[Federal Register Volume 79, Number 214 (Wednesday, November 5, 2014)]
[Proposed Rules]
[Pages 65603-65609]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26247]


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

DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EERE-2014-BT-STD-0048]
RIN 1904-AD37


Energy Conservation Program: Energy Conservation Standards for 
Residential Central Air Conditioners and Heat Pumps; Request for 
Information

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

ACTION: Request for information (RFI).

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

SUMMARY: The U.S. Department of Energy (DOE) is initiating an effort to 
determine whether to amend the current energy conservation standards 
for residential central air conditioner and heat pump products. 
According to the Energy Policy and Conservation Act's 6-year review 
requirement (42 U.S.C. 6295(m)(1)), DOE must publish a notice of 
proposed rulemaking to propose new standards for residential central 
air conditioner and heat pump products or a notice of determination 
that the existing standards do not need to be amended by June 6, 2017. 
This RFI seeks to solicit information from the public to help DOE 
determine whether amended standards for residential central air 
conditioner and heat pump products would result in a significant amount 
of additional energy savings and whether those standards would be 
technologically feasible and economically justified.

DATES: Written comments and information are requested on or before 
December 5, 2014.

ADDRESSES: Interested parties are encouraged to submit comments 
electronically. However, comments may be submitted by any of the 
following methods:
     Federal eRulemaking Portal: www.regulations.gov. Follow 
the instructions for submitting comments.
     Email to the following address: 
[email protected]. Include docket number EERE-2014-BT-
STD-0048 and/or RIN 1904-AD37 in the subject line of the message. All 
comments should clearly identify the name, address, and, if 
appropriate, organization of the commenter.

[[Page 65604]]

     Postal Mail: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Program, Mailstop EE-2J, Request for 
Information for Energy Conservation Standards for Residential Central 
Air Conditioners and Heat Pumps, Docket No. EERE-2014-BT-STD-0048 and/
or RIN 1904-AD37, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Please submit one signed paper original.
     Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department 
of Energy, Building Technologies Program, Sixth Floor, 950 L'Enfant 
Plaza SW., Washington, DC 20024. Please submit one signed paper 
original.
    Instructions: All submissions received must include the agency name 
and docket number and/or RIN for this rulemaking. No telefacsimiles 
(faxes) will be accepted.
    Docket: The docket is available for review at www.regulations.gov, 
including Federal Register notices, comments, and other supporting 
documents/materials. 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://www.regulations.gov/#!docketDetail;D=EERE-2014-BT-STD-0048. This Web 
page contains a link to the docket for this notice on the 
www.regulations.gov Web site. The www.regulations.gov Web page contains 
simple instructions on how to access all documents, including public 
comments, in the docket.
    For information on how to submit a comment, review other public 
comments and the docket, or participate in the public meeting, contact 
Ms. Brenda Edwards at (202) 586-2945 or by email: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Direct requests for additional 
information may be sent to:

Ms. Ashley Armstrong, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 
1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: 
202-586-6590. Email: [email protected].
Ms. Johanna Hariharan, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 287-6307. Email: [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
    A. Authority and Background
    B. Rulemaking Process
II. Request for Information and Comments
    A. Market Assessment and Screening Analysis
    B. Engineering Analysis
    C. Markups Analysis
    D. Energy Use Analysis
    E. Life-Cycle Cost and Payback Period Analysis
    F. Shipments Analysis
    G. National Impact Analysis
    H. Manufacturer Impact Analysis
    I. Submission of Comments

I. Introduction

A. Authority and Background

    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) sets forth a variety of provisions designed to improve energy 
efficiency and established the Energy Conservation Program for Consumer 
Products Other Than Automobiles, a program covering major household 
appliances (collectively referred to as ``covered products''), 
including residential central air conditioners and heat pumps that are 
the subject of this rulemaking. (42 U.S.C. 6292(a)(3))
    EPCA prescribed energy conservation standards for central air 
conditioners and heat pumps and directed DOE to conduct two cycles of 
rulemakings to determine whether to amend these standards. (42 U.S.C. 
6295(d)(1)-(3)) DOE completed the second of the two rulemaking cycles 
by publishing a direct final rule on June 27, 2011 (2011 Direct Final 
Rule). 76 FR 37414. The DFR amended standards for central air 
conditioners and heat pumps manufactured on or after January 1, 2015. 
These amended standards differ by region. (10 CFR 430.32(c)(2)-(5)) DOE 
seeks comment from interested parties as to whether DOE should consider 
and analyze amended standards on a national basis or amended standards 
that differ by region for central air conditioners and heat pumps.
    EPCA requires that, not later than 6 years after the issuance of a 
final rule establishing or amending a standard, DOE publish a NOPR 
proposing new standards or a notice of determination that the existing 
standards do not need to be amended. (42 U.S.C. 6295(m)(1)) Based on 
this provision, DOE must publish by June 6, 2017 either a NOPR 
proposing new standards for residential central air conditioners and 
heat pumps or a notice of determination that the existing standards do 
not need to be amended. Today's notice seeks input from the public to 
assist DOE with its determination on whether amended standards 
pertaining to residential central air conditioners and heat pumps are 
warranted. In making this determination, DOE must evaluate whether more 
amended standards would (1) yield a significant savings in energy use 
and (2) be both technologically feasible and economically justified. 
(42 U.S.C. 6295(o)(3)(B))

B. Rulemaking Process

    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products. EPCA requires that any new or 
amended energy conservation standard be designed to achieve the maximum 
improvement in energy or water efficiency that is technologically 
feasible and economically justified. To determine whether a standard is 
economically justified, EPCA requires that DOE determine whether the 
benefits of the standard exceed its burdens by considering, to the 
greatest extent practicable, the following:
    1. The economic impact of the standard on the manufacturers and 
consumers of the affected products;
    2. The savings in operating costs throughout the estimated average 
life of the product compared to any increases in the initial cost, or 
maintenance expense, likely to result from the imposition of the 
standard;
    3. The total projected amount of energy savings likely to result 
directly from the imposition of the standard;
    4. Any lessening of the utility or the performance of the products 
likely to result from the imposition of 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 
imposition of 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))
    DOE fulfills these and other applicable requirements by conducting 
a series of analyses throughout the rulemaking process. Table B.1 shows 
the individual analyses that are performed to satisfy each of the 
requirements within EPCA.

[[Page 65605]]



       Table B.1--EPCA Requirements and Corresponding DOE Analysis
------------------------------------------------------------------------
         EPCA requirement                Corresponding DOE analysis
------------------------------------------------------------------------
Technological Feasibility........   Market and Technology
                                    Assessment.
                                    Screening Analysis.
                                    Engineering Analysis.
Economic Justification:
    1. Economic impact on           Manufacturer Impact
     manufacturers and consumers.   Analysis.
                                    Life-Cycle Cost and Payback
                                    Period Analysis.
                                    Life-Cycle Cost Subgroup
                                    Analysis.
                                    Shipments Analysis.
    2. Lifetime operating cost      Markups for Product Price
     savings compared to            Determination.
     increased cost for the         Energy and Water Use
     product.                       Determination.
                                    Life-Cycle Cost and Payback
                                    Period Analysis.
    3. Total projected energy       Shipments Analysis.
     savings.
                                    National Impact Analysis.
    4. Impact on utility or         Screening Analysis.
     performance.
                                    Engineering Analysis.
    5. Impact of any lessening of   Manufacturer Impact
     competition.                   Analysis.
    6. Need for national energy     Shipments Analysis.
     and water conservation.
                                    National Impact Analysis.
    7. Other factors the            Emissions Analysis.
     Secretary considers relevant.
                                    Utility Impact Analysis.
                                    Employment Impact Analysis.
                                    Monetization of Emission
                                    Reductions Benefits.
                                    Regulatory Impact Analysis.
------------------------------------------------------------------------

    As detailed throughout this RFI, DOE is specifically publishing 
this notice as the first step in the analysis process and is 
specifically requesting input and data from interested parties to aid 
in the development of the technical analyses.

II. Request for Information and Comments

    In the next section, DOE has identified a variety of questions that 
DOE would like to receive input on to aid in the development of the 
technical and economic analyses regarding whether new standards for 
residential central air conditioners and heat pumps may be warranted. 
In addition, DOE welcomes comments on other issues relevant to the 
conduct of this rulemaking that may not specifically be identified in 
this notice.

A. Market Assessment and Screening Analysis

    The market and technology assessment provides information about the 
residential central air conditioner and heat pump industry that would 
be used throughout the rulemaking process. For example, this 
information may address technological improvements used in the design 
and manufacturing of such products. DOE uses qualitative and 
quantitative information to characterize the structure of the 
residential central air conditioner and heat pump industry and market. 
In this analysis, DOE will identify and characterize the manufacturers 
of residential central air conditioners and heat pumps, estimate market 
shares and trends, address regulatory and non-regulatory initiatives 
intended to improve energy efficiency or reduce energy consumption, and 
explore the potential for technological improvements in the design and 
manufacturing of residential central air conditioners and heat pumps. 
DOE will also review product literature, industry publications, and 
company Web sites. Additionally, DOE will also consider conducting 
interviews with manufacturers to assess the overall market for 
residential central air conditioners and heat pumps.
Product Classes
    When evaluating and establishing energy conservation standards, DOE 
may divide covered products into product classes by the type of energy 
used or by capacity or other performance-related features that would 
justify a different standard. In making a determination whether a 
performance-related feature justifies a different standard, DOE must 
consider factors such as the utility to the consumer of the feature and 
other factors DOE determines are appropriate. (42 U.S.C. 6295(q)) The 
energy conservation standards for residential central air conditioners 
and heat pumps established by the 2011 Direct Final Rule will become 
effective on January 1, 2015. 10 CFR Part 430.32(c)(2) lists the seven 
product classes for residential central air conditioners and heat pumps 
and their corresponding energy conservation standards. The product 
classes are:

(1) Split system air conditioners
(2) Split system heat pumps
(3) Single-package air conditioners
(4) Single-package heat pumps
(5) Small duct, high velocity (SDHV) systems
(6) Space-constrained air conditioners
(7) Space-constrained heat pumps

    For this rulemaking, DOE plans to maintain the existing product 
classes for residential central air conditioners and heat pumps, as 
presented above.
    Issue A.1 DOE requests feedback on whether it should consider any 
changes to the existing product classes for residential central air 
conditioners and heat pumps.
Technology Assessment and Screening Analysis
    The purpose of the technology assessment is to develop a 
preliminary list of technologies that could potentially be used to 
improve the efficiency of residential central air conditioners and heat 
pumps. The purpose of the screening analysis is to screen out 
technologies that are not appropriate for consideration in the 
engineering analysis due to the following four factors: (1) 
Technological feasibility, (2) practicability to manufacture, install, 
and service, (3) impacts on product utility to consumers, and (4) 
health and safety. (10 CFR 430, subpart C, appendix A, section 
(4)(a)(4)) The technologies that pass the screening are called design 
options and are considered in the engineering analysis. DOE uses 
information about existing and past technology options and prototype 
designs to help identify technologies

[[Page 65606]]

that manufacturers could use to meet and/or exceed energy conservation 
standards.
    The 2011 Direct Final Rule identified several design options that 
are employed in central air conditioners and heat pumps. The design 
options used in the 2011 Direct Final Rule analyses may still be 
representative of the range of design options currently employed by 
product manufacturers, as listed below:

A. Higher-efficiency compressors
B. Higher-efficiency fan motors
C. Higher-efficiency fan blades
D. Improvements to baseline coils
E. Micro-channel heat exchangers
F. Flat-tube heat exchangers
G. Heat pump defrost controls
H. Inverter technology
I. High-efficiency expansion valves

However, DOE understands that manufacturers typically introduce new 
design options into the market as technology evolves over time.

    Issue A.2 DOE requests comment on whether DOE should consider 
design options other than those considered in the analyses supporting 
the 2011 Direct Final Rule, as listed above.

B. Engineering Analysis

    The engineering analysis estimates the cost-efficiency relationship 
of products at different levels of increased energy efficiency. This 
relationship serves as the basis for the cost-benefit calculations for 
consumers, manufacturers, and the nation. In determining the cost-
efficiency relationship, DOE estimates the increase in manufacturer 
cost associated with increasing the efficiency of products above the 
baseline to the maximum technologically feasible (``max-tech'') 
efficiency level for each product class. The baseline model is used as 
a reference point for each product class in the engineering analysis 
and the life-cycle cost and payback-period analyses.
Efficiency Levels
    For each established product class, DOE selects a baseline model as 
a reference point against which any changes resulting from energy 
conservation standards can be measured. The baseline model in each 
product class represents the characteristics of common or typical 
products in that class. Typically, a baseline model is one that meets 
the current minimum energy conservation standards by a small or zero 
margin.
    In the 2011 Direct Final Rule, DOE established minimum energy 
conservation standards that will become effective on January 1, 
2015.\1\ DOE would consider these minimum energy conservation standards 
as the baseline efficiency levels for any analyses conducted to 
consider amending the standards.
---------------------------------------------------------------------------

    \1\ In addition, the American Manufacturing Technical 
Corrections Act of 2012 established minimum energy conservation 
standards for small duct, high velocity systems that will become 
effective on January 1, 2015. These were added to the code of 
regulations in a December 3, 2013 Technical Amendment. 78 FR 72533.
---------------------------------------------------------------------------

    During the 2011 DFR rulemaking, DOE also established maximum-
technology (max-tech) efficiency levels for residential central air 
conditioner and heat pump product classes. DOE determined each max-tech 
level by researching the Air-Conditioning, Heating, and Refrigeration 
Institute (AHRI) directory \2\ and the major manufacturers' product 
literature.
---------------------------------------------------------------------------

    \2\ AHRI is the trade association representing manufacturers of 
HVACR and water heating equipment within the global industry. 
Products of different manufacturers are certified to AHRI and listed 
in the AHRI directory: https://www.ahridirectory.org/ahridirectory/pages/home.aspx.
---------------------------------------------------------------------------

    DOE also set regional cooling performance standards for split 
system air conditioners as a function of a Seasonal Energy Efficiency 
Ratio (SEER) in the states of Virginia, Maryland, Kentucky, North and 
South Carolina, Tennessee, Georgia, Florida, Alabama, Mississippi, 
Arkansas, Louisiana, Texas, and Oklahoma (South), and regional 
performance standards for split system and single-package air 
conditioners as a function of SEER and Energy Efficiency Ratio (EER) in 
the states of Arizona, California, Nevada, or New Mexico (Southwest). 
In both cases, DOE has identified baseline and max-tech efficiency 
levels for the respective SEER and EER values. Table B.1 summarizes 
these efficiency levels.

 Table B.1--Baseline and Max-Tech Efficiency Levels of Covered Products
------------------------------------------------------------------------
        Product class                        Baseline        Max-Tech
------------------------------------------------------------------------
                         SEER or EER (Btu/hr-W)
------------------------------------------------------------------------
Split system air conditioner  SEER                  13.0            26.0
    <45,000 Btu/hr..........  EER                   12.2            16.5
    >=45,000 Btu/hr.........  EER                   11.7            13.0
Single-package air            SEER                  14.0            20.0
 conditioner.
                              EER                   11.0            13.0
Split system heat pump......  SEER                  14.0            24.0
Single-packaged heat pump...  SEER                  14.0            16.4
Small-duct, high-velocity     SEER                  12.0            12.5
 systems.
Space constrained air         SEER                  12.0            14.0
 conditioner.
Space constrained heat pump.  SEER                  12.0            12.0
------------------------------------------------------------------------

    Issue B.1 DOE requests comment on the baseline and max-tech 
efficiency levels for each product class.

C. Markups Analysis

    To carry out the life-cycle cost (LCC) and payback period (PBP) 
calculations, DOE needs to determine the cost to the residential 
consumer of baseline products that satisfies the currently applicable 
standards, and the cost of the more-efficient unit the consumer would 
purchase under potential amended standards. By applying a multiplier 
called a ``markup'' to the manufacturer's selling price, DOE is able to 
estimate the residential consumer's price.
    For the 2011 Direct Final Rule, DOE used two distribution channels 
to characterize how products pass from the manufacturer to the 
customer: Replacement applications and new construction. 76 FR 37464-65 
(June 27, 2011). For residential central air conditioning and heat pump 
products installed in replacement applications, the manufacturer sells 
the equipment to a wholesaler, who in turn sells it to a mechanical 
contractor, who in turns sells it to the consumer. For products 
installed in new construction applications, an additional link in the 
distribution chain for the general

[[Page 65607]]

contractor is added. In this new construction distribution channel, the 
manufacturer sells the equipment to a wholesaler, who in turn sells it 
to a mechanical contractor, who in turn sells it to a general 
contractor, who in turns sells it to the consumer.
    To be consistent with the approach followed in the 2011 rulemaking 
and for other energy consuming product rulemakings, DOE plans to 
estimate the manufacturer markup based on publicly available data 
(e.g., SEC 10-K reports, corporate annual reports) and feedback 
obtained from manufacturers during interviews. DOE also plans to 
estimate average wholesaler, mechanical contractor, and general 
contractor markups based on available income statement data (e.g., 
Heating, Air-conditioning & Refrigeration Wholesalers International 
(HARDI) Profit Planning Reports, Air Conditioning Contractors of 
America (ACCA), U.S. Census Bureau).
    Issue C.1 DOE seeks input on distribution channels relevant for 
residential central air conditioners and heat pumps as well as the 
percent of equipment being distributed through the channels.
    Issue C.2 DOE seeks recent data to establish the markups for the 
parties involved with the distribution of the equipment addressed by 
today's notice.

D. Energy Use Analysis

    The purpose of the energy analysis is to assess the energy-savings 
potential of different product efficiencies. DOE uses the annual energy 
consumption and energy-savings potential in the LCC and PBP analyses to 
establish the savings in consumer operating costs at various product 
efficiency levels. As part of the energy use analysis, certain 
assumptions may be required regarding product application, including 
how and under what conditions the product is operated.
    DOE's energy use analysis estimates the range of energy use of 
residential central air conditioner and heat pump products in the 
field, i.e., as they are actually used by consumers. Because energy use 
by such products varies greatly based on efficiency level, consumer 
usage patterns, and environmental attributes, DOE will establish a 
range of energy use.
    Because DOE has set regional cooling-performance standards for 
split system and single-package air conditioners as function of SEER 
and EER, DOE will analyze the impact of increasing SEER and EER on 
cooling energy savings.
    Issue D.1 DOE requests stakeholder input regarding the impact of 
changes in SEER and EER on cooling energy savings.
    In the 2011 Direct Final Rule, DOE estimated that, based on 
stakeholder input, seven-percent of central air conditioner and heat 
pump shipments were utilized in commercial building applications. DOE 
utilized simulations of a reference office building modeled with 
EnergyPlus to estimate the representative space-cooling and space-
heating energy consumption of central air conditioners and heat pumps 
in commercial buildings. For this rulemaking, DOE is considering using 
the same methodology to estimate energy use in commercial building 
applications.
    Issue D.2 DOE requests stakeholder comment on whether a significant 
enough percentage of residential central air conditioners and heat 
pumps are utilized in commercial buildings to warrant considering their 
use in commercial applications.

E. Life-Cycle Cost and Payback Period Analysis

    The purpose of the LCC and PBP analysis is to analyze the effects 
of potential amended energy conservation standards on consumers of 
residential central air conditioner and heat pump products by 
determining how a potential amended standard affects the consumers' 
operating expenses (usually decreased) and total installed costs 
(usually increased).
    DOE intends to analyze the potential for variability and 
uncertainty by performing the LCC and PBP calculations on a 
representative sample of households from RECS for the considered 
product classes using Monte Carlo simulation and probability 
distributions. The analysis results are a distribution of results 
showing the range of LCC savings and PBPs for a given efficiency level 
relative to the baseline level. DOE plans to analyze all seven product 
classes of residential central air conditioner and heat pump products.
    Inputs to the LCC and PBP analysis are categorized as: (1) Inputs 
for establishing the purchase expense, otherwise known as the total 
installed cost, and (2) inputs for calculating the operating expense. 
The primary inputs for establishing the total installed cost are the 
baseline consumer price, standard-level consumer price increases, and 
installation costs. Baseline consumer prices and standard-level 
consumer price increases will be determined by applying markups to 
manufacturer price estimates. The installation cost is added to the 
consumer price to arrive at a total installed cost.
    In the 2011 Direct Final Rule, DOE derived the total installed cost 
from central air conditioner data in RS Means. 76 FR 37472 (June 27, 
2011). DOE plans to use similar data sources for this rulemaking, with 
adjustments to reflect current-day labor and material prices as well as 
to scale installation cost for higher-efficiency products based on 
equipment weight.
    Issue E.1 DOE seeks input on the appropriateness to estimate that 
changes in installation costs will scale with equipment weight.
    The primary inputs for calculating the operating costs are product 
energy consumption, product efficiency, electricity and gas prices and 
forecasts, maintenance and repair costs, product lifetime, and discount 
rates. Both product lifetime and discount rates are used to calculate 
the present value of future operating expenses.
    Maintenance costs are costs associated with maintaining the 
operation of the product. In the 2011 Direct Final Rule, DOE utilized 
sources of preventative maintenance pricing to determine maintenance 
costs. 76 FR 37476 (June 27, 2011). DOE also assumed that such 
maintenance costs do not change with efficiency. 76 FR 37471, 37476.
    Issue E.2 DOE seeks stakeholder input on the appropriateness to 
assume that changes in maintenance costs will be negligible for more-
efficient products.
    Repair costs are costs associated with a major repair to the 
product. In the 2011 Direct Final Rule, DOE determined the costs of 
major repairs (e.g., compressor replacement) from RS Means and industry 
literature. 76 FR 37476 (June 27, 2011). DOE also assumed that repair 
costs vary in direct proportion with the product price at higher 
efficiency levels as replacement costs for more-efficient components 
are likely to be greater than components in baseline products. 76 FR 
37471, 37476.
    Issue E.3 DOE seeks stakeholder comment on the assumption that 
repair costs vary in direct proportion to product price.
    DOE measures LCC and PBP impacts of potential standard levels 
relative to a base case that reflects the market in the absence of 
amended standards. DOE plans to develop market-share efficiency data 
(i.e., the distribution of product shipments by efficiency) for the 
product classes DOE is considering, for the year in which compliance 
with any amended or new standards would be required. By accounting for 
consumers who already purchase more efficient products, DOE avoids 
overstating the potential benefits from potential standards.
    Issue E.4 DOE seeks stakeholder input and data on the fraction of 
central

[[Page 65608]]

air conditioners and heat pumps that are sold above the minimum energy 
efficiency standards. DOE requests such data to be provided by product 
class and, for split system air conditioners, by region. DOE also 
requests information on expected trends in product efficiency over the 
next five years.

F. Shipments Analysis

    DOE uses shipment projections by product class and efficiency level 
in its analysis of the national impacts of potential standards, as well 
as in the manufacturer impact analysis.
    In the 2011 Direct Final Rule, DOE developed a shipments model for 
residential central air conditioner and heat pump products driven by 
historical shipments data, which were used to build up a product stock 
and calibrate the shipments model. 76 FR 37482 (June 27, 2011). 
Shipments of each product class were projected for two market sectors 
that use these products: Residential and commercial sectors; for three 
product placement channels in each market sector: New construction, 
existing owners, and new owners; and for three climatic regions: hot-
dry, hot-humid, and rest of the U.S., which correspond to the regions 
for which DOE ultimately adopted regional standards.
    Issue F.1 DOE seeks stakeholder input and data showing the 
distribution of shipments by product class, market sector, product 
placement channel, and climactic region.
    In the 2011 Direct Final Rule, DOE modeled the decision to repair 
or replace equipment for existing owners and the impact that decision 
would have on the shipments model. 76 FR 37482-84. DOE investigated how 
increases in product purchase price and decreases in product operating 
costs due to standards impact product shipments due to standards.
    Issue F.2 DOE seeks input and data on factors that influence a 
consumer's decisions to repair or replace failed products. In 
particular, DOE is seeking historical repair cost data as a function of 
efficiency.

G. National Impact Analysis

    The purpose of the national impact analysis (NIA) is to estimate 
aggregate impacts of potential efficiency standards at the national 
level. Impacts that DOE reports include the national energy savings 
(NES) from potential standards and the national NPV of the total 
consumer benefits. The NIA considers lifetime impacts of potential 
standards on residential central air conditioner and heat pump products 
shipped in a 30-year period that begins with the expected compliance 
date for new or amended standards. To develop the NES, DOE calculates 
annual energy consumption of products in the building stock for the 
base case and each standards case. To develop the national NPV of 
consumer benefits from potential standards, DOE calculates national 
annual energy expenditures and annual product expenditures for the base 
case and the standards cases. DOE calculates total annual energy 
expenditures using data on annual energy consumption in each case, 
forecasted average annual energy prices, and shipment projections. The 
difference each year between operating cost savings and increased 
product expenditures is the net savings or net costs.
    A key component of DOE's estimates of NES and NPV is the product 
energy efficiency forecasted over time for the base case and for each 
of the standards cases. In the 2011 Direct Final Rule, DOE based 
projections of base-case shipment-weighted efficiency (SWEF) for the 
single-packaged and split system air conditioner and heat pump product 
classes off SWEF growth rates determined from historical data provided 
by AHRI. 76 FR 37484-86 (June 27, 2011). Since DOE only received 
efficiency data at the national level, it assumed that the efficiency 
distributions and trends developed for the entire Nation are also 
representative at the regional level (i.e., efficiency distributions 
and trends do not vary by region). For this rulemaking, DOE plans on 
considering recent trends in efficiency and input from stakeholders to 
update product energy efficiency forecasts, and maintain the assumption 
that efficiency trends developed for the entire Nation are also 
representative at the regional level.
    Issue G.1 DOE seeks stakeholder input and historical SWEF data for 
residential central air conditioner and heat pumps by product class and 
by region.

H. Manufacturer Impact Analysis

    The purpose of the manufacturer impact analysis (MIA) is to 
estimate the financial impact of potential energy conservation 
standards on manufacturers of residential central air conditioners and 
heat pumps and to evaluate the potential impact of such standards on 
employment and manufacturing capacity. The MIA includes 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 used to estimate a range of potential impacts 
on manufacturer profitability. The qualitative part of the MIA 
addresses a proposed standard's potential impacts on manufacturing 
capacity and industry competition, as well as factors such as product 
characteristics, impacts on particular subgroups of firms, and 
important market and product trends.
    As part of the MIA, DOE intends to analyze impacts of potential 
energy conservation standards on small business manufacturers of 
covered products. DOE intends to use the Small Business 
Administration's small business size standards to determine whether 
manufacturers qualify as small businesses. The size standards are 
listed by North American Industry Classification System (NAICS) code 
and industry description.\3\ Manufacturing of residential central air 
conditioners and heat pumps 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. This 750-employee threshold would 
include all employees in a business's parent company and any other 
subsidiaries.
---------------------------------------------------------------------------

    \3\ Available at: http://www.sba.gov/content/small-business-size-standards.
---------------------------------------------------------------------------

    DOE conducted a market survey using publicly available information 
to identify potential small manufacturers. DOE's used DOE's Compliance 
Certification Management System (CCMS), industry trade association 
membership directories (including AHRI), individual company Web sites, 
and market research tools (e.g., Hoovers reports) to create a list of 
companies that manufacture or sell products covered by this rulemaking. 
DOE has initially identified seven domestic small businesses that 
manufacture residential central air conditioners and heat pumps. The 
small businesses identified are:
     Aerosys, Inc.
     Bard Manufacturing Company
     First Co.
     Heat Controller, Inc.
     National Refrigeration and Air Conditioning Products, Inc.
     Style Crest Enterprises, Inc.
     Unico, Inc.
    Issue H.1 DOE requests comment on what small business manufacturers 
of residential central air conditioners and heat pumps have not been 
identified in the above list that it should consider in its analysis.

I. Submission of Comments

    DOE invites all interested parties to submit in writing by December 
5, 2014,

[[Page 65609]]

comments and information on matters addressed in this notice and on 
other matters relevant to DOE's consideration of new or amended energy 
conservations standards for residential central air conditioners and 
heat pumps. After the close of the comment period, DOE will begin 
collecting data, conducting the analyses, and reviewing the public 
comments, as needed. These actions will be taken to aid in the 
development of a NOPR for residential central air conditioner and heat 
pump products if DOE decides to amend the standards for such products.
    DOE considers public participation to be a very important part of 
the process for developing test procedures and energy conservation 
standards. DOE actively encourages the participation and interaction of 
the public during the comment period in each stage of the rulemaking 
process. Interactions with and between members of the public provide a 
balanced discussion of the issues and assist DOE in the rulemaking 
process. Anyone who wishes to be added to the DOE mailing list to 
receive future notices and information about this rulemaking should 
contact Ms. Brenda Edwards at (202) 586-2945, or via email at 
[email protected].

    Issued in Washington, DC, on October 30, 2014.
Kathleen B. Hogan,
Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and 
Renewable Energy.
[FR Doc. 2014-26247 Filed 11-4-14; 8:45 am]
BILLING CODE 6450-01-P