, DOE used NEMS-BT, 
along with EIA data on the capital cost of various power plant types, 
to estimate the reduction in national expenditures for electricity 
generating capacity due to potential residential furnace fan standards. 
The method used and the results are described in chapter 15 of the 
final rule TSD.

N. Employment Impact Analysis

    Employment impacts from new or amended energy conservation 
standards include direct and indirect impacts. Direct employment 
impacts are any changes in the number of employees of manufacturers of 
the products subject to standards; the MIA addresses those impacts. 
Indirect employment impacts are changes in national employment that 
occur due to the shift in expenditures and capital investment caused by 
the purchase and operation of more-efficient appliances. Indirect 
employment impacts from standards consist of the jobs created or 
eliminated in the national economy due to: (1) Reduced spending by end 
users on energy; (2) reduced spending on new energy supply by the 
utility industry; (3) increased consumer spending on the purchase of 
new products; and (4) the effects of those three factors throughout the 
economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (BLS). BLS regularly publishes its estimates of the 
number of jobs per million dollars of economic activity in different 
sectors of the economy, as well as the jobs created elsewhere in the 
economy by this same economic activity. Data from BLS indicate that 
expenditures in the utility sector generally create fewer jobs (both 
directly and indirectly) than expenditures in other sectors of the 
economy.\69\ There are many reasons for these differences, including 
wage differences and the fact that the utility sector is more capital-
intensive and less labor-intensive than other sectors. Energy 
conservation standards have the effect of reducing consumer utility 
bills. Because reduced consumer expenditures for energy likely lead to 
increased expenditures in other sectors of the economy, the general 
effect of efficiency standards is to shift economic activity from a 
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based 
on the BLS data alone, DOE believes net national employment may 
increase because of shifts in economic activity resulting from energy 
conservation standards for residential furnace fans.
---------------------------------------------------------------------------

    \69\ See Bureau of Economic Analysis, ``Regional Multipliers: A 
User Handbook for the Regional Input-Output Modeling System (RIMS 
II),'' U.S. Department of Commerce (1992).
---------------------------------------------------------------------------

    For the standard levels considered in today's document, DOE 
estimated indirect national employment impacts using an input/output 
model of the U.S. economy called Impact of Sector Energy Technologies 
version 3.1.1 (ImSET).\70\ ImSET is a special-purpose version of the 
``U.S. Benchmark National Input-Output'' (I-O) model, which was 
designed to estimate the national employment and income effects of 
energy-saving technologies. The ImSET software includes a computer-
based I-O model having structural coefficients that characterize 
economic flows among the 187 sectors. ImSET's national economic I-O 
structure is based on a 2002 U.S. benchmark table, specially aggregated 
to the 187 sectors most relevant to industrial, commercial, and 
residential building energy use. DOE notes that ImSET is not a general 
equilibrium forecasting model, and understands the uncertainties 
involved in projecting employment impacts, especially changes in the 
later years of the analysis. Because ImSET does not incorporate price 
changes, the employment effects predicted by ImSET

[[Page 38183]]

may over-estimate actual job impacts over the long run. For the final 
rule, DOE used ImSET only to estimate short-term (2019 and 2024) 
employment impacts.
---------------------------------------------------------------------------

    \70\ J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1: 
Impact of Sector Energy Technologies, PNNL-18412, Pacific Northwest 
National Laboratory (2009) (Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).
---------------------------------------------------------------------------

    For more details on the employment impact analysis, see chapter 16 
of the final rule TSD.

O. Comments on Proposed Standards

    NEEP, CA IOUs, and the Joint Advocates support the selection of 
DOE's proposed trial standard level, given the limited impact on 
furnace fan manufacturers, positive benefits to consumers, and 
substantial energy savings. (NEEP, No. 109 at p. 2; CA IOUs, No. 106 at 
p. 2; Joint Advocates, No. 105 at p. 1)
    A number of stakeholders disagreed with the proposed selection of 
TSL 4. Rheem argued that TSL 4 is not economically justified. (Rheem, 
No. 83 at p. 7) Lennox stated that because TSL 4 likely has costs that 
are understated, and overly optimistic efficiency projections, DOE 
should not pursue TSL 4, and instead adopt standards based on a less-
stringent, less-costly technology. (Lennox, No. 100 at p. 2) EEI 
suggested the adoption of TSL 1 or TSL 2 to conserve energy, minimize 
economic harm to consumers, and minimize the possible negative impacts 
on the electric grid from the motors that would be able to meet the 
proposed standard. (EEI, No. 87 at p. 2)
    DOE has addressed specific issues regarding costs, efficiency 
projections, and possible negative impacts on the electric grid in 
previous parts of section IV of this document. DOE addresses the 
economic justification for today's standards in section V.C of this 
document.
    Southern Company believes that under TSL 4, too large a proportion 
of consumers have net costs. Southern Company would prefer that a 
substantial majority of consumers derive benefits from a proposed rule. 
(Southern Company, No. 85 at p. 3) EEI also stated that a much higher 
percentages of consumers will experience a net cost than is the case 
with many other DOE energy conservation standards. (EEI, No. 87 at p. 
2) The Mercatus Center stated that the proposed rule will confer net 
benefits on a majority of the consumers for only one product class 
(i.e., non-weatherized, non-condensing gas furnace fans). It added that 
the aggregate financial benefits to consumers are not spread uniformly 
over the population, but instead are mostly concentrated in a minority 
of households. (Mercatus Center, No. 82 at p. 7)
    As shown in Table V.31 of today's final rule, more consumers would 
have a net benefit from standards at TSL 4 than would have a net cost 
for all of the considered product classes. For the two largest product 
classes (non-weatherized non-condensing gas furnace fans and non-
weatherized condensing gas furnace fans), nearly twice as many 
consumers would have a net benefit from standards at TSL 4 as would 
have a net cost.
    The Mercatus Center stated that seven out of eight proposed 
standards at TSL 4 fail the rebuttable payback period benchmark, 
thereby making it difficult for DOE to demonstrate economic 
justification for the proposed rule. (Mercatus Center, No. 82 at p. 6) 
In response, the commenter has misinterpreted the role of the 
rebuttable payback period presumption. As discussed in section III.E.2, 
EPCA provides that a rebuttable presumption is established that an 
energy conservation standard is economically justified if the 
additional cost to the consumer of a product that meets the standard is 
less than three times the value of the first year's energy savings 
resulting from the standard, as calculated under the applicable DOE 
test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) To determine economic 
justification, DOE routinely conducts an analysis that considers the 
full range of impacts, including those to consumers, manufacturers, the 
Nation, and the environment, as required under 42 U.S.C. 
6295(o)(2)(B)(i). The results of this analysis serve as the basis for 
DOE to definitively evaluate the economic justification for a potential 
standard level, thereby supporting or rebutting the results of any 
preliminary determination of economic justification.
    Rheem and Miller stated that the proposed standard may act as a 
transfer payment from lower-income households, who are more likely to 
bear net costs as a result of this rule, to higher-income households; 
and that higher-priced furnace fans resulting from this rule will be 
out of reach for some consumers. They stated that these distributive 
impacts necessitate close scrutiny from the Department in order to 
determine whether the proposed standards will actually improve social 
welfare. (Rheem, No. 83 at p. 14; Miller, No. 79 at p. 14)
    DOE's consumer subgroup analysis indicates that, for non-
weatherized gas furnace fans, lower-income households would have 
positive average LCC savings and median PBPs less than five years (see 
section V.B.1). Furthermore, many lower-income households rent rather 
than own their dwelling, and are responsible for utility bills but not 
for purchase of a furnace. To the extent that there is delay in the 
landlords' passing of extra costs into the rent, consumers that rent 
will benefit more those who own, all else being equal.
    Ingersoll Rand stated that promulgating a rule at TSL4 would force 
the future generation of furnaces sold in the U.S. to be less reliable 
than many of those on the market today as a result of eliminating PSC 
motors from the market. (Ingersoll Rand, No. 107 at p. 7) DOE notes 
that furnace fans meeting today's standards are already widely 
available as a substitute for units with baseline motors. DOE evaluated 
issues related to reliability, as discussed in section IV.F.2, and 
concluded that the benefits to consumers outweigh any costs related to 
reliability that may be associated with products meeting the standards.

V. Analytical Results and Conclusions

    This section addresses the results from DOE's analyses with respect 
to potential energy conservation standards for residential furnace 
fans. It addresses the TSLs examined by DOE, the projected impacts of 
each of these levels if adopted as energy conservation standards for 
furnace fans, and the standard levels ultimately adopted by DOE in 
today's final rule. Additional details regarding DOE's analyses are 
contained in the TSD supporting this document.

A. Trial Standard Levels

    DOE developed trial standard levels (TSLs) that combine efficiency 
levels for each product class of residential furnace fans. Table V.1 
presents the efficiency levels for each product class in each TSL. TSL 
6 consists of the max-tech efficiency levels. TSL 5 consists of those 
efficiency levels that provide the maximum NPV using a 7-percent 
discount rate (see section V.B.3 for NPV results). TSL 4 consists of 
those efficiency levels that provide the highest NPV using a 7-percent 
discount rate, and that also result in a higher percentage of consumers 
that receive an LCC benefit than experience an LCC loss (see section 
V.B.1 for LCC results). TSL 3 uses efficiency level 3 for all product 
classes. TSL 2 consists of efficiency levels that are the same as TSL 3 
for non-weatherized gas furnace fans, weatherized gas furnace fans, and 
electric furnace fans, but are at efficiency level 1 for oil-fired 
furnace fans and mobile home furnace fans. TSL 1 consists of the most 
common efficiency levels in the current market. In summary, Table V.1 
presents the six TSLs which DOE has identified for residential furnace 
fans, including the efficiency level associated with each

[[Page 38184]]

TSL, the technology options anticipated to achieve those levels, and 
the expected resulting percentage reduction in FER from the baseline 
corresponding to each efficiency level.

                          Table V.1--Trial Standard Levels for Residential Furnace Fans
----------------------------------------------------------------------------------------------------------------
                                                           Trial standard levels (Efficiency level) *
                 Product class                 -----------------------------------------------------------------
                                                    1          2          3          4          5          6
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace             1          3          3          4          4          6
 Fan..........................................
Non-Weatherized, Condensing Gas Furnace Fan...          1          3          3          4          4          6
Weatherized Non-Condensing Gas Furnace Fan....          1          3          3          4          4          6
Non-Weatherized, Non-Condensing Oil Furnace             1          1          3          1          3          6
 Fan..........................................
Non-Weatherized Electric Furnace/Modular                1          3          3          4          4          6
 Blower Fan...................................
Mobile Home Non-Weatherized, Non-Condensing             1          1          3          1          3          6
 Gas Furnace Fan..............................
Mobile Home Non-Weatherized, Condensing Gas             1          1          3          1          3          6
 Furnace Fan..................................
Mobile Home Electric Furnace/Modular Blower             1          1          3          4          4          6
 Fan..........................................
----------------------------------------------------------------------------------------------------------------
* Efficiency level (EL) 1 = Improved PSC (12 percent). (For each EL, the percentages given refer to percent
  reduction in FER from the baseline level.) EL 2 = Inverter-driven PSC (25 percent). EL 3 = Constant-torque BPM
  motor (38 percent). EL 4 = Constant-torque BPM motor + Multi-Staging (51 percent). EL 5 = Constant-airflow BPM
  motor (57 percent). EL 6 = Constant-airflow BPM motor + Multi-Staging (61 percent).

B. Economic Justification and Energy Savings

1. Economic Impacts on Consumers
Life-Cycle Cost and Payback Period
    To evaluate the economic impact of the considered efficiency levels 
on consumers, DOE conducted an LCC analysis for each efficiency level. 
More-efficient residential furnace fans would affect these consumers in 
two ways: (1) Annual operating expense would decrease; and (2) purchase 
price would increase. Inputs used for calculating the LCC include total 
installed costs (i.e., equipment price plus installation costs), 
operating expenses (i.e., energy costs, repair costs, and maintenance 
costs), product lifetime, and discount rates.
    The output of the LCC model is a mean LCC savings (or cost) for 
each product class, relative to the base-case efficiency distribution 
for residential furnace fans. The LCC analysis also provides 
information on the percentage of consumers for whom an increase in the 
minimum efficiency standard would have a positive impact (net benefit), 
a negative impact (net cost), or no impact.
    DOE also performed a PBP analysis as part of the LCC analysis. The 
PBP is the number of years it would take for the consumer to recover 
the increased costs of higher-efficiency products as a result of energy 
savings based on the operating cost savings. The PBP is an economic 
benefit-cost measure that uses benefits and costs without discounting. 
Chapter 8 of the final rule TSD provides detailed information on the 
LCC and PBP analyses.
    DOE's LCC and PBP analyses provide five key outputs for each 
efficiency level above the baseline, as reported in Table V.2 through 
Table V.9 for the considered TSLs. (Results for all efficiency levels 
are reported in chapter 8 of the final rule TSD.) These outputs include 
the proportion of residential furnace fan purchases in which the 
purchase of a furnace fan compliant with the new energy conservation 
standard creates a net LCC increase, no impact, or a net LCC savings 
for the consumer. Another output is the average LCC savings from 
standards-compliant products, as well as the median PBP for the 
consumer investment in standards-compliant products. Savings are 
measured relative to the base-case efficiency distribution (see section 
IV.F.4), not the baseline efficiency level.

                                   Table V.2--LCC and PBP Results for Non-Weatherized, Non-Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Life-cycle cost 2013$                   Life-cycle cost savings
                                                            ----------------------------------------------------------------------------------
                                                                                                                 Percent of consumers that       Median
           Efficiency level                     TSL                        Discounted               Average              experience             payback
                                                              Installed     operating      LCC      savings  ---------------------------------   period
                                                                 cost         cost                   2013$                             Net       years
                                                                                                               Net cost  No impact   benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..............................  ...................         $347        $2,194     $2,541         $0          0        100          0  .........
1.....................................  1..................          359         1,933      2,292         85          1         68         30        1.1
2.....................................  ...................          408         1,655      2,063        263         25         25         50        3.8
3.....................................  2, 3...............          423         1,367      1,791        471         17         25         58        2.6
4.....................................  4, 5...............          501         1,249      1,750        506         30         14         56        5.4
5.....................................  ...................          658         1,244      1,902        373         47         12         41       10.6
6.....................................  6..................          694         1,150      1,844        431         50          0         50       10.2
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 38185]]


                                     Table V.3--LCC and PBP Results for Non-Weatherized, Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Life-cycle cost 2013$                   Life-cycle cost savings
                                                            ----------------------------------------------------------------------------------
                                                                                                                 Percent of consumers that       Median
           Efficiency level                     TSL                        Discounted               Average              experience             payback
                                                              Installed     operating      LCC      savings  ---------------------------------   period
                                                                 cost         cost                   2013$                             Net       years
                                                                                                               Net cost  No impact   benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..............................  ...................         $343        $2,134     $2,478         $0          0        100          0  .........
1.....................................  1..................          355         1,909      2,264         58          1         75         24        1.2
2.....................................  ...................          403         1,666      2,070        182         21         41         38        4.2
3.....................................  2, 3...............          416         1,402      1,818        335         11         41         48        2.9
4.....................................  4, 5...............          493         1,319      1,812        341         23         34         43        5.8
5.....................................  ...................          652         1,334      1,987        219         42         29         30       12.0
6.....................................  6..................          687         1,250      1,937        268         51          0         49       11.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                     Table V.4--LCC and PBP Results for Weatherized, Non-Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Life-cycle cost 2013$                   Life-cycle cost savings
                                                            ----------------------------------------------------------------------------------
                                                                                                                 Percent of consumers that       Median
           Efficiency level                     TSL                        Discounted               Average              experience             payback
                                                              Installed     operating      LCC      savings  ---------------------------------   period
                                                                 cost         cost                   2013$                             Net       years
                                                                                                               Net cost  No Impact   benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..............................  ...................         $333        $2,667     $3,000         $0          0        100          0  .........
1.....................................  1..................          345         2,329      2,674         67          0         81         19        0.7
2.....................................  ...................          393         2,025      2,418        189          8         56         36        3.2
3.....................................  2, 3...............          406         1,609      2,015        378          3         56         41        1.8
4.....................................  4, 5...............          481         1,434      1,914        447         16         33         51        4.4
5.....................................  ...................          633         1,476      2,109        304         38         27         35       10.3
6.....................................  6..................          668         1,354      2,022        391         41          0         59        8.2
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                   Table V.5--LCC and PBP Results for Non-Weatherized, Non-Condensing Oil Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Life-cycle cost 2013$                   Life-cycle cost savings
                                                            ----------------------------------------------------------------------------------
                                                                                                                 Percent of consumers that       Median
           Efficiency level                     TSL                        Discounted               Average              experience             payback
                                                              Installed     operating      LCC      savings  ---------------------------------   period
                                                                 cost         cost                   2013$                             Net       years
                                                                                                               Net cost  No impact   benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..............................  ...................         $417        $2,510     $2,927         $0          0        100          0  .........
1.....................................  1, 2, 4............          427         2,356      2,783         46         13         71         17        1.7
2.....................................  ...................          501         2,090      2,592        181         46         28         26       10.3
3.....................................  3, 5...............          507         1,979      2,486        259         44         28         28        4.6
4.....................................  ...................          589         1,920      2,509        244         48         28         24        8.1
5.....................................  ...................          813         1,922      2,736         80         56         28         16       18.3
6.....................................  6..................          863         1,873      2,736         80         78          0         22       18.6
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                 Table V.6--LCC and PBP Results for Non-Weatherized Electric Furnace/Modular Blower Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Life-cycle cost 2013$                   Life-cycle cost savings
                                                            ----------------------------------------------------------------------------------
                                                                                                                 Percent of consumers that       Median
           Efficiency level                     TSL                        Discounted               Average              experience             payback
                                                              Installed     operating      LCC      savings  ---------------------------------   period
                                                                 cost         cost                   2013$                             Net       years
                                                                                                               Net cost  No impact   benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..............................  ...................         $244        $1,211     $1,455         $0          0        100          0  .........
1.....................................  1..................          255         1,079      1,335         29          4         73         22        1.9
2.....................................  ...................          299           941      1,241         88         27         37         36        6.2
3.....................................  2, 3...............          292           797      1,089        181         17         37         45        2.6
4.....................................  4, 5...............          309           747      1,055        204         23         25         51        3.2
5.....................................  ...................          444           796      1,240         66         48         25         27       12.0
6.....................................  6..................          477           748      1,225         81         60          0         39       11.5
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 38186]]


                             Table V.7--LCC and PBP Results for Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Life-cycle cost 2013$                   Life-cycle cost savings
                                                            ----------------------------------------------------------------------------------
                                                                                                                 Percent of consumers that       Median
           Efficiency level                     TSL                        Discounted               Average              experience             payback
                                                              Installed     operating      LCC      savings  ---------------------------------   period
                                                                 cost         cost                   2013$                             Net       years
                                                                                                               Net cost  No impact   benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..............................  ...................         $256        $1,118     $1,374         $0          0        100          0  .........
1.....................................  1, 2, 4............          268         1,026      1,293         36         10         56         34        2.7
2.....................................  ...................          313           930      1,243         87         62          0         38       10.2
3.....................................  3, 5...............          318           867      1,185        144         55          0         45        6.8
4.....................................  ...................          390           831      1,222        108         67          0         33       12.7
5.....................................  ...................          530           853      1,383       (54)         81          0         19       24.3
6.....................................  6..................          563           824      1,388       (58)         80          0         20       24.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                               Table V.8--LCC and PBP Results for Mobile Home Non-Weatherized, Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Life-cycle cost 2013$                   Life-cycle cost savings
                                                            ----------------------------------------------------------------------------------
                                                                                                                 Percent of consumers that       Median
           Efficiency level                     TSL                        Discounted               Average              experience             payback
                                                              Installed     operating      LCC      savings  ---------------------------------   period
                                                                 cost         cost                   2013$                             Net       years
                                                                                                               Net cost  No impact   benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..............................  ...................         $274        $1,283     $1,556         $0          0        100          0  .........
1.....................................  1, 2, 4............          285         1,170      1,454         35          5         68         27        2.3
2.....................................  ...................          330         1,061      1,391         79         43         29         28        9.7
3.....................................  3, 5...............          339           977      1,316        133         37         29         33        6.6
4.....................................  ...................          411           936      1,347        103         66          4         29       15.8
5.....................................  ...................          558           953      1,510       (53)         80          4         16       33.3
6.....................................  6..................          591           917      1,508       (51)         82          0         18       31.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                                   Table V.9--LCC and PBP Results for Mobile Home Electric Furnace/Modular Blower Fan
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Life-cycle cost 2013$                   Life-cycle cost savings
                                                            ----------------------------------------------------------------------------------
                                                                                                                 Percent of consumers that       Median
           Efficiency level                     TSL                        Discounted               Average              experience             payback
                                                              Installed     operating      LCC      savings  ---------------------------------   period
                                                                 cost         cost                   2013$                             Net       years
                                                                                                               Net cost  No impact   benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..............................  ...................         $194          $643       $837         $0          0        100          0  .........
1.....................................  1, 2...............          204           575        778         19          7         71         22        2.1
2.....................................  ...................          245           531        777         20         36         38         26        8.9
3.....................................  3..................          237           466        702         70         26         38         37        3.6
4.....................................  4, 5...............          251           433        685         85         32         26         43        4.1
5.....................................  ...................          375           487        862       (48)         57         26         18       15.0
6.....................................  6..................          406           462        868       (54)         75          0         25       14.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

Consumer Subgroup Analysis
    DOE estimated the impacts of the considered efficiency levels 
(TSLs) on the following consumer subgroups: (1) Senior-only households; 
and (2) low-income households. The results of the consumer subgroup 
analysis indicate that for residential furnace fans, senior-only 
households and low-income households experience lower average LCC 
savings and longer payback periods than consumers overall, with the 
difference being larger for low-income households. The difference 
between the two subgroups and all consumers is larger for non-
weatherized, non-condensing gas furnace fans (see Table V.10) than for 
non-weatherized, condensing gas furnace fans (see Table V.11). Chapter 
11 of the final rule TSD provides more detailed discussion on the 
consumer subgroup analysis and results for the other product classes.

[[Page 38187]]



              Table V.10--Comparison of Impacts for Consumer Subgroups With All Consumers, Non-Weatherized, Non-Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Average life-cycle cost savings (2013$)                    Median payback period (years)
                                             -----------------------------------------------------------------------------------------------------------
              Efficiency level                                                                            All                                    All
                                                           TSL              Senior-only   Low-income   consumers   Senior-only   Low-income   consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...........................................  1...........................          $65          $48          $85          1.6          1.7          1.1
2...........................................  ............................          209          133          263          5.2          6.3          3.8
3...........................................  2, 3........................          366          251          471          3.7          3.6          2.6
4...........................................  4, 5........................          373          234          506          7.6          7.8          5.4
5...........................................  ............................          226           77          373         14.5         15.9         10.6
6...........................................  6...........................          264           96          431         13.7         15.3         10.2
--------------------------------------------------------------------------------------------------------------------------------------------------------


                Table V.11--Comparison of Impacts for Consumer Subgroups With All Consumers, Non-Weatherized, Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Average life-cycle cost savings (2013$)                    Median payback period (years)
                                             -----------------------------------------------------------------------------------------------------------
              Efficiency level                                                                            All                                    All
                                                           TSL              Senior-only   Low-income   consumers   Senior-only   Low-income   consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...........................................  1...........................          $49          $38          $58          1.5          2.0          1.2
2...........................................  ............................          155          121          182          5.5          7.1          4.2
3...........................................  2, 3........................          288          230          335          3.7          4.4          2.9
4...........................................  4, 5........................          275          202          341          7.5          9.7          5.8
5...........................................  ............................          141           66          219         15.4         19.5         12.0
6...........................................  6...........................          178           90          268         12.2         17.0         11.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

Rebuttable Presumption Payback
    As discussed in section III.E.2, EPCA provides a rebuttable 
presumption that, in essence, an energy conservation standard is 
economically justified if the increased purchase cost for a product 
that meets the standard is less than three times the value of the 
first-year energy savings resulting from the standard. However, DOE 
routinely conducts a full economic analysis that considers the full 
range of impacts, including those to the consumer, manufacturer, 
Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). 
The results of this analysis serve as the basis for DOE to definitively 
evaluate the economic justification for a potential standard level, 
thereby supporting or rebutting the results of any preliminary 
determination of economic justification. For comparison with the more 
detailed analytical results, DOE calculated a rebuttable presumption 
payback period for each TSL. Table V.12 shows the rebuttable 
presumption payback results to determine whether any of them meet the 
rebuttable presumption conditions for the residential furnace fans 
product classes.

         Table V.12--Rebuttable Presumption Payback Periods for Residential Furnace Fan Product Classes
----------------------------------------------------------------------------------------------------------------
                                                             Rebuttable presumption payback (years)
                 Product class                 -----------------------------------------------------------------
                                                  TSL 1      TSL 2      TSL 3      TSL 4      TSL 5      TSL 6
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace           3.3        5.3        5.3       10.3       10.3       19.4
 Fan..........................................
Non-Weatherized, Condensing Gas Furnace Fan...        3.1        4.9        4.9        9.6        9.6       18.2
Weatherized Non-Condensing Gas Furnace Fan....        3.0        4.8        4.8        9.4        9.4       17.6
Non-Weatherized, Non-Condensing Oil Furnace           2.3        2.3        5.9        2.3        5.9       19.8
 Fan..........................................
Non-Weatherized Electric Furnace/Modular              3.2        5.1        5.1        5.8        5.8       15.4
 Blower Fan...................................
Mobile Home Non-Weatherized, Non-Condensing           3.8        3.8        6.1        3.8        6.1       22.1
 Gas Furnace Fan..............................
Mobile Home Non-Weatherized, Condensing Gas           3.5        3.5        5.7        3.5        5.7       20.9
 Furnace Fan..................................
Mobile Home Electric Furnace/Modular Blower           4.3        4.3        6.8        7.7        7.7       20.2
 Fan..........................................
----------------------------------------------------------------------------------------------------------------

2. Economic Impact on Manufacturers
    As noted above, DOE performed an MIA to estimate the impact of new 
energy conservation standards on manufacturers of residential furnace 
fans. The following section describes the expected impacts on 
manufacturers at each considered TSL. Chapter 12 of the final rule TSD 
explains the analysis in further detail.
Industry Cash-Flow Analysis Results
    Table V.13 and Table V.14 depict the financial impacts (represented 
by changes in INPV) of new energy standards on manufacturers of 
residential furnace fans, as well as the conversion costs that DOE 
expects manufacturers would incur for all product classes at each TSL. 
To evaluate the range of cash flow impacts on the residential furnace 
fans industry, DOE modeled two different mark-up scenarios using 
different assumptions that correspond to the range of anticipated 
market responses to potential new energy conservation standards: (1) 
The preservation of gross

[[Page 38188]]

margin percentage; and (2) the preservation of per-unit operating 
profit. Each of these scenarios is discussed immediately below.
    To assess the lower (less severe) end of the range of potential 
impacts, DOE modeled a preservation of gross margin percentage markup 
scenario, in which a uniform ``gross margin percentage'' markup is 
applied across all potential efficiency levels. In this scenario, DOE 
assumed that a manufacturer's absolute dollar markup would increase as 
production costs increase in the standards case.
    To assess the higher (more severe) end of the range of potential 
impacts, DOE modeled the preservation of per-unit operating profit 
markup scenario, which assumes that manufacturers would be able to earn 
the same operating margin in absolute dollars per-unit in the standards 
case as in the base case. In this scenario, while manufacturers make 
the necessary investments required to convert their facilities to 
produce new standards-compliant products, operating profit does not 
change in absolute dollars per unit and decreases as a percentage of 
revenue.
    The set of results below shows potential INPV impacts for 
residential furnace fan manufacturers; Table V.13 reflects the lower 
bound of impacts, and Table V.14 represents the upper bound.
    Each of the modeled scenarios results in a unique set of cash flows 
and corresponding industry values at each TSL. In the following 
discussion, the INPV results refer to the difference in industry value 
between the base case and each standards case that results from the sum 
of discounted cash flows from the base year 2014 through 2048, the end 
of the analysis period. To provide perspective on the short-run cash 
flow impact, DOE includes in the discussion of the results below a 
comparison of free cash flow between the base case and the standards 
case at each TSL in the year before new standards would take effect. 
This figure provides an understanding of the magnitude of the required 
conversion costs relative to the cash flow generated by the industry in 
the base case.

            Table V.13--Manufacturer Impact Analysis for Residential Furnace Fans--Preservation of Gross Margin Percentage Markup Scenario *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Trial standard level
                                                           Units             Base case -----------------------------------------------------------------
                                                                                            1          2          3          4          5          6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..........................................  $M.........................      349.6      336.6      360.0      359.1      397.8      397.6      422.4
Change in INPV................................  $M.........................  .........     (13.0)       10.4        9.4       48.2       48.0       72.8
                                                (%)........................  .........      (3.7)        3.0        2.7       13.8       13.7       20.8
Product Conversion Costs......................  $M.........................        2.2       18.8       23.6       25.3       25.5       27.1       29.4
Capital Conversion Costs......................  $M.........................  .........        8.8       11.1       11.8       15.1       15.7      134.7
Total Conversion Costs........................  $M.........................        2.2       27.7       34.7       37.1       40.6       42.8      164.2
Free Cash Flow (2018).........................  $M.........................       20.3       11.3        8.8        8.0        6.4        5.6     (48.6)
Free Cash Flow (change from Base Case) (2018).  %..........................        0.0     (44.5)     (56.7)     (60.8)     (68.3)     (72.2)    (339.8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. All values have been rounded to the nearest tenth.
M = millions.


                Table V.14--Manufacturer Impact Analysis for Residential Furnace Fans--Preservation of Operating Profit Markup Scenario *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Trial standard level
                                                           Units             Base case -----------------------------------------------------------------
                                                                                            1          2          3          4          5          6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..........................................  $M.........................      349.6      332.3      313.2      311.0      290.6      288.8      147.2
Change in INPV................................  $M.........................  .........     (17.3)     (36.4)     (38.6)     (59.0)     (60.8)    (202.5)
                                                (%)........................  .........      (5.0)     (10.4)     (11.0)     (16.9)     (17.4)     (57.9)
Product Conversion Costs......................  $M.........................        2.2       18.8       23.6       25.3       25.5       27.1       29.4
Capital Conversion Costs......................  $M.........................  .........        8.8       11.1       11.8       15.1       15.7      134.7
Total Conversion Costs........................  $M.........................        2.2       27.7       34.7       37.1       40.6       42.8      164.2
Free Cash Flow................................  $M.........................       20.3       11.3        8.8        8.0        6.4        5.6     (48.6)
Free Cash Flow (change from Base Case)........  %..........................        0.0     (44.5)     (56.7)     (60.8)     (68.3)     (72.2)    (339.8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. All values have been rounded to the nearest tenth.
M = millions.

    TSL 1 represents the most common efficiency levels in the current 
market for all product classes. At TSL 1, DOE estimates impacts on INPV 
for residential furnace fan manufacturers to range from -$17.3 million 
to -$13.0 million, or a change in INPV of -5.0 percent to -3.7 percent. 
At this potential standard level, industry free cash flow is estimated 
to decrease by as much as 44.5 percent to $11.3 million, compared to 
the base-case value of $20.3 million in the year before the compliance 
date (2018). DOE anticipates industry conversion costs totaling $27.7 
million at TSL 1.
    TSL 2 represents EL 1 for the oil and mobile home product classes, 
and EL 3 for all other product classes. At TSL 2, DOE estimates impacts 
on INPV for residential furnace fan manufacturers to range from -$36.4 
million to $10.4 million, or a change in INPV of -10.4 percent to 3.0 
percent. At this potential standard level, industry free cash flow is 
estimated to decrease by as much as 56.7 percent to $8.8 million, 
compared to the base-case value of $20.3 million in the year before the 
compliance date (2018). DOE anticipates industry conversion costs of 
$34.7 million at TSL 2.
    TSL 3 represents EL 3 for all product classes. At TSL 3, DOE 
estimates impacts on INPV for residential furnace fan manufacturers to 
range from -$38.6 million to $9.4 million, or a change in INPV of -11.0 
percent to 2.7 percent. At this potential standard level,

[[Page 38189]]

industry free cash flow is estimated to decrease by as much as 60.8 
percent to $8.0 million, compared to the base-case value of $20.3 
million in the year before the compliance date (2018). DOE anticipates 
industry conversion costs of $37.1 million at TSL 3.
    TSL 4 represents the efficiency levels that provide the highest NPV 
using a 7-percent discount rate, and that also result in a higher 
percentage of consumers receiving an LCC benefit rather than an LCC 
loss. At TSL 4, DOE estimates impacts on INPV for residential furnace 
fan manufacturers to range from -$59.0 million to $48.2 million, or a 
change in INPV of -16.9 percent to 13.8 percent. At this potential 
standard level, industry free cash flow is estimated to decrease by as 
much as 68.3 percent to $6.4 million, compared to the base-case value 
of $20.3 million in the year before the compliance date (2018). DOE 
anticipates industry conversion costs totaling $40.6 million at TSL 4.
    TSL 5 represents the efficiency levels that provide the maximum NPV 
using a 7-percent discount rate. At TSL 5, DOE estimates impacts on 
INPV for residential furnace fan manufacturers to range from -$60.8 
million to $48.0 million, or a change in INPV of -17.4 percent to 13.7 
percent. At this potential standard level, industry free cash flow is 
estimated to decrease by as much as 72.2 percent to $5.6 million, 
compared to the base-case value of $20.3 million in the year before the 
compliance date (2018). DOE anticipates industry conversion costs of 
$42.8 million at TSL 5.
    TSL 6 represents the max-tech efficiency level for all product 
classes. At TSL 6, DOE estimates impacts on INPV for residential 
furnace fan manufacturers to range from -$202.5 million to $72.8 
million, or a change in INPV of -57.9 percent to 20.8 percent. At this 
potential standard level, industry free cash flow is estimated to 
decrease by as much as 339.8 percent to -$48.6 million, compared to the 
base-case value of $20.3 million in the year before the compliance date 
(2018). DOE anticipates industry conversion costs totaling $164.2 
million at TSL 6.
    DOE anticipates very high capital conversion costs at TSL 6 because 
manufacturers would need to make significant changes to their 
manufacturing equipment and production processes in order to 
accommodate the use of backward-inclined impellers. This design option 
would require modifying, or potentially eliminating, current fan 
housings. DOE also anticipates high product conversion costs to develop 
new designs with backward-inclined impellers for all their products. 
Some manufacturers may also have stranded assets from specialized 
machines for building fan housing that can no longer be used.
Impacts on Employment
    To quantitatively assess the impacts of energy conservation 
standards on direct employment in the residential furnace fan industry, 
DOE used the GRIM to estimate the domestic labor expenditures and 
number of employees in the base case and at each TSL from 2014 through 
2048. DOE used statistical data from the U.S. Census Bureau's 2011 
Annual Survey of Manufacturers (ASM),\71\ the results of the 
engineering analysis, and interviews with manufacturers to determine 
the inputs necessary to calculate industry-wide labor expenditures and 
domestic employment levels. Labor expenditures related to manufacturing 
of the product are a function of the labor intensity of the product, 
the sales volume, and an assumption that wages remain fixed in real 
terms over time. The total labor expenditures in each year are 
calculated by multiplying the MPCs by the labor percentage of MPCs.
---------------------------------------------------------------------------

    \71\ ``Annual Survey of Manufactures (ASM),'' U.S. Census Bureau 
(2011) (Available at: http://www.census.gov/manufacturing/asm/).
---------------------------------------------------------------------------

    The total labor expenditures in the GRIM were then converted to 
domestic production employment levels by dividing production labor 
expenditures by the annual payment per production worker (production 
worker hours times the labor rate found in the U.S. Census Bureau's 
2011 ASM). The estimates of production workers in this section cover 
workers, including line-supervisors who are directly involved in 
fabricating and assembling a product within the manufacturing facility. 
Workers performing services that are closely associated with production 
operations, such as materials handling tasks using forklifts, are also 
included as production labor. DOE's estimates only account for 
production workers who manufacture the specific products covered by 
this rulemaking.
    The total direct employment impacts calculated in the GRIM are the 
sum of the changes in the number of production workers resulting from 
the new energy conservation standards for residential furnace fans, as 
compared to the base case.

                                 Table V.15--Potential Changes in the Number of Furnace Fan Industry Employment in 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Trial standard level *
                                ------------------------------------------------------------------------------------------------------------------------
                                  Base case         1                2               3                 4                   5                   6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic                303  303............  303...........  303...........  301...............  301...............  349.
 Production Workers in 2019
 (assuming no changes in
 production locations).
Total Number of Domestic Non-           107  107............  107...........  107...........  106...............  106...............  123.
 Production Workers in 2019.
Range of Potential Changes in    ..........  (410) to 0.....  (410) to 0....  (410) to 0....  (410) to (3)......  (410) to (3)......  (410) to 62.
 Domestic Workers in 2019 **.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses represent negative values.
** DOE presents a range of potential employment impacts, where the lower range represents the scenario in which all domestic manufacturers move
  production to other countries.

    The employment impacts shown in Table V.15 represent the potential 
production and non-production employment changes that could result 
following the compliance date of a new energy conservation standard for 
residential furnace fans. The upper end of the results in the table 
estimates the maximum increase in the number of production and non-
production workers after the implementation of new energy conservation 
standards, and it assumes

[[Page 38190]]

that manufacturers would continue to produce the same scope of covered 
products within the United States. The lower end of the range indicates 
the total number of U.S. production and non-production workers in the 
industry who could lose their jobs if all existing production were 
moved outside of the United States or if companies exited the market. 
This scenario is highly conservative. Even if all production was 
relocated overseas, manufacturers would likely maintain large portions 
of domestic non-production staff (e.g., sales, marketing, technical, 
and management employees). The industry did not provide sufficient 
information for DOE fully quantify the percentage of the non-production 
workers that would leave the country or be eliminated at each evaluated 
standard level.
    For residential furnace fans, DOE does not expect significant 
changes in domestic employment levels from baseline to TSL 5. Based on 
the engineering analysis, DOE has concluded that most product lines 
could be converted to meet the standard with changes in motor 
technology and the application of multi-staging designs. While such 
designs require more controls and have more complex assembly, DOE does 
not believe the per-unit labor requirements for the furnace fan 
assembly would change significantly.
    The only standard level at which significant changes in employment 
would be expected is at TSL 6, the max-tech level. At TSL 6, DOE 
estimates increases in labor costs because backwards-inclined impeller 
assemblies are heavier and require more robust mounting approaches than 
are currently used for forward-curved impeller assemblies. Backward-
inclined impeller assemblies could require manufacturers to adjust 
their assembly processes, with the potential for increases in per-unit 
labor requirements. However, DOE received limited feedback from 
manufacturers regarding the labor required to produce furnace fans with 
backward-curved impellers, because they generally do not have any 
experience in working with this design option.
    DOE notes that the employment impacts discussed here are 
independent of the indirect employment impacts to the broader U.S. 
economy, which are documented in chapter 15 of the final rule TSD.
Impacts on Manufacturing Capacity
    According to the residential furnace fan manufacturers interviewed, 
the new energy conservation standards being adopted in today's final 
rule would not significantly affect manufacturers' production capacity, 
or throughput levels. Some manufacturers noted in interviews that 
testing resources could potentially be a bottleneck to the conversion 
process and cited the potential need for adding in-house testing 
capacity. However, in written comments, stakeholders generally agreed 
that a five-year lead time between the publication date and compliance 
date is appropriate for this rulemaking.
Impacts on Subgroups of Manufacturers
    Small manufacturers, niche equipment manufacturers, and 
manufacturers exhibiting a cost structure substantially different from 
the industry average could be affected disproportionately. As discussed 
in section IV.J, using average cost assumptions developed for an 
industry cash-flow estimate is inadequate to assess differential 
impacts among manufacturer subgroups.
    For the residential furnace fans industry, DOE identified and 
evaluated the impact of new energy conservation standards on one 
subgroup, specifically small manufacturers. The SBA defines a ``small 
business'' as having 750 employees or less for NAICS 333415, ``Air-
Conditioning and Warm Air Heating Equipment and Commercial and 
Industrial Refrigeration Equipment Manufacturing.'' Based on this 
definition, DOE identified 15 manufacturers in the residential furnace 
fans industry that qualify as small businesses. For a discussion of the 
impacts on the small manufacturer subgroup, see the regulatory 
flexibility analysis in section VI.B of this notice and chapter 12 of 
the final rule TSD.
Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of recent or impending regulations 
may have serious consequences for some manufacturers, groups of 
manufacturers, or an entire industry. Assessing the impact of a single 
regulation may overlook this cumulative regulatory burden. In addition 
to energy conservation standards, other regulations can significantly 
affect manufacturers' financial operations. Multiple regulations 
affecting the same manufacturer can strain profits and lead companies 
to abandon product lines or markets with lower expected future returns 
than competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    During previous stages of this rulemaking, DOE identified a number 
of requirements in addition to new energy conservation standards for 
residential furnace fans. The following section briefly summarizes 
those identified regulatory requirements and addresses comments DOE 
received with respect to cumulative regulatory burden, as well as other 
key related concerns that manufacturers raised during interviews.
    While the cumulative regulatory burden analysis contained in the 
NOPR reflects manufacturers' concerns regarding CC&E costs, DOE has 
decided to exclude CC&E costs from the cumulative burden analysis for 
the final rule. The furnace fan test procedure changed from the NOPR to 
the final rule. Much of the concern relating to CC&E costs expressed by 
stakeholders, and summarized in the NOPR, had to do with the old test 
procedure. The new test procedure reduces burden substantially. Also, 
for the final rule, CC&E costs have been explicitly incorporated into 
product conversion costs inputted into the GRIM, so they are no longer 
considered separately in the cumulative regulatory burdens section.
DOE Energy Conservation Standards
    Companies that produce a wide range of regulated products and 
equipment may face more capital and product development expenditures 
than competitors with a narrower scope of products and equipment. Many 
furnace fan manufacturers also produce other residential and commercial 
equipment. In addition to the amended energy conservation standards for 
furnace fans, these manufacturers contend with several other Federal 
regulations and pending regulations that apply to other products and 
equipment. DOE recognizes that each regulation can significantly affect 
a manufacturer's financial operations. Multiple regulations affecting 
the same manufacturer can quickly strain manufacturers' profits and 
possibly cause an exit from the market. Table V.16 lists the other DOE 
energy conservation standards that could also affect manufacturers of 
furnace fans in the 3 years leading up to and after the compliance date 
of the new energy conservation standards for this equipment. 
Additionally, at the request of stakeholders, DOE has listed several 
DOE rulemakings in the table below that are currently in process but 
that have not been finalized.

[[Page 38191]]



                      Table V.16--Other DOE Regulations Impacting Furnace Fan Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                          Number of
              Regulation                 Compliance       impacted     Estimated total industry conversion costs
                                            year          companies
----------------------------------------------------------------------------------------------------------------
Commercial Refrigeration Equipment...            2017               4  $184.0 million (2012$).
Commercial Packaged Air-Conditioning           * 2018              24  N/A.**
 and Heating Equipment.
Commercial/Industrial Fans and                 * 2019              29  N/A.**
 Blowers.
Residential Boilers..................          * 2019               9  N/A.**
Residential Non-Weatherized Gas                   n/a              38  N/A.**
 Furnaces.
----------------------------------------------------------------------------------------------------------------
* The dates listed are an approximation. The exact dates are pending final DOE action.
** For energy conservation standards that have not been issued, DOE does not have finalized industry conversion
  cost data available.

EPA ENERGY STAR
    During interviews, some manufacturers stated that ENERGY STAR 
specifications for residential furnaces, central air conditioners, and 
heat pumps would be a source of cumulative regulatory burden. ENERGY 
STAR specifications are as follows:

    Table V.17--ENERGY STAR Specifications for HVAC Products That Use
                              Furnace Fans
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Gas Furnaces......................  Rating of 90% AFUE or greater for
                                     U.S. South gas furnaces.
                                    Rating of 95% AFUE or greater for
                                     U.S. North gas furnaces.
                                    Less than or equal to 2.0% furnace
                                     fan efficiency.*
Oil Furnaces......................  Rating of 85% AFUE or greater.
                                    Less than or equal to 2.0% furnace
                                     fan efficiency.*
Air-Source Heat Pumps.............  >= 8.2 HSPF/>= 14.5 SEER/>= 12 EER
                                     for split systems.
                                    >= 8.0 HSPF/>= 14 SEER/>=11 EER for
                                     single-package equipment.
Central Air Conditioners..........  >= 14.5 SEER/>= 12 EER for split
                                     systems.
                                    >= 14 SEER/>=11 EER for single-
                                     package equipment.
------------------------------------------------------------------------
* Furnace fan efficiency in this context is furnace fan electrical
  consumption as a percentage of total furnace energy consumption in
  heating mode.

    DOE realizes that the cumulative effect of several regulations on 
an industry may significantly increase the burden faced by 
manufacturers that need to comply with multiple regulations and 
certification programs from different organizations and levels of 
government. However, DOE notes that certain standards, such as ENERGY 
STAR, are optional for manufacturers. As they are voluntary standards, 
they are not considered by DOE to be part of manufacturers' cumulative 
regulatory burden.
    DOE discusses these and other requirements (e.g., Canadian Energy 
Efficiency Regulations, California Title 24, Low NOX 
requirements), and includes the full details of the cumulative 
regulatory burden analysis, in chapter 12 of the final rule TSD. DOE 
also discusses the impacts on the small manufacturer subgroup in the 
regulatory flexibility analysis in section VI.B of this final rule.
3. National Impact Analysis
Significance of Energy Savings
    For each TSL, DOE projected energy savings for residential furnace 
fans purchased in the 30-year period that begins in the first full year 
of compliance with amended standards (2019-2048). The savings are 
measured over the entire lifetime of products purchased in the 30-year 
period. DOE quantified the energy savings attributable to each TSL as 
the difference in energy consumption between each standards case and 
the base case. Table V.18 presents the estimated primary energy savings 
for each considered TSL, and Table V.19 presents the estimated FFC 
energy savings for each considered TSL. The energy savings in the 
tables below are net savings that reflect the subtraction of the 
additional gas or oil used by the furnace associated with higher-
efficiency furnace fans. The approach for estimating national energy 
savings is further described in section IV.H.1.
    The difference between primary energy savings and FFC energy 
savings for all TSLs is small (less than 1 percent), because the 
upstream energy savings associated with the electricity savings are 
partially or fully offset by the upstream energy use from the 
additional gas or oil used by the furnace due to higher-efficiency 
furnace fans.

  Table V.18--Cumulative National Primary Energy Savings for Trial Standard Levels for Residential Furnace Fans
                                                Sold in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                Trial standard level
           Product class           -----------------------------------------------------------------------------
                                         1            2            3            4            5            6
----------------------------------------------------------------------------------------------------------------
                                                                        quads
                                   -----------------------------------------------------------------------------
Non-Weatherized, Non-Condensing           0.296        1.341        1.341        1.796        1.796        2.426
 Gas Furnace Fan..................
Non-Weatherized, Condensing Gas           0.278        1.188        1.188        1.614        1.614        2.324
 Furnace Fan......................
Weatherized Non-Condensing Gas            0.048        0.224        0.224        0.330        0.330        0.462
 Furnace Fan......................
Non-Weatherized, Non-Condensing           0.006        0.006        0.022        0.006        0.022        0.046
 Oil Furnace Fan..................
Non-Weatherized Electric Furnace/         0.032        0.143        0.143        0.193        0.193        0.264
 Modular Blower Fan...............
Mobile Home Non-Weatherized, Non-         0.009        0.009        0.023        0.009        0.023        0.053
 Condensing Gas Furnace Fan.......

[[Page 38192]]

 
Mobile Home Non-Weatherized,              0.001        0.001        0.003        0.001        0.003        0.008
 Condensing Gas Furnace Fan.......
Mobile Home Electric Furnace/             0.009        0.009        0.030        0.044        0.044        0.055
 Modular Blower Fan...............
                                   -----------------------------------------------------------------------------
    Total--All Classes............        0.679        2.922        2.974        3.994        4.024        5.639
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.


Table V.19--Cumulative National Full-Fuel-Cycle Energy Savings for Trial Standard Levels for Residential Furnace
                                             Fans Sold in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                Trial standard level
           Product class           -----------------------------------------------------------------------------
                                         1            2            3            4            5            6
----------------------------------------------------------------------------------------------------------------
                                                                        quads
                                   -----------------------------------------------------------------------------
Non-Weatherized, Non-Condensing           0.297        1.338        1.338        1.793        1.793        2.428
 Gas Furnace Fan..................
Non-Weatherized, Condensing Gas           0.278        1.176        1.176        1.604        1.604        2.314
 Furnace Fan......................
Weatherized Non-Condensing Gas            0.048        0.225        0.225        0.331        0.331        0.463
 Furnace Fan......................
Non-Weatherized, Non-Condensing           0.006        0.006        0.020        0.006        0.020        0.044
 Oil Furnace Fan..................
Non-Weatherized Electric Furnace/         0.032        0.145        0.145        0.196        0.196        0.268
 Modular Blower Fan...............
Mobile Home Non-Weatherized, Non-         0.009        0.009        0.022        0.009        0.022        0.052
 Condensing Gas Furnace Fan.......
Mobile Home Non-Weatherized,              0.001        0.001        0.003        0.001        0.003        0.008
 Condensing Gas Furnace Fan.......
Mobile Home Electric Furnace/             0.010        0.010        0.030        0.045        0.045        0.056
 Modular Blower Fan...............
    Total--All Classes............        0.680        2.909        2.958        3.986        4.014        5.635
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.

    OMB Circular A-4 \72\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this rulemaking, 
DOE undertook a sensitivity analysis using nine, rather than 30, years 
of product shipments. The choice of a nin-year period is a proxy for 
the timeline in EPCA for the review of certain energy conservation 
standards and potential revision of and compliance with such revised 
standards.\73\ The review timeframe established in EPCA is generally 
not synchronized with the product lifetime, product manufacturing 
cycles, or other factors specific to residential furnace fans. Thus, 
such results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology. The NES 
results based on a 9-year analytical period are presented in Table 
V.20. The impacts are counted over the lifetime of products purchased 
in 2019-2027.
---------------------------------------------------------------------------

    \72\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis'' (Sept. 17, 2003) (Last accessed September 17, 
2013 from http://www.whitehouse.gov/omb/circulars_a004_a-4/.)
    \73\ Section 325(m) of EPCA requires DOE to review its standards 
at least once every 6 years, and requires, for certain products, a 
3-year period after any new standard is promulgated before 
compliance is required, except that in no case may any new standards 
be required within 6 years of the compliance date of the previous 
standards. While adding a 6-year review to the 3-year compliance 
period adds up to 9 years, DOE notes that it may undertake reviews 
at any time within the 6-year period and that the 3-year compliance 
date may yield to the 6-year backstop. A 9-year analysis period may 
not be appropriate given the variability that occurs in the timing 
of standards reviews and the fact that for some consumer products, 
the compliance period is 5 years rather than 3 years.

  Table V.20--Cumulative National Primary Energy Savings for Trial Standard Levels for Residential Furnace Fans
                                                Sold in 2019-2027
----------------------------------------------------------------------------------------------------------------
                                                                Trial standard level
           Product class           -----------------------------------------------------------------------------
                                         1            2            3            4            5            6
----------------------------------------------------------------------------------------------------------------
                                                                        quads
                                   -----------------------------------------------------------------------------
Non-Weatherized, Non-Condensing           0.099        0.454        0.454        0.611        0.611        0.838
 Gas Furnace Fan..................
Non-Weatherized, Condensing Gas           0.075        0.316        0.316        0.429        0.429        0.612
 Furnace Fan......................
Weatherized Non-Condensing Gas            0.016        0.075        0.075        0.108        0.108        0.150
 Furnace Fan......................
Non-Weatherized, Non-Condensing           0.002        0.002        0.009        0.002        0.009        0.020
 Oil Furnace Fan..................
Non-Weatherized Electric Furnace/         0.009        0.043        0.043        0.058        0.058        0.080
 Modular Blower Fan...............

[[Page 38193]]

 
Mobile Home Non-Weatherized, Non-         0.003        0.003        0.007        0.003        0.007        0.018
 Condensing Gas Furnace Fan.......
Mobile Home Non-Weatherized,              0.000        0.000        0.001        0.000        0.001        0.002
 Condensing Gas Furnace Fan.......
Mobile Home Electric Furnace/             0.003        0.003        0.009        0.013        0.013        0.017
 Modular Blower Fan...............
                                   -----------------------------------------------------------------------------
    Total--All Classes............        0.207        0.897        0.914        1.225        1.236        1.737
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.

Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV of the total costs and savings for 
consumers that would result from the TSLs considered for residential 
furnace fans. In accordance with OMB's guidelines on regulatory 
analysis,\74\ DOE calculated NPV using both a 7-percent and a 3-percent 
real discount rate. Table V.21 shows the consumer NPV results for each 
TSL considered for residential furnace fans. In each case, the impacts 
cover the lifetime of products purchased in 2019-2048.
---------------------------------------------------------------------------

    \74\ OMB Circular A-4, section E (Sept. 17, 2003) (Available at: 
http://www.whitehouse.gov/omb/circulars_a004_a-4).

          Table V.21--Cumulative Net Present Value of Consumer Benefit for Trial Standard Levels for Residential Furnace Fans Sold in 2019-2048
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Trial standard level
                        Product class                           Discount  ------------------------------------------------------------------------------
                                                                 rate %         1            2            3            4            5             6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          billion 2013$ *
                                                                          ------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan.............            3        2.150       12.031       12.031       13.309       13.309       11.943
Non-Weatherized, Condensing Gas Furnace Fan.................                     1.842       10.769       10.769       11.444       11.444       10.156
Weatherized Non-Condensing Gas Furnace Fan..................                     0.335        1.849        1.849        2.288        2.288        2.082
Non-Weatherized, Non-Condensing Oil Furnace Fan.............                     0.028        0.028        0.154        0.028        0.154        0.078
Non-Weatherized Electric Furnace/Modular Blower Fan.........                     0.215        1.237        1.237        1.480        1.480        0.615
Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan.                     0.045        0.045        0.171        0.045        0.171       (0.039)
Mobile Home Non-Weatherized, Condensing Gas Furnace Fan.....                     0.007        0.007        0.025        0.007        0.025       (0.005)
Mobile Home Electric Furnace/Modular Blower Fan.............                     0.047        0.047        0.168        0.209        0.209       (0.099)
                                                                          ------------------------------------------------------------------------------
    Total--All Classes......................................                     4.668       26.013       26.403       28.810       29.079       24.731
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan.............            7        0.823        4.502        4.502        4.713        4.713        3.381
Non-Weatherized, Condensing Gas Furnace Fan.................                     0.677        3.856        3.856        3.876        3.876        2.686
Weatherized Non-Condensing Gas Furnace Fan..................                     0.129        0.702        0.702        0.825        0.825        0.604
Non-Weatherized, Non-Condensing Oil Furnace Fan.............                     0.012        0.012        0.061        0.012        0.061        0.006
Non-Weatherized Electric Furnace/Modular Blower Fan.........                     0.078        0.438        0.438        0.515        0.515        0.014
Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan.                     0.017        0.017        0.058        0.017        0.058       (0.071)
Mobile Home Non-Weatherized, Condensing Gas Furnace Fan.....                     0.003        0.003        0.008        0.003        0.008       (0.010)
Mobile Home Electric Furnace/Modular Blower Fan.............                     0.017        0.017        0.054        0.065        0.065       (0.102)
                                                                          ------------------------------------------------------------------------------

[[Page 38194]]

 
    Total--All Classes......................................                     1.754        9.545        9.679       10.024       10.120        6.509
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.22. The impacts are counted over the 
lifetime of products purchased in 2019-2027. As mentioned previously, 
this information is presented for informational purposes only and is 
not indicative of any change in DOE's analytical methodology or 
decision criteria.

          Table V.22--Cumulative Net Present Value of Consumer Benefit for Trial Standard Levels for Residential Furnace Fans Sold in 2019-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Trial standard level
                        Product class                           Discount  ------------------------------------------------------------------------------
                                                                 rate %         1            2            3            4            5             6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          billion 2013$ *
                                                                          ------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan.............            3        0.893        5.028        5.028        5.527        5.527        4.908
Non-Weatherized, Condensing Gas Furnace Fan.................                     0.652        3.784        3.784        4.005        4.005        3.550
Weatherized Non-Condensing Gas Furnace Fan..................                     0.139        0.777        0.777        0.945        0.945        0.864
Non-Weatherized, Non-Condensing Oil Furnace Fan.............                     0.015        0.015        0.082        0.015        0.082        0.064
Non-Weatherized Electric Furnace/Modular Blower Fan.........                     0.080        0.463        0.463        0.549        0.549        0.217
Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan.                     0.019        0.019        0.073        0.019        0.073       (0.012)
Mobile Home Non-Weatherized, Condensing Gas Furnace Fan.....                     0.003        0.003        0.010        0.003        0.010       (0.001)
Mobile Home Electric Furnace/Modular Blower Fan.............                     0.017        0.017        0.061        0.074        0.074       (0.052)
                                                                          ------------------------------------------------------------------------------
    Total--All Classes......................................                     1.819       10.106       10.278       11.137       11.266        9.537
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan.............            7        0.444        2.433        2.433        2.531        2.531        1.799
Non-Weatherized, Condensing Gas Furnace Fan.................                     0.325        1.840        1.840        1.845        1.845        1.290
Weatherized Non-Condensing Gas Furnace Fan..................                     0.070        0.384        0.384        0.446        0.446        0.333
Non-Weatherized, Non-Condensing Oil Furnace Fan.............                     0.008        0.008        0.040        0.008        0.040        0.015
Non-Weatherized Electric Furnace/Modular Blower Fan.........                     0.039        0.220        0.220        0.257        0.257        0.001
Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan.                     0.009        0.009        0.033        0.009        0.033       (0.037)
Mobile Home Non-Weatherized, Condensing Gas Furnace Fan.....                     0.001        0.001        0.004        0.001        0.004       (0.005)
Mobile Home Electric Furnace/Modular Blower Fan.............                     0.008        0.008        0.026        0.031        0.031       (0.059)
                                                                          ------------------------------------------------------------------------------
    Total--All Classes......................................                     0.905        4.904        4.980        5.128        5.186        3.338
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.

    As noted in section IV.H.2, DOE assumed no change in residential 
furnace fan prices over the 2019-2048 period. In addition, DOE 
conducted a sensitivity analysis using alternative price trends: One in 
which prices decline over time, and one in which prices increase over 
time. These price trends, and the NPV results from the associated 
sensitivity cases, are described in appendix 10-C of the final rule 
TSD.
Indirect Impacts on Employment
    DOE expects energy conservation standards for residential furnace 
fans to reduce energy costs for consumers, with the resulting net 
savings being redirected to other forms of economic

[[Page 38195]]

activity. Those shifts in spending and economic activity could affect 
the demand for labor. As described in section IV.N, DOE used an input/
output model of the U.S. economy to estimate indirect employment 
impacts of the TSLs that DOE considered in this rulemaking. DOE 
understands that there are uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Therefore, DOE generated results for near-term time frames 
(2019 and 2024), where these uncertainties are reduced.
    The results suggest that today's standards would be likely to have 
negligible impact on the net demand for labor in the economy. The net 
change in jobs is so small that it would be imperceptible in national 
labor statistics and might be offset by other, unanticipated effects on 
employment. Chapter 16 of the final rule TSD presents more detailed 
results about anticipated indirect employment impacts.
4. Impact on Product Utility or Performance
    DOE has concluded that the standards it is adopting in this final 
rule would not lessen the utility or performance of residential furnace 
fans.
5. Impact of Any Lessening of Competition
    EPCA directs DOE to consider any lessening of competition that is 
likely to result from standards. It also directs the Attorney General 
of the United States (Attorney General) to determine the impact, if 
any, of any lessening of competition likely to result from a proposed 
standard and to transmit such determination in writing to the Secretary 
within 60 days of the publication of a proposed rule, together with an 
analysis of the nature and extent of the impact. (42 U.S.C. 
6295(o)(2)(B)(i)(V) and (ii))
    To assist the Attorney General in making such a determination for 
today's standards, DOE provided the Department of Justice (DOJ) with 
copies of the NOPR and the TSD for review. In its assessment letter 
responding to DOE, DOJ concluded that the proposed energy conservation 
standards for residential furnace fans are unlikely to have a 
significant adverse impact on competition. DOE is publishing the 
Attorney General's assessment at the end of this final rule.
6. Need of the Nation To Conserve Energy
    An improvement in the energy efficiency of the products subject to 
this rule is likely to improve the security of the nation's energy 
system by reducing overall demand for energy. Reduction in the growth 
of electricity demand resulting from energy conservation standards may 
also improve the reliability of the electricity system. Reductions in 
national electric generating capacity estimated for each considered TSL 
are reported in chapter 15 of the final rule TSD.
    Energy savings from standards for the residential furnace fan 
products covered in today's final rule could also produce environmental 
benefits in the form of reduced emissions of air pollutants and 
greenhouse gases associated with electricity production. Table V.23 
provides DOE's estimate of cumulative emissions reductions projected to 
result from the TSLs considered in this rulemaking. The table includes 
both power sector emissions and upstream emissions. The emissions were 
calculated using the multipliers discussed in section IV.K. DOE reports 
annual emissions reductions for each TSL in chapter 13 of the final 
rule TSD.
    As discussed in section IV.K, DOE did not include NOX 
emissions reduction from power plants in States subject to CAIR, 
because an energy conservation standard would not affect the overall 
level of NOX emissions in those States due to the emissions 
caps mandated by CAIR. For SO2, under the MATS, projected 
emissions will be far below the cap established by CAIR, so it is 
unlikely that excess SO2 emissions allowances resulting from 
lower electricity demand would be needed or used to permit offsetting 
increases in SO2 emissions by any regulated EGU. Therefore, 
DOE believes that efficiency standards will reduce SO2 
emissions.

         Table V.23--Cumulative Emissions Reduction for Potential Standards for Residential Furnace Fans
----------------------------------------------------------------------------------------------------------------
                                                                      TSL
                             -----------------------------------------------------------------------------------
                                    1             2             3             4             5             6
----------------------------------------------------------------------------------------------------------------
                                           Primary Energy Emissions *
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...         29.3         124.5         126.3         171.1         172.0         241.5
SO2 (thousand tons).........         38.1         174.3         178.0         232.5         235.2         323.5
NOX (thousand tons).........         (5.2)        (32.4)        (33.8)        (38.7)        (40.2)        (51.1)
Hg (tons)...................          0.1           0.3           0.3           0.4           0.4           0.5
N2O (thousand tons).........          1.0           4.5           4.6           6.0           6.1           8.4
CH4 (thousand tons).........          5.2          23.4          23.9          31.3          31.6          43.7
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...          1.7           6.7           6.7           9.6           9.5          13.7
SO2 (thousand tons).........          0.5           2.4           2.4           3.2           3.2           4.4
NOX (thousand tons).........         22.5          84.9          85.0         122.8         122.0         177.5
Hg (tons)...................          0.0           0.0           0.0           0.0           0.0           0.0
N2O (thousand tons).........          0.0           0.1           0.1           0.1           0.1           0.2
CH4 (thousand tons).........        127.0         447.7         455.4         663.7         666.1         984.3
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...         31.0         131.2         133.1         180.6         181.5         255.2
SO2 (thousand tons).........         38.6         176.7         180.4         235.7         238.4         327.9
NOX (thousand tons).........         17.2          52.6          51.2          84.0          81.8         126.4
Hg (tons)...................          0.1           0.3           0.3           0.4           0.4           0.5
N2O (thousand tons).........          1.0           4.6           4.7           6.2           6.2           8.6
N2O thousand tons CO2eq **..        302.2        1378.9        1402.4        1843.7        1859.3        2569.2
CH4 (thousand tons).........        132.1         471.1         479.3         695.0         697.7        1028.0

[[Page 38196]]

 
CH4 million tons CO2eq **...       3303.3       11778         11982         17375         17442         25700
----------------------------------------------------------------------------------------------------------------
* Includes emissions from additional gas use associated with more-efficient furnace fans.
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
Note: Parentheses indicate negative values.

    As part of the analysis for this final rule, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
and NOX estimated for each of the TSLs considered for 
residential furnace fans. As discussed in section IV.L, for 
CO2, DOE used four sets of values for the SCC developed by 
an interagency process. Three sets of values are based on the average 
SCC from three integrated assessment models, at discount rates of 2.5 
percent, 3 percent, and 5 percent. The fourth set represents the 95th-
percentile SCC estimate across all three models at a 3-percent discount 
rate. The SCC values for CO2 emissions reductions in 2015, 
expressed in 2013$, are $12.0/ton, $40.5/ton, $62.4/ton, and $119/ton. 
The values for later years are higher due to increasing damages as the 
magnitude of projected climate change increases. Table V.24 presents 
the global value of CO2 emissions reductions at each TSL. 
DOE calculated domestic values as a range from 7 percent to 23 percent 
of the global values, and these results are presented in chapter 14 of 
the final rule TSD.

Table V.24--Global Present Value of CO2 Emissions Reduction for Potential Standards for Residential Furnace Fans
----------------------------------------------------------------------------------------------------------------
                                                                            SCC Case *
                                                 ---------------------------------------------------------------
                       TSL                                                                          3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                                                           million 2013$
----------------------------------------------------------------------------------------------------------------
                                           Primary Energy Emissions **
----------------------------------------------------------------------------------------------------------------
1...............................................             184             880           1,409           2,722
2...............................................             785           3,755           6,007          11,612
3...............................................             797           3,811           6,096          11,784
4...............................................           1,077           5,152           8,245          15,934
5...............................................           1,083           5,181           8,291          16,023
6...............................................           1,517           7,265          11,628          22,467
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................            10.2            50.1              81             155
2...............................................            40.0             196             315             607
3...............................................            40.0             196             316             608
4...............................................            57.0             279             449             866
5...............................................            56.6             278             447             861
6...............................................            81.7             401             644           1,241
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             194             930           1,489           2,878
2...............................................             825           3,951           6,323          12,219
3...............................................             837           4,007           6,412          12,392
4...............................................           1,134           5,432           8,694          16,799
5...............................................           1,140           5,459           8,737          16,884
6...............................................           1,599           7,666          12,272          23,709
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119
  per metric ton (2013$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).
** Includes site emissions from additional use of natural gas associated with more-efficient furnace fans.

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other greenhouse gas (GHG) emissions 
to changes in the future global climate and the potential resulting 
damages to the world economy continues to evolve rapidly. Thus, any 
value placed in this rulemaking on reducing CO2 emissions is 
subject to change. DOE, together with other Federal agencies, will 
continue to review various methodologies for estimating the monetary 
value of reductions in CO2 and other GHG emissions. This 
ongoing review will consider the comments on this subject that are part 
of the public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the

[[Page 38197]]

uncertainty involved with this particular issue, DOE has included in 
this final rule the most recent values and analyses resulting from the 
interagency review process.
    DOE also estimated a range for the cumulative monetary value of the 
economic benefits associated with NOX emissions reductions 
anticipated to result from standards for the residential furnace fan 
products that are the subject of this final rule. The dollar-per-ton 
values that DOE used are discussed in section IV.L. Table V.25 presents 
the present value of cumulative NOX emissions reductions for 
each TSL calculated using the average dollar-per-ton values and 7-
percent and 3-percent discount rates.

   Table V.25--Present Value of NOX Emissions Reduction for Potential
                 Standards for Residential Furnace Fans
------------------------------------------------------------------------
               TSL                 3% Discount rate    7% Discount rate
------------------------------------------------------------------------
                                               million 2013$
------------------------------------------------------------------------
                    Power Sector and Site Emissions *
------------------------------------------------------------------------
1...............................               (3.8)                0.0
2...............................              (27.1)               (3.7)
3...............................              (28.6)               (4.1)
4...............................              (31.0)               (2.8)
5...............................              (32.5)               (3.3)
6...............................              (39.4)               (2.1)
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1...............................               25.9                10.2
2...............................               98.1                38.7
3...............................               98.3                38.8
4...............................              141.8                55.9
5...............................              140.9                55.6
6...............................              205.5                81.4
------------------------------------------------------------------------
                         Total FFC Emissions **
------------------------------------------------------------------------
1...............................               22.1                10.2
2...............................               71.0                35.1
3...............................               69.7                34.7
4...............................              110.8                53.1
5...............................              108.4                52.3
6...............................              166.1                79.3
------------------------------------------------------------------------
* Includes site emissions from additional use of natural gas associated
  with more-efficient furnace fans.
** Components may not sum to total due to rounding.
Note: Parentheses indicate negative values.

    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the consumer 
savings calculated for each TSL considered in this rulemaking. Table 
V.26 presents the NPV values that result from adding the estimates of 
the potential economic benefits resulting from reduced full-fuel-cycle 
CO2 and NOX emissions in each of four valuation 
scenarios to the NPV of consumer savings calculated for each TSL 
considered in this rulemaking, at both a 7-percent and a 3-percent 
discount rate. The CO2 values used in the columns of each 
table correspond to the four scenarios for the valuation of 
CO2 emission reductions discussed above.

  Table V.26--Potential Standards for Residential Furnace Fans: Net Present Value of Consumer Savings Combined
                 With Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
                                                     Consumer NPV at 3% Discount Rate added with:
                                     ---------------------------------------------------------------------------
                                       SCC Case $12.0/    SCC Case $40.5/    SCC Case $62.4/     SCC Case $119/
                 TSL                   metric ton CO2*    metric ton CO2*    metric ton CO2*    metric ton CO2*
                                      and low value for   and medium value   and medium value    and high value
                                            NOX**            for NOX**          for NOX**          for NOX**
----------------------------------------------------------------------------------------------------------------
                                                                     billion 2013$
----------------------------------------------------------------------------------------------------------------
1...................................                4.9                5.6                6.2                7.6
2...................................               26.9               30.0               32.4               38.3
3...................................               27.3               30.5               32.9               38.9
4...................................               30.1               34.4               37.6               45.7
5...................................               30.3               34.6               37.9               46.1
6...................................               26.5               32.6               37.2               48.6
----------------------------------------------------------------------------------------------------------------


[[Page 38198]]


 
                                                     Consumer NPV at 7% Discount Rate added with:
                                     ---------------------------------------------------------------------------
                                       SCC Case $12.0/    SCC Case $40.5/    SCC Case $62.4/     SCC Case $119/
                 TSL                   metric ton CO2*    metric ton CO2*    metric ton CO2*    metric ton CO2*
                                      and low value for   and medium value   and medium value    and high value
                                            NOX**            for NOX**          for NOX**          for NOX**
----------------------------------------------------------------------------------------------------------------
                                                                     billion 2013$
----------------------------------------------------------------------------------------------------------------
1...................................                2.0                2.7                3.3                4.6
2...................................               10.4               13.5               15.9               21.8
3...................................               10.6               13.7               16.1               22.1
4...................................               11.2               15.5               18.8               26.9
5...................................               11.3               15.6               18.9               27.1
6...................................                8.2               14.3               18.9               30.3
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC in 2015, in 2013$.
** Low Value corresponds to $476 per ton of NOX emissions. Medium Value corresponds to $2,684 per ton, and High
  Value corresponds to $4,893 per ton.

    Although adding the value of consumer savings to the values of 
emission reductions provides a valuable perspective, two issues should 
be considered. First, the national operating cost savings are domestic 
U.S. consumer monetary savings that occur as a result of market 
transactions, while the value of CO2 reductions is based on 
a global value. Second, the assessments of operating cost savings and 
the SCC are performed with different methods that use quite different 
time frames for analysis. The national operating cost savings is 
measured for the lifetime of products shipped in 2019-2048. The SCC 
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one metric ton of 
CO2 in each year. Because of the long residence time of 
CO2 in the atmosphere, these impacts continue well beyond 
2100.
7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) No 
other factors were considered in this analysis.

C. Conclusions

    When considering proposed standards, the new or amended energy 
conservation standard that DOE adopts for any type (or class) of 
covered product shall be designed to achieve the maximum improvement in 
energy efficiency that the Secretary determines is technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In 
determining whether a standard is economically justified, the Secretary 
must determine whether the benefits of the standard exceed its burdens 
by, to the greatest extent practicable, considering the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or 
amended standard must also result in significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B))
    For today's final rule, DOE considered the impacts of standards at 
each TSL, beginning with the maximum technologically feasible level, to 
determine whether that level was economically justified. Where the max-
tech level was not justified, DOE then considered the next most 
efficient level and undertook the same evaluation until it reached the 
highest efficiency level that is both technologically feasible and 
economically justified and saves a significant amount of energy.
    To aid the reader in understanding the benefits and/or burdens of 
each TSL, tables in this section summarize the quantitative analytical 
results for each TSL, based on the assumptions and methodology 
discussed herein. The efficiency levels contained in each TSL are 
described in section V.A. In addition to the quantitative results 
presented in the tables, DOE also considers other burdens and benefits 
that affect economic justification. These include the impacts on 
identifiable subgroups of consumers who may be disproportionately 
affected by a national standard, and impacts on employment. Section 
V.B.1.b presents the estimated impacts of each TSL for these subgroups. 
DOE discusses the impacts on direct employment in residential furnace 
fan manufacturing in section V.B.2.b, and discusses the indirect 
employment impacts in section V.B.3.c.
    DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy 
savings in the absence of government intervention. Much of this 
literature attempts to explain why consumers appear to undervalue 
energy efficiency improvements. There is evidence that consumers 
undervalue future energy savings as a result of: (1) A lack of 
information; (2) a lack of sufficient salience of the long-term or 
aggregate benefits; (3) a lack of sufficient savings to warrant 
delaying or altering purchases; (4) excessive focus on the short term, 
in the form of inconsistent weighting of future energy cost savings 
relative to available returns on other investments; (5) computational 
or other difficulties associated with the evaluation of relevant 
tradeoffs; and (6) a divergence in incentives (for example, renter 
versus owner or builder versus purchaser). Other literature indicates 
that with less than perfect foresight and a high degree of uncertainty 
about the future, consumers may trade off at a higher than expected 
rate between current consumption and uncertain future energy cost 
savings. This undervaluation suggests that regulation that promotes 
energy efficiency can produce significant net private gains (as well as 
producing social gains by, for example, reducing pollution).
    In DOE's current regulatory analysis, potential changes in the 
benefits and costs of a regulation due to changes in consumer purchase 
decisions are included in two ways. First, if consumers forego a 
purchase of a product in the standards case, this decreases sales for 
product manufacturers and the cost to manufacturers is included in the 
MIA. Second, DOE accounts for energy savings attributable only to 
products actually used by consumers in the standards case; if a 
standard decreases the number of products purchased by consumers, this 
decreases the potential energy savings from an energy conservation 
standard. DOE provides estimates of changes in the volume of product 
purchases in chapter 9 of the final rule TSD. DOE's current analysis 
does not explicitly control for heterogeneity in consumer preferences, 
preferences across subcategories of products or specific features, or

[[Page 38199]]

consumer price sensitivity variation according to household income.\75\
---------------------------------------------------------------------------

    \75\ P.C. Reiss and M.W. White, Household Electricity Demand, 
Revisited, Review of Economic Studies (2005) 72, 853-883.
---------------------------------------------------------------------------

    While DOE is not prepared at present to provide a fuller 
quantifiable framework for estimating the benefits and costs of changes 
in consumer purchase decisions due to an energy conservation standard, 
DOE is committed to developing a framework that can support empirical 
quantitative tools for improved assessment of the consumer welfare 
impacts of appliance standards. DOE has posted a paper that discusses 
the issue of consumer welfare impacts of appliance standards, and 
potential enhancements to the methodology by which these impacts are 
defined and estimated in the regulatory process.\76\ DOE welcomes 
comments on how to more fully assess the potential impact of energy 
conservation standards on consumer choice and how to quantify this 
impact in its regulatory analysis.
---------------------------------------------------------------------------

    \76\ Alan Sanstad, Notes on the Economics of Household Energy 
Consumption and Technology Choice. Lawrence Berkeley National 
Laboratory (2010) (Available at: http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf (Last 
accessed May 3, 2013).
---------------------------------------------------------------------------

1. Benefits and Burdens of Trial Standard Levels Considered for 
Residential Furnace Fans
    Table V.27 through Table V.29 summarize the quantitative impacts 
estimated for each TSL for residential furnace fans. The national 
impacts are measured over the lifetime of furnace fans purchased in the 
30-year period that begins in the first full year of compliance with 
amended standards (2019-2048). The energy savings, emissions 
reductions, and value of emissions reductions refer to full-fuel-cycle 
results. Results that refer to primary energy savings are presented in 
chapter 10 of the final rule TSD.

                                                Table V.27--Summary of Analytical Results for Residential Furnace Fan Standards: National Impacts
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
             Category                        TSL 1                      TSL 2                      TSL 3                      TSL 4                     TSL 5                     TSL 6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Full-Fuel-Cycle Energy Savings quads
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                   0.680                      2.909                      2.958                      3.986                     4.014                     5.635
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NPV of Consumer Benefits 2013$ billion
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate.................  4.668                      26.013                     26.403                     28.810                    29.079                    24.731
7% discount rate.................  1.754                      9.545                      9.679                      10.024                    10.120                    6.509
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative Emissions Reduction (FFC Emissions)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 million metric tons..........  31.0                       131.2                      133.1                      180.6                     181.5                     255.2
SO2 thousand tons................  38.6                       176.7                      180.4                      235.7                     238.4                     327.9
NOX thousand tons................  17.2                       52.6                       51.2                       84.0                      81.8                      126.4
Hg tons..........................  0.1                        0.3                        0.3                        0.4                       0.4                       0.5
N2O thousand tons................  1.0                        4.6                        4.7                        6.2                       6.2                       8.6
N2O thousand tons CO2eq *........  302.2                      1378.9                     1402.4                     1843.7                    1859.3                    2569.2
CH4 thousand tons................  132.1                      471.1                      479.3                      695.0                     697.7                     1028.0
CH4 million tons CO2eq *.........  3303                       11778                      11982                      17375                     17442                     25700
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction (FFC Emissions) 2013$ billion
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 **...........................  0.194 to 2.878             0.825 to 12.219            0.837 to 12.392            1.134 to 16.799           1.140 to 16.884           1.599 to 23.709
NOX--3% discount rate............  0.0221                     0.0710                     0.0697                     0.1108                    0.1084                    0.1661
NOX--7% discount rate............  0.0102                     0.0351                     0.0347                     0.0531                    0.0523                    0.0793
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
** Range of the economic value of CO2 reductions is based on interagency estimates of the global benefit of reduced CO2 emissions.


  Table V.28--Summary of Analytical Results for Residential Furnace Fan Standards: Manufacturer and Average or
                                             Median Consumer Impacts
----------------------------------------------------------------------------------------------------------------
                Category                     TSL 1       TSL 2       TSL 3       TSL 4       TSL 5       TSL 6
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (baseline value is 349.6)      332.3 to    313.2 to    311.0 to    290.6 to    288.8 to    147.2 to
 (2013$ in millions)....................       336.6       360.0       359.1       397.8       397.6       422.4
Change in Industry NPV (% change).......    (5.0) to   (10.4) to   (11.0) to   (16.9) to   (17.4) to   (57.9) to
                                               (3.7)         3.0         2.7        13.8        13.7        20.8
----------------------------------------------------------------------------------------------------------------
                                      Consumer Average LCC Savings (2013$)
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-condensing Gas              $85        $471        $471        $506        $506        $431
 Furnace Fan............................
Non-Weatherized, Condensing Gas Furnace          $58        $335        $335        $341        $341        $268
 Fan....................................
Weatherized Non-Condensing Gas Furnace           $67        $378        $378        $447        $447        $391
 Fan....................................
Non-Weatherized, Non-Condensing Oil              $46         $46        $259         $46        $259         $80
 Furnace Fan............................
Non-Weatherized Electric Furnace/Modular         $29        $181        $181        $204        $204         $81
 Blower Fan.............................
Mobile Home Non-Weatherized, Non-                $36         $36        $144         $36        $144       ($58)
 condensing Gas Furnace Fan.............
Mobile Home Non-Weatherized, Condensing          $35         $35        $133         $35        $133       ($51)
 Gas Furnace Fan........................

[[Page 38200]]

 
Mobile Home Electric Furnace/Modular             $19         $19         $70         $85         $85       ($54)
 Blower Fan.............................
----------------------------------------------------------------------------------------------------------------
                                           Consumer Median PBP (years)
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-condensing Gas             1.12        2.60        2.60        5.41        5.41       10.16
 Furnace Fan............................
Non-Weatherized, Condensing Gas Furnace         1.18        2.87        2.87        5.78        5.78       11.01
 Fan....................................
Weatherized Non-Condensing Gas Furnace          0.73        1.79        1.79        4.42        4.42        8.19
 Fan....................................
Non-Weatherized, Non-Condensing Oil             1.70        1.70        4.65        1.70        4.65       18.56
 Furnace Fan............................
Non-Weatherized Electric Furnace/Modular        1.94        2.64        2.64        3.21        3.21       11.45
 Blower Fan.............................
Mobile Home Non-Weatherized, Non-               2.72        2.72        6.84        2.72        6.84       24.38
 condensing Gas Furnace Fan.............
Mobile Home Non-Weatherized, Condensing         2.31        2.31        6.65        2.31        6.65       31.27
 Gas Furnace Fan........................
Mobile Home Electric Furnace/Modular            2.07        2.07        3.58        4.09        4.09       14.90
 Blower Fan.............................
----------------------------------------------------------------------------------------------------------------
Note: Parentheses indicate negative values.


  Table V.29--Summary of Analytical Results for Residential Furnace Fan Standards: Distribution of Consumer LCC
                                                     Impacts
----------------------------------------------------------------------------------------------------------------
                 Product Class                    TSL 1      TSL 2      TSL 3      TSL 4      TSL 5      TSL 6
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace
 Fan:
    Net Cost..................................         1%        17%        17%        30%        30%        50%
    No Impact.................................        68%        25%        25%        14%        14%         0%
    Net Benefit...............................        30%        58%        58%        56%        56%        50%
Non-Weatherized, Condensing Gas Furnace Fan:
    Net Cost..................................         1%        11%        11%        23%        23%        51%
    No Impact.................................        75%        41%        41%        34%        34%         0%
    Net Benefit...............................        24%        48%        48%        43%        43%        49%
Weatherized Non-Condensing Gas Furnace Fan:
    Net Cost..................................         0%         3%         3%        16%        16%        41%
    No Impact.................................        81%        56%        56%        33%        33%         0%
    Net Benefit...............................        19%        41%        41%        51%        51%        59%
Non-Weatherized, Non-Condensing Oil Furnace
 Fan:
    Net Cost..................................        13%        13%        44%        13%        44%        78%
    No Impact.................................        71%        71%        28%        71%        28%         0%
    Net Benefit...............................        17%        17%        28%        17%        28%        22%
Non-Weatherized Electric Furnace/Modular
 Blower Fan:
    Net Cost..................................         4%        17%        17%        23%        23%        60%
    No Impact.................................        73%        37%        37%        25%        25%         0%
    Net Benefit...............................        22%        45%        45%        51%        51%        39%
Mobile Home Non-Weatherized, Non-Condensing
 Gas Furnace Fan:
    Net Cost..................................        10%        10%        55%        10%        55%        80%
    No Impact.................................        56%        56%         0%        56%         0%         0%
    Net Benefit...............................        34%        34%        45%        34%        45%        20%
Mobile Home Non-Weatherized, Condensing Gas
 Furnace Fan:
    Net Cost..................................         5%         5%        37%         5%        37%        82%
    No Impact.................................        68%        68%        29%        68%        29%         0%
    Net Benefit...............................        27%        27%        33%        27%        33%        18%
Mobile Home Electric Furnace/Modular Blower
 Fan:
    Net Cost..................................         7%         7%        26%        32%        32%        75%
    No Impact.................................        71%        71%        38%        26%        26%         0%
    Net Benefit...............................        22%        22%        37%        43%        43%        25%
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.

    First, DOE considered TSL 6, which would save an estimated total of 
5.63 quads of energy, an amount DOE considers significant. TSL 6 has an 
estimated NPV of consumer benefit of $6.51 billion using a 7-percent 
discount rate, and $24.7 billion using a 3-percent discount rate.
    The cumulative CO2 emissions reduction at TSL 6 is 255.2 
million metric tons. The estimated monetary value of the CO2 
emissions reductions ranges from $1.60 billion to $23.71 billion. The 
other emissions reductions are 327.9 thousand tons of SO2, 
126.4 thousand tons of NOX, 0.5 tons of Hg, 8.6 thousand 
tons of N2O, and 1,028.0 thousand tons of CH4.
    At TSL 6, the average LCC savings are positive for: (1) Non-
weatherized, non-condensing gas furnace fans; (2) non-weatherized, 
condensing gas furnace fans; (3) weatherized non-condensing gas furnace 
fans; (4) non-weatherized, non-condensing oil furnace fans; and (5) 
non-weatherized electric furnace/modular blower fans. The LCC savings 
are negative for: (1) Mobile home non-weatherized, non-condensing gas 
furnace fans; (2) mobile home non-weatherized, condensing gas furnace 
fans; and (3) mobile home electric furnace/modular blower fans. The 
median payback period is lower than the median product lifetime (which 
is 21.2 years for gas and electric furnace

[[Page 38201]]

fans) for all of the product classes except for: (1) Mobile home non-
weatherized, non-condensing gas furnace fans, and (2) mobile home non-
weatherized, condensing. The share of consumers experiencing an LCC 
cost (increase in LCC) is higher than the share experiencing an LCC 
benefit (decrease in LCC) for all of the product classes except for 
weatherized non-condensing gas furnace fans.
    At TSL 6, manufacturers may expect diminished profitability due to 
increases in product costs, stranded assets, capital investments in 
equipment and tooling, decreases in unit shipments, and expenditures 
related to engineering and testing. The projected change in INPV ranges 
from a decrease of $202.5 million to an increase of $72.8 million based 
on DOE's manufacturer markup scenarios. The upper bound of $72.8 
million is considered an optimistic scenario for manufacturers because 
it assumes manufacturers can fully pass on substantial increases in 
product costs and maintain existing mark ups. DOE recognizes the risk 
of large negative impacts on industry if manufacturers' expectations 
concerning reduced profit margins are realized. TSL 6 could reduce INPV 
in the residential furnace fan industry by up to 57.9 percent if 
impacts reach the lower bound of the range.
    Accordingly, the Secretary concludes that at TSL 6 for residential 
furnace fans, the benefits of significant energy savings, positive NPV 
of consumer benefit, emission reductions and the estimated monetary 
value of the CO2 emissions reductions, as well as positive 
average LCC savings for most product classes would be outweighed by the 
high percentage of consumers that would experience an LCC cost in all 
of the product classes, and the substantial reduction in INPV for 
manufacturers. Consequently, DOE has concluded that TSL 6 is not 
economically justified.
    Next, DOE considered TSL 5, which would save an estimated total of 
4.01 quads of energy, an amount DOE considers significant. TSL 5 has an 
estimated NPV of consumer benefit of $10.1 billion using a 7-percent 
discount rate, and $29.1 billion using a 3-percent discount rate.
    The cumulative CO2 emissions reduction at TSL 5 is 181.5 
million metric tons. The estimated monetary value of the CO2 
emissions reductions ranges from $1.14 billion to $16.88 billion. The 
other emissions reductions are 238.4 thousand tons of SO2, 
81.8 thousand tons of NOX, 0.4 tons of Hg, 6.2 thousand tons 
of N2O, and 697.7 thousand tons of CH4.
    At TSL 5, the average LCC savings are positive for all of the 
product classes. The median payback period is lower than the average 
product lifetime for all of the product classes. The share of consumers 
experiencing an LCC benefit (decrease in LCC) is higher than the share 
experiencing an LCC cost (increase in LCC) for five of the product 
classes (non-weatherized, non-condensing gas furnace fans; non-
weatherized, condensing gas furnace fans; weatherized non-condensing 
gas furnace fans; non-weatherized electric furnace/modular blower fans; 
and mobile home electric furnace/modular blower fans), but lower for 
the other three product classes.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$60.8 million to an increase of $48.0 million. At TSL 5, DOE recognizes 
the risk of negative impacts if manufacturers' expectations concerning 
reduced profit margins are realized. If the lower bound of the range of 
impacts is reached, as DOE expects, TSL 5 could result in a net loss of 
17.4 percent in INPV for residential furnace fan manufacturers.
    Accordingly, the Secretary concludes that at TSL 5 for residential 
furnace fans, the benefits of significant energy savings, positive NPV 
of consumer benefit, positive average LCC savings for all of the 
product classes, emission reductions and the estimated monetary value 
of the CO2 emissions reductions, would be outweighed by the 
high percentage of consumers that would be negatively impacted for some 
of the product classes, and the substantial reduction in INPV for 
manufacturers. Consequently, DOE has concluded that TSL 5 is not 
economically justified.
    Next, DOE considered TSL 4, which would save an estimated total of 
3.99 quads of energy, an amount DOE considers significant. TSL 4 has an 
estimated NPV of consumer benefit of $10.0 billion using a 7-percent 
discount rate, and $28.8 billion using a 3-percent discount rate.
    The cumulative CO2 emissions reduction at TSL 4 is 180.6 
million metric tons. The estimated monetary value of the CO2 
emissions reductions ranges from $1.13 billion to $16.8 billion. The 
other emissions reductions are 235.7 thousand tons of SO2, 
84.0 thousand tons of NOX, 0.4 tons of Hg, 6.2 thousand tons 
of N2O, and 695.0 thousand tons of CH4.
    At TSL 4, the average LCC savings are positive for all of the 
product classes. The median payback period is lower than the average 
product lifetime for all of the product classes. The share of consumers 
experiencing an LCC benefit (decrease in LCC) is higher than the share 
experiencing an LCC cost (increase in LCC) for all of the product 
classes.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$59.0 million to an increase of $48.2 million. At TSL 4, DOE recognizes 
the risk of negative impacts if manufacturers' expectations concerning 
reduced profit margins are realized. If the lower bound of the range of 
impacts is reached, as DOE expects, TSL 4 could result in a net loss of 
16.9 percent in INPV for residential furnace fan manufacturers.
    After considering the analysis and weighing the benefits and the 
burdens, the Secretary concludes that at TSL 4 for residential furnace 
fans, the benefits of significant energy savings, positive NPV of 
consumer benefit, positive average LCC savings for all of the product 
classes, emission reductions and the estimated monetary value of the 
CO2 emissions reductions would outweigh the reduction in 
INPV for manufacturers. The Secretary has concluded that TSL 4 would 
save a significant amount of energy and is technologically feasible and 
economically justified. Therefore, DOE today is adopting the energy 
conservation standards for residential furnace fans at TSL 4. Table 
V.30 presents the energy conservation standards for residential furnace 
fans.

 Table V.30--Energy Conservation Standards for Residential Furnace Fans
------------------------------------------------------------------------
         Product class                 Standard: FER * (W/1000 cfm)
------------------------------------------------------------------------
Non-Weatherized, Non-Condensing  FER = 0.044 x QMax + 182
 Gas Furnace Fan.
Non-Weatherized, Condensing Gas  FER = 0.044 x QMax + 195
 Furnace Fan.
Weatherized Non-Condensing Gas   FER = 0.044 x QMax + 199
 Furnace Fan.
Non-Weatherized, Non-Condensing  FER = 0.071 x QMax + 382
 Oil Furnace Fan.
Non-Weatherized Electric         FER = 0.044 x QMax + 165
 Furnace/Modular Blower Fan.
Mobile Home Non-Weatherized,     FER = 0.071 x QMax + 222
 Non-Condensing Gas Furnace Fan.
Mobile Home Non-Weatherized,     FER = 0.071 x QMax + 240
 Condensing Gas Furnace Fan.

[[Page 38202]]

 
Mobile Home Electric Furnace/    FER = 0.044 x QMax + 101
 Modular Blower Fan.
Mobile Home Weatherized Non-     Reserved
 Condensing Gas Furnace Fan.
Mobile Home Non-Weatherized Non- Reserved
 Condensing Oil Furnace Fan.
------------------------------------------------------------------------
* QMax is the airflow, in cfm, at the maximum airflow-control setting
  measured using the final DOE test procedure. 79 FR 500, 524 (Jan. 3,
  2014).

2. Summary of Benefits and Costs (Annualized) of Today's Standards
    The benefits and costs of today's standards can also be expressed 
in terms of annualized values. The annualized monetary values are the 
sum of: (1) The annualized national economic value, expressed in 2013$, 
of the benefits from operating products that meet the standards 
(consisting primarily of operating cost savings from using less energy, 
minus increases in equipment purchase costs, which is another way of 
representing consumer NPV), and (2) the monetary value of the benefits 
of emission reductions, including CO2 emission 
reductions.\77\ The value of the CO2 reductions, otherwise 
known as the Social Cost of Carbon (SCC), is calculated using a range 
of values per metric ton of CO2 developed by a recent 
interagency process.
---------------------------------------------------------------------------

    \77\ DOE used a two-step calculation process to convert the 
time-series of costs and benefits into annualized values. First, DOE 
calculated a present value in 2013, the year used for discounting 
the NPV of total consumer costs and savings, for the time-series of 
costs and benefits using discount rates of 3 and 7 percent for all 
costs and benefits except for the value of CO2 
reductions. For the latter, DOE used a range of discount rates. From 
the present value, DOE then calculated the fixed annual payment over 
a 30-year period, starting in 2013, that yields the same present 
value. The fixed annual payment is the annualized value. Although 
DOE calculated annualized values, this does not imply that the time-
series of cost and benefits from which the annualized values were 
determined would be a steady stream of payments.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO2 reductions provides a useful perspective, two issues 
should be considered. First, the national operating savings are 
domestic U.S. consumer monetary savings that occur as a result of 
market transactions while the value of CO2 reductions is 
based on a global value. Second, the assessments of operating cost 
savings and SCC are performed with different methods that use different 
time frames for analysis. The national operating cost savings is 
measured for the lifetime of products shipped in 2019-2048. The SCC 
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one metric ton of 
CO2 in each year over a very long period.
    Table V.31 shows the annualized values for today's standards for 
residential furnace fans. The results under the primary estimate are as 
follows. (All monetary values below are expressed in 2013$.) Using a 7-
percent discount rate for benefits and costs other than CO2 
reduction (for which DOE used a 3-percent discount rate along with the 
SCC series corresponding to a value of $40.5/ton in 2015), the cost of 
the residential furnace fan standards in today's rule is $358 million 
per year in increased equipment costs, while the benefits are $1,416 
million per year in reduced equipment operating costs, $312 million in 
CO2 reductions, and $5.61 million in reduced NOX 
emissions. In this case, the net benefit amounts to $1,376 million per 
year.
    Using a 3-percent discount rate for all benefits and costs and the 
SCC series corresponding to a value of $40.5/ton in 2015, Table V.31 
shows the cost of the residential furnace fans standards in today's 
rule is $355 million per year in increased equipment costs, while the 
benefits are $2010 million per year in reduced operating costs, $312 
million in CO2 reductions, and $6.36 million in reduced 
NOX emissions. In this case, the net benefit amounts to 
$1,973 million per year.

           Table V.31--Annualized Benefits and Costs of Standards (TSL 4) for Residential Furnace Fans
----------------------------------------------------------------------------------------------------------------
                                                                                      Low net        High net
                                                 Discount rate        Primary        benefits        benefits
                                                                    estimate *       estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                                                million 2013$/year
----------------------------------------------------------------------------------------------------------------
Benefits:
  Consumer Operating Cost Savings...........                  7%            1416            1167            1718
                                                              3%            2010            1626            2467
  CO[ihel2] Reduction Monetized Value ($12.0/                 5%              90              77             108
   t case) **...............................
  CO[ihel2] Reduction Monetized Value ($40.5/                 3%             312             268             377
   t case) **...............................
  CO2 Reduction Monetized Value ($62.4/t                    2.5%             459             393             555
   case) **.................................
  CO2 Reduction Monetized Value ($119/t                       3%             965             828            1166
   case) **.................................
  NOX Reduction Monetized Value (at $2,684/                   7%            5.61            4.80            6.82
   ton) **..................................                  3%            6.36            5.35            7.86
                                             -------------------------------------------------------------------
    Total Benefits [dagger].................   7% plus CO2 range  1,512 to 2,387  1,249 to 2,000  1,833 to 2,891
                                                              7%           1,734           1,439           2,102
                                               3% plus CO2 range  2,106 to 2,981  1,708 to 2,459  2,583 to 3,641
                                                              3%           2,328           1,899           2,852
Costs:
  Consumer Incremental Product Costs........                  7%             358             314             410
                                                              3%             355             304             419
Net Benefits:
                                             -------------------------------------------------------------------
    Total [dagger]..........................   7% plus CO2 range  1,154 to 2,029    935 to 1,685  1,423 to 2,481
                                                              7%           1,376           1,125           1,692

[[Page 38203]]

 
                                               3% plus CO2 range  1,750 to 2,625  1,404 to 2,155  2,164 to 3,222
                                                              3%           1,973           1,595           2,433
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with residential furnace fans shipped in 2019-
  2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2019-
  2048. Costs incurred by manufacturers, some of which may be incurred in preparation for the rule, are not
  directly included, but are indirectly included as part of incremental equipment costs. The Primary, Low
  Benefits, and High Benefits Estimates utilize projections of energy prices and housing starts from the AEO
  2013 Reference case, Low Estimate, and High Estimate, respectively. Incremental product costs reflect a
  constant product price trend in the Primary Estimate, an increasing price trend in the Low Benefits Estimate,
  and a decreasing price trend in the High Benefits Estimate.
** The CO2 values represent global values of the SCC, in 2013$, in 2015 under several scenarios. The first three
  cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively.
  The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate.
  The SCC values increase over time. The value for NOX (in 2013$) is the average of the low and high values used
  in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the SCC value
  of $40.5/t in 2015. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost
  and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range
  of CO2 values.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify 
the problem that it intends to address, including, where applicable, 
the failures of private markets or public institutions that warrant new 
agency action, as well as to assess the significance of that problem. 
The problems that today's standards address, are as follows:

    (1) There is a lack of consumer information and/or information 
processing capability about energy efficiency opportunities in the 
home appliance market.
    (2) There is asymmetric information (one party to a transaction 
has more and better information than the other) and/or high 
transactions costs (costs of gathering information and effecting 
exchanges of goods and services).
    (3) There are external benefits resulting from improved energy 
efficiency of residential furnace fans that are not captured by the 
users of such equipment. These benefits include externalities 
related to environmental protection and energy security that are not 
reflected in energy prices, such as reduced emissions of greenhouse 
gases.

    In addition, DOE has determined that today's regulatory action is 
an ``economically significant regulatory action'' under section 3(f) of 
Executive Order 12866. Accordingly, section 6(a)(3) of the Executive 
Order requires that DOE prepare a regulatory impact analysis (RIA) for 
this rule and that the Office of Information and Regulatory Affairs 
(OIRA) in the OMB review this rule. DOE presented to OIRA for review 
the draft rule and other documents prepared for this rulemaking, 
including the RIA, and has included these documents in the rulemaking 
record. The assessments prepared pursuant to Executive Order 12866 can 
be found in the technical support document for this rulemaking.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). 
Executive Order 13563 is supplemental to and explicitly reaffirms the 
principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. To the extent permitted by law, 
agencies are required by Executive Order 13563 to: (1) Propose or adopt 
a regulation only upon a reasoned determination that its benefits 
justify its costs (recognizing that some benefits and costs are 
difficult to quantify); (2) tailor regulations to impose the least 
burden on society, consistent with obtaining regulatory objectives, 
taking into account, among other things, and to the extent practicable, 
the costs of cumulative regulations; (3) select, in choosing among 
alternative regulatory approaches, those approaches that maximize net 
benefits (including potential economic, environmental, public health 
and safety, and other advantages; distributive impacts; and equity); 
(4) to the extent feasible, specify performance objectives, rather than 
specifying the behavior or manner of compliance that regulated entities 
must adopt; and (5) identify and assess available alternatives to 
direct regulation, including providing economic incentives to encourage 
the desired behavior, such as user fees or marketable permits, or 
providing information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, the Office of Information and Regulatory Affairs has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes. For the reasons stated in the preamble, 
DOE believes that today's final rule is consistent with these 
principles, including the requirement that, to the extent permitted by 
law, benefits justify costs and that net benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of a final regulatory flexibility analysis (FRFA) for any 
rule that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site (http://energy.gov/gc/office-general-counsel). DOE 
has prepared the following FRFA for the products that are the subject 
of this rulemaking.

[[Page 38204]]

1. Description and Estimated Number of Small Entities Regulated
Methodology for Estimating the Number of Small Entities
    For the manufacturers of residential furnace fans, the Small 
Business Administration (SBA) has set a size threshold, which defines 
those entities classified as ``small businesses'' for the purposes of 
the statute. DOE used the SBA's small business size standards to 
determine whether any small entities would be subject to the 
requirements of the rule. 65 FR 30836, 30848 (May 15, 2000), as amended 
at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at 13 CFR part 121. 
The size standards are listed by NAICS code and industry description 
and are available at: http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Residential furnace fan manufacturing is 
classified under NAICS 333415, ``Air-Conditioning and Warm Air Heating 
Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing.'' The SBA sets a threshold of 750 employees or less for 
an entity to be considered as a small business for this category.
    To estimate the number of companies that could be small business 
manufacturers of products covered by this rulemaking, DOE conducted a 
market survey using available public information to identify potential 
small manufacturers. DOE's research involved public databases (e.g., 
AHRI Directory,\78\ the SBA Database \79\), individual company Web 
sites, and market research tools (e.g., Hoovers Web site \80\) to 
create a list of companies that manufacture or sell products covered by 
this rulemaking. DOE also asked stakeholders and industry 
representatives if they were aware of any other small manufacturers 
during manufacturer interviews and at DOE public meetings. DOE reviewed 
publicly-available data and contacted select companies on its list, as 
necessary, to determine whether they met the SBA's definition of a 
small business manufacturer of covered residential furnace fans. DOE 
screened out companies that do not offer products covered by this 
rulemaking, do not meet the definition of a ``small business,'' or are 
foreign owned and operated.
---------------------------------------------------------------------------

    \78\ See https://www.ahridirectory.org/ahriDirectory/pages/home.aspx.
    \79\ See http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
    \80\ See Hoovers: http://www.hoovers.com./.
---------------------------------------------------------------------------

    DOE initially identified 38 manufacturers of residential furnace 
fan products sold in the U.S. DOE then determined that 23 were large 
manufacturers or manufacturers that are foreign owned and operated. DOE 
was able to determine that 15 domestic manufacturers meet the SBA's 
definition of a ``small business'' and manufacture products covered by 
this rulemaking.
Manufacturer Participation
    Before issuing this Notice, DOE attempted to contact all the small 
business manufacturers of residential furnace fans it had identified. 
One of the small businesses consented to being interviewed during the 
MIA interviews. DOE also obtained information about small business 
impacts while interviewing large manufacturers.
Industry Structure
    The 15 identified domestic manufacturers of residential furnace 
fans that qualify as small businesses under the SBA size standard 
account for a small fraction of industry shipments. Generally, 
manufacturers of furnaces are also manufacturers of furnace fan 
products. The market for residential gas furnaces is almost completely 
held by seven large manufacturers, and small manufacturers in total 
account for only 1 percent of unit sales in the market. These seven 
large manufacturers also control 97 percent of the market for central 
air conditioners. The market for mobile home furnaces is primarily held 
by one large manufacturer. In contrast, the market for domestic oil 
furnaces is almost entirely comprised of small manufacturers.
Comparison Between Large and Small Entities
    Today's standards for residential furnace fans could cause small 
manufacturers to be at a disadvantage relative to large manufacturers. 
One way in which small manufacturers could be at a disadvantage is that 
they may be disproportionately affected by product conversion costs. 
Product redesign, testing, and certification costs tend to be fixed per 
basic model and do not scale with sales volume. For each model, small 
businesses must make investments in research and development to 
redesign their products, but because they have lower sales volumes, 
they must spread these costs across fewer units. In addition, because 
small manufacturers have fewer engineers than large manufacturers, they 
would need to allocate a greater portion of their available resources 
to meet a standard. Since engineers may need to spend more time 
redesigning and testing existing models as a result of the new 
standard, they may have less time to develop new products.
    Furthermore, smaller manufacturers may lack the purchasing power of 
larger manufacturers. For example, since motor suppliers give discounts 
to manufacturers based on the number of motors they purchase, larger 
manufacturers may have a pricing advantage because they have higher 
volume purchases. This purchasing power differential between high-
volume and low-volume orders applies to other furnace fan components as 
well, including the impeller fan blade, transformer, and capacitor.
2. Description and Estimate of Compliance Requirements
    Since the standard in today's final rule for residential furnace 
fans could cause small manufacturers to be at a disadvantage relative 
to large manufacturers, DOE cannot certify that today's standards would 
not have a significant impact on a significant number of small 
businesses, and consequently, DOE has prepared this FRFA.
    At TSL 4, the level adopted in today's document, DOE estimates 
capital conversion costs of $0.14 million and product conversion costs 
of $0.23 million over a five-year conversion period for a typical small 
manufacturer. This is compared to capital conversion costs of $0.59 and 
product conversion costs of $1.00 million over a five-year conversion 
period for a typical large manufacturer. These costs and their impacts 
are described in detail below.
    To estimate how small manufacturers would be potentially impacted, 
DOE used the market share of small manufacturers to estimate the annual 
revenue, earnings before interest and tax (EBIT), and research and 
development (R&D) expense for a typical small manufacturer. DOE then 
compared these costs to the required product conversion costs at each 
TSL for both an average small manufacturer and an average large 
manufacturer. Table VI.1 and VI.2 show the capital and product 
conversion costs for a typical small manufacturer versus those of a 
typical large manufacturer. Tables VI.3 and VI.4 report the total 
conversion costs as a percentage of annual R&D expense, annual revenue, 
and EBIT for a typical small and large manufacturer, respectively. In 
the following tables, TSL 4 represents the adopted standard.

[[Page 38205]]



Table VI.1--Comparison of Typical Small and Large Manufacturer's Capital
                            Conversion Costs
------------------------------------------------------------------------
                                              Capital         Capital
                                            conversion      conversion
                                             costs for       costs for
                                           typical small   typical large
                                           manufacturer    manufacturer
                                             (in 2013$       (in 2013$
                                             millions)       millions)
------------------------------------------------------------------------
TSL 1...................................            0.08            0.35
TSL 2...................................            0.10            0.44
TSL 3...................................            0.11            0.46
TSL 4...................................            0.14            0.59
TSL 5...................................            0.14            0.62
TSL 6...................................            1.24            5.28
------------------------------------------------------------------------


    Table VI.2:--Comparison of Typical Small and Large Manufacturer's
                        Product Conversion Costs
------------------------------------------------------------------------
                                              Product         Product
                                            conversion      conversion
                                             costs for       costs for
                                           typical small   typical large
                                           manufacturer    manufacturer
                                             (in 2013$       (in 2013$
                                             millions)       millions)
------------------------------------------------------------------------
TSL 1...................................            0.17            0.74
TSL 2...................................            0.22            0.93
TSL 3...................................            0.23            0.99
TSL 4...................................            0.23            1.00
TSL 5...................................            0.25            1.06
TSL 6...................................            0.27            1.15
------------------------------------------------------------------------


                         Table VI.3--Impacts of Conversion Costs on a Small Manufacturer
----------------------------------------------------------------------------------------------------------------
                                                      Capital         Product          Total
                                                    conversion      conversion      conversion         Total
                                                     cost as a       cost as a       cost as a      conversion
                                                   percentage of   percentage of   percentage of     cost as a
                                                  annual capital    annual R&D        annual       percentage of
                                                    expenditures      expense         revenue       annual EBIT
----------------------------------------------------------------------------------------------------------------
TSL 1...........................................             69%            185%              5%             72%
TSL 2...........................................             86%            232%              6%             90%
TSL 3...........................................             92%            249%              7%             96%
TSL 4...........................................            117%            250%              8%            105%
TSL 5...........................................            122%            266%              8%            111%
TSL 6...........................................           1048%            289%             31%            427%
----------------------------------------------------------------------------------------------------------------


                         Table VI.4--Impacts of Conversion Costs on a Large Manufacturer
----------------------------------------------------------------------------------------------------------------
                                                      Capital         Product          Total
                                                    conversion      conversion      conversion         Total
                                                     cost as a       cost as a       cost as a      conversion
                                                   percentage of   percentage of   percentage of     cost as a
                                                  annual capital    annual R&D        annual       percentage of
                                                    expenditures      expense         revenue       annual EBIT
----------------------------------------------------------------------------------------------------------------
TSL 1...........................................              3%              8%              0%              3%
TSL 2...........................................              4%             10%              0%              4%
TSL 3...........................................              4%             11%              0%              4%
TSL 4...........................................              5%             11%              0%              5%
TSL 5...........................................              5%             11%              0%              5%
TSL 6...........................................             45%             12%              1%             18%
----------------------------------------------------------------------------------------------------------------

    Based on the results in Table VI.1 and Table VI.2, DOE understands 
that the potential conversions costs faced by small manufacturers may 
be proportionally greater than those faced by larger manufacturers. 
Small manufacturers have less engineering staff and lower R&D budgets. 
They also have lower capital expenditures annually. As a result, the 
conversion costs incurred by a small manufacturer would likely be a 
larger percentage of its annual capital expenditures, R&D expenses, 
revenue, and EBIT, than those for a large manufacturer.

[[Page 38206]]

3. Duplication, Overlap, and Conflict with Other Rules and Regulations
    DOE is not aware of any rules or regulations that duplicate, 
overlap, or conflict with the rule being adopted today.
4. Significant Alternatives to the Rule
    The discussion above analyzes impacts on small businesses that 
would result from the other TSLs DOE considered. Although TSLs lower 
than the proposed TSLs would be expected to reduce the impacts on small 
entities, DOE is required by EPCA to establish standards that achieve 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and result in a significant 
conservation of energy. Thus, DOE rejected the lower TSLs.
    In addition to the other TSLs being considered, the NOPR TSD 
includes a regulatory impact analysis in chapter 17. For residential 
furnace fans, this report discusses the following policy alternatives: 
(1) No standard, (2) consumer rebates, (3) consumer tax credits, (4) 
manufacturer tax credits, and (5) early replacement. DOE does not 
intend to consider these alternatives further because they are either 
not feasible to implement without authority and funding from Congress, 
or are expected to result in energy savings that are much smaller 
(ranging from less than 1 percent to less than 31 percent) than those 
that would be achieved by the considered energy conservation standards.

C. Review Under the Paperwork Reduction Act

    Manufacturers of furnace fans, or their third party 
representatives, must certify to DOE that their products comply with 
any applicable energy conservation standard. In certifying compliance, 
manufacturers or their third-party representatives must test their 
equipment according to the DOE test procedure for furnace fans, 
including any amendments adopted for that test procedure. Manufacturers 
or their third-party representatives must then submit certification 
reports and compliance statements using DOE's electronic Web-based 
tool, the Compliance and Certification Management System (CCMS), 
regarding product characteristics and energy consumption information 
regarding basic models of furnace fans distributed in commerce in the 
U.S. CCMS uses product-specific templates that manufacturers are 
required to use when submitting certification data to DOE. See http://www.regulations.doe.gov/ccms.
    The collection-of-information requirement for furnace fan 
certification is subject to review and approval by OMB under the 
Paperwork Reduction Act (PRA). This requirement has been submitted to 
OMB for approval. Public reporting burden for the certification is 
estimated to average 30 hours per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Note that the certification and 
recordkeeping requirements for certain consumer products in 10 CFR part 
430 have previously been approved by OMB and assigned OMB control 
number 1910-1400; the certification requirement for furnace fans will 
be included in this collection once approved by OMB. DOE will notify 
the public of OMB approval through a Federal Register notice.
    Public comment is sought regarding: whether this proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information shall 
have practical utility; the accuracy of the burden estimate; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways to minimize the burden of the collection of 
information, including through the use of automated collection 
techniques or other forms of information technology. Send comments on 
these or any other aspects of the collection of information to the DOE 
program official listed in the ADDRESSES section above, and email to 
[email protected].
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (NEPA) of 1969, 
DOE has determined that this rule fits within the category of actions 
included in Categorical Exclusion (CX) B5.1 and otherwise meets the 
requirements for application of a CX. See 10 CFR Part 1021, App. B, 
B5.1(b); 1021.410(b) and Appendix B, B(1)-(5). The rule fits within the 
category of actions because it is a rulemaking that establishes energy 
conservation standards for consumer products or industrial equipment, 
and for which none of the exceptions identified in CX B5.1(b) apply. 
Therefore, DOE has made a CX determination for this rulemaking, and DOE 
does not need to prepare an Environmental Assessment or Environmental 
Impact Statement for this rule. DOE's CX determination for this rule is 
available at http://cxnepa.energy.gov/.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism.'' 64 FR 43255 (August 10, 
1999) imposes certain requirements on Federal agencies formulating and 
implementing policies or regulations that preempt State law or that 
have Federalism implications. The Executive Order requires agencies to 
examine the constitutional and statutory authority supporting any 
action that would limit the policymaking discretion of the States and 
to carefully assess the necessity for such actions. The Executive Order 
also requires agencies to have an accountable process to ensure 
meaningful and timely input by State and local officials in the 
development of regulatory policies that have Federalism implications. 
On March 14, 2000, DOE published a statement of policy describing the 
intergovernmental consultation process it will follow in the 
development of such regulations. 65 FR 13735. DOE has examined this 
final rule and has determined that it would not have a substantial 
direct effect on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. EPCA governs 
and prescribes Federal preemption of State regulations as to energy 
conservation for the products that are the subject of today's final 
rule. States can petition DOE for exemption from such preemption to the 
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) No 
further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' imposes on Federal agencies the general duty 
to adhere to the following requirements: (1) Eliminate drafting errors 
and ambiguity; (2) write regulations to minimize litigation; (3) 
provide a clear legal standard for affected conduct rather than a 
general standard; and (4) promote simplification and burden reduction. 
61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 
3(a), section 3(b) of Executive Order 12988 specifically requires that

[[Page 38207]]

Executive agencies make every reasonable effort to ensure that the 
regulation: (1) Clearly specifies the preemptive effect, if any; (2) 
clearly specifies any effect on existing Federal law or regulation; (3) 
provides a clear legal standard for affected conduct while promoting 
simplification and burden reduction; (4) specifies the retroactive 
effect, if any; (5) adequately defines key terms; and (6) addresses 
other important issues affecting clarity and general draftsmanship 
under any guidelines issued by the Attorney General. Section 3(c) of 
Executive Order 12988 requires Executive agencies to review regulations 
in light of applicable standards in section 3(a) and section 3(b) to 
determine whether they are met or it is unreasonable to meet one or 
more of them. DOE has completed the required review and determined 
that, to the extent permitted by law, this final rule meets the 
relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. DOE's policy statement is also available at 
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    Although today's final rule, which adopts new energy conservation 
standards for residential furnace fans, does not contain a Federal 
intergovernmental mandate, it may require annual expenditures of $100 
million or more by the private sector. Specifically, the final rule 
could require expenditures of $100 million or more, including: (1) 
Investment in research and development and in capital expenditures by 
residential furnace fans manufacturers in the years between the final 
rule and the compliance date for the new standards, and (2) incremental 
additional expenditures by consumers to purchase higher-efficiency 
residential furnace fans, starting at the compliance date for the 
applicable standard.
    Section 202 of UMRA authorizes a Federal agency to respond to the 
content requirements of UMRA in any other statement or analysis that 
accompanies the final rule. 2 U.S.C. 1532(c). The content requirements 
of section 202(b) of UMRA relevant to a private sector mandate 
substantially overlap the economic analysis requirements that apply 
under section 325(o) of EPCA and Executive Order 12866. The 
SUPPLEMENTARY INFORMATION section of this final rule and the 
``Regulatory Impact Analysis'' section of the TSD for this final rule 
respond to those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. 2 U.S.C. 1535(a). DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule unless DOE publishes an 
explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. As required by 42 U.S.C. 6295(f) 
and (o), today's final rule establishes energy conservation standards 
for residential furnace fans that are designed to achieve the maximum 
improvement in energy efficiency that DOE has determined to be both 
technologically feasible and economically justified. A full discussion 
of the alternatives considered by DOE is presented in the ``Regulatory 
Impact Analysis'' section of the TSD for this final rule.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This rule would not have any impact on the autonomy or integrity of the 
family as an institution. Accordingly, DOE has concluded that it is not 
necessary to prepare a Family Policymaking Assessment.

I. Review Under Executive Order 12630

    Pursuant to Executive Order 12630, ``Governmental Actions and 
Interference with Constitutionally Protected Property Rights,'' 53 FR 
8859 (March 18, 1988), DOE has determined that this regulation would 
not result in any takings that might require compensation under the 
Fifth Amendment to the U.S. Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 
2001

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review 
most disseminations of information to the public under information 
quality guidelines established by each agency pursuant to general 
guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 
(Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 
(Oct. 7, 2002). DOE has reviewed today's final rule under the OMB and 
DOE guidelines and has concluded that it is consistent with applicable 
policies in those guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA 
at OMB, a Statement of Energy Effects for any proposed significant 
energy action. A ``significant energy action'' is defined as any action 
by an agency that promulgates or is expected to lead to promulgation of 
a final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    DOE has concluded that today's regulatory action, which sets forth 
energy conservation standards for residential furnace fans, is not a 
significant energy action because the

[[Page 38208]]

new standards are not likely to have a significant adverse effect on 
the supply, distribution, or use of energy, nor has it been designated 
as such by the Administrator at OIRA. Accordingly, DOE has not prepared 
a Statement of Energy Effects on the final rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 
2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
the agency reasonably can determine will have or does have a clear and 
substantial impact on important public policies or private sector 
decisions.'' Id. at 2667.
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation using 
objective criteria and qualified and independent reviewers to make a 
judgment as to the technical/scientific/business merit, the actual or 
anticipated results, and the productivity and management effectiveness 
of programs and/or projects. The ``Energy Conservation Standards 
Rulemaking Peer Review Report'' dated February 2007 has been 
disseminated and is available at the following Web site: 
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of this rule prior to its effective date. The report will 
state that it has been determined that the rule is a ``major rule'' as 
defined by 5 U.S.C. 804(2).

VII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
rule.

List of Subjects

10 CFR Part 429

    Administrative practice and procedure, Commercial equipment, 
Confidential business information, Energy conservation, Household 
appliances, Imports, Reporting and recordkeeping requirements.

10 CFR Part 430

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Household appliances, Imports, 
Intergovernmental relations, Small businesses.

    Issued in Washington, DC, on June 25, 2014.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons stated in the preamble, DOE amends parts 429 and 
430 of chapter II, subchapter D, of title 10 of the Code of Federal 
Regulations, as set forth below:

PART 429--CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER 
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT

0
1. The authority citation for part 429 continues to read as follows:

    Authority:  42 U.S.C. 6291-6317.


Sec.  429.12  [Amended]

0
2. Section 429.12 is amended by:
0
a. Removing in paragraph (b)(13) ``429.54'' and adding in its place 
``429.58'';
0
b. Removing in paragraph (d) table, first column, second row (i.e., for 
products with a submission deadline of May 1st) the word ``and'' and 
adding ``and Residential furnace fans'' at the end of the listed 
products.

0
3. Section 429.58 is amended by:
0
a. Adding in paragraph (a)(2) introductory text ``within the scope of 
appendix AA of subpart B of part 430'' after ``basic model of furnace 
fan''; and
0
b. Adding paragraph (b).
    The addition reads as follows:


Sec.  429.58  Furnace fans.

* * * * *
    (b) Certification reports. (1) The requirements of Sec.  429.12 are 
applicable to residential furnace fans; and
    (2) Pursuant to Sec.  429.12(b)(13), a certification report shall 
include the following public product-specific information: The fan 
energy rating (FER) in watts per thousand cubic feet per minute (W/1000 
cfm); the calculated maximum airflow at the reference system external 
static pressure (ESP) in cubic feet per minute (cfm); the control 
system configuration for achieving the heating and constant-circulation 
airflow-control settings required for determining FER as specified in 
the furnace fan test procedure (10 CFR part 430, subpart B, appendix 
AA); the measured steady-state gas, oil, or electric heat input rate 
(QIN) in the heating setting required for determining FER; 
and for modular blowers, the manufacturer and model number of the 
electric heat resistance kit with which it is equipped for 
certification testing.

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
4. The authority citation for part 430 continues to read as follows:

    Authority:  42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.

0
5. Section 430.2 is amended by adding definitions for ``small-duct 
high-velocity (SDHV) electric furnace'' and ``small-duct high-velocity 
(SDHV) modular blower'' in alphabetical order to read as follows:


Sec.  430.2  Definitions.

* * * * *
    Small-duct high-velocity (SDHV) electric furnace means an electric 
furnace that:
    (1) Is designed for, and produces, at least 1.2 inches of external 
static pressure when operated at the certified air volume rate of 220-
350 CFM per rated ton of cooling in the highest default cooling 
airflow-control setting; and
    (2) When applied in the field, uses high velocity room outlets 
generally greater than 1,000 fpm that have less than 6.0 square inches 
of free area.
    Small-duct high-velocity (SDHV) modular blower means a modular 
blower that:
    (1) Is designed for, and produces, at least 1.2 inches of external 
static pressure when operated at the certified air volume rate of 220-
350 CFM per rated ton of cooling in the highest default cooling 
airflow-controls setting; and
    (2) When applied in the field, uses high velocity room outlets 
generally greater than 1,000 fpm that have less than 6.0 square inches 
of free area.
* * * * *

0
6. Section 430.32 is amended by adding paragraph (y) to read as 
follows:

[[Page 38209]]

Sec.  430.32  Energy and water conservation standards and their 
effective dates.

* * * * *
    (y) Residential furnace fans. Residential furnace fans incorporated 
in the products listed in Table 1 of this paragraph and manufactured on 
and after July 3, 2019, shall have a fan energy rating (FER) value that 
meets or is less than the following values:

 Table 1--Energy Conservation Standards for Covered Residential Furnace
                                  Fans*
------------------------------------------------------------------------
        Product class                      FER ** (Watts/cfm)
------------------------------------------------------------------------
Non-Weatherized, Non-          FER = 0.044 x QMax + 182
 Condensing Gas Furnace Fan
 (NWG-NC).
Non-Weatherized, Condensing    FER = 0.044 x QMax + 195
 Gas Furnace Fan (NWG-C).
Weatherized Non-Condensing     FER = 0.044 x QMax + 199
 Gas Furnace Fan (WG-NC).
Non-Weatherized, Non-          FER = 0.071 x QMax + 382
 Condensing Oil Furnace Fan
 (NWO-NC).
Non-Weatherized Electric       FER = 0.044 x QMax + 165
 Furnace/Modular Blower Fan
 (NWEF/NWMB).
Mobile Home Non-Weatherized,   FER = 0.071 x QMax + 222
 Non-Condensing Gas Furnace
 Fan (MH-NWG-NC).
Mobile Home Non-Weatherized,   FER = 0.071 x QMax + 240
 Condensing Gas Furnace Fan
 (MH-NWG-C).
Mobile Home Electric Furnace/  FER = 0.044 x QMax + 101
 Modular Blower Fan (MH-EF/
 MB).
Mobile Home Non-Weatherized    Reserved
 Oil Furnace Fan (MH-NWO).
Mobile Home Weatherized Gas    Reserved
 Furnace Fan (MH-WG) **.
------------------------------------------------------------------------
* Furnace fans incorporated into hydronic air handlers, SDHV modular
  blowers, SDHV electric furnaces, and CAC/HP indoor units are not
  subject to the standards listed in this table.
** QMax is the airflow, in cfm, at the maximum airflow-control setting
  measured using the final DOE test procedure at 10 CFR part 430,
  subpart B, appendix AA.


    Note:  The following will not appear in the Code of Federal 
Regulations.


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[FR Doc. 2014-15387 Filed 7-2-14; 8:45 am]
BILLING CODE 6450-01-P